Test 2 Econ

The _____ excludes excise taxes but does include changes in sales promotion programs such as rebate programs and zero-interest loans. Please choose the correct answer from the following choices, and then select the submit answer button.

producer price index

The part of the business cycle that goes from economic trough to economic peak is known as a(n) _____.

recovery During this period, businesses and consumers are more enthusiastic about the economy.

Steve worked in a North Carolina furniture factory until it went out of business because foreign competition had cheaper labor costs. Now he is unable to find a new job because he is not qualified for any available jobs. This is an example of:

structural unemployment. Structural unemployment occurs when there is a change in consumer demand or technology requiring that unemployed people retrain for new jobs.

Which of the following is an example of the primary explanation for the extraordinary economic growth the United States has enjoyed over the past century?

technological advancement

June is a surgeon who took a job as a lifeguard at a local pool because she was unable to find a job in the medical field. June is considered to be:

underemployed.

If exports for a country are $2 billion and imports are $3 billion, what are net exports?

-1 billion

If nominal GDP increases by 7.5% in one year, and inflation as measured by the GDP deflator grows by 7.5%, how much has real output increased?

0

If there are 1,500 in the population, 900 are employed, and 100 are unemployed, what is the unemployment rate?

10%

_____ refer(s) to fixed investments, or investments in such things as residential and nonresidential structures, equipment, and software. Please choose the correct answer from the following choices, and then select the submit answer button.

Correct: Gross private domestic investment Gross private domestic investment

_____ workers are those who have given up actively looking for work and as a result are not counted as unemployed.

Discouraged

_____ unemployment includes short-term unemployment caused by workers switching jobs.

Frictional

How would creating a new technology that makes production line workers more efficient be illustrated on the production possibilities frontier?

The PPF would shift to the right. A rightward shift illustrates long-run growth.

How would hiring unemployed workers to increase production be illustrated on the production possibilities frontier?

The economy would move from a point beneath the PPF to one on the PPF.

Which of the following is NOT considered when measuring GDP per capita?

Under the table

Developed countries tend to have:

an abundance of capital but a shortage of labor.

GDP per _____ is a country's GDP divided by its population.

capita This provides a useful measure of a country's relative standard of living.

Kayla is a computer engineer who has been laid off as a result of the most recent downturn in the economy. What type of unemployment is Kayla experiencing?

cyclical unemployment

An economy that is facing a declining rate of inflation is experiencing: disinflation hyperinflation rising unemployment deflation

disinflation An economy going through this is typically still facing inflation, but at a declining rate.

In 2005 the inflation level was 3.4%, and in 2006 it was 3.2%. This is an example of:

disinflation.

The natural rate of unemployment is the rate at which all unemployment is either structural or:

frictional.

Which of the following is a macroeconomic topic? how the business cycle affects unemployment how OPEC output decisions affect the entire oil market how bailouts affect the behavior of financial firms how fuel prices affect airline ticket prices

how the business cycle affects unemployment

The _____ economy includes all transactions that are conducted but are not licensed and/or generate income that is not reported to the government.

informal This can include illegal transactions or those not reported to the IRS for tax collection.

One indication of a recession is that the interest rates on long-term bonds are _____ than on short-term bills.

lower When investors believe an economic slowdown may occur, they buy long-term bonds to lock in interest rates.

Jessie has been out of work for more than a year. A few months ago she gave up trying to get a new job until the economy gets better. Jessie is considered to be:

marginally attached. Marginally attached workers are available for work and have actively looked for work in the past year, but not in the past four weeks. Jessie isn't looking.

Labor, a factor of production, includes:

mental and physical talents of people.

In which phase of the business cycle is the economy usually operating at its capacity?

peak

How is real GDP per capita calculated?

real GDP divided by population

Hiring unemployed workers to increase production is likely to produce _____ growth.

short-run Short-run growth is common when an economy is recovering from an economic downturn

When an economy makes use of existing but underutilized resources, that economy is likely to undergo:

short-run growth.

The National Activity Index was developed by:

the Federal Reserve Bank of Chicago.

A Japanese automaker produces $1 million worth of automobiles in its factory in the United States. How much of that is added into the GDP of the United States? $1 million none $250,000 $500,000

1 mill

If there are 2,000 people in the population, 1,000 in the labor force, and 950 classified as being employed, what is the unemployment rate?

50/1,000

Using the Rule of 70, assume it takes 10 years for the initial value to double. What is the growth rate?

7%

Which of the following are NOT considered when measuring GDP per capita? population personal consumption expenditures environmental quality gross private domestic investment

Correct: environmental quality

Which of the following is a macroeconomic topic? Please choose the correct answer from the following choices, and then select the submit answer button. how consumers maximize their utility how the government formulates environmental policy how monetary policy affects interest rates how firms maximize profits

Correct: how monetary policy affects interest rates

Which of the following is a macroeconomic topic? how oligopolies interact how technology affects the way retail chains manage inventory how the adoption of new technology affects the business cycle how monopolistically competitive firms compete

Correct: how the adoption of new technology affects the business cycle

Which of the following plays the LEAST significant role in economic growth? increasing the capital-to-labor ratio increasing the quality of the labor force increasing the quantity of land and natural resources improvements in technology and ideas

Correct: increasing the quantity of land and natural resources

Which of the following are NOT considered when measuring GDP per capita? natural resources population government purchases personal consumption expenditures

Correct: natural resources

Which of the following is NOT used to calculate GDP as part of the expenditures approach? Please choose the correct answer from the following choices, and then select the submit answer button. net exports personal consumption expenditures government spending rental income

Correct: rental income

Use the following data to calculate GDP: consumption = $9.5 billion, investment = $3 billion, government spending = $2.5 billion, exports = $2 billion, imports = $1 billion

GDP is $16 billion. The equation is GDP = C + I + G + (X − M) = $9.5 billion + $3 billion + $2.5 billion + ($2 billion − $1 billion) = $16 billion.

Assume the initial value of an investment is $1,000 and the growth rate is 15%. Using the Rule of 70, how many years will it take for the initial value to double?

4.7 years Number of years to double value = 70/growth rate.

Suppose the consumer price index in 2010 was 150 and its corresponding basket of goods was $19,000. If the consumer price index was 140 in 2006, what is the cost of that same basket of goods in that year?

$17,733 To find the cost of the basket of goods in 2006, divide the CPI in 2006 by the CPI in 2010 and multiply by the cost of the basket of goods in 2010. The equation is Cost in 2006 = (140/150) × $19,000 = 0.9333 × $19,000 = $17,733.

If a set basket of goods costs $22,000 in the current year and $20,000 in the base year, how much have prices risen since the base year? Please choose the correct answer from the following choices, and then select the submit answer button.

% Change in Price = [(CPI in Current Year / CPI in Original Year) × 100] − 100. The equation is % Change in Price= [($22,000/$20,000) × 100] − 100 = (1.1 × 100) − 100 = 110 − 100 = 10 or 10%.

_____ compares the cost of maintaining the same standard of living in the current and base periods.

A cost-of-living index

Which of the following countries would have the LOWEST GDP per capita and the LOWEST growth rates? a country categorized as mostly unfree by the Index of Economic Freedom a country categorized as free by the Index of Economic Freedom a country categorized as mostly free by the Index of Economic Freedom a country categorized as moderately free by the Index of Economic Freedom

Correct: a country categorized as mostly unfree by the Index of Economic Freedom a country categorized as mostly unfree by the Index of Economic Freedom

Which of the following is a macroeconomic topic? Please choose the correct answer from the following choices, and then select the submit answer button. how monetary policy affects interest rates how the price of sugar in the United States affects domestic candy companies how interest rates determine how much a firm invests how tariffs affect the price of sugar in the United States

Correct: how monetary policy affects interest rates

Which of the following is a nondurable good? Please choose the correct answer from the following choices, and then select the submit answer button. a car legal advice ice cream a refrigerator

Correct: ice cream

Roger worked in a coal mine until it went out of business because fewer people were using coal to heat their homes. Now he is unable to find a new job because he is not qualified for any of the jobs that are available. This is an example of: part-time unemployment. cyclical unemployment. frictional unemployment. structural unemployment.

Correct: structural unemployment.

What happened to the unemployment rate in the United States during the past 50 years?

It has tended to hover around 5% to 6%. The unemployment rate has increased and decreased in the last 50 years, but has tended to hover around the 5% to 6% range.

The headline "Bailout Plan Rejected, Markets Plunge, Forcing New Scramble to Solve Crisis" appeared in the Wall Street Journal on September 30, 2008. What phase of the business cycle does this headline suggest the economy was in at that time?

Recession

Jim has been out of work for more than a year and has given up trying to get a new job until the economy gets better. Jim is considered to be:

a discouraged worker.

Long-run growth occurs when:

an economy finds ways to use existing resources better. Long-run growth occurs when an economy finds ways to use existing resources better.

Policymakers can have the greatest impact on ____ by keeping the economy on a steady, low-inflationary, solid growth path. Please choose the correct answer from the following choices, and then select the submit answer button.

cyclical unemployment

The natural rate of unemployment: is consistent with a high rate of inflation. is always larger than the nonaccelerating inflation rate of unemployment. occurs when the unemployment rate is consistent with full employment. is equal to the rate of structural unemployment.

occurs when the unemployment rate is consistent with full employment.

Which of the following would NOT increase the quality of the labor force? college degree programs relaxing immigration restrictions on-the-job training certification programs

relaxing immigration restrictions

According to the aggregate production function, output is determined by _____, capital, natural resources and land, and labor.

technology According to the aggregate production function, output is determined by technology, physical capital, human capital, natural resources and land, and labor.

Entrepreneurial ability, a factor of production, includes:

the ability to use resources in creative ways to produce goods and services.