ECON 201 Exam 2

Which of the statements is the best decription of a business cycle?

Alternating periods of increasing and decreasing economic output.

The source of the _______ for loanable funds is investment.

Demand

Which transaction is not included in gross domestic product?

Francis recieves her social security check

All else equal, which hypotheical scenario exhibits a country with the most economic growth?

Froland, a country that resolves most trails and legal issues within a year.

A worker repairing VHS cassette-tape players was laid off because most of his customars have started using DVD players and streaming services. This worker is now:

Structurally unemployed

The labor force consists of:

employed workers and adults who do not have jobs but who are looking for work.

Someone who recently moved to Florida because of its warmer climate will need to spend some time looking for a new job. This is an example of:

frictional unemployment

A business that pays for its workers to attend a technical college is increasing its:

human captial

When workers lose their jobs and become officially unemployed, the number of people in the labor force:

remains constant

Suppose that Congress decided to exempt seniors from paying income taxes on labor income. What would happen to the labor force participation rate for seniors?

It would increase

Which of the following is NOT an example of the need to borrow to finance large investments?

Jamie pays for college by working two jobs on the weekends.

Which of the following would be considered unemployed?

Janice, who graduated from the university in May, is waiting for her new job to start in July.

Which of the following is considered unemployed?

John, on temporary layoff from his work, awaits recall.

Which of the situations is an example of the crowding- out effect on investment as it pertains to macroeconomics?

The government deficit is at an all-time high in the United States. As such, people begin to save more money in fear that takes will increase in the future.

A binding and effective interest rate ceiling creates _____ loanable funds.

a shortage of

Consider an ecomony that is operating at its steady state. An increase in the investment rate in this ecomony will lead to:

an increase in the growth rate of output in the short run but zero growth in output in the long run.

A set of tires installed on a vehicle produced by an automobile factory is counted as:

an intermediate good and its market price is not part of GDP.

A rural village in a developing country has an economy based on agriculture. Then the government of the country provides the village with newly developed hybrid seeds that more than double the agricultural yield per acre. This story illustrates the growth of per captia GDP in the village through which factor(s) of production?

technological knowledge

Which of the following do economists consider an investment?

the construction of a new factory

Which person cna be catergorized as a discouraged worker?

Andy Friese was formerly employed at Mama's Used Cars. He has not worked there for six months and has given up looking for work.

Many people say that if people save more, that is bad for the economy. They say that spending money on consumer goods keeps money moving through the economy. Does the Solow model say that?

No; a higher savings rate is good for the economy.

Suppose a doctor spends half of the year in the United States and the other half in Canada and works in both places. How does his production get allocated between the US and Canadian GDP?

The value

Akemi, who is a Japenese citizen, works in the United States as a computer programmer. The value of her output is included in:

U.S. GDP and Japan's GDP

If the supply loanable funds increases and the demand for the loanable funds increases at the same time, interest rates will:

increase, decrease, or remain the same

According to the Solow growth modal, which of these would not increase economic output in a developing nation?

increasing their government ownership of agricultural land

Laws the make it more difficult (and more expensive) to fire workers:

lead to higher rates of long-term unemployment.

If two countries have the same steady-state levels of output, the country that is _____ today and will _____ in per capita output.

poorer, catch up

Minimum wage laws and unions tend to:

raise wages and raise unemployment

Consider a hypotheical model for the loanable funds market. Suppose that the government decides to reduce the federal Goods and Services Tax (GST). How does this tax reduction impact investment and why? The tax reduction

reduces investment because lowering the GST reduces savings.

For most of recorded history, economic growth has been:

virtually nonexistent

Economics is characterized by many statistics and measurements. Suppose that an analyst is interested in comparing the economy of today with the economy ten years ago. Which term is least likely to be useful for this purpose?

Nominal GDP

Suppose the country of Altaria only produces one style of good, pink tutu. Last year, nominal GDP was $50,000 and this year it is $200,000. What can be definitely concluded?

None of the statements are necessarily true.

If the recent financial crisis raises awareness about the dangers of not saving, leading to an increase in overall savings rates across the country, the loanable funds market will experience an increase in the ______ loanable funds and ______ in equilibrium interest rates.

supply of; a decrease