chapter 21-24

You open a savings account that earns a nominal interest rate of 1.3% interest a year. The current consumer price index is 117. In one year, the consumer price index is expected to go to 120. What is your expected real rate of return?

-1.26%

(Table: Per Capita GDP) Use Table: Per Capita GDP. The growth rate of per capita real GDP from 2016 to 2019 was:

-33%

The table below shows data for Central African Republic (CAR). What was the economic growth rate between 2012 and 2013?

-36.20%

(Table: Pizza Economy III) Use Table: Pizza Economy III. Considering 2018 as the base year, given that the total population was 1,140 in 2018 and 1,380 in 2019, real GDP per capita between 2018 and 2019 grew at a rate of _____.

-50%

(Table: Market Basket of School Supplies) Use Table: Market Basket of School Supplies. The table shows the prices of three common school supplies in 2018 and 2019 and the quantities of these goods sold in 2018, the base year. A school supply index, used to measure the rate at which average school supply prices have changed, would show an inflation rate of:

22%

(Table: The Consumer Price Index) Use Table: The Consumer Price Index. The approximate rate of inflation in year 5 is:

20%

The table shows Canada's labor force characteristics. What was Canada's labor force in January 2019?

20,035,900

The table shows consumer price index data for the United States. In which year was the inflation rate the highest?

2008

The table below shows data for Central African Republic (CAR). In which year, did this country experience a decline in the standard of living?

2013

(Table: Price Index) Use Table: Price Index. Which year is MOST likely to be the base year?

2016

(Table: Population Data for Estill County) If marginally attached workers are included in the labor force and in the unemployment rate, the unemployment rate in this economy is _____.

23.1%

What is Nicaragua's GDP deflator if its nominal GDP is $13.118 billion (in current US$) and the real GDP is $5.676 billion?

231.1

(Figure: The Labor Market) Use Figure: The Labor Market. What is the unemployment rate at an efficiency wage of $16, assuming all workers without a job are searching for work?

27%

If the nominal interest rate is 4%, and the inflation rate is 1%, then the real interest rate is _____.

3%

Refer to the following table that shows monthly data for Japan. What was the unemployment rate in December 2016?

3%

The table shows consumer price index data for the United States. Based on this information, what is the rate of inflation in 2006?

3.22%

Suppose that the real interest rate is 2.1%, and the nominal interest rate is 5.4%. The inflation rate is _____.

3.3%

Assume that the consumer price index is 103.9 for 2018 and 107.6 for 2019. What was the inflation rate between these two years?

3.56%

Refer to the following table that shows monthly data for Japan. What was the unemployment rate in January 2014?

3.7%

(Table: Employment Data) The number of persons in the labor force is _____ million.

32

In a 2016 to 2017 labor force survey, the working age population in Uganda was 18,843,000. The labor force was 9,932,000. What was the labor force participation rate in Uganda?

52.7%

What is the difference between microeconomics and macroeconomics?

Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole.

Refer to the following table that shows monthly data for Japan. What was the total number of people (in millions) in the labor force in March 2017?

NOT 68.6 million

Consider the data in the table below. Which of the following statements is true?

NOT During the years 2014 to 2018, Kenya's standard of living always exceeded Bangladesh's standard of living.

The government passes a new initiative to provide a tax credit on research and innovation by firms. What is the impact on the production function, and what is the effect on economic growth in the country?

NOT Human capital is enhanced, and economic growth is positively affected.

The average price level is the:

NOT average price of commodities.

When inflation rises unexpectedly, borrowers will _____, and lenders will _____.

NOT be hurt; benefit

Which statement is a likely response to inflation?

NOT people tend to make fewer transactions

An increase in the number of marginally attached workers tends to:

NOT raise the official unemployment rate

Which of following people can be classified as frictionally unemployed?

Nancy, who is currently unemployed, lives in a town where telecommunications are poor, and cannot find proper information on available jobs

(Figure: The Minimum Wage) Use Figure: The Minimum Wage. By how much does the quantity of labor demanded fall when the government imposes a binding minimum wage of P3?

Q2-Q1

(Figure: The Minimum Wage) Use Figure: The Minimum Wage. By how much does the quantity of labor supplied rise when the government imposes a binding minimum wage of P3?

Q4-Q2

How does money illusion cause nominal wage rigidity?

Since workers focus on nominal earnings and thus resent wage cuts, employers often choose to hold nominal wages constant rather than lower them.

Which of the following countries enjoyed significant catch-up economic growth in the second half of the twentieth century?

South Korea

The government removes an existing investment tax credit. Which input in the production function changes, and what is the effect on economic growth in the country?

The capital stock decreases, and economic growth is negatively affected.

The government passes a new initiative to encourage savings in a country with a well-functioning banking system. Which input in the production function changes, and what is the effect on economic growth in the country?

The capital stock increases, and economic growth is positively affected.

A group of people moves onto a forested piece of land (which has no established owner), cuts down all the trees, and acquires all the lumber on the land. Thereafter, the land is farmed until all the mineral properties of the soil are depleted. Ultimately, the land becomes a barren desert property. This is an example of:

a lack of established property rights leading to the depletion of a resource.

A production function is:

a method through which inputs can be turned into outputs, given the available resources.

With the advent of cloud computing, different units within a business now share data much more easily. The sharing of data with their suppliers and distributors is also much more streamlined. This is an example of:

a rise in technology leading to an increase in efficiency.

Diminishing returns to physical capital imply that, with human capital per worker and technology held fixed, each successive increase in physical capital leads to _____ productivity (or real GDP per worker).

a smaller increase in

A decreasing returns to scale production function is one where increasing all inputs by a certain proportion leads to output rising by:

a smaller proportion

Diminishing returns to physical capital mean that as more and more physical capital is combined with a fixed amount of human capital and a fixed technology, eventually:

additions to GDP per worker decline.

High rates of anticipated inflation affect:

all aspects of the economy

A minimum wage that is above the equilibrium wage is:

an example of a price floor.

A firm that prepares and mails customer notices on behalf of banks has recently shifted from manually addressing letters to using a computer program that automatically inserts customer addresses and prepares letters. Thus, the production time for each letter has decreased from four minutes to just 30 seconds. This scenario is an example of:

an improvement in technology leading to a rise in productivity.

Structural unemployment cannot be caused by:

fluctuations in the business cycle

A recent college graduate with a major in psychology attends a job fair but has not yet found a job. This graduate is _____ unemployed.

frictionally

Last week, Saanvi quit her job as a copywriter at an advertising agency. She has spent the past few days browsing the help-wanted ads but hasn't found anything that matches her skills. Saanvi is BEST classified as:

frictionally unemployed.

Since 1960, in the United States, the price level has:

generally increased.

A savvy investor seeks:

inflation-indexation clauses

Refer to the diagram of the circular flow of income. Based on the diagram, the arrow going FROM box 4 to box 3 must be:

inputs used by business

The real interest rate is the:

interest rate in terms of changes in purchasing power

The capital stock in an economy stops growing when:

investment equals depreciation

The equilibrium unemployment rate cannot be equal to zero because:

it is the sum of the frictional and structural unemployment rates.

An example of human capital is a person's:

job skills

If the actual inflation rate is less than the expected inflation rate:

lenders gain and borrowers lose.

Aran expects the inflation rate to be 4%. If Aran borrows money at a nominal interest rate of 5%, Aran expects his real interest rate to be:

less than his nominal interest rate.

The U.S. inflation rate has been _____ in the 2000s than it was in the 1970s.

lower

Menu costs are the:

marginal costs of adjusting prices.

During periods of high inflation, stores that publish catalogs find it necessary to revise prices and publish new catalogs _____ frequently than they did before. This is an example of _____ costs.

more; menu

An increase in the amount of physical capital per worker _____, while technological progress _____.

moves the economy along the production function; shifts up the production function

Purchases of _____ are included in GDP.

new capital goods

Suppose that the graph depicts the labor market for personal care aides in Morgantown, West Virginia. If the government enacts a minimum wage of $11, the number of employed workers:

rises by 1,000.

Consider the graph of the labor market shown below. If the government raises the minimum wage from $23 to $25:

the number of people working in this market will fall by 4,000 people.

Consider the graph of the labor market shown here. At the wage rate of $23:

the number of unemployed people in this market is zero. (point where supply and demand meet)

The CPI changes from 100 to 90. This means that:

there is deflation

The Bureau of Labor Services calculates U-6. This statistic measures the:

underuse of labor, including discouraged workers, marginally attached workers, and underemployed workers.

A person without a job who is actively seeking work is considered:

unemployed

The law of diminishing returns states that:

when one input is held constant, while other inputs are increased, eventually output will increase by smaller and smaller amounts.

People counted as unemployed by the Bureau of Labor Statistics are:

without a job and actively seeking work.

An underemployed person is one who is:

working but whose skills are not fully utilized.

Even if inflation exists, your purchasing power from one period to the next will stay intact if:

your pay rise exactly matches the rate of inflation.

Consider the graph of the labor market shown here. At the wage rate of $13, the number of unemployed people in this market is:

zero

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the growth rate of real GDP between the two years using last year as the base year?

5%

Consider the data in the table below. In 2016, the country with the highest economic growth rate was:

Iceland

Below is economic data for Germany for 2016 (measured in billions of current euros). What was total spending?

3,137

(Table: Price and Output Data) Use Table: Price and Output Data. Between years 2 and 3, the amount of change in nominal GDP due to inflation was:

34%

Consider the data shown in the table. Assume that the economy produces only barrels of oil. What is the real GDP for this year?

$5, 104, 500

Based on the following statistics, how much is consumption?

$6.49trillion (y=c+i+g+nx)

(Table: Per Capita GDP) Use Table: Per Capita GDP. Per capita real GDP in 2016 was:

$600

Consider the data shown in the table. Assume that the economy produces only frozen fish. What is the real GDP for this year?

$191, 625

Refer to the table below, which shows data for the United Arab Emirates (UAE). What was the economic growth rate in UAE in 2009?

-15.15% (new-prev/prev)

In 2018, Luxembourg's GDP was about $65 billion. This number, in trillions, is:

0.065

Consider the data shown in the table. Assume that the economy produces only frozen fish. What is the growth rate of real GDP between the two years?

5%

Refer to the table below that shows data for Panama. What was Panama's economic growth rate between 2003 and 2004?

5.54%

Macroeconomics entails the study of:

the overall behavior of the economy

(Table: Per Capita GDP) Use Table: Per Capita GDP. If 2016 is the base year, real GDP in 2016 was:

$3,000

Suppose a labor market is described by the demand equation, Qd = 60 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor, Qs is the quantity supplied of labor, and w is the wage (in dollars). What is the equilibrium wage in this labor market?

$23.33

In 2007, a U.S. forever stamp cost $0.41. In 2019, a U.S. forever stamp cost $0.55. In January 2007, the consumer price index was 207.34. If in January 2019, the consumer price index was 251.1, what is the approximate price of the 2007 forever stamp in 2019 dollars?

$0.50

(Table: Real and Nominal Output) Use Table: Real and Nominal Output. Nominal output in year 3 is:

$100

What is Iceland's real GDP if its nominal GDP is $25.9 billion (in current US$) and the GDP deflator is 124.5?

$20.8 billion

In 1979, when the consumer price index was 72.58, men earned a median income of $11,779 per year. If the consumer price index in 2015 was 236.99, how much was $11,779 in 2015 dollars?

$38,461

Consider the following basket of goods: 15 lollipops, 10 bars of chocolate, four jars of peanut butter, and two ice-cream cakes. Suppose that in 1999, each lollipop was 10 cents, each bar of chocolate was $1.50, each jar of peanut butter was $2.50, and each ice-cream cake was $7.99. In 2018, each lollipop was 80 cents, each bar of chocolate was $3.75, each jar of peanut butter was $4.25, and each ice-cream cake was 12.99. What was the value of the basket in 1999?

$42.48

(Table: Peanut Butter and Jelly Prices) Suppose a market basket consists of 20 jars of peanut butter and 10 jars of jelly. What is the value of the market basket in 2019?

$49

In 1989, a four-year college degree would set you back $26,902. The consumer price index was 123.94 in January 1989. If the current consumer price index is 251.1, what is the cost of the four-year degree in current dollars?

$54,502.92

What is Botswana's real GDP if its nominal GDP is $18.6 billion (in current US$) and the GDP deflator is 196.7?

$9.5 billion

The aggregate production function Y = f(L, H, K) shows that economic growth can occur if: (i) human capital increases. (ii) labor productivity falls. (iii) the capital stock in the country depreciates. (iv) the depreciation rate increases.

(i) only

Structural unemployment can be caused by:(i) efficiency wages.(ii) union-determined wages.(iii) minimum wage laws.(iv) job protection regulations.

(i), (ii),(iii), and (iv)

The Industrial Revolution led to: (i) increased intellectual pursuits. (ii) increased production of food. (iii) economic growth. (iv) a rise in inventions.

(i),(ii),(iii), and (iv)

You open a savings account that pays 1.67% interest a year. What is your real rate of return if the actual inflation rate is 1.67%?

0%

You open an investment account that earns a nominal interest rate of 4.2% a year. The current consumer price index is 108. In one year, the consumer price index is expected to go to 112. What is your expected real rate of return?

0.5%

You purchase a certificate of deposit and expect an inflation rate of 1.5% over the next year. Your nominal rate of interest is 2.25%. Over the next year, the actual inflation rate turns out to be 1.75%. What is your actual real rate of return?

0.5%

During 2000 and 2001, nominal GDP in the United States grew by 3.2%, and the rate of inflation was 2.2%. What was the growth rate of real GDP between the two years?

1%

(Table: The Consumer Price Index (CPI)) The inflation rate between 2011 and 2012 was _____.

1.4%

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its unemployment rate is:

10%

Suppose a labor market is described by the demand equation, Qd = 60 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor, Qs is the quantity supplied of labor, and w is the wage (in dollars). If the government institutes a minimum wage of $25, how many workers will be employed in this market?

10,000,000

In 2019, 10 million people did not have a job but were actively looking for employment, and 85 million people had either a full-time or a part-time job. The unemployment rate in 2019 was _____.

10.5%

(Table: Unemployment and Employment Data) The number of persons in the labor force in this economy is _____ million.

100

What is the GDP deflator if nominal GDP is $300 billion and real GDP is also $300 billion?

100

(Table: GDP II) Calculate the GDP deflator for 2019.

104

(Table: Labor Force Data) Suppose the labor force participation rate is 70%. The labor force is equal to _____ million.

105

Suppose that, in the base period, a college student buys 20 gallons of gasoline at $2 per gallon, 2 mugs for $13 each, and 4 movie tickets for $7 each. In the next month, the price of gasoline is $2.25 per gallon, mugs cost $12.50 each, and the price of a movie ticket is $7.50. The price index for the second month is:

106.4

(Table: Peanut Butter and Jelly Prices) Use Table: Peanut Butter and Jelly Prices. Suppose a market basket consists of 20 jars of peanut butter and 10 jars of jelly. If 2017 is the base year, what is the value of the price index in 2018?

111.25

If the cost of a market basket is $200 in year 1 and $230 in year 2, the price index for year 2 using year 1 as the base is:

115

Suppose that a market basket used to construct a university student price index (USPI) consists of 4 textbooks and 100 gallons of gasoline. In 2018, the base year, textbooks cost $100 each, and gasoline costs $2 per gallon. In 2019, textbooks still cost $100 each, and gasoline costs $4 per gallon. The USPI for 2019 is:

116.67

(Table: Market Basket of School Supplies) Use Table: Market Basket of School Supplies. The table shows the prices of three common school supplies in 2018 and 2019 and the quantities of these goods sold in 2018, the base year. The school supply price index for 2019 is:

122.2

(Table: Peanut Butter and Jelly Prices) Use Table: Peanut Butter and Jelly Prices. Suppose a market basket consists of 20 jars of peanut butter and 10 jars of jelly. If 2017 is the base year, what is the value of the price index in 2019?

122.5

In Monaco, a market basket of goods and services cost $130 in 2017, $140 in 2018, and $160 in 2019. Based on this information, and assuming 2017 is the base year, the price index in 2019 was:

123.07

If the rate of unemployment is 10%, and the labor force is 130 million, the number of unemployed workers is _____ million.

13

If a country has a working-age population of 200 million, 135 million people with jobs, 10 million people who are unemployed and have given up looking for a job, and 5 million people who are unemployed and seeking employment, then its labor force is _____ million.

140

Suppose a labor market is described by the demand equation, Qd = 60 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor, Qs is the quantity supplied of labor, and w is the wage (in dollars). If the government institutes a minimum wage of $25, how many workers will be willing to work in this market?

15,000,000

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its labor force is:

150 million.

(Table: Population Data for Estill County) What is the unemployment rate?

17%

Refer to the table below, which shows data for the United Arab Emirates (UAE). What was the economic growth rate in UAE in 2012?

2.26%

If the consumer price index is 148.3 for 2018 and 152.5 for 2019, what was the inflation rate between these two years?

2.83%

The table shows consumer price index data for the United States. Based on this information, what is the rate of inflation in 1993?

2.97%

Consider the labor market shown here. If an efficiency wage of $14 is instituted in this market:

4,000 workers who are willing to work will not find employment

You open an investment account that earns a nominal interest rate of 3.1% per year. The current consumer price index is 205. In one year, the consumer price index is expected to go to 203. What is your expected real rate of return?

4.08%

The table shows consumer price index data for the United States. Based on this information, what is the rate of inflation in 1991?

4.22%

Refer to the table that shows data for Panama. What was Panama's real GDP per person in the year 2004?

45, 865.94

(Table: The Consumer Price Index) Use Table: The Consumer Price Index. Use Table: The Consumer Price Index. The approximate rate of inflation in year 3 is:

5%

If the labor force includes 100 million workers, and 5 million people are unemployed but actively seeking work, then the unemployment rate is _____.

5%

The table shows Canada's labor force characteristics. What was Canada's unemployment rate in May 2019?

5.4%

Assume that the consumer price index is 124.0 for 2018 and 130.7 for 2019. What was the inflation rate between these two years?

5.40%

The table shows Canada's labor force characteristics. What was Canada's unemployment rate in March 2019?

5.8%

You open an investment account that earns a nominal interest rate of 4.2% a year. The current consumer price index is 108. In one year, the consumer price index is expected to go to 106. What is your expected real rate of return?

6.05%

(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. The growth of nominal GDP from 2018 to 2019 was due to an approximately _____ increase in prices and an approximately _____ increase in aggregate output.

6.25%; 5%

Suppose that, in the base period, a college student buys 20 gallons of gasoline at $2 per gallon, 2 mugs for $13 each, and 4 movie tickets for $7 each. In the next month, the price of gasoline is $2.25 per gallon, mugs cost $12.50 each, and the price of a movie ticket is $7.50. The change in the price level from the first to the second month is:

6.4%

(Table: Price and Output Data) Use Table: Price and Output Data. Between years 2 and 3, nominal GDP increased by:

67%

A fixed nominal interest rate of _____ with _____ inflation will yield the highest real rate of return for a lender.

7%; 2%

The Republic of Livonia has an adult population of 100 million; 60% of Livonia's population is employed, and 10% of the people are unemployed. The labor force participation rate in Livonia is _____.

70%

(Table: Price and Output Data) Use Table: Price and Output Data. Between years 4 and 5, nominal GDP increased by:

75%

(Table: Labor Force Data) Suppose the labor force participation rate is 70%. The number of unemployed adults is _____ million.

8

A fixed nominal interest rate of _____ with _____ inflation will yield the highest real rate of return for a lender.

8%; 1% (always pick the lesser inflation rate)

(Figure: Productivity) Use Figure: Productivity. An increase in physical capital per worker, with everything else remaining unchanged, is shown in the diagram as a movement from:

A to B

The topics studied in macroeconomics include:

All of these answers are correct.

Which of the following is an example of hyperinflation?

An economy experiences inflation of more than 7,500% in one year.

You have four friends. Which of your friends can be described as "structurally unemployed"?

Marty, who cannot find a job, though he is willing to accept less than the existing wage

If an economy is a closed economy, then the equation for total spending is:

C + I + G

Consider the data in the table below. In 2015, the country that experienced negative growth in real GDP per person was:

Canada

Labor productivity growth can be attributed to:

expanding college education

Which of the following shows the medium of exchange function of money?

Daniela goes to the store and purchases roses with U.S. dollars.

Consider the data in the table below. For the year 2018, rank the countries' standard of living, from highest to lowest.

Denmark, US, Iceland, Canada, and Spain

Consider the data in the table below. For the year 2016, rank the countries' standard of living, from highest to lowest.

Denmark, United States, Canada, Iceland, and Spain

Consider the data in the table below. Which of the following statements is true?

During the years 2014 to 2017, Kenya's standard of living always exceeded Bangladesh's standard of living.

Consider the data in the table below. Which of the following statements is true?

During the years 2014 to 2018, Bangladesh's economic growth rates always exceeded Kenya's economic growth rates.

Consider the production functions shown here, which show the output of a bakery over time. Suppose that the bakery institutes robotic baking, which greatly increases efficiency and productivity. Which of the movements reflects this scenario?

E to C

Which statement is FALSE?

Efficiency wages may cause frictional unemployment

You have decided to live off of nature. You cut down an old dead tree and use the wood to make a small canoe for yourself. Then you fashion a fishing rod from some old wire and an old hook. You dig up worms to use as bait, and you catch two fish and cook them for your dinner. Based on all these activities, how much did GDP change?

GDP does not change

Suppose that a bank wishes to earn a 5% real rate of return on a one-year loan but expects inflation over the course of the loan to be roughly 3%. Which statement is TRUE?

If the bank charges 8%, and the inflation rate is less than 3%, then the bank will have earned a higher real rate of return than expected.

Suppose that roughly 8 million people in the United States unsuccessfully sought work this month, the same number as last month, while 2 million people who were unemployed last month stopped searching for work this month. What will happen to the official unemployment rate this month, all other things equal?

It will fall because 2 million people are no longer in the labor force and so are not counted as unemployed.

Which of the following people can be classified as "unemployed"?

Laura, who has been seeking employment for two months.

Which of the following scenarios shows a production function at work?

You buy flour and eggs and bake a cake to sell in your bakery.

Which of the following scenarios shows evidence of inflation?

You go to the soda machine and realize that a bottle of Fanta now costs 15 cents more.

An increase in the length of time that unemployment insurance is provided can lead to:

an increase in the government budget deficit.

In periods of unexpected inflation:

borrowers benefit since they repay their loans in dollars with lower real value

When inflation is lower than expected, there is redistribution from:

borrowers to lenders.

Rapid growth in poorer countries leads to:

convergence in real GDP per person between poorer countries and richer countries.

Which of the following is NOT a reason that female labor force participation increased to 60% in the United States?

decreased male labor force participation

The use of online banking _____ the _____ costs of high inflation.

decreases; shoe-leather

A dressmaker's shop doubles in size, buys a second sewing machine, hires a second tailor, buys double the cloth, and then produces 90% more dresses than it did before. The dressmaker is experiencing:

decreasing returns to scale (b/c it's not the same as the input ratio)

(Table: Hypothetical Relationship) Use Table: Hypothetical Relationship. This economy is undergoing:

diminishing returns to physical capital per worker.

The production function exhibits _____ returns to _____ capital.

diminishing; physical

Frictional unemployment is unemployment:

due to the time it takes for employers to search for workers and for workers to search for jobs.

An example of a structurally unemployed worker is a(n):

geologist who is permanently laid off because of an increase in wages won by labor unions.

Consider these four graphs of the labor market, showing four different minimum wage levels. Which graph(s) shows a wage level where there is an excess supply of workers?

graphs A and D (where minimum wage is above equilibrium)

Suppose that Asha has an accounting degree, but she lost her job two months ago when her company merged with another firm. Asha hasn't been able to find another accounting job, so she has now taken a part-time job as a sales clerk at a clothing store. As a result of Asha's changes in employment status, the official unemployment rate would:

have increased temporarily, then fell back to its original level.

The higher the minimum wage, as compared to the equilibrium wage, the:

higher the structural unemployment rate.

The U.S. Department of Education sponsors the i3 program (Investing in Innovation), which provides grants to educational institutions and schools that have a proven track record of high student achievement. This is an example of a government program designed to build:

human capital

A carpenter's shop doubles in size, buys twice the wood, hires a second carpenter, buys a second lathe, and then manages to produce 230% more furniture than it did before. The carpenter's shop is experiencing:

increasing returns to scale.

Employment is the total:

number of people actively working, either full time or part time.

The labor force is the total:

number of people who are employed or unemployed.

Which of the following is an example of effective property rights leading to economic growth?

patents

The inflation rate is the:

percentage change in the price level from one year to the next.

The _____ interest rate _____.

real; can be zero, positive, or negative

Unanticipated inflation:

reduces the real value of debt

Unanticipated inflation:

reduces the value of money

If the state begins to subsidize child day care heavily, we would expect labor force participation to:

rise.

A survey reveals that, on a small island, initially, 1,000 people have jobs, 200 people are unemployed but are looking for jobs, and 200 people are neither working nor looking for work. Suppose that 100 of the 200 people who weren't looking for work now begin looking for work and that half of the new entrants find a job. The unemployment rate:

rises to 19.2%

A survey reveals that, on a small island, initially, 1,000 people have jobs, 250 people are not working but looking for jobs, and 450 people are neither working nor looking for work. Suppose that 150 of the 450 people who weren't looking for work now begin looking for work. There are now 400 people looking for work and 1,000 people working. The unemployment rate:

rises to 28.6%

A survey reveals that, on a small island, initially, 100 people have jobs, 25 people don't have jobs but are looking for jobs, and 45 people are neither working nor looking for work. Suppose that 15 of the 45 people who weren't looking for work now begin looking for work. There are now 40 people looking for work and 100 people working. The unemployment rate:

rises to 28.6%

A survey reveals that, on a small island, initially, 40 people have jobs, 10 people are not working but are looking for jobs, and 30 people are neither working nor looking for jobs. Suppose that 10 of the 30 people who weren't working or looking for work now begin looking for work. There are now 20 people without jobs but looking for work and 40 people working. The unemployment rate:

rises to 33.3%

High inflation often leads people to spend inordinate amounts of time seeking to make transactions and finding ways to keep the real value of their money from decreasing. This illustrates _____ costs.

shoe-leather

Consider the graph of the labor market shown here. At the wage rate of $13, the market has a:

shortage of 4,000 workers.

Last month, Brayton lost his job at the local auto parts factory when the factory relocated. Brayton has subsequently looked for a similar job but has found no openings. Brayton is BEST classified as:

structurally unemployed.

Thomas Malthus's predictions about the earth did not come true because:

technological advances in agriculture outpaced population growth rates.

Consider the data shown in the table. Assume that the economy produces only barrels of oil. What is the real GDP for this year using last year as the base year?

$4,980,000

Suppose that, in year 1, an economy produces 200 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year, the economy produces 210 golf balls that sell for $3.50 each and 80 pizzas that sell for $9 each. The value of nominal GDP in years 1 and 2, respectively, is:

$1,200 and $1,455

(Table: Pizza Economy III) Use Table: Pizza Economy III. Using 2018 as the base year, nominal GDP in 2018 was:

$114,000

(Table: Real and Nominal Output) Use Table: Real and Nominal Output. Assuming year 3 is the base year, real output in year 4 is:

$140

Consider the data shown in the table. Assume that the economy produces only frozen fish. What is the real GDP for last year using this year as the base year?

$185,000

In 2010, Canada's GDP was approximately $1,357 billion, and its population was about 34.12 million. What was Canada's approximate GDP per person in 2010?

$39,770

An increasing return to scale production function is one where increasing all inputs by a certain proportion leads to output rising by:

a larger proportion

Which of the following is a scaled number?

government budget deficit as a percentage of GDP

In 1798, the English economist Thomas Malthus predicted that:

rising population growth would cause productivity per capita to fall.

If technology advances:

workers can produce more with fixed amounts of physical and human capital.

Refer to the diagram of the circular flow of income. The key lessons from this diagram are that:(i) all flows of resources are matched by flows of money.(ii) the market value of total output must be equal to total spending.(iii) total spending must equal total income.(iv) all inputs are provided by businesses.

(i), (ii), and (iii)

Based on the following statistics, how much are net exports?

-$0.575 trillion

In 1945, the United States recorded real GDP growth of -1% and nominal GDP growth of 1.6%. What was the inflation rate in 1945?

2.6% (1.6-(-1))

Refer to the table, which shows data for Ireland. Based only on the data in this table, in which year(s) did Ireland experience a fall in the standard of living?

2008 and 2009

Refer to the table below, which shows data for the United Arab Emirates (UAE). Based only on the data in this table, in which year(s) did the UAE experience a fall in the standard of living?

2008, 2009, and 2010

Refer to the table below, which shows data for the United Arab Emirates (UAE). Based only on the data in this table, in which year(s) did the UAE experience an increase in the standard of living?

2011 and 2012

Suppose that, in year 1, an economy produces 200 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year, the economy produces 210 golf balls that sell for $3.50 each and 80 pizzas that sell for $9 each. The growth rate of nominal GDP is ____.

21.25%

Which transaction would NOT be counted in GDP?

NOT (The Indiana state gov pays for the repair of a damaged bridge over the Wabash River.)

Intermediate goods are NOT counted in GDP because:

doing so would result in double counting

Rising high school graduation rates entail an increase in:

human capital

GDP counts the dollar value of only final goods and services because:

if we counted the value of all goods, we would count inputs, such as the value of steel in a new automobile, more than once.

Net exports are calculated by subtracting:

imports from exports

(Table: Price and Output Data) Use Table: Price and Output Data. Between years 4 and 5, real GDP:

increased by 17%

Refer to the diagram of the circular flow of income. Based on the diagram, the arrow going FROM box 2 to box 1 must be:

output bought by households.

Which of the following encourages the development of new ideas and inventions?

patents

The circular flow diagram illustrates _____.

spending on goods and services

Which item would NOT be included in GDP?

the dollar value of a repair job done by your cousin on her own car

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the real GDP for last year?

$262, 500

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the real GDP for this year?

$275,625

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the nominal GDP for this year?

$288,750

(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. If 2019 is the base year, real GDP in 2018 was:

$425

Refer to the table below that shows data for Panama. What was Panama's real GDP per person in the year 2002?

$5, 435.17

Which of the following is (are) included in investment? (i) military spending(ii) the purchase of an aircraft by a domestic airline(iii) the purchase of $45,000 worth of bonds (iv) the purchase of $32,000 worth of stock(v) social security payments(vi) the construction of a highway by the federal government

(ii) only

The aggregate production function Y = f(L, H, K) shows that economic growth can occur if: (i) labor force participation rates fall. (ii) human capital stays constant. (iii) education and worker skills improve. (iv) the depreciation rate increases.

(iii). only

(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. The growth rate of nominal GDP from 2018 to 2019 was _____.

11.25%

Consider the data shown in the table. Assume that the economy produces only barrels of oil. What is the growth rate of real GDP between the two years?

3.75%

The table below shows data for Central African Republic (CAR). What was the economic growth rate between 2011 and 2012?

4.63%

(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. Assuming that 2019 is the base year, the growth rate of real GDP from 2018 to 2019 is:

4.7%

(Figure: Technological Progress and Productivity Growth) Use Figure: Technological Progress and Productivity Growth. A significant increase in human capital per worker, with all other factors remaining unchanged, is BEST indicated by a move from:

B to C (change in physical capital PERIOD is a movement)

(Figure: Productivity) Use Figure: Productivity. An improvement in technology, with everything else remaining unchanged, is shown in the diagram as a movement from:

B to C.

A recent World Bank study found that in South Africa, the top 1% of the population have about 71% of the wealth in the economy, and the lowest 60% of the population have about 7% of the wealth in the economy. What shortcoming of GDP measurement does this finding reflect?

GDP ignores income distribution.

You purchase a new car (produced this year) for $38,000. After six months, you sell the car for $31,500. How much does GDP rise because of these two transactions?

GDP rises by $38,000.

You own and run a bakery. Last month, you purchased $760 worth of flour, eggs, butter, chocolate, and frosting. Using these inputs, you made and sold 12 large wedding cakes for an average price of $525. How much did GDP change?

GDP rises by $6,300.

What is the difference between income from a microeconomic standpoint versus income from a macroeconomic standpoint?

In microeconomics, income refers to one individual's income, whereas in macroeconomics, income refers to the total income in the entire economy.

In the circular flow diagram, goods and services are bought and sold in:

NOT households

In the market for inputs:

NOT households buy goods and services

Real GDP per capita is:

NOT the only way to measure living standards across different countries. i think it's "an incomplete measure of a country's standard of living."

Consider the data in the table below. In 2017, the country with the highest economic growth rate was:

Spain

Consider the data in the table below. In 2018, the country with the highest economic growth rate was:

Spain

Which change will NOT increase the productivity of labor?

an increase in the size of the labor force

A city experiences a rise in economic growth due to improvements in technology, but at the same time, there is increasing consumption of illegal drugs. What shortcoming of GDP measurement does this finding reflect?

The shadow economy is missing.

Which would NOT be classified as a macroeconomic question?

What determines a university's cost of offering a new course?

Chain-weighting dollars is:

a method of calculating changes in real GDP, using an early base year and a late base year.

Rapid growth in poorer countries leads to:

a reduction in inequality between poorer countries and richer countries

WinSun, a Chinese firm, began producing 3-D printed houses in late 2013. These houses were produced in a fraction of the time it would take to produce a house in the regular way and at a much lower cost. This is an example of:

an advance in technology leading to a rise in productivity.

When a U.S. consumer buys a Battenberg cake made in London, this is:

an import.

If a bakery buys a second oven, hires a second baker, buys double the number of ingredients, doubles the size of the bakery, and then produces double the number of cakes, then the bakery is experiencing:

constant returns to scale

An economy's gross domestic product consists of:

consumption, investment spending, government purchases of goods and services, and net exports.

Which of the following is an example of regulatory institutions that protect property rights?

courts of law

Refer to the diagram of the circular flow of income. Based on the diagram, the arrow going FROM box 2 to box 3 must be:

earnings by businesses.

A new tannery opens in town. Although the tannery brings many new jobs, it is also dumping waste into the river. What shortcoming of GDP measurement does this reflect?

environmental degradation is not counted.

(Table: Peanut Butter and Jelly Economy) Use Table: Peanut Butter and Jelly Economy. Between 2018 and 2019, nominal GDP _____ by _____.

increased; 31.25%

Which statement is NOT a government transfer?

payments by the Defense Department for a new weapons system (so, gov transfers are unemployment compensation, food stamps, and SS benefits paid to a retiree)

Which of the following can be classified as technological progress?

the invention of the light bulb