Econ Part 4

Suppose that in a closed economy GDP is equal to 20,000, consumption equal to 15,000, government purchases equal 4,000 and taxes equal 3,000. What are private saving, public saving, and national saving?

2,000, -1,000, and 1,000, respectively.

Atlas Corporation is in sound financial condition. It sells a long-term bond. Which of the following make the interest rate on this bond lower than otherwise?

Atlas' sound finances but not the long term of the bond.

Jenna is searching for a job that suits her tastes about where to live. Mary is looking for a job that makes best use of her skills.

Jenna and Mary are both frictionally unemployed.

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

Only Amy

Which of the following is not correct?

Right-to-work laws prevent firms from hiring permanent replacements for workers who are on strike.

Which of the following is an example of an efficiency wage?

an above-equilibrium wage offered by a firm to attract a more talented pool of job applicants

Norberto is opening a bicycle shop, and his monthly expenditures to get the shop up and running exceed his monthly income. Norberto is best described as a

borrower or as a demander of funds.

When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures

capital investment

A person who is not employed and claims to be trying hard to find a job but really is not trying hard to find a job is

counted as unemployed but should be counted as out of the labor force.

Higher education subsidies in the form of the federal government's student loan program have the potential to

create a credit bubble and debt crisis.

The deviation of unemployment from its natural rate is called

cynical unemployment

Duane owns his own real estate company. The Bureau of Labor Statistics counts Duane as

employed and in the labor force.

Compared to bondholders, stockholders

face higher risk and have the potential for higher returns.

Financial intermediaries are

financial institutions through which savers can indirectly provide funds to borrowers.

Workers searching for jobs that best suit them is most closely associated with

frictional unemployment

A mutual fund

is an institution that sells shares to the public and uses the proceeds to buy a selection of various types of stocks, bonds, or both stocks and bonds.

Frictional unemployment results from

job searching. It is often thought to explain relatively short spells of unemployment.

If outsiders had more say in union contracts then it is likely that union wages would be

lower so unemployment would be lower.

The primary economic function of the financial system is to

match one person's saving with another person's investment.

In the absence of right-to-work laws, workers

might be required to join the union if they worked for a unionized firm.

Caroline is the owner of a hair-styling salon and spa. She decides to raise the wages of her workers even though she faces an excess supply of labor. Her decision

might increase profits if it attracts a better pool of workers to apply for jobs at her salon. will increase the excess supply of labor. may increase the quality of her work force.

When a country saves a larger portion of its GDP than it did before, it will have

more capital and higher productivity.

Christopher is an unpaid, stay-at-home father who works as a volunteer at the local Habitat for Humanity chapter. Currently, Christopher is not looking for a paid job. The Bureau of Labor Statistics counts Christopher as

neither in the labor force nor unemployed.

Suppose that medical technicians and nurses' aides are not unionized. If the nurses' aides unionize, then the wages of

nurses' aides will rise, and the wages of medical technicians will fall.

Jim buys a $1000 bond from ABC Company. ABC Company uses the $1000 to purchase a new piece of machinery. Whose spending would be an act of investment in the language of macroeconomics?

only ABCs corporation

A high demand for a company's stock is an indication that

people are optimistic about the company's future.

An increase in the government's budget surplus means

public saving is greater than $0 and increasing.

If the minimum wage were currently above the equilibrium wage, then a decrease in the minimum wage that kept it above the equilibrium wage would

reduce the surplus of labor.

Consider two labor markets in which jobs are equally attractive in all respects other than the wage rate. All workers are equally able to do either job. Initially, both labor markets are perfectly competitive. If a union organizes workers in one of the markets, then the wage rates will tend to

rise for the union jobs and fall for the nonunion jobs.

Suppose that college professors at public universities are unionized. If public university college professors change their minds and vote not to be unionized, the quantity of public university college professors demanded will

rise. The supply of workers in other similar professions will fall.

As an alternative to selling shares of stock as a means of raising funds, a large company could, instead,

sell bonds

Workers waiting for jobs to open up is most closely associated with

structural unemployment.

The introduction of a union into an industry creates a

surplus of labor and so raises unemployment.

Minimum wages create unemployment in markets where they create a

surplus of labor. Minimum wage laws are not the predominant reason for unemployment in the U.S.

In a closed economy, public saving is the amount of

tax revenue that the government has left after paying for its spending.

Net exports must equal zero for any economy

that is closed, for which Y=C+I+G, and for which S=Y-C-G

If people expect future earnings of Galt Corporation to be high relative to current earnings, then

the P/E ratio of its stock will be high. A P/E ratio of 8 is relatively low.

Ariana is the CEO of a corporation that hires nonunion labor. According to the theory of efficiency wages, if she decides to pay her workers more than the competitive equilibrium wage, then

the profits of her firm might increase.

Most entrepreneurs do not have enough money of their own to start their businesses. When they acquire the necessary funds from someone else,

their investments are being financed by someone else's saving.

To maintain their standard of living, most people rely on

their labor earnings.

It is claimed that a secondary advantage of mutual funds is that

they give ordinary people access to the skills of professional money managers.

Other things the same, which bond would you expect to pay the lowest interest rate?

a bond issued by a state with a very good credit rating

At the broadest level, the financial system moves the economy's scarce resources from

savers to borrowers.

Which of the following is not correct?

Unions play a much larger role in the U.S. labor market now than they did in the past.

Minimum-wage laws, unions, and efficiency wages contribute to

both structural unemployment and the natural rate of unemployment.

In the long run the unemployment rate equals

the natural rate of unemployment.

For a closed economy, GDP is $18 trillion, consumption is $13 trillion, taxes are $2 trillion and the government runs a deficit of $1 trillion. What are private saving and national saving?

$3 trillion and $2 trillion, respectively

In a small closed economy investment is $50 billion and private saving is $45 billion. What are public saving and national saving?

$5 billion and $50 billion

A particular stock pays an annual dividend of $2 per share and the annual dividend yield is 2.5 percent. The price of a share of this stock is

$80