Macro Exam #2

A student who just graduated from college but has not found a job would most likely be A) frictionally unemployed. B) structurally unemployed. C) cyclically unemployed. D) seasonally unemployed.

A

Calculate the private saving of this economy? household income : $250 transfer payments: $75 corporate tax: $50 hopusehold consumption $100 tax paid by household$ 55 a. $170 b. $75 c. $50 d. $105

A

During a business cycle expansion, total production ________ and total employment ________. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases

A

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.

A

How do we calculate Real GDP per capita? a. Real GDP divided by population b. Real GDP divided population x 100 c. Real GDP multiply total population d. Real GDP multiply by labor force

A

If the number employed is 190 million, the working-age population is 230 million, and the number unemployed is 10 million, then the unemployment rate is A) 5%. B) 5.2%. C) 8%. D) 10%. E) 50%.

A

If the working-age population is 20 million and labor force is 13 million, the labor force participation rate is A) 65 percent. B) 35 percent. C) 153 percent. D) 60 percent.

A

In the circular flow model, the value of total income for an economy ________ the value of total production. A) equals B) is greater than C) is less than D) may be greater than or less than

A

In the circular flow model, the value of total production for an economy ________ the value of total expenditures on final goods and services. A) equals B) is greater than C) is less than D) may be greater than or less than

A

Some countries have larger underground economies than do other​ countries, because A. of government policies that are retarding economic growth. B. of low tax rates and tax regulations that prevail in these nations. C. the informal sector can produce much more than the formal sector. D. of government policies that are accelerating economic growth.

A

Structural unemployment is the result of A) a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. B) the search process of matching workers with jobs. C) the ups and downs in inflation. D) a slowdown in the economy.

A

The "underground economy" is also referred to as A) the informal sector. B) the formal sector. C) the halfway economy. D) the net domestic product economy.

A

The formula for calculating the CPI is A) (Expenditures in the current year/Expenditures in the base year) × 100. B) (Expenditures in the current year × Expenditures in the base year)/100. C) (Expenditures in the base year/Expenditures in the current year). D) (Expenditures in the base year × 100)/(Expenditures in the current year).

A

The​ short-term unemployment that arises from the process of matching workers with jobs is called A.frictional unemployment. B.seasonal unemployment. C.structural unemployment. D.cyclical unemployment.

A

To examine how the total production of an economy has changed over time, it would be better to examine A) real GDP. B) nominal GDP. C) GDP at current prices. D) the GDP deflator.

A

What are the three Key Services of the Financial System? a. Risk sharing, liquidity, information b. dividends, interest, earnings c. saving, loans, borrowing d. jobs, consumption, financing

A

What are the three main factors affecting labor productivity growth? a. Property rights, Capital, Technological change b. growth rate, long run, cycle c. per capita, average, recession d. Nobel prize, potential, prosperity

A

What is the largest component of spending in the United States? A) consumption spending B) investment spending C) government purchases D) net investment spending

A

Which of the following terms refers to a flow of funds from savers to firms through financial​ markets? A. direct finance B. business finance C. indirect finance D. financial engineering

A

47) Monthly expenditures for a family of 4 in 2017 averaged $1,400. In 2018, the cost of the same purchases was $1,500. If 2017 is the base year, what was the CPI in 2018? A) 110 B) 107 C) 100 D) 93

B

A..... is a financial security representing partial ownership of a firm. While a ..... is a financial security promising to repay a fixed amount of funds. a. saving; loan b. stock; bond c. bank; dividends d. pension funds; insurance

B

Calculate the public saving of the economy Total taxes collected $250 Household consumption $50 Transfer payments made $175 Government purchases $200 a. $75 b. - $125 c. -$120 d. $55

B

Frictional unemployment is the result of A) a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. B) the process of matching workers with jobs. C) the ups and downs in inflation. D) a slowdown in the economy.

B

GDP is not a perfect measure of well-being because A) the value of leisure is included in GDP. B) GDP is not adjusted for pollution. C) GDP is adjusted for changes in crime rates. D) GDP is adjusted for increases in drug addiction.

B

Gross domestic product in the economy is measured by the A) total number of goods and services produced in the economy. B) dollar value of all final goods and services produced in the economy. C) total number of goods produced in the economy. D) total number of services produced in the economy.

B

If Samantha quits her job voluntarily and actively searches for other work, then she is considered A) structurally unemployed. B) frictionally unemployed. C) cyclically unemployed. D) not to be unemployed.

B

If real GDP grows by 3% in 2014, 3.2% in 2017, and 2.5% in 2018, what is the average annual growth rate of real GDP? a. 2.6% b. 2.9% c. 3.1% d. 4.2%

B

In 2016, Ford Motor Company's sales were rising. These events were caused by A) an economic recession. B) an economic expansion. C) an increase in advertising. D) improving quality of service.

B

In the circular flow diagram, ________ supply the factors of production, and ________ goods and services. A) households; sell B) households; buy C) firms; sell D) firms; buy

B

Labor productivity refers to a. the quantity of labor in the U.S. b. the quantity of goods and services that can be produced by one worker or by one hour of work. c. the quantity of unemployed labor in U.S. d. the lack of capital

B

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.

B

The measure of production that values production using current prices is called A) value-added GDP. B) nominal GDP. C) real GDP. D) underground GDP.

B

The most widely used measure of inflation is based on which of the following price indices? A) the producer price index B) the consumer price index C) the GDP deflator D) the wholesale price index

B

The natural rate of unemployment is the amount of unemployment A) associated with the business cycle. B) equal to frictional plus structural unemployment. C) that exists when the economy goes into recession. D) that exists when the economy is in an expansion.

B

The unemployment rate equals the number of unemployed divided by the ________, all times 100. A) number of employed B) labor force C) working-age population D) total population

B

To calculate GDP by the expenditure method, one must add A) wages, rents, interest, and profits. B) consumption spending, investment spending, government purchases, and net exports. C) consumption spending, investment spending, government purchases, and exports. D) labor, natural resources, entrepreneurship, and capital.

B

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.

B

We say that the economy is at full employment if the unemployment rate is equal to A) zero. B) the natural rate of unemployment. C) the amount of cyclical unemployment. D) the sum of frictional and cyclical unemployment. E) the sum of structural and cyclical unemployment.

B

What are the four categories of​ income? A.​ Labor, Capital, Natural​ Resources, and Entrepreneurship. B. ​Wages, Interest,​ Rent, and Profit. C. ​Consumption, Investment, Government​ Purchases, and Net Exports. D. ​Wages, Salaries,​ Interest, and Dividends.

B

What do we mean by the separation of ownership from control in large​ corporations? A. Shareholders own the​ corporation, but it is controlled by the government. B. Shareholders own the​ corporation, but it is controlled by managers. C. Shareholders control the​ corporation, but it is owned by managers. D. Shareholders control the​ corporation, but it is owned by the government and by taxpayers.

B

Which of the following policies would reduce structural unemployment? A) an increase in the minimum wage B) a job retraining program C) implementing an unemployment insurance policy D) building an online job database that helps workers find jobs

B

A bond represents A. The earning of the company B. Part ownership of the company C A loan to the company D. A type of technology

C

During the Great Depression, cyclical unemployment increased as the recession continued. This increase in cyclical unemployment A) increased the natural rate of unemployment. B) decreased the natural rate of unemployment. C) had no effect on the natural rate of unemployment. D) could have increased or decreased the natural rate of unemployment.

C

Emma is a road construction worker. During the winter months, Emma finds it more difficult to get work. The unemployment Emma experiences in the winter is A) structural. B) cyclical. C) seasonal. D) functional.

C

If the GDP deflator is less than 100, then for that year, nominal GDP ________ real GDP. A) equals B) is greater than C) is less than D) may be greater than or less than

C

If you have trouble finding a job because of a slowdown in the overall economy, we would say that you are A) frictionally unemployed. B) structurally unemployed. C) cyclically unemployed. D) seasonally unemployed.

C

In 2016, Ford's sales were rising, but in early 2017, Ford's sales declined. Ford and the U.S. automobile industry were experiencing the effects of A) inflation. B) the underground economy. C) the business cycle. D) depreciation.

C

Labor unions cause unemployment because the union contract wage is set A) below the market wage, causing a shortage of labor. B) below the market wage, causing a surplus of labor. C) above the market wage, causing a surplus of labor. D) above the market wage, causing a shortage of labor.

C

Legalizing all forms of illegal activities A) reduces GDP and reduces the size of the underground economy. B) reduces GDP and increases the size of the underground economy. C) increases GDP and reduces the size of the underground economy. D) increases GDP and increases the size of the underground economy.

C

Since 1948, the labor force participation rate for adult men has ________ and for adult women has ________. A) increased; increased B) increased; decreased C) decreased; increased D) decreased; decreased

C

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as A) employed. B) unemployed. C) not in the labor force. D) not in the working-age population.

C

Structural unemployment is the result of A) voluntary job quitting by workers. B) changing labor needs by firms during the year. C) technology changes or foreign competition. D) changes in the family structure. E) downturns in the business cycle.

C

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100. A) CPI; real GDP; nominal GDP B) GDP deflator; real GDP; nominal GDP C) GDP deflator; nominal GDP; real GDP D) PPI; nominal GDP; real GDP E) PPI; real GDP; nominal GDP

C

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector A) produce goods and services no one wants. B) sell their goods and services to citizens in other countries. C) do not pay taxes to the government. D) employ illegal immigrants from other countries.

C

The labor force equals the number of people A) employed. B) unemployed. C) employed plus unemployed. D) in the working-age population.

C

The producer price index measures the prices that firms A) pay for imported natural resources that go into the production process. B) receive for the goods and services they export. C) receive for the goods and services they use at all stages of production. D) pay for labor, whether or not the labor is foreign or domestic.

C

The underground economy can be described as A) production of intermediate goods and services. B) economic production that includes mining. C) economic activity that is hidden from the government to avoid taxes or because the activity is illegal. D) production of infrastructure that spurs growth in the rest of the economy.

C

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called A.frictional unemployment. B.seasonal unemployment. C.structural unemployment. D.cyclical unemployment.

C

Unemployment that results because the number of jobs available in some labor markets may be insufficient to give a job to everyone who wants one is called A. the natural rate of unemployment. B. cyclical unemployment. C. structural unemployment. D. frictional unemployment.

C

What is the average annual real GDP growth rate for U.S. based of the following information? In 2009, real GDP growth was -1.4% In 2010, real GDP growth was 2.6% In 2011, real GDP growth was 1.6% In 2012, real GDP growth was 2.3% a. 2.20% b. 1.82% c. 1.27% d. -1.25%

C

Which of the following equations correctly measures GDP in an economy? A) GDP = C + I + G + X B) GDP = C + net I + G + NX C) GDP = C + I + G + NX D) GDP = C + G + I - taxes

C

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study? A) Avocado prices rise due to a late frost in California. B) The United Auto Workers sign a contract raising wages and benefits 7% over the next 3 years. C) Real GDP grows by 2.3% in the second quarter. D) Airlines raise ticket prices in response to rising fuel costs.

C

Which of the following is not directly counted in GDP? A) investment expenditures B) government purchases C) intermediate goods D) consumer goods

C

Why is GDP an imperfect measurement of total production in the​ economy? A. The BEA does not include the value of new houses in GDP. B. GDP measures total income paid to the factors of​ production, not production. C. GDP does not include household production or production from the underground economy. D. The official measure of GDP does not include intermediate goods and services.

C

Workers who lose their jobs because of a recession are experiencing A. structural unemployment. B. seasonal unemployment. C. cyclical unemployment. D. frictional unemployment.

C

A firm's A. implicit cost is its monetary cost whereas its explicit cost is its nonmonetary opportunity cost. B. explicit cost is equal to its sunk cost whereas its implicit cost is its out of pocket cost. C. explicit cost is its nonmonetary opportunity cost whereas its implicit cost is equal to its sunk cost. D. explicit cost is its monetary cost whereas its implicit cost is its nonmonetary opportunity cost.

D

A(n) ​ _____ is a financial security that represents partial ownership of a​ firm, while a​ _____ is a financial security that represents a promise to repay a fixed amount of funds. ​A. stock, dividend B. bond, stock C. interest​ payment, stock​ D. stock, bond

D

According to the text, economists consider full employment to occur when A) everyone who wants a job has a job. B) frictional unemployment equals zero. C) the sum of frictional unemployment and structural unemployment equals zero. D) the unemployment rate consists of only frictional and structural unemployment.

D

An underground economy involves all of the following except A. avoiding tax payment on the earned income. B. trying to avoid government regulations. C. dealing in illegal goods and​ services, such as drugs or prostitution. D. buying and selling of goods and services by obtaining a permit from the government.

D

Cyclical unemployment is the result of A) a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. B) the search process of matching workers with jobs. C) the ups and downs in inflation. D) a slowdown in the economy.

D

Discouraged workers are A) workers who have a part time job but want a full time job. B) workers who find their current jobs unfulfilling and are considering a job change. C) workers who have consistently been looking for work for more than 4 weeks. D) workers who have stopped looking for work because they believe there are no jobs for them.

D

Gross domestic product is calculated by summing up A) the total quantity of goods and services in the economy. B) the total quantity of goods and services produced in the economy during a period of time. C) the total market value of goods and services in the economy. D) the total market value of final goods and services produced in the economy during a period of time.

D

If 160 million people are employed, 15 million people are unemployed, and the population is 280 million people, the unemployment rate is A) 57 percent. B) 62.5 percent. C) 9.4 percent. D) 8.6 percent.

D

If Jose is 22-years old, is available to work but does not have a job and made no specific efforts to find a job for the previous month, Jose is classified in the Current Population Survey as A) unemployed. B) employed. C) not in the working-age population. D) not in the labor force.

D

If the CPI changes from 125 to 120 between 2017 and 2018, how did prices change between 2017 and 2018? A) Prices increased by 5%. B) Prices decreased by 5% C) Prices increased by 25%. D) Prices decreased by 4%.

D

If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years? A) 270% B) 50% C) 5% D) 2.7%

D

Long-run economic growth requires all of the following except A) technological change. B) increases in capital per hour worked. C) government provision of secure property rights. D) political instability.

D

Minimum wage laws cause unemployment because the legal minimum wage is set A) below the market wage, causing labor demand to be greater than labor supply. B) below the market wage, causing labor demand to be less than labor supply. C) above the market wage, causing labor demand to be greater than labor supply. D) above the market wage, causing labor demand to be less than labor supply.

D

Real GDP is GDP in a given year A) adjusted only for anticipated inflation. B) adjusted only for unanticipated inflation. C) valued in the prices of that year. D) valued in the prices of the base year.

D

The Bureau of Labor Statistics would categorize a retiree who is not working as A) employed. B) unemployed. C) a discouraged worker. D) out of the labor force.

D

The GDP deflator is the A) difference between real GDP and nominal GDP multiplied by 100. B) difference between nominal GDP and real GDP divided by 100. C) ratio of real GDP to nominal GDP multiplied by 100. D) ratio of nominal GDP to real GDP multiplied by 100.

D

The U.S. real GDP growth rate is estimated at 3.4%. Using the Rule of 70, how long is it going take the U.S. real GDP to double? (Round your answer to the next digit) a. 14 b. 10 years c. 12 years d. 21 years

D

The natural rate of unemployment is the A) unemployment rate that would prevail with zero inflation. B) rate associated with the highest possible level of GDP. C) difference between the long-run and short-run unemployment rates. D) amount of unemployment that the economy normally experiences.

D

The nominal GDP of the U.S. in 2016 was approximately $18.6 trillion. This means that A) the value of output in 2016 was around $18.6 trillion. B) total income in 2016 was around $18.6 trillion. C) total spending in 2016 was around $18.6 trillion. D) all of the above are true.

D

The percent increase in the CPI from one year to the next is a measure of thea. A. GDP deflator. B. unemployment rate. C. real interest rate. D. inflation rate.

D

Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes is called A. the natural rate of unemployment. B. cyclical unemployment. C. structural unemployment. D. frictional unemployment.

D

What are the four major categories of​ expenditure? A.​ Labor, capital, natural​ resources, and entrepreneurship. B. Final​ goods, intermediate​ goods, production, and income. C. ​Wages, interest,​ rent, and profit. D. ​Consumption, investment, government​ purchases, and net exports.

D

What are the three main types of unemployment? A) frictional, seasonal, and cyclical B) temporary, permanent, and volunteer C) cyclical, structural, and temporary D) structural, frictional, and cyclical

D

What is the growth rate of the real GDP between 2019 and 2020? In 2019, Real GDP was $18,492 billion In 2020, Real GDP was $17,769 billion a. -5.91% b. 3.91% c. 4.9% d. -3.91%

D

What is the potential GDP? a. potential GDP and actual GDP are the same thing b. the actual level of GDP attacine by firms no matter the level of the capacity they operate at. c. potential GDP is another name of current GDP d. the level of real GDP attained when all firms are operating at capacity.

D

When the labor market is at full employment A) there is only cyclical unemployment in the economy. B) there is only structural unemployment in the economy. C) the unemployment rate is 0%. D) there is no cyclical unemployment in the economy.

D

Which of the following is not a financial intermediaries? a. banks b. mutual funds c. pension funds d. airlines

D

Which of the following would decrease the unemployment rate? A) an increase in the minimum wage B) an increase in the efficiency wage C) an increase in labor union membership D) government aid to retrain unemployed workers

D

If the number employed is 190 million, the number unemployed is 10 million, and the working-age population is 250 million, then the labor force participation rate is A) 4%. B) 5.2%. C) 60%. D) 76%. E) 80%.

E