Macroeconomics Final Exam
If the GDP price index is 125 and nominal GDP is $130 billion, then real GDP equals ________ billion.
$104.00
A ham and cheese sandwich at the local deli costs $4.99 in 2005. If the CPI in 2005 was 90.0 and the CPI today is 121.0, the equivalent price for the ham and cheese sandwich today is
$6.71.
Mary has $1,000 and is considering purchasing a $1,000 bond that pays 7 percent interest per year. Mary decides not to buy the bond and holds the $1,000 as cash. If the inflation rate is 4 percent, the opportunity cost of holding the $1,000 as money is
$70.00
Moving between two points on a PPF, a country gains 8 desktop computers and forgoes 4 laptop computers. the opportunity cost of one laptop computer is
2 laptops.
Hershey Chocolate Factory pays a money wage rate equal to $30 per hour and sells its candy bars for $1.50 each. Hershey Chocolate Factory should hire labor until an additional unit of labor produces ________ candy bars an hour.
20
In the United States, the poorest 20 percent of households earn roughly ________ percent of total income
3
In the United States the richest 20 percet of households recieve about ________ percent of the total income.
50
In August of 2013, the number of employed persons in the United States was 144.2 million, the number of unemployed persons was 11.3 million, and the number of persons not in the labor force was 90.5 million. What was the labor force participation rate in August of 2013?
63.2%
If the cost of the CPI market basket at current period prices is $275 and the cost of the CPI market basket at base period prices is $350, the CPI is
79.
If the real interest rate is 5 percent when the inflation rate is 4 percent, the nominal interest rate is
9 percent.
If you mow the lawn yourself, the lawnmowing is considered household production. If you pay Larry's Lawn Service to mow your lawn, the lawn mowing is considered
a service, that will be counted as part of GDP.
To calculate GDP using the income approach, one of the adjustments made to net domestic product at factor cost is to
add depreciation
Intel wants to attract the most productive and knowledgeable workers. To achieve this goal it could pay ________ wage.
an efficiency
_______ is most likely to contribute to an improvement in our living standard
an increase in real GDP
If there is unemployment in an economy, then the
economy is producing at a point inside the Production Possibilities Frontier
The largest catagorie of state and local government expenditures is
education
When the unemployment rate is less than the natural unemployment rate, real GDP is ________ potential GDP.
greater than
The real minimum wage rate
has generally decreased during the 1970s and 1980s and has fluctuated around a $6 per hour average since the mid-1980s.
For the CPI to provide an accurate measure of the prices paid by urban consumers, it is necessary to
have a market basket that is consistent and corresponds to what households actually purchase.
According to the CPI basket, the largest item in the households' budgets is
housing
The charitable organization Creating Hope International trains women in Afghanistan to become tailors. this effort reduces __________
human capital differences between advanced and developing countries
Moving from a point inside the production possibilities frontier to a point on the production possibilities frontier, the opportunity cost of producing more of the good on the horizontal axis
is 0
When Mik has an absolute advantage in the production of two goods over Tommy, Mik
is more productive in producing both goods than Tommy.
The natural unemployment rate is the result of
job search and job rationing.
Which of the following correctly lists the catagories of factors of production?
land, labor, capital, and entrepreneurship
What would be the effect on the labor supply curve of a higher income tax rate?
leftward shift of the supply of labor curve
If adding an initial 100 billion labor hours per year increases real GDP by $3 trillion, diminishing returns informs us that an additional 100 billion labor hours per year will increase real GDP by
less than $3 trillion.
The women's labor force participation rate is
lower in the United States than in Iceland
The more generous the amount of unemployment benefits, the
lower the opportunity cost of job search.
Capital is a factor of production. An example of capital as a factor of production is
machines
GDP is equal to the ________ value of all the final goods and services produced within a country in a given period of time.
market
The production possibilities frontier is a graph showing the
maximum combinations of goods and services that can be produced
Other things the same, if the Fed increases the quantity of money, the ________ because ________.
nominal interest rate decreases; the supply of money curve shifts rightward
Someone who does not currently have a job and has not looked for work in a year would be classified as
not in the labor force.
If you buy a five-year-old TV from a friend, the amount you paid for the TV is
not included in this years GDP.
The negative slope of the production possibilities represents the idea
of tradeoffs, that in order to produce more of one good, the nation must produce less of another.
In the circulation flow model, which of the following own the factors of production?
only households
In growth theory, the change in a country's standard of living is measured by the change in
real GDP per person
________ paid for the use of land;_______ paid for the services of labor;and _______ paid for the use of capital.
rent is; wages are; interest is
Which of the following would have the biggest payoff?
restoring real GDP growth to its 1960s growth rate
Retirement savings accounts, such as IRAs, help increase economic growth because
savings finances investment.
For twenty years, Jim was a customer service representation at a call center in Minnesota. In order to save money, his firm moved the call center to India and laid off Jim two years ago. Jim has been unable to find a similar job anywhere. Jim's unemployment is best classified as
structural.
An example of the outlet substitution bias in the calculation of the CPI is a price increase in
textbooks bought through the campus bookstore relative to textbooks via Craigslist.
When drawing a production possibilities fronteir, which of the following is held constant?
the available factors of production and the state of technology
A country reports that its actual real GDP is greater than its potential GDP. It must be that
the excess by which real GDP exceeds potential GDP is only temporary, and eventually real GDP will decrease to be equal to potential GDP.
When measuring GDP,
the expenditure on goods and services by all levels of government are included
The benefit to the firm of hiring another worker is
the extra output produced by the worker.
The circular flow diagram shows
the flow of expenditures and income between different sections of the economy
Which of the following is NOT shown explicitly in the circular flow model?
the legal system
The Consumer Price Index measures the average prices paid by
urban consumers for a fixed market basket of goods and services.
In order to obtain the data used to calculate the unemployment rate, the Bureau of Labor Statistics
uses a survey from 60,000 households.
The average number of times in a year each dollar is used to buy goods and service is called
velocity of circulation.
Bill's Lawn service starts the year with 20 lawn mowers. During the year, 3 mowers break and are not worth fixing. Bill also expands his business and buys 10 more mowers. Bill's gross investment is ________ mowers.
10
Suppose the CPI last year was 82.3 and this year is 90.9. Based on this information, we can calculate that the inflation rate in 1981 was
10.4 percent
Which of the following is an example of a worker experiencing cyclical unemployment?
A freightliner employee that got laid off because of the recession of 2007-2009.
Which of the following persons is NOT considered a part of the labor force?
Desire, a wealthy hedge fund manager who just took early retirement
_______ is the human resource that organizes labor, land, and capital.
Entreprenuership
You hire some of your friends to help you move to a new house. You pay them a total of $200 and buy them dinner at PizzaHut. Which of the following is true?
If your friends do not report the $200 on their tax forms, it becomes part of the underground economy.
production efficient
Points on the PPF are all
Among the United States, Canada, Russia, India, and the United Kingdom, the country with the highest average income per person is
The United States
Why is the production possibilities frontier bowed out (concave)?
The bowed shape reflects increasing opportunity cost.
Which of the following creates job rationing?
The real wage rate is above the equilibrium level.
Which of the following is NOT an example of a capital good?
a U.S. government bond
Which of the following is correct about comparative advantage?
a country has a comparative advantage in the production of a good if it can produce the good at lower opportunity cost of any other country
When the Fed ________ securities in an open market operation, banks' reserves ________, and therefore lending ________.
buys; increase; increases
Economists define investment to include purchases of
capital goods and inventories.
The Monetarist model expands the Keynesian model by proposing that
decreases in the quantity of money lead to higher interest rates.
Which of the following lowers frictional unemployment?
decreasing unemployment benefits
When the price of, say, a package of rice changes, what must the BLS do next?
determine if the size, quality, weight, or packing of the rice has changed and adjust the price accordingly
Most of the world's population lives in
developing economies
To increase a nations economic growth, a nation should
encourage education because that increases the quality of labor.
The U.S. economy is experiencing rising output, rising employment, rising income and falling unemployment. these descriptions best describe a business cycle
expansion.
Because of the circular flows of expenditure and income in the economy, total ________ equals total ________ equals total ________.
expenditure; investment; income
The national debt is the total amount the _______ governmant has borrowed to make expenditures that _______ tax revenue
federal; exceed
Which type of unemployment is a permanent and healthy phenomenon in a dynamic economy?
frictional
The fact that the CPI is a biased measure of the inflation rate means government outlays will
increase at a faster rate than the actual inflation rate.
If the CPI is used as a cost of living index, incomes that are adjusted to reflect the changes in the CPI will
increase by more than the actual change in the cost of living.
To calculate the opportunity cost per unit, you divide the decrease in the quantity of the forgone item by the
increase in the quantity of the other item obtained
Since 1960, the labor force participation rate in the United States has
increased for women and decreased for men.
Income equality has
increased within countries but has narrowed across countries
Over time, the percentage of total employment in services has ________ and in agriculture, employment has ________.
increased; decreased
The labor force participation rate
increases as the real wage increases.
The CPI bias was estimated by the Congressional Advisory Commission on the Consumer Price Index as
overstating the actual inflation rate by about 1 percentage point a year.
A recession runs from the
peak of the business cycle to its trough
The unemployment rate is the
percentage of the labor force that does not have a job
Which of the following is NOT directly included in the U.S. GDP
popcorn purchased by a movie theater chain in Georgia
The supply of labor curve has a ________ slope because as the real wage rate rises, ________.
positive; the opportunity cost of leisure rises
To find the cost of the CPI market basket in the base period prices we have to multiply the
quantities in the CPI market basket by the base period prices.
If the real wage rate decreases from $14.00 per hour to $13.00 per hour, the
quantity demanded of labor increases.
A change in the real wage rate measures the change in the
quantity of goods and services that an hour's work can buy.
Ceteris paribus, when discouraged workers become more hopeful about their job prospects and begin actively searching for employment,
the official unemployment rate will increase.
The GDP deflator measures
the price level.
The difference between nominal GDP and real GDP is
the prices used in their calculations
Bobby was researching the economic growth of a country between 2006 and 2011. Using 2006 as the base year, he calculated a twelve percent increase for real GDP and a ten percent increase for nominal GDP. His results indicate that
the quantity of goods and services produced increased and prices decreased over the period.
According to the above table, if the minimum wage is set at $20 per hour, then
the quantity of labor supplied exceeds the quantity of labor demanded by 50 million hours per month.
A main reason for the low unemployment rate from 1995 through most of the 2000s was because of
the rapid development of the Internet industry and other new technologies.
Firms hire more labor as long as
the real wage rate is less than the additional output the labor produces
Full employment is the level of unemployment that occurs
when cyclical unemployment is zero.
The Ricardo-Barro effect argues that the crowding-out effect
will not occur, because the private saving supply will change to offset any change in the government budget deficit.
