MACRO midterm 2

In a closed economy, what does the difference between the tax revenue and government purchases, (T − G), represent?

public saving

The natural rate of unemployment: -Unions -Minimum-wage laws -Job search -Efficiency wages

varies less than the measured unemployment rate

cyclical unemployment refers to

short-run fluctuations around the natural rate of unemployment.

Janet is a farmer. Which of the following are included in her human capital?

what she's learned from experience but not her tractor

Esther is considering expanding her dress shop. If interest rates rise she is: -less likely to expand. This illustrates why the demand for loanable funds slopes downward. -more likely to expand. This illustrates why the demand for loanable funds slopes upward. -more likely to expand. This illustrates why the supply of loanable funds slopes upward. -less likely to expand. This illustrates why the supply of loanable funds slopes downward.

less likely to expand. This illustrates why the demand for loanable funds slopes downward.

When the government's budget deficit increases the government is borrowing: -more and public savings increases. -less and public savings falls. -less and public savings increases. -more and public savings falls.

more and public savings falls

Dollar bills, rare paintings, and emerald necklaces are all: -stores of value. -extremely liquid assets. -units of account. -media of exchange.

stores of value

Which of the following can be measured by the level of real GDP per person?

the standard of living but not productivity

Suppose the Fed requires banks to hold 9 percent of their deposits as reserves. A bank has $18,000 of excess reserves and then sells the Fed a Treasury bill for $9,000. How much does this bank now have available to lend out if it decides to hold only required reserves?

$27,000

The country of Cedarland does not trade with any other country. Its GDP is $17 billion. Its government purchases $5 billion worth of goods and services each year and collects $6 billion in taxes. Private saving in Cedarland is $5 billion. For Cedarland, investment is: -$7 billion and consumption is $7 billion. -$6 billion and consumption is $6 billion. -$6 billion and consumption is $7 billion. -$7 billion and consumption is $6 billion.

$6 billion and consumption is $6 billion

Last year real GDP in the imaginary nation of Oceania was 561.0 billion and the population was 2.2 million. The year before, real GDP was 500.0 billion and the population was 2.0 million. What was the growth rate of real GDP per person during the year?

2%

Suppose that some country had an adult population of about 46 million, a labor-force participation rate of 75 percent, and an unemployment rate of 8 percent. How many people were unemployed?

2.76 million

In the nation of Wiknam, the money supply is $80,000 and reserves are $18,000. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

22.5%

In one year, you meet 52 people who are each unemployed for one week and eight people who are each unemployed for the whole year. What percentage of the unemployment spells you encountered ended within one week and therefore was short term, and what percentage of the unemployment you encountered in a given week was long term?

86.7% was short term; 88.9% was long term

Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods. -Country A has higher productivity and higher real GDP per person than country B. -Country A has lower productivity and lower real GDP per person than country B. -Country A has higher productivity but lower real GDP per person than country B. -Country A has lower productivity but higher real GDP per person than country B.

Country A has higher productivity but lower real GDP per person than country B

Country A had a population of 1,000, of whom 600 worked an average of 8 hours a day and had a productivity of 2.5. Country B had a population of 800, of whom 560 worked 8 hours a day and had productivity of 3.0. -Country B had the higher level of real GDP and Country A had the higher level of real GDP per person. -Country A had the higher level of real GDP and real GDP per person. -Country B had the higher level of real GDP and real GDP per person. -Country A had the higher level of real GDP and Country B had the higher level of real GDP per person.

Country B had the higher level of real GDP and real GDP per person

John and Jane decide to go on a vacation. As a result, they withdraw $2,500 from their savings account to purchase $2,500 worth of traveler's checks. As a result of these changes: -M1 increases by $2,500 and M2 stays the same. -M1 increases by $2,500 and M2 decreases by $2,500. -M1 decreases by $2,500 and M2 increases by $2,500. -M1 and M2 stay the same.

M1 increases by $2500 and M2 stays the same

You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate? -Liquidity -Store of value -Unit of account -Medium of exchange

Medium of exchange

Tatiana is waiting to be recalled to a job from which she was laid off. Ivan was fired but has not looked for work during the last two months. Who does the Bureau of Labor Statistics count as "unemployed"?

Tatiana but not Ivan

Who of the following is not included in the Bureau of Labor Statistics' "employed" category? -Those who worked as unpaid workers in a family member's business -Those who were temporarily absent from work because of vacation -Those waiting to be recalled to a job from which they had been laid off -Those who worked in their own business

Those waiting to be recalled to a job from which they had been laid off

A bank loans Kellie's Print Shop $350,000 to remodel a building near campus to use as a new store. On their respective balance sheets, this loan is: -an asset for the bank and a liability for Kellie's Print Shop. The loan does not increase the money supply. -a liability for the bank and an asset for Kellie's Print Shop. The loan increases the money supply. -a liability for the bank and an asset for Kellie's Print Shop. The loan does not increase the money supply. -an asset for the bank and a liability for Kellie's Print Shop. The loan increases the money supply.

an asset for the bank and a liability for Kellie's Print Shop. The loan increases the money supply

If the demand for loanable funds shifts to the right, then the equilibrium interest rate: -and quantity of loanable funds fall. -falls and the quantity of loanable funds rises. -and quantity of loanable funds rise. -rises and the quantity of loanable funds falls.

and quantity of loanable funds rise

Esmerelda worked part-time for her mother's business without pay. Tabitha was absent from work because she had strep throat. Who is counted as "employed" by the Bureau of Labor Statistics?

both esmerelda and tabitha

Greg learns how to bake from his grandmother. This is an example of: ​-neither human capital nor technological knowledge. ​-both human capital and technological knowledge. -human capital, but not technological knowledge. ​-technological knowledge, but not human capital.

human capital, but not technological knowledge

Which of the following is an explanation for the existence of frictional unemployment? -Unions -Minimum-wage laws -Job search -Efficiency wages

job search

Other things the same, when the interest rate rises, people would want to lend: -more, making the supply of loanable funds increase. -more, making the quantity of loanable funds supplied increase. -less, making the supply of loanable funds decrease. -less, making the quantity of loanable funds supplied decrease.

more, making the quantity of loanable funds supplied increase

The slope of the demand for loanable funds curve represents the: -negative relation between the real interest rate and saving. -positive relation between the real interest rate and investment. -negative relation between the real interest rate and investment. -positive relation between the real interest rate and saving.

negative relation between the real interest rate and investment

An increase in the government's budget surplus means public saving is: -negative and increasing. -positive and decreasing. -negative and decreasing. -positive and increasing.

positive and increasing

Which of the following is not a function of money? -Unit of account -Store of value -Medium of exchange -Protection against inflation

protection against inflation

Given that Monika's income exceeds her expenditures, Monika is best described as a: -borrower or as a supplier of funds. -borrower or as a demander of funds. -saver or as a supplier of funds. -saver or as a demander of funds.

saver or as a supplier of funds

If the government's expenditures exceeded its receipts, it would likely: -sell bonds directly to the public. -borrow money from a bank or other financial intermediary. -buy bonds directly from the public. -lend money to a bank or other financial intermediary.

sell bonds directly to the public

T/F If Country A produces 7,000 units of goods and services using 700 hours of labor, and if Country B produces 5,500 units of goods and services using 500 units of labor, then productivity is lower in Country A than in Country B.

t

T/F If a production function has constant returns to scale, then if all inputs double so does production.

t

In a close economy, private saving is

the amount of income that households have left after paying for their taxes and consumption.

In a closed economy, private saving is

the amount of income that households have left after paying for their taxes and consumption.

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to decrease barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies do most economists say promote growth?

the first but not the second

Sheila is on a temporary layoff from her automobile factory job but has not looked for work in the last four weeks. The Bureau of Labor Statistics counts Sheila as

unemployed and in the labor force

If the reserve ratio is 5 percent, then $500 of additional reserves would ultimately generate

$10,000 of money.

To be counted as "employed" in the U.S. labor force statistics, a person

does not have to be working for pay if they are working for a family business and does not have to be working full time.

The equipment and structures available to produce goods and services are called

physical capital

Suppose the banking system currently has $300 billion in reserves, the reserve requirement is 5 percent, and excess reserves are $30 billion. What is the level of loans?

$5,100 billion

Which of the following functions as both a store of value and a medium of exchange? -Neither cash nor stocks -Cash and stocks -Cash but not stocks -Stocks but not cash

cash but not stocks

Which of the following is included in both M1 and M2? -Currency, demand deposits, and savings deposits -Currency and money market mutual funds -Currency, demand deposits, and other checkable deposits -Traveler's checks, demand deposits, and savings deposits

currency, demand deposits, and other checkable deposits

If the natural rate of unemployment is 5.2 percent and the actual rate of unemployment is 5.7 percent, then by definition there is: -structural unemployment amounting to 0.5 percent of the labor force. -search unemployment amounting to 0.5 percent of the labor force. -frictional unemployment amounting to 0.5 percent of the labor force. -cyclical unemployment amounting to 0.5 percent of the labor force.

cyclical unemployment amounting to 0.5 percent of the labor force.

T/F If it could increase its growth rates slightly, a country with low income would catch up with rich countries in about ten years.

f

If an American-based firm opens and operates a new clothing factory in Honduras, then it is engaging in

foreign direct investment