ECO 202 Final

The agency that identifies a recession is the A. Federal Reserve. B. NBER--National Bureau of Economic Research. C. BEA--Bureau of Economic Analysis. D. BLS--Bureau of Labor Statistics.

B. NBER--National Bureau of Economic Research.

National Income is A. GDP minus depreciation. B. real GDP minus personal taxes. C. nominal GDP minus personal taxes. D. nominal GDP minus GNP.

A. GDP minus depreciation.

Who developed a growth model that suggests new products unleash a​ "gale of creative​ destruction" that drives old products out of the​ market? A. Alan Greenspan B. Joseph Schumpeter C. Ben Bernanke D. Adam Smith

B. Joseph Schumpeter

In 1970​, the price of a Big Mac was​ $0.50. Use the information in the table below to find the price of a Big Mac in 2006 dollars. Year 1970, CPI 38.8 Year 2006, CPI 201.6 The value of a 1970 Big Mac in 2006 dollars is ​$_______ The actual price of a Big Mac in 2006 was approximately​ $2.99. Thus the price of Big Macs has risen (slower than, faster than) the cost of living.

$2.60 Faster than Value today = Value in previous year * (CPI today/CPI in previous year)

Indicate whether each of the following is a final​ good, an intermediate​ good, or neither. -Coffee beans purchased by a coffee shop -One share of Google stock -A new​ pick-up truck purchased by a consumer -A new home purchased by a family

-Coffee beans purchased by a coffee shop = Intermediate good -One share of Google stock = Neither -A new​ pick-up truck purchased by a consumer = Final good -A new home purchased by a family = Final good

Consider the importance of growth LOADING... in​ GDP, particularly real GDP per​ capita, to the quality of life of a​ country's citizens. Indicate whether you agree or disagree with each of the following statements. 1. Increases in real GDP per capita do not increase the amount of goods and services available to a​ country's citizens. 2. Increases in real GDP per capita increase life expectancy at birth. 3. Increases in real GDP per capita mean people will have a lower portion of leisure time over the course of their lives.

1. Disagree 2. Agree 3. Disagree

Indicate whether each of the following transactions represents the purchase of a final good 1. The purchase of tires from Bridgestone tire company by an automobile manufacturer. 2. The purchase of an aircraft carrier by the federal government. 3. The purchase of French wine by a U.S. consumer. 4. The purchase of a new machine tool by the Ford Motor Company.

1. IS NOT 2. IS 3. IS 4. IS

Suppose the amount the federal government collects in personal income taxes decreases​, while the level of GDP remains the same. What will happen to the values of national​ income, personal​ income, and disposable personal​ income? (remain the same, increase, decrease) 1. National Income 2. Personal Income 3. Disposable Personal Income

1. Remain the same 2. Remain the same 3. Increase

What are the names of the following events in a business​ cycle? The high point of economic activity is called A. a peak. B. a high. C. a trough. D. a zenith. The low point of economic activity is called A. a low. B. a bottom. C. a trough. D. a peak. The period between the high point of economic activity and the following low point is called A. an expansion. B. inflation. C. stagflation. D. a recession. The period between the low point of economic activity and the following high point is called A. inflation. B. an expansion. C. stagflation. D. an acceleration.

1. peak 2. trough 3. recession 4. expansion

A simple economy produces two​ goods, Pumpkin Pies and Computer Games. Price and quantity data are as​ follows: Production and Prices in Year 1​ (Base year) Pumpkin Pies Quantity: 130 ​Price/Unit: $2.50 Computer Games Quantity: 850 ​Price/Unit: $40.00 Production and Prices in Year 2 Pumpkin Pies 162.50 ​$3.75 Computer Games 1275.00 ​$80.00 In Year​ 2, nominal GDP is equal​ to: ​$____________, and real GDP is ​$_____________

102609.38, 51406.25 Economic growth = (Real GDP in year 2 - Real GDP in year 1 / Real GDP in year 1) * 100

If real GDP equals​ $11,567 billion in 2006 and​ $11,916 billion in​ 2007, and assuming population is constant over those two​ years, how many years will it take for real GDP per capita to​ double?

23.2 years Number of years to double = 70/Growth Rate

Real GDP per capita in the country of Arcadia grew from about ​$4,144 in 1900 to about ​$39,410 in​ 2008, which represents an annual growth rate of 2.11 percent. If Arcadia continues to grow at this​ rate, calculate the number of years when its real GDP per capita will double.

33 years Number of years to double = 70/Growth Rate

Suppose an economy is given by the​ following: Population​ = 211 million Labor force​ = 145 million The number of people employed​ = 137.8 million The number of people unemployed​ = 7.2 million Given the information​ above, the unemployment rate is ____%

5.0%

In an​ economy, the​ working-age population is 300 million. Of this​ total, 240.0 million workers are employed. 9.0 million workers are unemployed. 42.0 million workers are not available for work​ (homemakers, full-time​ students, etc.). 6.0 million workers are available for work but are discouraged and thus are not seeking work. 3.0 million workers are available for work but are not currently seeking work due to transportation or childcare problems. The labor force participation rate in this economy is _____%

83.0% LF/WAP * 100 LF = labor force WAP = working age population labor force = employed or unemployed

What is the general relationship between the business cycle and unemployment and​ inflation? A. During an​ expansion, unemployment falls and inflation increases. B. During a​ recession, unemployment and inflation increase. C. During a​ recession, unemployment and inflation decrease. D. During an​ expansion, unemployment and inflation increase.

A. During an​ expansion, unemployment falls and inflation increases.

When low income countries begin to experience economic​ growth, they often do so at rates much higher than current growth rates of industrial nations. Which of the following does not provide an explanation of this​ phenomenon? A. Industrial countries have higher rates of growth in physical capital and developing countries are not able to invest in large quantities of capital. B. As industrial countries are​ growing, they have high levels of capital and face diminishing returns from investment in capital. C. Developing countries may not need to engage in large amounts of​ R&D as they can borrow technologies that have already been developed in industrial nations. D. Low income countries do not usually have large volumes of capital. They can grow from technology improvements and capital​ investment, without facing diminishing returns until they reach much larger levels of income.

A. Industrial countries have higher rates of growth in physical capital and developing countries are not able to invest in large quantities of capital.

The BLS uses the establishment survey LOADING... to collect information on employment in the economy. Indicate one drawback of the establishment survey compared to the current population survey and indicate one advantage. A. It does not include information about​ self-employed people. B. It is based on company payroll and not on unverifiable answers. C. It includes complete information about unemployment. D. It is based on​ unverifiable, self-reported survey responses.

A. It does not include information about​ self-employed people. (drawback) B. It is based on company payroll and not on unverifiable answers. (advantage)

Which of the following is a factor explaining why​ low-income countries have not experienced rapid economic​ growth? A. Many low minus income countries have had wars and revolutions comma disrupting economic activity. B. ​Low-income countries are generally expected to grow more slowly than​ high-income countries. C. ​Low-income countries have started to grow too late and can never catch up to rich countries. D. ​Low-income countries have governments that prefer more simple standards of living.

A. Many low minus income countries have had wars and revolutions comma disrupting economic activity.

Which of the following can give an early warning of future increases in the price​ level? A. Producer price index B. Consumer price index C. GDP deflator D. All of the above

A. Producer price index

Firms that act as financial intermediaries match households that have excess funds with firms that want to borrow funds. What other key services does the financial system provide to savers and​ lenders? ​(Mark all that​ apply.) A. Provides an easy method of exchanging a financial security for money. B. Allows savers to spread their money among many financial investments. C. Collects and communicates information about borrowers to savers D. Insures assets up to​ $500,000. E. Offers fixed and stable interest rates. F. Insures investments against decreasing in value.

A. Provides an easy method of exchanging a financial security for money. B. Allows savers to spread their money among many financial investments. C. Collects and communicates information about borrowers to savers

Consider the following data for a closed​ economy: Y​ = ​$12 trillion C​ = ​$8 trillion G​ = ​$2 trillion S^public​ = ​$-0.50 trillion T​ = ​$2 trillion Now suppose that government purchases increase from ​$2 trillion to ​$2.50 trillion but the values of Y and C are unchanged. What must happen to the values of S and​ I? A. S and I drop by ​$0.50 trillion. B. S and I increase by ​$0.50 trillion. C. S drops by ​$0.50 trillion and I increases by ​$0.50 trillion. D. S increases by ​$0.50 trillion and I drops by ​$0.50 trillion.

A. S and I drop by ​$0.50 trillion.

Which of the following is the best example of human​ capital? A. a worker gets a college degree B. a manager buys workers more personal computers C. a worker pays less taxes D. a manager devotes more spending to research and development

A. a worker gets a college degree

Typically, when will the National Bureau of Economic Research​ (NBER) announce that the economy is in a​ recession? A. a year or more after the recession has begun B. ​typically, more than 10 years after the recession begins C. about six months before the recession begins D. on the date that the recession begins

A. a year or more after the recession has begun

A columnist in the New York Times observes​ that, ​"many analysts agree that economic​ reform, of which integration into the global economy was a key​ element, has lifted millions of people out of poverty in​ India." ​ The term​ "integration into the global​ economy" means A. globalization and more integration of trade. B. becoming a part of EU. C. becoming a part of NAFTA. D. becoming a part of a global organization. ~~~~~~~~~~~~~~~~~ Integration into the global economy has A. reduced poverty in India by increasing the growth rate of the economy and a higher rate of economic growth generally results in faster poverty reduction. B. had an ambiguous effect on reducing poverty because of the skewed distribution of income in India. C. did not reduce poverty in India despite an increase in the growth rate of the economy because a higher rate of economic growth does not generally result in faster poverty reduction. D. not been successful in the reduction of poverty in India because poverty is determined by​ education, training and family background.

A. globalization and more integration of trade. ~~~~~~~~~~~~~~~~~~~~~ A. reduced poverty in India by increasing the growth rate of the economy and a higher rate of economic growth generally results in faster poverty reduction.

n August​ 2015, which of the following demographic groups had a higher rate of unemployment than the unemployment rate for the total​ population? A. high school dropouts B. whites C. college graduates D. asians

A. high school dropouts

Evaluate the following​ statement: ​"Saving money is not lending. How can it​ be? When I save my​ money, I put it in a bank. I​ don't loan it out to someone​ else." The statement is A. incorrect. The supply of loanable funds is determined by household saving. B. correct. Depositing money in a bank is​ borrowing, not saving. C. correct. Depositing money in a bank is neither saving nor borrowing. D. incorrect. The supply of loanable funds is determined by​ firms' willingness to borrow.

A. incorrect. The supply of loanable funds is determined by household saving.

Evaluate the following​ statement: ​"Saving money is not lending. How can it​ be? When I save my​ money, I put it in a bank. I​ don't loan it out to someone​ else." The statement is A. incorrect. The supply of loanable funds is determined by household saving. B. correct. Depositing money in a bank is​ borrowing, not saving. C. correct. Depositing money in a bank is neither saving nor borrowing. D. incorrect. The supply of loanable funds is determined by​ firms' willingness to borrow.

A. incorrect. The supply of loanable funds is determined by household saving.

Increases in the minimum wage will A. increase unemployment among teenagers. B. have a large effect on the unemployment rate in the United States. C. increase the level of unemployment for all groups of workers. D. increase unemployment among workers whose market wage is higher than the new minimum wage.

A. increase unemployment among teenagers.

Even though individuals earn interest on financial investments such as​ bonds, mutual​ funds, and certificates of​ deposits, they may still hold wealth in checking accounts because A. individuals need money that is available to be spent on goods and services. B. the government says people must hold a portion of wealth as reserves. C. some individuals might not be rational. D. individuals are uncertain of how much interest is appropriate for different types of securities.

A. individuals need money that is available to be spent on goods and services.

Pranab​ Bardhan, an economist at the University of​ California, Berkeley,​ argues: ​"China may be close to exhausting the possibilities of technological​ catch-up with the​ West, particularly in​ manufacturing." When Bardhan refers to​ "technological catch-up," he means that China A. is experiencing diminishing returns to investments in technology. B. has the best technology available and no country can catch up. C. is experiencing increasing returns to investments in technology. D. has the best technology available and the U.S.​ can't catch up. ~~~~~~~~~~~~~~~~ If Bardhan is​ correct, in the​ future, the Chinese economy might A. realize higher labor productivity. B. realize faster economic growth. C. realize slower economic growth. D. be a more fierce economic competitor. ~~~~~~~~~~~~~~~~ Comparing the Chinese economy today and the Soviet economy in the​ 1980s, it can be seen that both countries had a history of A. patriachial societies and central planning that have worked better than market​ systems, but have now transitioned to traditional markets and so will have high future growth. B. wars and market systems that have caused problems in making the transition to the new world order. But they​ have, and will continue to​ have, high economic growth. C. market planning and have eliminated market​ systems, but have experienced such success in making the transition that​ have, and will continue​ to, have higher economic growth. D. central planning and have introduced market​ systems, but have experienced problems in making the transition that​ have, and will continue​ to, hinder future growth.

A. is experiencing diminishing returns to investments in technology. ~~~~~~~~~~~~~~~~~~~~ C. realize slower economic growth. ~~~~~~~~~~~~~~~~~~~~ D. central planning and have introduced market​ systems, but have experienced problems in making the transition that​ have, and will continue​ to, hinder future growth.

Inflation can affect the distribution of income because A. people with incomes rising faster than the rate of inflation enjoy an increasing purchasing​ power, while people with incomes rising more slowly than the rate of inflation are hurt by a decreasing purchasing power. B. people with fixed​ incomes, such as retired persons who may be receiving a pension of a fixed number of dollars each​ year, are not affected by the inflation​ rate, but people with varying incomes are. C. people with incomes rising slower than the rate of inflation enjoy an increasing purchasing​ power, while people with incomes rising more quickly than the rate of inflation are hurt by a decreasing purchasing power. D. when inflation is fully​ anticipated, mortgage lenders face very high default risk.

A. people with incomes rising faster than the rate of inflation enjoy an increasing purchasing​ power, while people with incomes rising more slowly than the rate of inflation are hurt by a decreasing purchasing power.

Gross domestic product is best defined as A. the market value of all final goods and services produced in a country during a period of​ time, typically one year. B. the total value of all goods that can be found in a country. C. the total quantity of goods and services produced in a country during a period of time. D. the amount of all incomes earned by all citizens of a​ country, including those living overseas.

A. the market value of all final goods and services produced in a country during a period of​ time, typically one year.

The labor force participation rate is calculated by A. the percentage of the​ working-age population that is in the labor force or Labor force/Working age population * 100 B. the percentage of the employed workers that is in the labor force or Employed/Labor force * 100 C. the percentage of the retired population that is in the labor force or Retired people/Labor force * 100 D. the percentage of the labor force that is in the​ working-age population or Working age population/Labor force * 100

A. the percentage of the​ working-age population that is in the labor force or Labor force/Working age population * 100

The natural rate of unemployment is A. the sum of structural unemployment and frictional unemployment. B. the sum of seasonal unemployment and cyclical unemployment. C. the sum of cyclical unemployment and frictional unemployment. D. the sum of structural unemployment and cyclical unemployment.

A. the sum of structural unemployment and frictional unemployment.

When​ Ségolène Royal was running unsuccessfully for president of​ France, she proposed that workers who lost their jobs would receive unemployment payments equal to 90 percent of their previous wages during their first year of unemployment. If this proposal were​ enacted, the unemployment rate in France A. would have gone up as the opportunity cost of job search would have decreased. B. would have gone down as the opportunity cost of job search would have increased. C. would have gone up as people from other countries would migrate to France because of their generous unemployment insurance. D. would have stayed the same because unemployment insurance programs do not affect the unemployment rate.

A. would have gone up as the opportunity cost of job search would have decreased.

If the inflation rate is 6 percent and the nominal interest rate is 4​ percent, then the real interest rate is A. ​-2 percent, which is the nominal interest rate minus the inflation rate. B. 1.5​ percent, which is the ratio of the nominal interest rate to the inflation rate. C. 10​ percent, which is the sum of the nominal interest rate and the inflation rate. D. 2​ percent, which is the inflation rate minus the nominal interest rate.

A. ​-2 percent, which is the nominal interest rate minus the inflation rate.

Indicate whether you agree or disagree with the following​ statement: ​"In years when people buy few shares of​ stock, investment will be low ​and, therefore, so will gross domestic product LOADING... ​(GDP)." A. ​Disagree: Investment as a component of GDP refers to the purchase of physical and human capital and​ inventory, not stock purchases. B. ​Agree: GDP​ = C​ + I​ + G​ + NX. ​ Therefore, as​ "I" (Investment) decreases​, GDP decreases. C. ​Agree: When investment is low​, people must have less money to spend. ​ Therefore, GDP decreases. D. ​Disagree: While GDP will be low in this​ case, it is the result of a decrease in consumer expenditure on​ stocks, not investment spending.

A. ​Disagree: Investment as a component of GDP refers to the purchase of physical and human capital and​ inventory, not stock purchases.

How does the size of a​ country's GDP affect the quality of life of the​ country's people? A. ​Generally, the more goods and services people​ have, the better off they are. B. When GDP is​ high, production from the underground​ economy, and therefore the crime​ rate, is high. C. ​Generally, the more goods and services people​ have, the worse off they are. D. There is an inverse relationship between GDP and quality of life.

A. ​Generally, the more goods and services people​ have, the better off they are.

What are the four categories of​ income? A. ​Wages, Interest,​ Rent, and Profit. B. ​Wages, Salaries,​ Interest, and Dividends. C. ​Labor, Capital, Natural​ Resources, and Entrepreneurship. D. ​Consumption, Investment, Government​ Purchases, and Net Exports.

A. ​Wages, Interest,​ Rent, and Profit.

As of August​ 2015, which of the following demographic groups has the highest unemployment​ rate? A. Asians B. African Americans C. Hispanics D. Whites

B. African Americans

Globalization entails all of the following except​: A. Foreign portfolio investment. B. Cultural exchange between nations. C. Open trade and technology transfers between countries. D. Foreign direct investment.

B. Cultural exchange between nations.

Suppose John Q. Worker is currently unemployed. Each​ day, John Q. Worker spends the entire day searching available job openings for an appropriate position given his set of​ skills, abilities, and interests. If someone asks John Q. what he does for​ work, he tells them that he is currently​ "in-between jobs." Which of the following best classifies John​ Q.'s unemployment​ status? A. Seasonally unemployed B. Frictionally unemployed C. Structurally unemployed D. Cyclically unemployed

B. Frictionally unemployed

Scott is a woodworker and charges​ $125 an hour for his time manufacturing customminusmade wood products. For his​ wife's birthday, he designs and creates an intricate birdseye maple jewelry box that takes him 15 hours to complete. By how much and in what direction does GDP change as a result of his​ efforts? A. GDP falls by​ $1,875. B. GDP is not affected by​ Scott's production of the jewelry box. C. GDP rises by​ $125. D. GDP rises by​ $1,875.

B. GDP is not affected by​ Scott's production of the jewelry box.

What happens if we measure GDP by adding up the value of every good and service produced in the​ economy? A. GDP is underestimated because of double counting. B. GDP is overestimated because of double counting. C. This is the correct measure of real GDP but not nominal GDP. D. This is the correct measure of nominal GDP but not real GDP.

B. GDP is overestimated because of double counting.

Which of the following is not a shortcoming of GDP as a measure of​ well-being? A. GDP is not adjusted for the effects of pollution caused by the production of goods and services. B. GDP only counts final goods and services and not intermediate goods. C. GDP does not include the value of leisure. D. GDP is not adjusted for crime and other social problems.

B. GDP only counts final goods and services and not intermediate goods.

If Americans still worked​ 60-hour weeks, as they did in​ 1890, A. GDP would be lower than it​ is, but the​ well-being of the typical person would be higher. B. GDP would be much higher than it​ is, but the​ well-being of the typical person would not necessarily be higher. C. both GDP and the​ well-being of the typical person would be much higher than they are. D. both GDP and the​ well-being of the typical person would be lower than they are.

B. GDP would be much higher than it​ is, but the​ well-being of the typical person would not necessarily be higher.

Which of the following accurately describes an effect of hurricane Katrina on​ GDP? A. GDP would decrease reflecting the costs of cleanup. B. GDP would increase reflecting the costs of cleanup. C. GDP would increase well-being. D. GDP would increase reflecting the decrease in production that occurred during the storm and the productive capacity lost in the storm.

B. GDP would increase reflecting the costs of cleanup.

All of the following are correct except A. Gross domestic income includes sales​ tax, depreciation and other items. B. Gross domestic income does not include health insurance benefits received by the employees. C. Gross domestic income equals Wages plus Interest plus Profits plus Rent nbsp. D. Gross domestic income is GDP calculated as the sum of income payments to households.

B. Gross domestic income does not include health insurance benefits received by the employees.

How does the U.S. economy create and destroy millions of jobs each​ year? ​(Mark all that​ apply.) A. The federal government determines that certain industries are obsolete and closes firms. B. In the market​ system, new firms are constantly entering and exiting various industries. C. When unemployment is​ high, the federal government hires more workers to offset the effects of unemployment. D. Some businesses are​ expanding, while others are contracting.

B. In the market​ system, new firms are constantly entering and exiting various industries. D. Some businesses are​ expanding, while others are contracting.

Between 2015 and​ 2016, if an​ economy's exports rise by​ $8 billion and its imports fall by​ $8 billion, by how much will GDP change between the two​ years, all else​ equal? A. Net exports will increase GDP by​ $8 billion. B. Net exports will increase GDP by​ $16 billion. C. Net exports will decrease GDP by​ $8 billion. D. The increase in exports is offset by the decrease in​ imports, so there is no change in net exports and no effect on GDP.

B. Net exports will increase GDP by​ $16 billion.

Which of the following would be included in the gross national product​ (GNP) of the United​ States? A. Production from a Canadian firm that operates in Montana. B. Production from a U.S. firm that operates in Mexico. C. Production from a Hungarian citizen who works in​ Denver, CO. D. All of the above are included in the GNP of the U.S.

B. Production from a U.S. firm that operates in Mexico.

Which of the following is a problem of unanticipated​ inflation? A. Redistribution of income from borrowers to lenders B. Redistribution of income from lenders to borrowers C. Increases in taxes paid by investors D. Increases in frictional unemployment

B. Redistribution of income from lenders to borrowers

We often use real GDP per capita LOADING... as a measure of a​ country's well-being. Review the definition of real GDP per capita before answering the following question. ​Today, the typical American works fewer than 40 hours per week. In​ 1890, the typical American worked 60 hours per week. Would the difference between the real GDP per capita in 1890 and the real GDP per capita today understate or overstate the difference in the​ population's economic​ well-being? A. The decrease in real GDP per capita between 1890 and today overstates​ well-being because the value of leisure is not included in GDP. B. The increase in real GDP per capita between 1890 and today understates​ well-being because the value of leisure is not included in GDP. C. The increase in real GDP per capita between 1890 and today overstates​ well-being because the value of leisure is not included in GDP. D. The decrease in real GDP per capita between 1890 and today understates​ well-being because the value of leisure is not included in GDP.

B. The increase in real GDP per capita between 1890 and today understates​ well-being because the value of leisure is not included in GDP. If Americans still worked​ 60-hour weeks, GDP would be much higher than it is​ today, but the​ well-being of the typical person would be much lower because less time would be available for leisure activities.

Which of the following describes the effect of the business cycle on the inflation rate and the unemployment​ rate? A. The unemployment rate increases and the inflation rate falls during expansions. B. The unemployment rate increases and the inflation rate falls during recessions. C. The unemployment rate increases and the inflation rate increases during expansions. D. The unemployment rate falls and the inflation rate falls during recessions.

B. The unemployment rate increases and the inflation rate falls during recessions.

Indicate whether the following statement is true or false and why. ​"A wage rising slower than the rate of inflation is actually​ falling." A. False. A higher wage decreases purchasing power regardless of inflation. B. True. If wages are increasing slower than the average price of goods and​ services, purchasing power falls. C. True. If wages are increasing slower than the average price of goods and​ services, purchasing power increases. D. False. A higher wage increases purchasing power regardless of inflation.

B. True. If wages are increasing slower than the average price of goods and​ services, purchasing power falls.

Which of the following explains why fluctuations in real GDP have become less volatile in the United States since​ 1950? A. Services have become a smaller fraction of GDP since the 1950s. B. Unemployment insurance and other government transfer programs are more prevalent since the 1950s. C. The government has become more reluctant to intervene when real GDP declines and unemployment rises since the 1950s. D. Both B and C

B. Unemployment insurance and other government transfer programs are more prevalent since the 1950s.

Why does inflation make nominal GDP LOADING... a poor measure of the increase in total production from one year to the​ next? A. GDP is a measure of production in quantity terms. B. When nominal GDP increases from year to​ year, the increase is due partly to changes in prices and partly to changes in quantities. C. Nominal GDP separates increases in GDP as a result of price changes from increases in GDP as a result of quantity changes. D. All of the above E. A and B only

B. When nominal GDP increases from year to​ year, the increase is due partly to changes in prices and partly to changes in quantities.

Amartya​ Sen, a professor of economics at Harvard and a Nobel​ Laureate, has​ argued: ​"For India to match China in its range of manufacturing capacity... it needs a​ better-educated and healthier labor force at all levels of​ society." ​ Education and health care are important for economic growth because A. jobs are being outsourced from India to China as a result of faster internet technology. B. a​ well-educated and healthy workforce has higher productivity. C. the average diet in India is far less healthy than in China. D. it is unfair when some people have better education and health care than others. ~~~~~~~~~~~~~~~~~~~~~~ India has been able to experience rapid economic growth since 1991 despite poor educational and health care systems because A. the government scaled back central​ planning, reduced​ regulations, and introduced​ market-based reforms. B. the Indian people started to put aside their religious and cultural differences to make the country a better place. C. the government provided modern sewer systems serviced to the vast majority of it inhabitants. D. the British left a legacy of infrastructure including an efficient train system and world class ports.

B. a​ well-educated and healthy workforce has higher productivity. ~~~~~~~~~~~~~~~~~~ A. the government scaled back central​ planning, reduced​ regulations, and introduced​ market-based reforms.

An International Monetary Fund Factsheet makes the following observation regarding sound financial​ systems: ​"A country's financial​ system...provide[s] a​ framework...[for] supporting economic​ growth." Do you agree with this​ observation? Briefly explain. A weak financial system might make economic growth difficult, since A. a strong financial sector is needed for​ export-led economic growth. B. capital​ investment, essential for rapid economic​ growth, is often financed by borrowed funds and an unstable financial system leads to difficulty attracting loanable funds. C. a strong financial system is needed to provide employment for the​ country's labor force. D. a weak financial system implies that the government does not have enough resources.

B. capital​ investment, essential for rapid economic​ growth, is often financed by borrowed funds and an unstable financial system leads to difficulty attracting loanable funds.

Which of the following is not a reason that the economy is considered to have been more stable in the 1950dash2007 period than in other​ periods? A. the increasing importance of services and the declining importance of goods B. continually falling oil prices C. the use of active government policies to stabilize the economy D. the establishment of unemployment insurance programs

B. continually falling oil prices

Technological change is more important to​ long-run economic growth than changes in capital. The easiest way for firms to gain access to new technology is through A. health and education. B. foreign direct investment. C. wars and civil strife. D. savings and investment.

B. foreign direct investment.

In​ particular, the size of the health care sector in a developing country A. falls with economic prosperity as life expectancy increases. B. grows with economic prosperity as life expectancy increases. C. grows as the government provides more subsidy. D. falls since the developing country depends more on the advanced countries for their medical needs.

B. grows with economic prosperity as life expectancy increases.

Gross domestic product understates the total production of final goods and services because of the omission of A. exports. B. household production. C. intermediate goods. D. inflation.

B. household production.

The chapter explains that it is impossible to know whether a particular nominal interest rate is​ "high" or​ "low" because A. it all depends on the​ Fed's monetary policy rule. B. it all depends on the inflation rate. C. it all depends on the federal funds rate. D. it is controlled by the​ Fed's open market operations.

B. it all depends on the inflation rate.

A study by the McKinsey Global Institute reported that labor productivity increased at an average annual rate of 5.8 percent between 1999 and 2013 in​ Mexico's large​ companies, but fell at an average annual rate of 6.5 percent over the same period for​ Mexico's smaller​ firms, such as​ family-owned stores and bakeries. Productivity growth would be much higher for​ Mexico's largest companies than for its smaller companies because the A. larger companies have more​ employees, so they are more likely to be included in statistical information. B. larger companies have greater access to better technology which stimulates productivity growth. C. smaller companies are more highly regulated and so have lower productivity growth. D. smaller companies cannot achieve the scale to compete with larger companies.

B. larger companies have greater access to better technology which stimulates productivity growth.

The ease with which a financial security can be exchanged for money is referred to as A. retained earnings. B. liquidity. C. capital. D. loanable funds.

B. liquidity.

One major component of GDP that can be negative is A. consumption. B. net exports. C. investment. D. government expenditures.

B. net exports.

If the GDP deflator in 2012 has a value of​ 98.0, then A. the inflation rate in 2012 is 2 percent. B. prices have decreased 2 percent between the base year and 2012. C. the inflation rate in 2012 is​ -2 percent. D. prices have increased 9.8 percent between the base year and 2012.

B. prices have decreased 2 percent between the base year and 2012.

The real interest rate equals A. the nominal interest rate divided by the CPI for a given year. B. the nominal interest rate minus the inflation rate. C. the nominal interest rate plus the inflation rate. D. the inflation rate minus the nominal interest rate.

B. the nominal interest rate minus the inflation rate.

Which component of gross domestic income is the​ largest? A. interest B. wages C. profits D. rent

B. wages

Your father earned​ $34,000 per year in 1984. To the nearest​ dollar, what is that equivalent to in 2014 if the CPI in 2014 is 215 and the CPI in 1984 is​ 104? A. ​$16,447 B. ​$70,288 C. ​$34,000 D. ​$73,100

B. ​$70,288

The unemployment rate in the United States is usually​ ________ than the unemployment rates in most other​ high-income countries, partly because the United States has​ _________ requirements for the unemployed to receive government payments. A. ​higher; more stringent B. ​lower; more stringent C. ​lower; less stringent D. ​higher; less stringent

B. ​lower; more stringent

What is the equation that represents the relationship between GDP and the 4 major expenditure components?

Y = C + I + G + NX

Which of the following is an example of cyclical​ unemployment? A. Autoworkers lose jobs due to globalization and must retrain to find new jobs. B. Workers at ski resorts in Colorado are laid off during the summer. C. During a recession comma aircraft assemblers are laid off but expect to be recalled as the economy improves. D. Upper A worker moves to California and searches for a new job.

C. During a recession comma aircraft assemblers are laid off but expect to be recalled as the economy improves.

Which of the following is considered to be a problem in using GDP as a measure of national ​well-being​? A. GDP does not include products that you produce for yourself. B. GDP does not include the value of illegal goods comma such as drugs. C. GDP is not adjusted for changes in crime and other social problems. D. Items included in U.S. GDP are valued in current dollars.

C. GDP is not adjusted for changes in crime and other social problems.

Which one of the following is not a measure of the price​ level? A. GDP​ Deflator: broadest measure of the average price level as it includes prices of every final good and service. B. Consumer Price​ Index: an average of the prices of goods and services a typical family of four would purchase. C. Government Price​ Index: an average of the prices paid by the government for goods and services used only by different government agencies. D. Producer Price​ Index: an average of prices received by firms for goods and services at all stages of production.

C. Government Price​ Index: an average of the prices paid by the government for goods and services used only by different government agencies.

Which of the following equals the amount of public​ saving? A. The sum of government tax​ revenue, government​ purchases, and government transfer payments to households. B. Government transfer payments to household minus the sum of government tax revenue and government purchases. C. Government tax revenue minus the sum of government purchases and transfer payments to households. D. The sum of government purchases and government tax​ revenue, minus transfer payments to households.

C. Government tax revenue minus the sum of government purchases and transfer payments to households

Use the table and figure to help determine which of the following statements about the division of income is false. A. Profits include the profits of sole proprietorships and profits of corporations. B. The largest component of income received by households is wages. C. Gross domestic income is measured precisely. D. Wages are about three times as large as the profits received by sole proprietors and the profits received by corporations combined.

C. Gross domestic income is measured precisely.

Which of the following does NOT lead to long-run economic growth LOADING...​? A. Improved labor productivity B. Increase in the capital stock C. Increase in average wages D. Technological change

C. Increase in average wages

According to most​ economists, is it a serious shortcoming of GDP that it does not count household production or production in the underground​ economy? A. Most economists would answer​ "yes" because these types of production are likely to change significantly from one year to the next. B. Most economists would answer​ "no" because the purpose of measuring GDP is to see how the economy performs over fairly long periods of a decade or more. C. Most economists would answer​ "no" because these types of production do not affect the most important use of the GDP​ measure, which is to measure changes in total production over short periods of time. D. Most economists would answer​ "yes" because these types of production are likely to be a large component of the economy​ (or a large percentage of measured​ GDP), especially in countries like the United States.

C. Most economists would answer​ "no" because these types of production do not affect the most important use of the GDP​ measure, which is to measure changes in total production over short periods of time.

In a closed​ economy, the values for​ GDP, consumption​ spending, investment​ spending, transfer​ payments, and taxes are as​ follows: Y​ = $15 trillion C​ = $10 trillion I​ = $4 trillion TR​ = $1 trillion T​ = $4 trillion Using the information​ above, what is the value of private saving and public​ saving? A. Private saving equals ​$10 trillion and public saving equals ​$4 trillion. B. Private saving equals ​$4 trillion and public saving equals ​$10 trillion. C. Private saving equals ​$2 trillion and public saving equals ​$2 trillion. D. Private saving equals ​$2 trillion and public saving equals ​$1 trillion.

C. Private saving equals ​$2 trillion and public saving equals ​$2 trillion.

Suppose that Sally J. Society recently lost her job as an underwater welder. In looking for a new​ job, she discovers that the only available jobs are for economists and that there are no openings for underwater welders because the trade is now obsolete. If Sally J. Society decides to return to school to earn an Economics​ degree, what is the best classification of her unemployment​ status? A. Cyclically unemployed B. Frictionally unemployed C. Structurally unemployed D. Seasonally unemployed

C. Structurally unemployed

If the CPI is currently​ 202, what does this tell you about inflation between last year and this​ year? A. There was deflation in the economy between this year and last year. B. Inflation in the economy between this year and last year was​ 2%. C. The CPI measures only the level of prices in a given​ year, not the percentage change in prices from one year to the next. D. Inflation in the economy between this year and last year was​ 102%.

C. The CPI measures only the level of prices in a given​ year, not the percentage change in prices from one year to the next.

A government that collects more in taxes than it spends experiences A. a budget deficit. B. an increase in the national debt. C. a budget surplus. D. a budget balance.

C. a budget surplus.

An efficiency wage is A. equal to the​ market-clearing wage, so that social welfare is maximized. B. an​ above-market wage paid by a firm to maximize the output of the firm. C. an​ above-market wage paid by a firm to maximize worker productivity. D. a​ below-market wage paid by a firm to maximize firm profits.

C. an​ above-market wage paid by a firm to maximize worker productivity.

Household production and the underground economy A. are an increasingly large fraction of economic activity in the United States. B. are not considered important​ and, therefore, are not included when calculating GDP. C. are not accounted for in the Bureau of Economic​ Analysis' estimates of GDP. D. are fully accounted for in the Bureau of Economic​ Analysis' estimates of GDP.

C. are not accounted for in the Bureau of Economic​ Analysis' estimates of GDP.

When the economy is at full​ employment, which types of unemployment​ remain? A. cyclical and structural B. frictional and cyclical C. frictional and structural D. None of the above. Full employment means that there is no​ unemployment, so the unemployment rate would be zero.

C. frictional and structural

The economic growth model predicts that the A. level of per capita GDP in poor countries will decrease over time and the poor nations will not be able to catch up with the rich nations. B. rich countries will have stagnant growth and will catch up with the poor​ countries, so that there will be a convergence toward a​ "poverty trap." C. level of per capita GDP in poor countries will increase faster than rich countries and the poor nations will catch up with the rich nations. D. level of per capita GDP in rich countries will increase so fast that it will be difficult for poor countries with low income per capita to ever catch up with the rich countries.

C. level of per capita GDP in poor countries will increase faster than rich countries and the poor nations will catch up with the rich nations.

Personal income is A. national income minus income taxes. B. national income plus government transfer payments. C. national income minus retained corporate earnings plus government transfer payments and interest on government bonds. D. equal to the value of all final goods and services produced within a​ country's borders during one year.

C. national income minus retained corporate earnings plus government transfer payments and interest on government bonds.

Disposable personal income is A. national income minus personal taxes. B. national income minus depreciation. C. personal income minus personal taxes. D. personal income minus indirect business taxes.

C. personal income minus personal taxes.

The unemployment rate A. is the amount of the labor force that is not working. B. is the amount of people in the population that are not working. C. shows the percentage of the labor force that is considered unemployed. D. shows the percentage of the population that is considered unemployed.

C. shows the percentage of the labor force that is considered unemployed.

Which of the following changes will ensure that an economy experiences sustained economic​ growth? A. increasing the amount of raw materials B. increasing the amount of capital C. technological change D. increasing the amount of labor

C. technological change

When the economy is at full​ employment, unemployment is equal to A. normal rate of unemployment minus abnormal rate of unemployment. B. zero. C. the natural rate of unemployment. D. cyclical unemployment minus seasonal unemployment.

C. the natural rate of unemployment.

Shortly before the fall of the Soviet​ Union, the economist Gur Ofer of the Hebrew University of​ Jerusalem, wrote​ this: ​"The most outstanding characteristic of Soviet growth strategy is its consistent policy of very high rates of​ investment, leading to a rapid growth rate of​ [the] capital​ stock." This turned out to be a very poor growth strategy because A. the amount of capital per hour worked was decreasing. B. the amount of labor per unit of capital was increasing. C. there were diminishing returns to capital. D. the capital stock was increasing less rapidly than technology.

C. there were diminishing returns to capital.

What is the best use of the rule of 70 among those listed​ below? A. to calculate the difference between the growth rate in real GDP and the growth rate in real GDP per capita B. to find the average annual growth rate of real GDP C. to judge how rapidly real GDP per capita is growing over long time periods D. to forecast the duration of recessions

C. to judge how rapidly real GDP per capita is growing over long time periods

A politician makes the following​ argument: ​"The economy would operate more efficiently if frictional unemployment were eliminated.​ Therefore, a goal of government policy should be to reduce the frictional rate of unemployment to the lowest possible​ level." Eliminating all frictional unemployment A. will be good for the economy since the presence of frictional unemployment increases job destruction. B. will be good for the economy because the total unemployment will fall. C. will not be good for the economy since the presence of frictional unemployment increases economic efficiency. D. will not be good for the economy since the presence of frictional unemployment decreases job creation.

C. will not be good for the economy since the presence of frictional unemployment increases economic efficiency.

If the CPI was 207 in 2009 and 225 in​ 2013, what wage would someone who earned a​ $50,000 income in 2009 have to earn in 2013 in order to keep her purchasing power​ constant? A. ​$51,252 B. ​$54,000 C. ​$54,348 D. None of the above.

C. ​$54,348 Value today = Value in previous year * (CPI today/CPI in previous year)

If the U.S. Bureau of Economic Analysis​ (BEA) added up the values of every good and service sold during the​ year, would the total be larger or smaller than measured gross domestic product​ (GDP)? A. ​Smaller: Measured GDP includes the values of every good and service sold AND the market value of all final goods. B. ​Larger: Measured GDP includes quantities of goods and​ services, not the values of goods and services. C. ​Larger: The value of all goods and services sold would include intermediate goods. D. ​Equal: Measured GDP is calculated by adding the values of every good and service sold during the year.

C. ​Larger: The value of all goods and services sold would include intermediate goods.

GO TO QUESTION 37 ON CH 9 HW

CPI CALCULATION QUESTION Cost of the market basket in the current year/cost in the base year * 100

What are the 4 major expenditure components in GDP?

Consumption, investment, govt purchases, net exports

The figure to the right illustrates the relationship between weak and strong rule-of-law countries and economic growth. In addition to a​ country's failure to enforce​ rule-of-law, what else explains why more​ low-income countries do NOT experience rapid growth as the​ catch-up line​ predicts? A. Lengthy civil wars B. Inability to borrow money needed for investment C. Shortage of childhood vaccinations D. All of the above

D. All of the above

Which of the following causes changes in the CPI to overstate the true inflation​ rate? A. Increase in quality bias B. New product bias C. Substitution bias D. All of the above

D. All of the above

Which of the following​ contribute(s) to shorter​ recessions, longer​ expansions, and less severe fluctuations in real​ GDP? A. Social Security benefits B. Fiscal policy C. A​ service-based economy D. All of the above E. A and C only

D. All of the above

How do unemployment insurance payments LOADING... in the United States and social insurance programs in other countries increase the unemployment​ rate? A. The payments are costly and firms are forced to lay off workers. B. They increase the opportunity cost of job search. C. They are paid as long as the unemployed person remains unemployed. D. They decrease the opportunity cost of job search.

D. They decrease the opportunity cost of job search.

Which of the following are assertions made by opponents of​ globalization? A. Globalization has contributed to multinational firms moving production to​ low-income countries so they can pay their workers very low wages. B. Globalization has undermined the distinctive cultures of many countries. C. Globalization has contributed to multinational firms moving production to​ low-income countries to avoid safety and environmental regulations that​ high-income countries require such firms to follow. D. All of the above are assertions made by opponents of globalization.

D. All of the above are assertions made by opponents of globalization.

Even perfectly anticipated inflation imposes costs.​ Why? A. Menu costs. B. Paper money loses its purchasing power by the rate of inflation. C. Some wages will fail to keep up with anticipated inflation. D. All of the above. E. A and C only.

D. All of the above.

How does real GDP LOADING... deal with the problem inflation causes with nominal​ GDP? A. Real GDP uses the prices of goods and services in the base year to calculate the value of goods in all other years. B. By keeping prices​ constant, we know that changes in real GDP represent changes in the quantity of output produced. C. Real GDP separates price changes from quantity changes. D. All of the above. E. A and C only.

D. All of the above.

Real GDP per capita LOADING... is often used as a measure of general​ well-being. While increases in real GDP often do lead to increases in the​ well-being of the​ population, why is real GDP not a perfect measure of​ well-being? A. The costs of pollution are not included. B. The value of leisure is not included. C. GDP does not include crime rates or income distribution. D. All of the above.

D. All of the above.

The​ "normal" underlying level of unemployment in the economy is A. the sum of structural unemployment and frictional unemployment. B. the​ full-employment rate of unemployment. C. the natural rate of unemployment. D. All of the above.

D. All of the above.

When the economy is at full​ employment, A. the unemployment rate is greater than zero. B. all remaining unemployment is either frictional or structural. C. the natural rate of unemployment prevails. D. All of the above.

D. All of the above.

Why do economic growth rates​ matter? A. When a country sustains high growth​ rates, life expectancy at birth increases. B. High levels of sustained economic growth reduce infant mortality. C. High growth rates coincide with improved living standards. D. All of the above. E. A and C only.

D. All of the above.

Why might the unemployment rate continue to rise during the early stages of a​ recovery? A. Employment growth may be slow relative to the growth in the labor force. B. The number of discouraged workers may continue to increase. C. Some firms continue to operate well below their capacity even after a recession has ended. D. Because both​ (a) and​ (c) are true.

D. Because both​ (a) and​ (c) are true.

Suppose two​ countries, Country A and Country​ B, have a similar real GDP per capita. Country A has an average economic growth rate of​ 2% and Country B has an average economic growth rate of​ 3.3%. In the long​ run, what can we predict about living standards in the two​ countries? A. Growth rates are not related to living standards. B. Country​ A's living standards will increase much more rapidly in the long run. C. The countries will experience similar increases in their living standards. D. Country​ B's living standards will increase much more rapidly in the long run.

D. Country​ B's living standards will increase much more rapidly in the long run.

Which of the following formulas does the Bureau of Labor Statistics use to calculate the unemployment​ rate? A. Number of unemployed/ Working age population * 100. B. Number of unemployed/ Number of employed * 100. C. Number in labor force/ Number of unemployed * 100. D. Number of unemployed/ Number in labor force * 100.

D. Number of unemployed/ Number in labor force * 100.

The total value of saving in the economy must equal the total value of investment. Assume a closed​ economy, where I = Investment​, S = S^private + S^public​, S^private = Private Saving​, S^public = Public Saving​, C = Consumption Expenditure​, G = Government Expenditure, Y = GDP​, TR = Government Transfers. Which one of the following expressions shows the​ investment-saving equality? A. I = Y + TR - C - T B. S = Y + T - TR - G C. I = Y + TR - C - G D. S = Y - C - G

D. S = Y - C - G

What effect do labor unions LOADING... have on the unemployment​ rate? A. By increasing the wage above market​ equilibrium, labor unions considerably decrease the unemployment rate. B. Labor unions can significantly increase the unemployment rate when members go on strike. C. By increasing the wage above market​ equilibrium, labor unions considerably increase the unemployment rate. D. Since few​ non-government workers are​ unionized, there is no significant effect on the unemployment rate.

D. Since few​ non-government workers are​ unionized, there is no significant effect on the unemployment rate.

Which of the following is responsible for the upward shifts in the​ per-worker production​ function? A. Efficiency wages B. Increases in labor C. Increases in capital D. Technological change

D. Technological change

Use the graph to the right to help determine which of the following statements regarding the labor force participation rates of adult men and women since 1950 is false. A. The overall labor force participation rate is higher today than it was in 1950. B. The labor force participation rate of adult women has increased significantly since 1950. C. The labor force participation rate of adult men has declined gradually since 1950. D. The labor force participation rates of adult men and adult women were equal in 1990.

D. The labor force participation rates of adult men and adult women were equal in 1990.

Have poor countries been catching up to rich​ countries? A. There has been no​ catch-up by any of the poor countries. B. There has been​ catch-up among all poor countries. C. The rich countries are getting poorer and going down to the level of poor countries. D. There has been​ catch-up by some poor but industrialized countries.

D. There has been​ catch-up by some poor but industrialized countries.

Which of the following changes does not cause an increase in the quantity of goods and services that can be produced by one​ worker, or in one hour of​ work? A. an increase in the quantity of capital per hour worked B. an increase in the literacy rate C. technological change D. an increase in the number of workers

D. an increase in the number of workers

The financial system of a country is important for​ long-run economic growth because A. people can increase their wealth very quickly under a healthy financial system. B. firms that use the financial system predominantly are being reckless. C. most firms rely on their own retained earnings and do not use the financial system. D. firms need the financial system to acquire funds from households.

D. firms need the financial system to acquire funds from households.

Crowding out occurs when A. interest rates increase because the Federal Reserve reduces that​ economy's money supply. B. interest rates increase as firms spend a larger amount of resources on research and development. C. firms borrow more to expand operations which results in an increase in interest rates. D. governments must borrow funds which causes interest rates to rise and thus private investment is reduced.

D. governments must borrow funds which causes interest rates to rise and thus private investment is reduced.

Developing countries have benefited from​ globalization, because globalization can do all of the following except A. open the developing​ countries' market to foreign trade and thus help create a more robust economy. B. help spread new and advanced technology and aid in capital accumulation in the developing world. C. take poor countries out of a low​ saving-investment trap by providing foreign direct investment and foreign portfolio investment. D. impose trade barriers and tariffs on imported goods so as to protect domestic industries.

D. impose trade barriers and tariffs on imported goods so as to protect domestic industries.

The computation of the average annual growth rate of real GDP A. is the same for shorter periods of time as for longer periods of time. B. involves simply averaging the growth rate for each​ year, but only if data for many years are available. C. involves computing the percentage change in real GDP between the first year and the last year for the period being examined. D. is more complex when examining data for a long period of time than when examining data for only a few years.

D. is more complex when examining data for a long period of time than when examining data for only a few years.

Writing in​ 2016, economist Robert Gordon of Northwestern University stated his views of the effects of information technology on the​ economy: We​ don't eat computers or wear them or drive to work in them or let them cut our hair. We live in dwelling units that have appliances much like those of the​ 1950s, and we drive in motor vehicles that perform the same functions as in the​ 1950s, albeit with more convenience and safety....Most of the economy has already benefited from the Internet and web​ revolution, and in this sphere of the economic​ activity, methods of production have been little changed over the past decade....The revolutions in everyday life made possible by​ e-commerce and search engines were already well established​ [by 2004]. If​ Gordon's observations about the information revolution are​ correct, that implies A. it will be easy to maintain high growth rates in U.S. labor productivity in the future. B. that the U.S. is engaged in further innovations in information and communications technology. C. that the U.S. is producing too many​ small, hand-held gadgets. D. it will be difficult to sustain high growth rates in U.S. labor productivity in the future.

D. it will be difficult to sustain high growth rates in U.S. labor productivity in the future.

During the last half of the twentieth​ century, the U.S. economy experienced A. an inflation rate that increased during both recessions and expansions. B. long​ recessions, interrupted by relatively short expansions. C. much more severe swings in real GDP than in the first half of the twentieth century. D. long​ expansions, interrupted by relatively short recessions.

D. long​ expansions, interrupted by relatively short recessions.

When compared to the Great​ Depression, the typical length of unemployment in the modern​ (post-Great Depression-era) U.S. economy is A. significantly longer. B. slightly longer. C. approximately the same. D. relatively brief.

D. relatively brief.

From a trough to a​ peak, the economy goes through A. the recessionary phase of the business cycle. B. falling real GDP. C. rising real​ GDP, but falling real GDP per capita. D. the expansionary phase of the business cycle.

D. the expansionary phase of the business cycle.

Capital can be differentiated between physical capital and human capital. Human capital is A. the goods manufactured to produce other goods and services. B. the new developments in machinery and software. C. the energy use to bring together the factors of production to produce goods and services. D. the knowledge and skills workers acquire from education and training or from their life experiences

D. the knowledge and skills workers acquire from education and training or from their life experiences

Potential real GDP is A. the level of GDP attained when most firms are producing at capacity and unemployment is low. B. the level of GDP attained when only some firms have excess capacity. C. the level of GDP attained when all firms have excess capacity. D. the level of GDP attained when all firms are producing at capacity. ~~~~~~~~~~~~~~~~~~~~~~~~~ Potential real GDP (grows over time, remains the same, falls over time)

D. the level of GDP attained when all firms are producing at capacity. ~~~~~~~~~~~~~~~~~~~~~~~ Grows over time

The Gross National Product​ (GNP) of the United States is equal to A. the value of the total income received by all households in the United​ States, after taxes are paid. B. the value of final goods and services produced within the United States. C. the value of the total income received by all of the residents of the United States. D. the value of final goods and services produced by U.S. factors of production.

D. the value of final goods and services produced by U.S. factors of production.

What is the relationship between the unemployment rate and enacting or increasing a minimum​ wage? When a minimum wage is enacted or increased across a​ country, the unemployment rate A. is not affected because the minimum wage does not affect firm hiring decisions. B. will increase and the impacts will be spread evenly across all groups of workers. C. will decrease because workers will have more money which will increase demand and cause firms to hire more workers. D. will increase some but the impacts will be much larger for some groups of workers.

D. will increase some but the impacts will be much larger for some groups of workers.

If a​ 3-month Treasury bill pays​ 5.5% and the change in the consumer price index​ (CPI) is​ 4.7%, what is the real interest rate​ (the true return to​ lending)? A. ​4.7% B. ​5.5% C. ​10.2% D. ​0.8%

D. ​0.8% Real interest rate = Nominal interest rate - inflation rate

When the economy reaches a trough in a business​ cycle, which of the following will​ occur? A. Income and production will​ rise, but employment will continue to fall. B. Employment​ rises, but income and production will continue to fall. C. ​Income, production, and employment will continue to fall. D. ​Income, production, and employment will begin to rise.

D. ​Income, production, and employment will begin to rise.

Economics arrives at the conclusion that economic growth will always improve economic​ well-being. Do you​ agree? A. ​No, economic growth increases​ pollution, depletes natural​ resources, and creates a new kind of health problem. B. ​No, economic growth has empowered multinational companies who often exploit workers and the environment of the host country. C. ​No, economic growth has caused global warming that creates a very dangerous world for this and future generations. D. ​Yes, economic growth increases living​ standards, improves health and​ education, and builds a​ corruption-free society.

D. ​Yes, economic growth increases living​ standards, improves health and​ education, and builds a​ corruption-free society.

In the​ U.S., gross domestic product ​(GDP) and gross national product ​(GNP) are close in value. Under what circumstances would GNP be much larger than​ GDP? A. Many U.S. citizens currently work in foreign countries while few foreign citizens currently work in the U.S. B. Few foreign citizens currently work in the U.S. and few foreign firms maintain facilities in the U.S. C. Few foreign firms maintain facilities in the U.S. while many U.S. firms are currently operating abroad. D. All of the above would push GNP above GDP.

D. All of the above would push GNP above GDP.

Why is the unemployment​ rate, as measured by the Bureau of Labor​ Statistics, an imperfect measure of the extent of joblessness in the​ economy? A. It does not account for inaccurate responses to the Current Population Survey. B. Discouraged workers are not considered unemployed. C. It fails to account for illegal activities. D. Underemployed people are considered employed. E. All of the above.

E. All of the above.

Potential GDP A. measures the maximum that a firm is capable of producing. B. increases over time as the labor force grows. C. increases over time as technological change occurs. D. All of the above. E. B and C only.

E. B and C only.

GO LOOK AT QUESTION 24 ON CH 8 HW

ITS A GDP DEFLATOR CALCULATION QUESTION

GO LOOK AT QUESTION 12 IN CH 8 HW

ITS A HUGE TABLE OF CALCULATIONS

GO LOOK AT QUESTION 19 ON CH 11 HW

In the figure to the​ right, each dot represents a country with its initial real GDP per capita and its growth rate of real GDP per capita.

During the expansion phase of the business​ cycle, production,​ employment, and income (increase, decrease, remain the same). During the recession phase of the business​ cycle, production,​ employment, and income (increase, decrease, remain the same).

Increase Decrease

GO TO QUESTION 40 ON CH 8 HW

REAL GDP CALCULATION WITH TABLE

GO TO QUESTION 39 ON CH 9 HW

REAL/NOMINAL WAGE CALCULATION Real average hourly wage Year^i = Nominal average hourly wage Year^i * 100

Think about the relationship between economic prosperity and life expectancy. The size of the health care sector in a less developed country is (larger than, smaller than) the size of the health care sector of a developed country.

Smaller than

If inflation is unexpectedly​ high, borrowers will benefit and lenders will be harmed. True or False

True

If a large amount of production within a country takes place at foreign owned​ facilities, then it is likely that the​ country's GDP will be (larger than, smaller than) GNP.

larger than