Macro Test 1 Review
If the adult population equals 250 million, of which 195 million are employed and 5 million are unemployed, the labor force participation rate equals ____ percent.
80
When a firm sells a product out of inventory, investment expenditures _____ and consumption expenditures _______.
decrease; increase
The price received by each factor of production for its services is determined by:
demand and supply of factors
Consumption depends positively on _____ and investment depends negatively on _______.
disposable income; the real interest rate
A production function is a technological relationship between:
factors of production and the quantity of output produced
The market value of all final goods and services produced within an economy in a given period of time is called:
gross domestic product
The market value of all final goods and services produced within an economy in a given period period of time is called:
gross domestic product
In equilibrium, total investment equals:
national saving
In equilibrium, total investment in a closed economy equals:
national saving
Consumption expenditures include all of the following except household purchases of:
new residential housing
A competitive, profit-maximizing firm rents capital until the:
price of output multiplied by the marginal product of capital equals the rental price of capital
A competitive, profit-maximizing firm hires labor until the:
price of output multiplied by the marginal product of labor equals the wage
A firm's economic profit is:
revenue minus costs
Two equivalent ways to view GDP are as the:
total income of everyone in the economy or the total expenditure on the economy's output of goods and services
If the number of employed increases while the number of unemployed does not change, the unemployment rate:
will decrease
Other things equal, an increase in the interest rate leads to:
a decrease in the quantity of investment goods demanded
If the consumption function is given by C=150+0.75Y, what is marginal propensity to consume?
0.75
If 5 million workers are unemployed, 195 million workers are employed, and the adult population equals 250 million, then the unemployment rate equals ____ percent.
2.5
If the unemployment rate is 6 percent and the number of employed is 188 million, then the labor force equals ____ million.
200
If 7 million workers are unemployed, 143 million workers are employed, and the adult population equals 200 million, then the unemployment rate equals approximately _____ percent.
4.7
Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 4 in 2009, then the real GDP (in 2002 prices) in 2009 was:
6.50
If the adult population equals 250 million, of which 145 million are employed and 5 million are unemployed, the labor force participation rate equals ______ percent.
60
National savings refers to:
income minus consumption minus government spending
In the neoclassical model with fixed income, if there is a decrease in government spending with no change in taxes, then pubic saving _______ and private saving ______.
increases; does not change
In the neoclassical model with fixed income, if there is a decrease in government spending with no change in taxes, then public saving ______ and private saving ______.
increases; does not change
Real GDP is a better measure of economic well-being than nominal GDP, because real GDP:
measures changes in the quantity of goods and services produced by holding prices constant
Real GDP is a better measure of economic well-being than nominal GDP, because real GDP:
measures changes in the quantity of goods and services produced by holding prices constant.
A fixed-weight price index like the CPI ______ the change in the cost of living because it ______ take into account that people can substitute less expensive goods for ones that have become more expensive.
overestimates; does not
A fixed-weight price index like the CPI ______ the change in the cost of living because it ______ take into account that people can substitute less expensive goods for ones that have become more expensive.
overestimates; does not
An increase in the price of imported sweater shirts will show up in:
the CPI but not in the GDP deflator
A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarter(s) does(do) these transactions raise investment?
the first but not the second
If an increasing proportion of the adult population is retired, then the labor force participation rate:
will decrease
If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and net exports are -$1,910, then government purchases are:
$2,977
A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute
$250 to GDP
The two most important factors of production are:
capital and labor
Sam, an American citizen, prepares meals for his family at home. Ellen, a Canadian citizen, commutes to the U.S. to help prepare meals at a restaurant in Idaho. Whose value of services preparing meals is included in U.S. GDP?
Ellen's but not Sam's
The property of diminishing marginal product means that, after a point, when additional quantities of:
a factor is added when another factor remains fixed, the marginal product of that factor diminishes
The marginal product of labor is:
additional output produced when one additional unit of labor is added
If bread is produced by using a constant returns to scale production function, then if the:
amounts of equipment and workers are both doubled, twice as much bread will be produced
If bread is produced by using a constant returns to scale production function, then if the:
amounts of equipment and workers are both doubled, twice as much bread will be produced.