Macro exam 3 fall 2015 Dr. Nath

Suppose the economy is closed and consumption is 6,500, taxes are 1,500, and government purchases are 2,000. If national savings amounts to 1,000, then what is GDP?

9,500

Assume the following information for an imaginary, closed economy. GDP=$110,000; consumption=$70,000; private saving=$8,000; national savings=$12,000. For this economy, investment amount to

$12,000

The country of Yokovia does not trade with any other country. Its GDP is $30 billion. Its government purchases is $5 billion worth of goods and services each year, collects $7 billion in taxes, and provides $3 billion in transfer payments to households. Private savings in Yokovia amounts to $5 billion. What are consumption and investment in Yokovia?

$21 billion and $4 billion, respectively

Assume the following information for an imaginary, closed economy. GDP=$110,000; consumption=$70,000; private saving=$8,000; national savings=$12,000. For this economy, government purchases amount to

$28,000

the country of Cedarland does not trade with any other country. Its GDP is $20 billion. Its government purchases is $3 billion worth of goods and services each year, collects $6 billion in taxes, and provides $2 billion in transfer payments to households. Private saving in Cederland is $4 billion. What is investment in Cederland?

$5 billion

Suppose a closed economy had a public saving of $3 trillion and private saving of $2 trillion. What are national savings and investment for this country?

$5 trillion, $5 Trillion

If in a closed economy Y= $11 trillion, which of the following combination would be consistent with national savings of $2.5 trillion?

C=$8 trillion, G=$.5trillion

A budget deficit

Changes the supply of loanable demands

Fran buys 1,000 shares of stock issued by Miller Brewing. In return, Miller uses the funds to buy new machinery for one of its breweries.

Fran is saving; Miller is investing

Which of the following causes of unemployment is NOT associated with a wage rate above the market equilibrium level?

Job-search

Four employers have justified their actions as follows. Whose logic is NOT consistent with the logic of efficiency wage theory?

Kay pays her workers less than the equilibrium wage so they wont have the time or money to look for work somewhere else

Meredith is looking for work as a computer programmer. Although her prospects are good, she hasn't taken a job. Julie is looking for work in a steel mill. Every time she shows up for an interview, there are more people looking for a job than their are openings. Someone waiting in line with her tells her it has been that way for a long time

Meredith is frictional unemployed, and Julie is structurally unemployed

Daisy is the newly appointed CEO of a company that manufactures CD drives on an assembly line. Her staff has told her that the output the firms produces, given the number of workers employed, indicates that some workers may be shirking. According to efficiency wage theory, what should she do?

Pay all workers more than the equilibrium wage rate

Suppose that congress were to repeal an investment tax credit. What would happen in the market for loanable funds?

The demand for loanable funds would shift left

If the demand for loanable funds is shifted to the right, then equilibrium interest

and quantity of loanable funds rise

A firm may pay efficiency wages in an attempt to

attract a well-qualified pool of applicants, reduce incentive to shirk, reduce turnover

If Proctor and Gamble sell a bond it is

borrowing directly from the public

Job search

creates frictional unemployment, while firms paying wages above equilibrium to improve workers health creates structural unemployment

The deviation of unemployment from its natural rate is called

cyclical unemployment

In a closed economy, nation saving is

equal to investment

Providing training for unemployment individuals is primarily intended to reduce

fractional unemloyment

Consumers decides to buy more computers and fewer typewriters. As a result, computer companies expand production while typewriter companies lay-off workers. this is an example of

frictional unemployment created by sectoral shifts

From time to time, the demand for workers has risen in one region of the U.S. and fallen in another. This illustrates

frictional unemployment created by sectoral shifts

Suppose that because of the popularity of the low-carb diet, bakeries need fewer workers and steak houses need more workers. This is an example of

frictional unemployment created by sectoral shifts

The efficiency-wage theory of workers turnover suggests that firms with

higher turnover will have a higher production costs and lower profits

When unions raise wages in some sectors of the economy, the surplus of labor in other sectors of the economy

increases, reducing wages in industries that are not unionized

The primary economic function of the financial system is to

match on person's savings to another person's investment

The efficiency-wage theory of workers health is

more relevant for explaining unemployment in less developed countries than in rich countries

The slope of the demand for loanable funds curve represents the

negative relations between the real interest rate and investment

Frictional unemployment can be the consequences of

one industry declining while another is growing, workers leaving exsiting jobs to find ones they like better, changes in the working conditions offered by competing firms

When a union raises the wage rate above the equilibrium level, it

raises the quantity of labor supplied and reduces the quantity of labor demanded resulting in unemployment

If the tax revenue of the federal government exceeds spending, then the government necessarily

runs a budget surplus

Other things the same, a higher interest rate induces people to

save more, so the supply of loanable funds slopes upwards

Given the Lekeisha's income exceeds her expenditures, she is best described as

saver or as a supplier of funds

A bond buyer is a

saver. Bond buyers may sell their bonds prior to maturity

The source of the supply of loanable funds is

saving, and the source of the demand for loanable funds is investment

Which of the following is NOT a reason economies always experience some unemployment

scarcity of resources

Evidence from research studies by economists

shows that increased unemployment benefits decrease the job search efforts of the unemployed

Unions contribute to

structural unemployment

The economy's two most important financial markets are

the bond market and the stock market

If there is a surplus of loanable funds, then

the quantity supplied is greater than the quantity demanded and the interest rate will fall

Most entrepreneurs do not have enough money of their own start a business. When they acquire the necessary funds from someone else,

their investments are being financed by someone else's savings

When a union bargains successfully with employers, in that industry

unemployment and wages increases