Macro Exam 1 (CH 1, 8, 9.1-.3)

If the number employed is 190 million, the working-age population is 230 million, and the number unemployed is 10 million, then the unemployment rate is A. 5%. B. 5.2%. C. 8%. D. 10%. E. 50%.

A. 5%.

An example of a fixed investment spending it A. A purchase of a computer by an accounting firm B. $200 million of unsold cars at a car dealership C. A purchase of a home by a household D. A purchase of a bond by General Electirc Company

A. A purchase of a computer by an accounting firm

Gross domestic product understates the total production of final goods and services because of the omission of A. household production. B. inflation. C. intermediate goods. D. exports.

A. Household production

The economy has gone into a recession. You have majored in computer science and, because of the recession, have difficulty in finding a job. Should you go back to school and get a second major? A. No, the recession will most likely be short-lived and I can get a job after it is over. B. Yes, the recession will ensure that you will never find a job as a programmer. C. No, the recession will have no impact on my ability to get a job or my future income. D. Yes, the recession will lower income in my field permanently.

A. No, the recession will most likely be short-lived and I can get a job after it is over.

n the modern U.S. economy, the typical unemployed person stays unemployed for A. a relatively short time, less than six months. B. an amount of time that is hard to quantify. C. for a long time during expansions and short time during recessions. D. a relatively long time, over a year.

A. a relatively short time, less than six months.

In May 2009, Ford Motor Company's sales were down 20 percent from a year earlier. These events were caused by A. an economic recession. B. an economic expansion. C. a reduction in advertising. D. declining quality of service.

A. an economic recession

Investment, as defined by economists, would not include which of the following? Ford A. buys U.S. government bonds. B. adds 1,000 new cars to inventories. C. builds another assembly plant in the United States. D. buys a new robotic machine (from a plant in Ohio) to assemble cars.

A. buys U.S. government bonds.

Which of the following is not a durable good? A. clothing B. furniture C. refrigerator D. automobile

A. clothing

The purchase of a new automobile is included in A. consumption expenditures on durable goods. B. consumption expenditures on nondurable goods C. investment expenditures. D. consumption expenditures on services.

A. consumption expenditures on durable goods.

What is the largest component of spending in the United States? A. consumption spending B. government spending C. investment spending D. net investment spending

A. consumption spending

The labor force equals the number of people A. employed plus unemployed. B. employed. C. in the working-age population. D. unemployed.

A. employed plus unemployed.

Which of the following is not an example of a transfer payment? A. health insurance payments to an army private B. social security payments to disabled persons C. social security payments to retirees D. unemployment insurance payments

A. health insurance payments to an army private

An advantage of the establishment survey over the household survey of the labor market is that the establishment survey A. is based on actual payrolls, rather than on unverified answers. B. includes persons employed at newly opened firms. C. provides an estimate of the number of persons unemployed. D. includes the number of self-employed persons.

A. is based on actual payrolls, rather than on unverified answers.

The purchase by a foreign government of an airplane produced in the United States is included in U.S. A. net exports. B. consumption expenditures. C. government purchases. D. investment expenditures.

A. net exports.

The purchase by a household in China of a CD produced in the United States is included in U.S. A. net exports. B. investment expenditures. C. consumption expenditures. D. government purchases.

A. net exports.

Gross national product, GNP, of the United States is the market value of all final goods and services A. produced by citizens of the United States anywhere in the world. B. produced within the United States. C. consumed within the United States. D. consumed by citizens of the United States anywhere in the world.

A. produced by citizens of the United States anywhere in the world

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering A. structural unemployment. B. cyclical unemployment. C. frictional unemployment. D. unnatural unemployment. E. seasonal unemployment.

A. structural unemployment.

Which of the following is included in both the U.S. GDP and U.S. GNP? A. the value of all cars produced by General Motors in the United States B. the value of all cars produced by Toyota in the United States C. the value of all cars produced by Nissan in Japan and the United States D. the value of all cars produced by Ford in Mexico

A. the value of all cars produced by General Motors in the United States

Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 have part-time employment; 20 do not have employment, but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the U.S. Bureau of Labor would equal A. (30/80) × 100. B. (20/100) × 100. C. (20/80) × 100. D. (20/60) × 100.

B. (20/100) × 100.

In the United States, households were saving about ________ of their income in the mid 1980s, and by 2005, saving ________. A. 64 percent; increased to 70 percent. B. 10 percent; dropped to about 1 percent. C. 2 percent; dropped to negative 15 percent. D. 5 percent; increased to 25 percent

B. 10 percent; dropped to about 1 percent.

Recent estimates put the size of the underground economy in the United States at ________ of measured GDP. A. 2 percent B. 8 percent C. 13 percent D. over 50 percent

B. 8 percent

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study? A. Avocado prices rise due to a late frost in California. B. Real GDP grows by 2.3% in the second quarter. C. The United Auto Workers sign a contract raising wages and benefits 7% over the next 3 years. D. Airlines raise ticket prices in response to rising fuel costs.

B. Real GDP grows by 2.3% in the second quarter.

Which of the following goods is directly counted in GDP? Selected Answer: A. the lettuce that Subway purchases for its sandwiches B. a 12-inch Subway sandwich purchased by a student C. the bread that Subway purchases for its sandwiches D. the plastic bags that Subway purchases to wrap its sandwiches

B. a 12-inch Subway sandwich purchased by a student

Based in part on the aftermath of the financial crisis that began in 2008 and the speed of the recovery of the U.S. economy following the recession of 2007-2009, Bank of America ________ the number of persons it employed in September 2011 and this ________ the total number of persons unemployed in the economy. A. increased; decreased B. decreased; increased C. decreased; decreased D. increased; increased

B. decreased; increased

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness? A. inflation B. discouraged workers C. people employed in the underground economy D. unemployed persons falsely report themselves to be actively looking for a job

B. discouraged workers

The best measure of the income households actually have available to spend is A. net national income. B. disposable personal income. C. national income. D. personal income.

B. disposable personal income.

The Bureau of Labor Statistics would categorize a person as ________ if they were temporarily away from their job because they were ill. A. out of the labor force B. employed C. unemployed D. a discouraged worker

B. employed

In the circular flow model, the value of total income for an economy ________ the value of total production. A. is greater than B. equals C. is less than D. may be greater than or less than

B. equals

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population? A. unemployment rate B. labor force participation rate C. discouraged-worker ratio D. the ratio of minimum wage to inflation

B. labor force participation rate

The unemployment rate is an important economic statistic that can tell us about the health of the economy. If the unemployment rate turns out to be high or higher than anticipated, we would expect A. it is more likely that an incumbent president will be re-elected. B. that stock prices are more likely to fall. C. that investors will be more optimistic about the economy. D. that jobs are less difficult to find.

B. that stock prices are more likely to fall.

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to overstate the true extent of joblessness? A. inflation B. unemployed persons falsely report themselves to be actively looking for a job C. discouraged workers D. counting people as employed who are working part time, although they would prefer to be working full time

B. unemployed persons falsely report themselves to be actively looking for a job

The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is A. 105% higher in year 2 than in year 1. B. 105% higher in year 1 than in year 2. C. 5% higher in year 2 than in year 1. D. 5% higher in year 1 than in year 2.

C. 5% higher in year 2 than in year 1.

In the United States since the mid-1980s, consumption as a percentage of GDP has A. slowly decreased. B. remained the same. C. increased. D. dropped by more than half.

C. Increased

In May 2009, the U.S. auto industry experienced a 34 percent decline in sales compared to May 2008. The automobile industry was experiencing the effects of A. the underground economy. B. deflation. C. the business cycle. D. depreciation.

C. The business cycle

The GDP deflator is a measure of the A. total production of the economy unadjusted for inflation. B. total production of the economy adjusted for inflation. C. average level of prices of final goods and services in the economy. D. average level of prices of intermediate goods and services in the economy.

C. average level of prices of final goods and services in the economy.

Macroeconomics, as opposed to microeconomics, includes the study of what determines the A. quantity of Dell employees. B. wages paid to employees by Dell. C. average price levels of goods and services in the economy. D. price charged for laptop computers by Dell.

C. average price levels of goods and services in the economy.

Investment, as defined by economists, would include the purchase of a A. share of stock in ExxonMobil. B. government bond. C. computer by an accounting firm. D. corporate bond.

C. computer by an accounting firm.

To calculate GDP by the expenditure method, one must add A. consumption spending, investment spending, government spending and exports. B. labor, natural resources, entrepreneurship, and capital. C. consumption spending, investment spending, government spending and net exports. D. wages, rents, interest, and profits.

C. consumption spending, investment spending, government spending and net exports.

Workers laid off as a result of a recession suffer A. natural unemployment. B. seasonal unemployment. C. cyclical unemployment. D. frictional unemployment. E. structural unemployment.

C. cyclical unemployment.

Macroeconomics seeks to understand A. public choices, private choices, and consumer maximization. B. product demand, product cost, and profit maximization. C. economic growth, business cycles, and inflation. D. industry sales, marketing strategies and corporate growth.

C. economic growth, business cycles, and inflation.

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of A. output of a specific industry. B. employment in a specific industry. C. employment in the economy. D. output of a specific firm.

C. employment in the economy.

The output of Mexican citizens who work in Texas would be included in the A. gross national product of the United States. B. gross domestic product of Mexico. C. gross national product of Mexico. D. net national product of the United States.

C. gross national product of Mexico.

Legalizing all forms of illegal activities Selected Answer: A. increases GDP and increases the size of the underground economy. B. reduces GDP and increases the size of the underground economy. C. increases GDP and reduces the size of the underground economy. D. reduces GDP and the size of the underground economy.

C. increases GDP and reduces the size of the underground economy.

Which of the following would be directly counted in GDP in 2012? A. kitchen cabinets built in 1887, extracted from the 1887 B. home, and installed in a brand new country-style home kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a farm house built in 1950 C. kitchen cabinets purchased from Home Depot in 2012 to be installed in a house built in 1997 D. none of the above

C. kitchen cabinets purchased from Home Depot in 2012 to be installed in a house built in 1997

The Bureau of Labor Statistics would categorize a retiree who is not working as A. employed. B. unemployed. C. out of the labor force. D. a discouraged worker.

C. out of the labor force.

Suppose that nominal GDP in 2011 was less than real GDP in 2011. Given this information, we know for certain that A.the price level in 2011 was greater than the price level in the base year. B. real GDP in 2011 was greater than real GDP in the base year. C. the price level in 2011 was less than the price level in the base year. D. real GDP in 2011 was less than real GDP in the base year.

C. the price level in 2011 was less than the price level in the base year.

Gross domestic product understates the total production of final goods and services because of the omission of A. exports. B. intermediate goods. C. the underground economy. D. inflation.

C. the underground economy

When the labor market is at full employment A. the unemployment rate is 0%. B. there is only cyclical unemployment in the economy. C. there is no cyclical unemployment in the economy. D. there is only structural unemployment in the economy.

C. there is no cyclical unemployment in the economy.

Nominal GDP is GDP in a given year A. valued in the prices of the base year. B. adjusted for anticipated inflation. C. valued in the prices of that year. D. adjusted for inflation.

C. valued in the prices of that year.

Real GDP is GDP in a given year A. adjusted only for unanticipated inflation. B. adjusted only for anticipated inflation. C. valued in the prices of the base year. D. valued in the prices of that year.

C. valued in the prices of the base year.

Disposable personal income equals personal income A. Minus personal tax payments plus government transfer payments B. Minus government transfer payments plus personal tax payments C. Plus government transfer payments D. Minus personal tax payments

D. Minus personal tax payments

Which of the following transactions represents the purchase of a final good? A. Starbucks purchases coffee beans. B. Apple computer buys computer processors from Intel. C. Delta buys a new European-made jetliner. D. Your father buys a new John Deere riding lawn mower.

D. Your father buys a new John Deere riding lawn mower.

The nominal GDP of the U.S. in 2010 was approximately $14.6 trillion. This means that A. total income in 2010 was around $14.6 trillion. B. the value of output in 2010 was around $14.6 trillion. C. total spending in 2010 was around $14.6 trillion. D. all of the above are true.

D. all of the above are true.

During a business cycle expansion, total production ________ and total employment ________. A. decreases; increases B. increases; decreases C. decreases; decreases D. increases; increases

D. increases; increases

Which of the following is not directly counted in GDP? Selected Answer: A. consumer goods B. investment expenditures C. government purchases D. intermediate goods

D. intermediate goods

The purchase of a new house is included in A. government purchases. B. net exports. C. consumption expenditures. D. investment expenditures.

D. investment expenditures.

Presently, GDP is ________ to compensate for the costs of environmental damage. A. adjusted on a chain-weight basis B. partially adjusted C. fully adjusted D. not adjusted

D. not adjusted

Value added equals the market price of the firm's product minus A. the price of all factors of production. B. wages and salaries. C. depreciation on plant and equipment. D. the price of intermediate goods.

D. the price of intermediate goods.

Suppose, in 2012, you purchased a house built in 2003. Which of the following would be included in the gross domestic product for 2012? A. the value of the house in 2003 B. the value of the house in 2012 minus depreciation C. the value of the house in 2012 D. the value of the services of the real estate agent

D. the value of the services of the real estate agent

In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA A. simply counts the total number of goods and services produced in the marketplace and then adds them up. B. simply counts the total number of goods produced in the market place and then adds them up. C. values goods at their market prices, multiplies them by the quantity produced, and then adds them up. D. values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.

D. values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up