Exam 2- (10/21) Chapter 6-10 Sapling Questions
If Canada 's GDP doubled over 5 years, approximate growth rate? (rule of 70)
14%
If China's economy maintains a 7% annual rate over the next 20 years, how much how large will its economy be in 20 years if its current GDP is $12 trillion?
$48 trillion
If C= $1000, I= $500, G= $800, X= $400, M=$600 What is the value of the GDP?
2,100
Suppose that the CPI in 2013 was 250 and the CPI in 2014 was 260. What is the rate of inflation in this economy?
4.0%
If the village of Happyville has 150 residents, of which 50 are children are children or senior citizens, 95 are working, and 5 are actively seeking work, the unemployment rate is
5%
Suppose that in Southlandia, frictional unemployment is 2%, structural unemployment is 3%, and cyclical unemployment is 4%. What is the natural rate of unemployment in Southlandia?
5%
which of the following scenarios would result in economic growth in the country of Everland?
GDP doubles whiles prices remain the same
Peter is a compulsive gamer. He decides to buy World of Warcraft, all of its expansions, Starcraft 2, a PS3, a Wii, and an Xbox 360, since prices in general have been rising at an alarming rate
Inflation
Suppose that the stock market rises significantly over the next yr, investors more wealth and increase in consumption. Is the increase in consumer confidence macro or micro issue?
Macroeconomics
If Galaxia has a GDP that is 10 times larger than that of Myopia, which country would likely have greater marginal returns to a capital based on the law of diminishing marginal returns to capital?
Myopia
which of these organizations officially determines when the economy is experiencing a recession?
National Bureau of Economic Research
Which of the following characteristics about Econoville could be determined based on its GDP
None of the above can be determined based on Econoville's GDP
Who reports the official US unemployment rate?
U.S. Bureau of Labor Statistics
Suppose the production function for the country of Westlandia is Q=K+L. Which of the following statements is true about this production function?
Westlandia could achieve economic growth with labor alone.
All of the following are considered factors of production except production except
all of them are
At which stages is the unemployment rate likely to be higher?
at the very start of a economy recovery
which of the following assets will likely show the greatest increase in value over time?
blue-chip stock
When the stock market is rising rapidly, what tends to happen to bond prices and interest rates on bonds?
bond prices fall, and interest rates on bonds rise
the net amount of funds coming into a country
capital inflow
which type of economist would be least supportive of attempts to build a new high-speed railway network by raising taxes on gaseline?
classical economist
Which of the following best represents specialization and its relationship with trade?
comparative advantage
A major characteristic of a recession is
decrease in employment
Had society known at the time of the selected event what it knows now about the macroeconomy, what course of action might federal policymakers have taken?
decreased taxes, supported decreased interest rates, or both
Linda postpones her wedding event though most food prices and most service prices were dropping this year, which would keep the cost of the wedding down.
deflation
Individuals who want to work, but have given up searching for a job because of limited prospects, are known as
discouraged workers
Jonathan is currently enrolled in college full-time; however, he works part-time at a restaurant on weekends to earn some spending cash. Jonathan would be considered
employed
the purpose of growth accounting is
estimate the contribution of each component of the aggregate production function makes to overall economic growth
if the level of saving in an economy exceeds investment, what will likely happen to the interest rates as the economy moves to equillibrium
interest rates will fall to spur greater investment
if interest rates are rising, what might be the relationship between savings and investment that is causing this to happen?
investment demand is greater than savings
economic growth is important to understand because
it is closely tied to standard of living
If the projected rate of return for a project is less than the interest rate for a loan that is necessary to complete the project, how will the borrowing business act?
the business will not take out a loan
which effect best characterizes the relationship between inflation expectations and nominal interest rates?
the fisher effect
Which of the following would represent the fastest annual growth of GDP per capita?
An increase in GDP of 5% and population growth of 1%
According to the Keynesian economics, economic downturns are caused by
inadequate spending
suppose the government introduces a new incentive for individuals to save money for retirement. How would this affect the market for loanable funds and interest rates?
supply of loanable funds would increase and and interest rates would fall
Calculate the GDP of Dinoland using the expenditures approach given the following data: personal consumption= $10 billion; gross private domestic investment=$5 billion: government spending= $3 billion; exports= $2 billion, imports= $1 billion
$19 billion
Suppose that the consumer price index in Eastlandia rises from 150 to 159 over the past year, and that the city sets its car registration prices so that real prices stay the same. If the cost to register a car was $50 last year, how much would it cost this year, in nominal terms?
$53
If a bundle of goods used to calculate the consumer price index rises from $80 to $86 over a one-year period, what is the inflation rate for that year?
7.5%
Inflation
A general and ongoing rise in the average level of prices in an economy
which of the examples provides the best evidence that inflation has occured?
A person whose salary has increased is able to purchase fewer goods and services
which of the following is an example of monetary policy?
A rise in short-term interest rates
stock
A share of ownership in a corporation.
loan
An agreement between a borrower and a lender, where the borrower agrees to repay money with interest over a period of time.
Suppose Jollyland has a population of 1,000 people and a GDP of $1 million, while Follyland has a population of 8,000 people and a GDP of $8 million. Which country has a higher GDP per capita?
Both countries have the same GDP per capita
Suppose Hyperpolis's GDP increases by 15%, and its inflation rate is 12%, while Superpolis's GDP increases by 6%, and its inflation rate is 3%. Assuming the population in both countries remained constant, which economy grew faster?
Both economies grew at the same rate
Why is a hypothetical basket of goods used to measure inflation?
Consumers can see the general increase in price our time by using a basket of goods
which of the following situations would likely lead to a higher savings rate in in the short run?
JR believes that he may be laid off from his job within the next 6 months
Which of the following person would be considered employed?
Jennifer is still considered employed because she still works as a teacher and she is only temporarily leaving
Government should guarantee its citizens a basic standard of living by raising the minimum wage, providing housing assistance to the poor, and offering health coverage to everyone. What type of economist?
Keynesian economist
out of these individuals, whose money gained the most value during their time period?
Linda's most gained the most value (deflation).
Human Capital
Quality of labor, skills, knowledge, and experience possessed by an individual or pop, viewed in terms of value or cost
Which individual is out of the labor force?
Robert is without a job, is able to work, but is not actively looking for work.
which of the following is a macroeconomic issue?
South Park experiences an economic boom from increased tourism.
paradox of thrift
The economy is being harmed because there is a sharp decrease in consumer spending as a result of an upcoming recession.
Why does a small difference in economic growth result in a large difference in wealth over time?
The effect of compounding allows growth to build upon previous growth.
how does an increase in the savings rate affect the multiplier in an economy, if at all?
The multiplier would decrease
The actions of individuals in an economy can compound upon one another, leading to outcomes that magnify the actions of individuals. This can be summarized using which phrase?
The whole is greater than the sum of its parts.
Suppose that Pandastan has a GDP of $5 billion and a population of 2 million, while Tigerstan has a GDP of $3 billion and a population of 1 million. Which country has a higher GDP per capita, and what is the value?
Tigerstan, 3,000
which of the following best defines a financial intermediary
a financial institution that transforms investor funds into financial assets
which of the following would cause the demand for loanable funds to increase?
a new investment tax credit for businesses to expand
bond
a promise to repay borrowed money to a lender at a fixed rate of interest at a specified time at maturity
Which of the following is least likely to result in inflation?
a reduction in consumer confidence
which of the following is not true about the stock market?
a stockholder receives the amount it invests plus interest at a fixed time in the future
which of the events is likely to occur when the business cycle is in a period of expansion?
an increase in economic growth
Since 1900, what has been the long term pattern of growth in the United States?
an increase in real GDP per capita
What is an inflation
an increase in the overall price level
Which of the events likely to occur when the business cycle is in a period of recession (contraction)?
an increase in unemployment
the difference between the amount the government collects and how much it spends
budget balance
the result when the government spends more than it collects in taxes
budget deficit
when the government spends less than money than it takes it through taxes
budget surplus
Best summarizes the impact of the fisher effect
consumers consider future inflation
When the government changes either its spending or tax policy to pursue economic objectives, it has changed its
fiscal policy
The natural rate of unemployment equals
frictional unemployment plus structural unemployment
Chelsea was a manager at a vinyl records store who recently quit because she felt the recent popularity of vinyl is a current fad that will eventually fade away. She is now actively looking for a job. Chelsea is considered
frictionally unemployed
Suppose that GDP is $50 million in 2015 but falls to $48 million in 2016, and that no changes in personal consumption expenditures, gross private domestic investment, and government spending are recorded. What must have happened to next exports to cause this change?
from 2015 to 2016, the difference between exports and imports may have fallen by $2 million
bank deposit
funds that are kept in a bank that most be relinquished upon the owner's request
GDP per capita in the countries of Neverland and Everland are 2,000 and 500. That suggests that, other things being equal, the returns from capital investment would be
greater in Everland
which of the following policies should a country implement in an economic downturn to avoid a paradox of thrift?
implement policies to encourage greater consumption
In 2008, the rate of inflation was 2%, which then rose to 3% in 2009 before falling back to 2% in 2010. Between 2008 and 2009, the economy experienced ______________ and between 2009 and 2010, the economy experienced_______________
inflation, disflation
which of the following terms as prices in loanable funds
interest rates
Which of the following government actions would represent the largest increase in physical capital?
investment in hospitals and other health care facilities to modernize their operations.
Martha needs to acquire funds in order to expand her bakery. She does not want to give up control of her business, but her credit score is weak due to the recent foreclosure on her home. What should Martha do to acquire these funds?
issue bonds to willing investors
Any large, sustainable increase in real GDP must be due to steadily increasing __________.
labor productivity
What is the main goal of policymakers in regard to the business cycle?
limit the volatility of the business cycle by reducing the size of both recessions and economic booms
which of the following statements best describes the idea of economic convergence?
lower gdp per capital countries with catch up with higher gdp per capita countries
Physical capital
manufactured items used to produce goods and services; includes new plants and new equipment
This group, consisting of individuals who would like to work but have not looked for work during the past four week, is included among
marginally attached workers
Changing the amount of money in circulation to pursue economic objectives changes the
monetary policy
How often is the survey that determines unemployment released?
monthly
Prior to the Great Depression
most economist believed that the economy was self-regulating
when the preceding term is combined with all of the privately- held savings from around the country
national savings
How does funding from national savings differ from funding obtained from capital inflows?
national savings are repaid domestically, whereas capital inflows are repaid to a foreigner.
In an attempt to promote renewable energy, the President and Congress approve an annual rebate to those who install solar panels on their roofs. what type of economic policy would this represent?
neither fiscal or monetary policy
A measure of an economy's output using current prices
nominal GDP
A measure of output that is not adjusted for inflation
nominal GDP
Which of the following persons would be considered unemployed?
none of the above are considered unemployed
Labor productivity
output per worker
When considering economic growth, many policy makers focus on real gdp per capita since it takes into account the potentially distorting effects of
population change
Melissa decides to start her own personal library by amassing a private collection of books and magazines about world religions, cooking, comics, and economics. As she reads an issue of The Economist, she discovers that the overall price levels have changed only 0.01% in the past two years, and decides it does not matter whether she starts the project now or later
price stability
which effect will an increase in interest rates have on the quantity of loanable funds supplied?
quantity supplied will increase
A measure of an economy's output using constant prices.
real GDP
A measure of output that is adjusted for inflation
real GDP
which of the following choices is most directly related to cyclical unemployment?
recessions
Which of the following policies would likely not promote economic growth?
reducing the number of student visas issued to international students
marginal returns
the additional output resulting from a one unit increase in the use of variable inputs, while other inputs are held constant.
which of the factors would decrease the rate of frictional unemployment?
the advent of the internet, which makes finding jobs easier
factors of production
the resources that are used to make goods and services
Suppose that due to the poor economy, 1 million workers lost their jobs, causing the unemployment rate to increase to 10%. After a few months of searching, 300,000 of these unemployed workers give up looking for work. How would the decision by these 300,000 people affect the unemployment rate, all else equal?
the unemployment rate would decrease
Real GDP per capita is NOT an adequate measure of
the well-being of each person in the economy
which of the following is not a major function of financial institutions?
to minimize interest rates paid to savers
when the economy is doing well, a significant share of unemployment is frictional
true
From 2015 to 2016, the overall price level rose from 200 to 220. Over the same period, tuition rates at the local community college rose from $100 to $115 per credit hour. What can be concluded from the rise in tuition relative to overall inflation?
tuition rates increased at a faster rate than inflation
By excluding the groups identified in the previous questions (unemployed), the U.S Bureau of Labor Statistics calculation methods
understate the true level of unemployment
individuals who are involuntarily working part-time are considered
unemployed
The most common indicator in the labor market is
unemployment rate
