Macroeconomics Exam 1

Each of the following ideas is central to economics, EXCEPT: "good institutions can eliminate economic trade-offs." "people react to incentives." "specialization and trade benefit everyone." "prices rise when the government prints too much money."

"good institutions can eliminate economic trade-offs"

A country has 50 million people, 30 million of whom are adults. Of the adults, 5 million are not interested in working, another 5 million are interested in working but have given up looking for work, and 5 million are still looking for work. Of those who do have jobs, 5 million are working part time but would like to work full time, and the remaining 10 million are working full time. How many people in this country are in the labor force? 15 million 20 million 25 million 30 million

20 million

What is the unemployment rate for a nation with 6 million employed and 2 million unemployed? 10% 15% 20% 25%

25%

If the adult population of a country is 200 million, 100 million are employed, and 10 million are unemployed, this country's labor force participation rate is: 5%. 9%. 50%. 55%.

55%

Wealthy countries tend to have ______ physical capital per worker and _______ human capital per worker. little; a lot of a lot of; little a lot of; a lot of no; a lot of

A lot of and a lot of

Which of the following is part of the labor force? a homemaker a full-time student a person who was laid off and is now looking for work a retiree

A person who was laid off and is now looking for work

Structural unemployment is more persistent in France than in the United States because: A. French workers have less incentive to quickly seek a new position since their unemployment benefits are much higher. B. France's labor regulations require a mandatory waiting period before a worker can reapply for a new job. C. American workers have many more job opportunities than French workers. D. labor unions are weaker in France than they are in the United States.

A. French workers have less incentive to quickly seek a new position since their unemployment benefits are much higher

Which of the following is a case of frictional unemployment? A. Timothy is looking for a job where he can apply his expertise in computer programming. B. Terrance is one of more than a dozen applicants for a position teaching high school math. C. Tina was laid off temporarily while her company downsized. D. Thomas recently quit his job to start his own business.

A. Timothy is looking for a job where he can apply his expertise in computer programming

In the market for pharmaceuticals, the issue of "drug loss" illustrates which of the following ideas? The longer a drug is tested for safety, the lower is the opportunity cost in terms of lives lost. If a drug is not tested for safety, it might kill more people. Because of the higher the cost of testing a drug, fewer drugs are made, and more lives are lost. Lives are being lost because safe drugs that are still in the testing stage have not been approved.

Because of the higher the cost of testing a drug, fewer drugs are made and more lives are lost

Which one of the following represents the Goldin-Katz explanation for why women in the United States increased their labor force participation after 1970? A. The invention of the birth control pill gave women a new way to stop having babies. B. The lowering of marginal tax rates for married couples gave women a bigger incentive to work. C. The birth control pill effectively lowered the cost of obtaining a professional degree by giving women more control over the consequences of sex. D. The birth control pill could then be sold to married couples for the very first time and thus more women could work.

C. The birth control pill effectively lowered the cost of obtaining a professional degree by giving women more control over the consequences of sex

The basic postulate of economics indicates that changes in incentives influence the: actions of producers but not consumers. actions of consumers but not producers. choices of individuals only when they buy and sell goods in the marketplace. choices of individuals with regard to a wide range of activities, including those generally perceived as social or political.

Choices of individuals with regard to a wide range of activities, including those generally perceived as social or political

What type of unemployment can increase or decrease dramatically in a few months? frictional structural cyclical frictional, structural, and cyclical

Cyclical

An economy in which entrepreneurs are free to experiment with new ideas and bring innovative products to the market will: help economic growth but not affect living standards. lead to improved living standards and increased economic growth. lead to increased living standards but stagnate economic growth. help stagnate living standards but increase economic growth.

Lead to improved living standards but stagnate economic growth

Institutions that promote economic growth include: policies that provide incentives for people to produce and trade. the extent of government control in markets. income redistribution from the rich to the poor. the amount of goods and services that are provided citizens by their government.

Policies that provide incentives for people to produce and trade

When it comes to getting the flu shot, most people consider _______, not _________. the social interest; their self-interest their public interest; their social interest their costs; their benefits their self-interest; the social interest

Their self-interest, not the social interest

The implicit tax on working is less than 1% in the United States and over 2% in Belgium. Given this, we would expect: higher labor force participation in Belgium. higher labor force participation in the United States. higher unemployment in Belgium. higher unemployment in the United States.

higher labor force participation in the United States

When the opportunity cost of a choice increases: individuals are more likely to choose that same option. individuals are less likely to choose that same option. the marginal benefits of that choice increase, as well. the marginal benefits of that choice decrease.

individuals are less likely to choose that same option

Inflation: is a decrease in the general level of prices. is an increase in the general level of prices. makes it easier to figure out real values for goods, services, and investments. is a rare problem in macroeconomics.

is an increase in the general level of prices

Laws that make it more difficult (and more expensive) to fire workers: lead to higher rates of long-term unemployment. may raise unemployment rates but typically only in the short term. lead to higher rates of employment. typically lead to higher wages on average.

lead to higher rates of long-term unemployment

What is meant by the term "marginal revolution"? the public disdain at the institution of marginal tax rates the transformation in economic thought that occurred with the discovery of marginal thinking the institution of the death penalty for drug dealers the effect of policies on crime

the transformation in economic thought that occurred with the discovery of marginal thinking