Economics test 3

Every adult who was not employed during the previous four weeks is included in the Bureau of Labor Statistics' "unemployed" category.

false

Government purchases include spending on goods and services by...

federal, state, and local governments.

Financial intermediaries are...

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

Institutions that help to match one person's saving with another person's investment are collectively called the...

financial system.

The CPI and the GDP deflator...

generally move together.

Over the past several decades, the difference between the labor-force participation rates of men and women in the U.S. has...

gradually decreased.

In the early 1900s, Henry Ford introduced a...

high-wage policy, and this policy produced many of the effects predicted by efficiency-wage theory.

Countries with low GDP per person tend to have...

higher rates of infant mortality.

If the price of Italian shoes imported into the United States increases, then...

the consumer price index will increase, but the GDP deflator will not increase.

The term inflation is used to describe a situation in which...

the overall level of price increases in the economy.

Collective bargaining refers to...

the process by which unions and firms agree on the terms of employment

National saving is...

the total income in the economy that remains after paying for consumption and government purchases.

Human capital is the term economists use to refer to the knowledge and skills that workers acquire through education, training, and experience.

true

International data on real GDP per person gives us a sense of how standards of living vary across countries.

true

It is possible for a country without a lot of domestic natural resources to have a high standard of living.

true

When a country keeps its workers as fully employed as possible, it achieves a higher level of GDP than if many of its workers were idle.

true

The consumer price index is used to...

turn dollar figures into meaningful measures of purchasing power.

Indexation refers to...

using a law or contract to automatically correct a dollar amount for the effects of inflation.

GDP is defined as the...

value of all final goods and services produced within a country in a given period of time.

Cyclical unemployment refers to...

year-to-year fluctuations of unemployment around its natural rate

Natalia worked part-time for her mother's business without pay. Tabitha was absent from work because she had strep throat. Who is counted as "employed" by the Bureau of Labor Statistics?

Both Natalia and Tabitha

Crowding out occurs when investment declines because a budget...

deficit makes interest rates rise.

Which of the following demonstrates human capital and physical capital in that order?

For a restaurant: the chefs' knowledge about preparing food and the equipment in the kitchen.

Which of the following is not correct?

The unemployment rate occasionally falls to zero.

Who of the following is not included in the Bureau of Labor Statistics' "employed" category?

Those waiting to be recalled to a job from which they had been laid off

An organization that tries to encourage the flow of investment from advanced countries to poor countries is the...

World Bank

Net exports equal...

Y − (C + I + G)

When a minimum-wage law forces the wage to remain above the equilibrium level, the result is...

a surplus of labor and a shortage of jobs.

In a simple circular-flow diagram, total income and total expenditure are...

always equal because every transaction has a buyer and a seller.

Most goods and services produced at home...

and most goods and services produced illegally are excluded from GDP

For the purpose of calculating GDP, investment is spending on...

capital equipment, inventories, and structures, including household purchases of new housing.

A budget deficit...

changes the supply of loanable funds.

If the natural rate of unemployment is 4.7 percent and the actual rate of unemployment is 5.5 percent, then by definition there is...

cyclical unemployment amounting to 0.8 percent of the labor force.

Teenagers have more frequent unemployment spells and spend more time searching for jobs. Other thing the same, this means that teenagers have a...

higher unemployment rate. If a larger portion of the adult population were teenagers, the natural rate of unemployment would be higher.

Minimum-wage laws are least likely to affect the wages paid to...

highly-educated workers.

The nominal interest rate tells you...

how fast the number of dollars in your bank account rises over time.

The real interest rate tells you

how fast the purchasing power of your bank account rises over time.

In the CPI, goods and services are weighted according to...

how much consumers buy of each good or service.

The source of the supply of loanable funds...

is saving and the source of demand for loanable funds is investment.

The catch-up effect refers to the idea that

it is easier for a country to grow fast and so catch-up if it starts out relatively poor.

The theory of efficiency wages explains why...

it may be in the best interest of firms to offer wages that are above the equilibrium level.

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with...

longer life expectancy and a higher percentage of the population that is literate.

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,

market prices.

Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of productivity...

more in the short run than in the long run.

The labor force equals the...

number of people employed plus the number of people unemployed

One variable responsible for most significant explanation of variations in living standards around the world is...

productivity.

In order to promote growth in living standards, policymakers must...

protect property rights and maintain political stability.

A recession has traditionally been defined as a period during which...

real GDP declines for two consecutive quarters.

Suppose that a new government is elected in Eurnesia. The new government takes steps toward improving the court system and reducing government corruption. The citizens of Eurnesia find these efforts credible and outsiders believe these changes will be effective and long lasting. These changes will probably raise

real GDP per person and productivity in Eurnesia.

Given that Sarah's income exceeds her expenditures, Sarah is best described as a...

saver or as a supplier of funds.

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

savers to borrowers.

If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied, there is a...

shortage and the interest rate is below the equilibrium level.

Social Security payments are indexed for inflation using...

the CPI.

Two common measures of the overall level of prices are...

the GDP deflator and the consumer price index.

We associate the term debt finance with...

the bond market, and we associate the term equity finance with the stock market.