MACRO EXAM 2

Discouraged workers are

workers who have stopped looking for work because they believe there are no jobs for them.

Based on the information below, what is the level of private saving in the economy? Y = $12 trillion C = $8 trillion I = $2 trillion G = $2 trillion TR = $2 trillion T = $3 trillion

$3 trillion

Refer to Table 8-6. Consider the table of production and price statistics for a small economy in 2018. If the economy only produces the four goods listed below, what is GDP for 2018?

$428,000

A bond represents

A loan to the company

Cyclical unemployment is the result of

a slowdown in the economy.

Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes is called

a. frictional unemployment.

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. structural unemployment.

Labor unions cause unemployment because the union contract wage is set

above the market wage, causing a surplus of labor.

Minimum wage laws cause unemployment because the legal minimum wage is set

above the market wage, causing labor demand to be less than labor supply.

Which of the following is not a financial intermediaries?

airlines

The natural rate of unemployment is the

amount of unemployment that the economy normally experiences.

In 2016, Ford Motor Company's sales were rising. These events were caused by

an economic expansion.

What term do economists use to refer to the conflict between the interests of shareholders and the interests of top​ management?

a​ principal-agent problem

An underground economy involves all of the following except

buying and selling of goods and services by obtaining a permit from the government.

What is the largest component of spending in the United States?

consumption spending

To calculate GDP by the expenditure method, one must add

consumption spending, investment spending, government purchases, and net exports.

Workers who lose their jobs because of a recession are experiencing

cyclical unemployment.

If you have trouble finding a job because of a slowdown in the overall economy, we would say that you are

cyclically unemployed.

GDP is not a perfect measure of well-being because

GDP is not adjusted for pollution.

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?

Real GDP grows by 2.3% in the second quarter.

What are the three Key Services of the Financial System?

Risk sharing, liquidity, information

What do we mean by the separation of ownership from control in large​ corporations?

Shareholders own the​ corporation, but it is controlled by managers.

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

Which of the following policies would reduce structural unemployment?

a job retraining program

Structural unemployment is the result of

a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs.

Since 1948, the labor force participation rate for adult men has ________ and for adult women has ________.

decreased; increased

Which of the following terms refers to a flow of funds from savers to firms through financial​ markets?

direct finance

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

do not pay taxes to the government.

Gross domestic product in the economy is measured by the

dollar value of all final goods and services produced in the economy.

The underground economy can be described as

economic activity that is hidden from the government to avoid taxes or because the activity is illegal.

The labor force equals the number of people

employed plus unemployed

The labor force equals the number of people

employed plus unemployed.

The natural rate of unemployment is the amount of unemployment

equal to frictional plus structural unemployment.

In the circular flow model, the value of total income for an economy ________ the value of total production.

equals

In the circular flow model, the value of total production for an economy ________ the value of total expenditures on final goods and services.

equals

A​ firm's

explicit cost is its monetary cost whereas its implicit cost is its nonmonetary opportunity cost.

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower

frictional unemployment.

The​ short-term unemployment that arises from the process of matching workers with jobs is called

frictional unemployment.

A student who just graduated from college but has not found a job would most likely be

frictionally unemployed.

If Samantha quits her job voluntarily and actively searches for other work, then she is considered

frictionally unemployed.

Which of the following would decrease the unemployment rate?

government aid to retrain unemployed workers

During the Great Depression, cyclical unemployment increased as the recession continued. This increase in cyclical unemployment

had no effect on the natural rate of unemployment.

In the circular flow diagram, ________ supply the factors of production, and ________ goods and services.

households; buy

Legalizing all forms of illegal activities

increases GDP and reduces the size of the underground economy.

During a business cycle expansion, total production ________ and total employment ________.

increases, increases

The percent increase in the CPI from one year to the next is a measure of the

inflation rate.

Which of the following is not directly counted in GDP?

intermediate goods

If the GDP deflator is less than 100, then for that year, nominal GDP ________ real GDP.

is less than

The unemployment rate equals the number of unemployed divided by the ________, all times 100.

labor force

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

the business cycle.

The most widely used measure of inflation is based on which of the following price indices?

the consumer price index

The "underground economy" is also referred to as

the informal sector.

What is the potential GDP?

the level of real GDP attained when all firms are operating at capacity.

We say that the economy is at full employment if the unemployment rate is equal to

the natural rate of unemployment.

The rule of 70 states that

the number of years it takes an economy to double in size is 70 divided by the growth rate.

Frictional unemployment is the result of

the process of matching workers with jobs.

Real GDP is GDP in a given year

valued in the prices of the base year.

Consider the following data for Tyrovia, a country that produces only two products: guns and butter. Refer to Table 8-11. Nominal GDP for Tyrovia in 2018 equals

$1,140.

Refer to Table 8-3. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals

$1,200

Refer to Table 8-3. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals

$1,200.

Refer to Table 8-4. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals

$1,600.

A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2013 and 2018 are shown in the table above. Refer to Table 8-18. What is real GDP in 2018, using 2013 as the base year?

$10,275

Calculate the private saving of this economy? household income : $250 transfer payments: $75 corporate tax: $50 hopusehold consumption $100 tax paid by household$ 55

$170

Refer to Table 8-2. Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simple economy equals

$6,400.

Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simple economy equals

$6,400.

Refer to Table 8-1. Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. Using the information in the above table, nominal GDP for this simple economy equals

$8,750.

Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. Using the information in the above table, nominal GDP for this simple economy equals

$8,750.

Refer to Table 9-1. The labor force participation rate for this simple economy equals

(1,100/15,000) × 100.

Table 9-1. The labor force participation rate for this simple economy equals

(1,100/15,000) × 100.

Consider the data above for a simple economy. Refer to Table 9-1. The unemployment rate for this simple economy equals

(100/1,100) × 100

Refer to Table 9-1. The unemployment rate for this simple economy equals

(100/1,100) × 100.

The formula for calculating the CPI is

(Expenditures in the current year/Expenditures in the base year) × 100.

Calculate the public saving of the economy Total taxes collected $250 Household consumption $50 Transfer payments made $175 Government purchases $200

- $125

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

-3.91%

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%

1.27%

Refer to Table 8-19. Given the information above, calculate the GDP deflator in 2017.

105

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?

107

Refer to Table 8-14. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2018 equals

108.5

Refer to Table 8-19. Given the information above, calculate the GDP deflator in 2018.

114

Based on the table below, in​ 2011, the value of the GDP deflator is

116.57

Refer to Table 9-9. Suppose that the data in the table above reflect the price levels in the economy. Given that data, we can say that the cost of living rose by ________ between 2017 and 2018?

13%

If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years?

2.7%

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?

2.9%

Refer to Table 9-7. Suppose that the data in the table above reflect price levels in the economy. What is the inflation rate between 2017 and 2018?

2.9%

Refer to Table 9-8. Suppose that the data in the table above reflect the price levels in the economy. What is the inflation rate in between 2017 and 2018?

20%

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)

21 years

Refer to Table 9-5. Consider the following values of the consumer price index for 2017 and 2018. The inflation rate for 2018 was equal to

3.9 percent.

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

5%

The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is

5% higher in year 2 than in year 1.

If the working-age population is 20 million and labor force is 13 million, the labor force participation rate is

65 percent

If 160 million people are employed, 15 million people are unemployed, and the population is 280 million people, the unemployment rate is

8.6 percent.

Table 8-19. Given the information above, calculate the rate of increase in the price level from 2017 to 2018.

8.6%

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

80%

The nominal GDP of the U.S. in 2016 was approximately $18.6 trillion. This means that

All of the above are true.

What are the four major categories of​ expenditure?

Consumption, investment, government​ purchases, and net exports.

Which of the following equations correctly measures GDP in an economy?

GDP = C + I + G + NX

Why is GDP an imperfect measurement of total production in the​ economy?

GDP does not include household production or production from the underground economy.

In a closed economy, what is the relationship between saving and investment?

Investment is equal to saving.

Refer to Figure 9-1. Based on the graph of the labor market above, if a minimum wage is set at $5 per hour, which of the following will occur?

None of the above will occur.

Suppose that shortly after graduating from college you decide to start your own business. Assuming you are starting a small business and realize that you need someone with particular expertise or business skills​, which category of firm are you most likely to​ start?

Partnership

If the CPI changes from 125 to 120 between 2017 and 2018, how did prices change between 2017 and 2018?

Prices decreased by 4%.

If the GDP deflator is 142, by how much have prices changed since the base year?

Prices have increased by 42%.

What are the three main factors affecting labor productivity growth?

Property rights, Capital, Technological change

How do we calculate Real GDP per capita?

Real GDP divided by population

Refer to Figure 9-1. Based on the graph of the labor market above, if a minimum wage of $8 per hour is imposed, which of the following will result?

The quantity of labor demanded by firms will fall.

What are the four categories of​ income?

Wages, Interest,​ Rent, and Profit.

In a closed economy, private saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)

Y + TR - C - T

In a closed economy, which of the following equations reflects investment? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)

Y - C - G

Which of the following is an example of human capital?

a college education

Based on the information below, what is the level of public saving? Y = $12 trillion C = $8 trillion I = $2 trillion G = $2 trillion TR = $2 trillion T = $3 trillion

negative $1 trillion (a deficit of $1 trillion)

In a closed economy, which of the following components of GDP is not included?

net exports

The measure of production that values production using current prices is called

nominal GDP.

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

not in the labor force.

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

not in the labor force.

Some countries have larger underground economies than do other​ countries, because

of government policies that are retarding economic growth.

The Bureau of Labor Statistics would categorize a retiree who is not working as

out of the labor force.

Long-run economic growth requires all of the following except

political instability.

The GDP deflator is the

ratio of nominal GDP to real GDP multiplied by 100.

To examine how the total production of an economy has changed over time, it would be better to examine

real GDP.

The producer price index measures the prices that firms

receive for the goods and services they use at all stages of production.

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

seasonal.

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.

stock, bond

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.

stock; bond

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

structural unemployment.

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called

structural unemployment.

What are the three main types of unemployment?

structural, frictional, and cyclical

Structural unemployment is the result of

technology changes or foreign competition.

Labor productivity refers to

the quantity of goods and services that can be produced by one worker or by one hour of work.

Gross domestic product is calculated by summing up

the total market value of final goods and services produced in the economy during a period of time.

According to the text, economists consider full employment to occur when

the unemployment rate consists of only frictional and structural unemployment.

When the labor market is at full employment

there is no cyclical unemployment in the economy.