Macroeconomics Test 2

GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000. This economy's government is running a

budget deficit of $3,000

The logic behind the catch-up effect is that

new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital.

Proprietary technology is technology that is

not widely used because it is known or controlled only by the company that discovered it.

Amy is working part-time. Tavaris is on temporary layoff. Who is included in the Bureau of Labor Statistics' "employed" category?

only Amy

Greater scarcity of a natural resource is indicated

only by an increase in the price of the resource that is greater than the rate of inflation.

Babe Ruth's 1931 salary was $80,000. Government statistics show a consumer price index of 15.2 for 1931 and 229.6 for 2012. Ruth's 1931 salary was equivalent to a 2012 salary of about

$1,208,421

GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000. Refer to Scenario 26-1. For this economy, investment amounts to

$15,000.

GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000. For this economy, private saving amounts to

$18,000

Refer to Figure 28-4. If the government imposes a minimum wage of $6, how many workers will be unemployed?

$4,000

The table below shows the prices of baseballs and baseball bats for three years. Assume the typical consumer's basket consists of 6 baseballs and 2 baseball bats. Year Price of a Baseball Price of a Baseball Bat 2008 $3.25 $75 2009 $3.75 $82 2010 $4.50 $96 5) Refer to Table 24-10. The inflation rate was

10.03 percent in 2009 and 17.43 percent in 2010

The table below pertains to Iowan, an economy in which the typical consumer's basket consists of 4 pounds of pork and 3 bushels of corn. Year Price of Pork Price of Corn 2012 $20 per pound $12 per bushel 2013 $25 per pound $18 per bushel 3) Refer to Table 24-3. If 2012 is the base year, then the CPI for 2013 was

132.8

The table below lists the per gallon prices of gas and milk for the months of April, May, and June. Assume that the typical consumer buys 60 gallons of gas and 4 gallons of milk each month, and that April is the base period. Month Price of Gas Price of Milk April $2.00 $3.50 May $3.50 $3.25 June $3.85 $3.58 4) Refer to Table 24-9. What is the consumer price index for May

166

We would expect the interest rate on Bond A to be higher than the interest rate on Bond B if the two bonds have identical characteristics except that

Bond A was issued by a financially weak corporation and Bond B was issued by a financially strong corporation. Bond A was issued by the Exxon Mobil Corporation and Bond B was issued by the state of New York. Bond A has a term of 20 years and Bond B has a term of 1 year.

Which of the following is considered human capital? Knowledge acquired from

Early childhood education programs, job training, and on-the-job experience

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

Fran is saving; Miller is investing.

If Samantha quits her job voluntarily and actively searches for other work, then she is considered

Frictionally unemployed.

Outward-oriented policies

allow countries to take advantage of gains from trade, have generally led to high growth for the countries that pursued them and receive widespread support from economists.

The natural rate of unemployment is the

amount of unemployment that the economy normally experiences.

Which of the following is correct? a. The GDP deflator is better than the CPI at reflecting the goods and services bought by consumers. b. The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers. c. The GDP deflator and the CPI are equally good at reflecting the goods and services bought by consumers. d. The GDP deflator is more commonly used as a gauge of inflation than the CPI is.

b. The CPI is better than the GDP deflator and reflecting the goods and services bought by consumers.

Suppose a person receives an education in her home country. Which of the following will tend to make the increase in GDP of the person's home country larger than the increase in this person's income?

externalities but not brain drain

One of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI

fails to account for the introduction of new goods.

Consider a small economy in which consumers buy only two goods: pretzels and cookies. In order to compute the consumer price index for this economy for two or more consecutive years, we assume that

neither the number of pretzels nor the number of cookies bought by the typical consumer changes from year to year.

Suppose government expenditures on goods and services and net taxes both decrease, and expenditures fall by more than net taxes. The effects of these changes on the budget deficit cause

the equilibrium interest rate to fall and the equilibrium quantity of loanable funds to rise.

Assume that consumers consider rice and potatoes to be substitutes, so that when the price of rice rises, consumers purchase less rice and more potatoes. When the CPI is computed following the increase in the price of rice, it takes into account

the increase in the price of rice.

A nation's standard of living is determined by

the productivity of its workers

If the government institutes policies that diminish incentives to save, then in the loanable funds market

the supply of loanable funds shifts leftward.