Macro Econ Exam 2 Review

Labor force equation

# of employed + # of unemployed

Sarah is a recent economics graduate who is entering a difficult labor market, owing to a continued recession. She is continuing to look for work but is finding it difficult. Sarah is facing...?

Cyclical unemployment

Equality of Opportunity vs. Equality of Outcome

Equality of Opportunity: We all start at the same point, but differences in outcome aren't necessarily unjust—they could reflect harder or better work. Equality of Outcome: Anything other than perfect equality shows discrimination, and we all ought to have the same amount (i.e. outcome.)

Hamid has just graduated as a lawyer from an esteemed law school. He is confident about getting a job and has already refused a few lower-paid jobs. Hamid is facing...?

Frictional unemployment

Unemployment

People who want to work but cannot find a job

Craig lost his job several months ago. He is having a hard time finding a job that pays him more than unemployment insurance does. Craig is facing...?

Structural unemployment

Eric is an experienced project manager who lost his job at a tech start-up because the company's product failed to become popular. He is confident he can get a new job and has already rejected a number of offers. Eric is facing...?

company in closing

James is an architect who has bee laid off owing to a slump in the demand for property. He feels he will have to wait until the economy picks up before he can get a new job. James is facing...?

cyclical unemployment

Labor force participation rate equation

labor force/adult population x 100

Which statement describes a poverty line based on absolute poverty? a. It is the income level that separates the bottom and second quintiles in the distribution of income b. Household income is worth less than a third of the average household income in the nation c. Income below $5 per day per person in the household d. It is an income that provides less than the average household is able to buy

c. Income is below $5 per day per person in the household

Unemployment rate equation

#unemployed/labor force x 100

Frictional unemployment

A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.

Working age population

The total number of people aged 16 years and over who are not in jail, hospital, or some other form of institutional care or in the U.S. Armed Forces.

Seasonal Unemployment

Unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season

Structural Unemployment

Unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one

Cyclical Unemployment

Unemployment that rises during economic downturns and falls when the economy improves

It is graduation time in a small island nation. There are a total number of 13,728 graduating from college and are actively looking for work. The college graduates are not included in the current employment measures for the country, which are given in the table. Answer the related questions taking into account the college graduates and the information in the table. Number of employed = 342,425 Number of unemployed = 15,483 Total population over age 16 = 415,999 a. What is the size of the labor force? b. How many people are now out of the labor force? c. What is the unemployment rate? d. What is the total labor force participation rate?

a. 29211+342425 = 371636 b. c. 29211/371636 = 7.86% d. 371636/415999 x 100 =89/84%

The aggregate production function Y=f(L, H, K) shows that economic growth can occur if: a. more labor is employed b. Labor productivity fails c. Human Capital is reduced d. Capitol stock stays constant

a. More labor is employed

A constant return to scale function means that if all inputs that if all inputs are increased by 75%, this should lead to output...? a. Rising by 75% b. Rising by more than 75% c. Falling by less than 75% d. Falling by more than 75%

a. Rising by 75%

A company pays all employees the same salary, regardless of their position, skills, or performance. This way, all employees achieve the same level of income, but their individual contributions and efforts are not recognized or rewarded: a. Equality of opportunity b. Equality of outcomes

b. Equality of outcomes

Which statement describes a poverty line based on Absolute Poverty? a. It is an income level where you can't eat at mcdonalds once a week b. Income is below $2 per person per day in the household c. It is an income that provides less than the average household can buy d. It is an income level of beggars which is not stable

b. Income is below $2 per person per day in the household

A decreasing return to scale is one where increasing all inputs by certain proportions leads to outputs rising by...? a. Exactly double the proportion b. The same proportion c. A smaller proportion d. A larger proportion

c. A smaller proportion

The moral of the Solow growth model is that: a. Human capital growth does not lead to economic growth b. Capital accumulation is the key to sustained growth c. Technological advances cannot sustain economic growth d. Capital accumulation alone cannot lead to sustainable economic growth

d. Capitol accumulation alone cannot lead to sustainable economic growth

If a bakery buys a second oven, hires a second baker, buys double the number of ingredients, doubles the size of the bakery, and then produces double the number of cakes, then the bakery is experiencing:

d. Increasing returns to scale