ECON Yang 2023 Final

Based on the labor market diagram below, if the minimum wage is increased from $10 to $12 per hour, the numbered of unemployed workers will increase by ________ workers. A) 5 B) 8 C) 13 D) 15

C

13) If workers and employers agree to a three-year wage contract under the expectation of 2.5 percent inflation, and inflation turns out to be 10.4 percent, then A: workers lose and employers gain. B: workers gain and employers lose. C: workers gain and employers gain. D: workers lose and employers lose.

A

14) Economists refer to the talents, training, and education of workers as: A) human capital. B) physical capital. C) average labor productivity. D) labor supply.

A

A flow is a measure defined: A) per unit of time. B) at a point in time. C) in real terms. D) in nominal terms.

A

Among economists today, the most widely accepted cause of the Great Depression is: A) poor economic policymaking. B) wild stock market speculation on Wall Street. C) globalization. D) Adolf Hitler's election as Chancellor of Germany.

A

Based on the information in the table, what is the size of the population 16 and older? Size of Labor Force 836,000 Participation Rate 75% Employed Workers 710,000 A: 1,114,667 B: 946,667 C: 1,546,000 D: 1,209,667

A

Capital goods are treated as ________ goods and, therefore, are ________ GDP. A) final; included in B) final; excluded from C) intermediate; included in D) intermediate; excluded from

A

If bank reserves are 500, the public holds 300 in currency, and the desired reserve-deposit ratio is 0.1, the deposits are ______ and the money supply is _____. a. $5,000; $5,300 b. $27,000; $30,000 c. $4,000, $4,000 d. $4,000; $16,000

A

If the nominal interest rate is below the equilibrium value, then the quantity demanded of money is ________ than the quantity supplied of money, bond prices will ________, and the nominal interest rate will ________. a) greater; fall; increase b) greater; fall; decrease c) greater; rise; increase d) less; fall; increase

A

If there is 4 percent frictional unemployment, 2 percent structural unemployment, and the actual rate of unemployment equals 9 percent, then the cyclical unemployment must be a. 3 percent. b. 5 percent. c. 4 percent. d. 1 percent.

A

If total output increases from $1,000 to $3,000 as population increases from 100 to 200, then output per person A: increases, but by less than 100 percent. B: doubles. C: triples. D: remains constant.

A

In Barbados total output is $8,000,000,000 population equals 150,000 people, and of these, 100,000 are employed workers. Output per person in Barbados equals _______ and average labor productivity equals ______. A) 53,333; 80,000. B) 80,000; 53,333. C) 63,333; 82,000 D) 82,000; 63,333.

A

Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point _____ and eventually to a long-run equilibrium at point _____, if left to self-correcting tendencies. a. D; B b. D; C c. B; C d. A; B

A

The income-expenditure multiplier leads to greater than one-for-one changes in output when autonomous spending changes because: a) the direct changes in spending change the income of producers which leads to additional changes in spending. b) multiple deposits are generated when new reserves are produced through fractional reserve banking. c) autonomous spending supports more output than induced spending. d) planned changes in inventories signal producers to adjust the level of output.

A

Where Y is GDP, C is consumption, I is investment, (G ) is government spending, (T ) is net taxes, and there is no international trade, public saving equals: A) T - G. B) Y - T - C. C) Y + T - G. D) Y - C - T.

A

Which of the following is an example of the life-cycle motive for saving? A) Pat puts $400 per month in his 401(k) retirement account. B) Jordan sets aside $200 per month in case she has to pay for a new roof for her house. C) Gerry and Terry put $2,000,000 in a trust fund that will go to their children when they die. D) Chris keeps $15,000 in a money market account to pay expenses in case he loses his job.

A

Which of the following transactions would be included in the GDP of the United States? A: Boeing builds a plane in Seattle that is sold to Air Canada. B: General Motors produces a car in Germany that is sold in Michigan. C: Nestle produces a candy bar in Switzerland that is sold in San Francisco. D: Planet Hollywood serves customers in a restaurant in Hong Kong.

A

"The plan to create private accounts in Social Security will reduce benefits for some workers," is an example of a ________ statement, while "Social Security will be better if the private accounts are allowed" is an example of a ________ statement. A) monetary policy; fiscal policy B) positive; normative C) structural policy; fiscal policy D) normative; positive

B

"U.S. exports will increase as a result of joined CAFTA," is an example of a ______ statement, while "The U.S. should join CAFTA," is an example of a _____ statement. A: monetary policy; fiscal policy B: positive; normative C: structural policy; fiscal policy D: normative; positive

B

A fiscal policy action to close a recessionary gap is to? a. increase taxes. b. increase transfer payments. c. decrease government purchases. d. decrease the real interest rate.

B

An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output. a) increase; increase b) increase; decrease c) decrease; increase d) decrease; decrease

B

If policymakers deem inflation as being too high, then the policy response should be monetary _____, which shifts aggregate demand _____. a. tightening; right b. tightening; left c. easing; right d. easing; a left

B

If short-run equilibrium output equals 30,000 and potential output (Y*) equals 25,000, then this economy has a(n) ________ gap that can be closed by ________. a) recessionary; increasing taxes b) expansionary; increasing taxes c) expansionary; increasing government purchases d) recessionary; increasing government purchases

B

If the CPI equaled 1.43 in 2008 and 1.56 in 2009, then between 2008 and 2009, inflation was ________ percent. A) 0.13. B) 9.09. C) 8.33. D) 8.79.

B

If the Fed wishes to increase nominal interest rates, it must engage in an open market ________ of bonds that ________ the money supply. a) sale; increases b) sale; decreases c) sale; does not change d) purchase; increases

B

In an open economy, a decrease in capital inflows ______ the equilibrium domestic real interest rate and ______ the quantity of domestic investment. a. increases; increases b. increases; decreases c. decreases; decreases d. decreases; increases

B

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: What is the value added of Fulton Family Farm? Revenues of FFM = $0.50 Cost of Purchased Inputs for FFM = 0 A) $0.00 B) $0.50 C) $1.50 D) $2.50

B

The data below describe the economy of Econland: Public saving in Econland equals: Business and household saving: 58 Gov transfers and int payments: 12 Gov purchases of goods & services: 25 Tax collection: 42 A) -5 B) 5 C) 16 D) 17

B

The increase in wage inequality resulting from globalization can be reversed through: A) revoking the principle of comparative advantage. B) increases in worker mobility. C) decreases in worker mobility. D) making markets more competitive.

B

The introduction of word processing software that increases the demand for workers with computer skills relative to those without such skills is an example of: A) increasing reservation prices. B) skill-biased technological change. C) the diminishing marginal product of labor. D) globalization.

B

A decision by the Federal Reserve to raise interest rates is an example of ________ policy. A) aggregation B) fiscal C) monetary D) structural

C

Assume an economy produces only footballs and baseballs and the base year is 2016. Given the data in the table above, what is the value of real GDP in 2017? A) $9,000 B) $10,000 C) $12,000 D) $12,500

C

Based on the information in the table, what is the unemployment rate? 16 and older: 1,300,000 participation rate: 72% employed workers: 810,000 A: 28.0 percent B: 37.7 percent C: 13.5 percent D: 6.2 percent

C

Han pays $10,000 for a newly issued two-year government bond with a $10,000 face value and a 7 percent coupon rate. One year later, after receiving the first coupon payment, Han sells the bond. If the current one-year interest rate on government bonds is 6 percent, then the price Han receives is a. $10,000. b. $700. c. greater than $10,000. d. less than $10,000.

C

If all prices, including the price of a gallon of gasoline at the pump increased by 8 percent. Then nominal price of gasoline ________, and the relative price of gasoline ________. A) increased; increased B) increased; decreased C) increased; did not change D) decreased; increased

C

If the marginal propensity to consume is 0.7, then a $300 increase in disposable income leads to a ______ increase in consumption a. $25.00 b. $250 c. $210 d. $160

C

Jim Brown would like to work, but has not looked for work in the past four weeks because he does not believe any jobs are available. In the official employment statistics, Jim is classified as: A) employed. B) unemployed. C) out of the labor force. D) underemployed.

C

One shortcoming of real GDP as an indicator of society's social well-being is that it fails to take into account the A: growth in productivity. B: increase in the quantity of goods. C: non-market production. D: change in the price level.

C

Starting from a long-run equilibrium, an increase in potential output leads to ________ gap in the short run and to ________ rates of inflation in the long run. a) an expansionary; higher b) an expansionary; lower c) a recessionary; lower d) a recessionary; higher

C

Suppose that the total expenditures for a typical household in 2015 equaled $2,500 per month, while the cost of purchasing exactly the same items in 2017 was $3,000. If 2015 is the base year, the CPI for 2017 equals: A) 0.83 B) 1.00 C) 1.20 D) 1.25

C

Taylor has the following assets and liabilities: 2 cars: 15K house: 400K mortgage: 300K cash: 1K car loans: 5K checking account balance: 3K credit card balance: 3K A: $105,000 B: $107,000 C: $111,000 D: $419,000

C

The interest rate the Federal Reserve charges commercial banks to borrow reserves is called the ________ rate. a) Fed funds b) prime c) discount d) Federal

C

The table below gives the quantities and prices for 2005 and 2015 for an economy that produces just two goods: sailboats and coconuts. For this economy that produces just sailboats and coconuts, and with 2005 as the base year, real GDP was approximately ________ times larger in 2015 than it was in 2005. A) 1.34 B) 1.65 C) 1.77 D) 2.19

C

When an American buys stock in a Japanese company, from the perspective of the United States this is a(n) a. import. b. export. c. capital outflow. d. capital inflow.

C

When the Federal Reserve reduces its target rate of inflation, it will set a _____ real interest rate at every inflation rate and the aggregate demand curve will _____. a) higher; shift to the right b) lower; shift to the right c) higher; shift to the left d) lower; shift to the left

C

Which of the following would increase the government purchases component of U.S. GDP? A) The U.S. federal government pays $3 billion in pensions to government workers. B) The U.S. federal government pays $3 billion in interest on the national debt. C) The U.S. federal government pays $3 billion in salaries to soldiers in the military. D) The U.S. federal government pays $3 billion in interest to foreign holders of U.S. government bonds.

C

An increase in interest rates by the Fed based on a given and unchanged policy reaction function represents a _____ the aggregate demand curve, and higher interest rates resulting from an upward shift in the Fed's policy reaction function represents a _____ the aggregate demand curve. a. shift left of; movement up b. shift left of; shift right of c. movement up; movement down d. movement down; shift left of

D

Bank C promises to pay a compound annual interest rate of 6 percent, while Bank S pays a 10 percent simple annual interest rate on deposits. If you deposit $1,000 in each bank, after 10 years, your deposit in Bank C equals ________, while your deposit in Bank S equals ________. A) $1,060; $1,100 B) $1,600; $2,000 C) $1,600; $2,594 D) $1,791; $2,000

D

Based on the diagram, if potential output equals 8,000 and the real interest rate is 2 percent, then there is ________ gap and the Fed must ________ the real interest rate so that output will equal potential output. a) a recessionary; raise b) an expansionary; reduce c) no output; not change d) an expansionary; raise

D

If 30 percent of the population in a country is employed and average labor productivity equals $20,000, then real GDP per person equals a. $1,500. b. $3,000. c. $5,000. d. $6,000.

D

In an open economy with a given level of real interest rates and risk, an increase in real interest rates abroad will ______ domestic net capital inflows and ______ the equilibrium domestic real interest rate.. a. increase; increase b. decrease; decrease c. increase; decrease d. decrease; increase

D

In the short-run Keynesian model where the marginal propensity to consume is 0.75, to offset an expansionary gap resulting from a $1 million increase in autonomous expenditure, government spending must be __________ by $___________. a) increased; 1 million b) increased; 1.33 million c) decreased; 1.33 million. d) decreased; 1 million.

D

The country of Southland produced $2,000 billion of output in one year. The population of Southland was 100 million, of whom 60 million were employed. What was average labor productivity in Southland? A: $20 B: $33 C: $20,000 D: $33,333

D

The demand for labor depends on ______ and _______. A: the supply of labor; the marginal product of labor B: the supply of labor; the price of output produced C: the rate of price inflation; the price of the output produced D: the marginal product of labor; the price of output produced

D

The following table provides information about production at the XYZ-TV Company. How many workers will XYZ-TV Company hire if the going wage for TV production workers is $28,000? (look at value of marginal product) A) 1 B) 2 C) 3 D) 4

D

To close a recessionary gap, the Fed ______ interest rates which ______ planned aggregate spending and ______ short-run equilibrium output. a. raises; increases; increases b. raises; decreases; increases c. reduces; decreases; decreases d. reduces; increases; increases

D

Two groups of workers not counted as unemployed in the official unemployment statistics are ______ workers. A: chronically unemployed and short-term unemployed B: chronically unemployed and discouraged C: chronically unemployed and involuntary part-time D: discouraged and involuntary part-time

D