MACRO-EXAM 2

Actual U-Rate =

Actual U-Rate = FU rate + SU rate + CU rate --1

QUIZ 9 HAS TO BE LOOKED AT BCUZ CANNOT COPY TABLE

QUIZ 9 HAS TO BE LOOKED AT BCUZ CANNOT COPY TABLE

The slope of the demand for loanable funds curve represents the a. positive relation between the interest rate and investment. b. negative relation between the interest rate and investment. c. positive relation between the interest rate and saving. d. negative relation between the interest rate and saving.

b. negative relation between the interest rate and investment.

LABOR FORCE =

#OF EMPLOYED + # OF UNEMPLOYED

Assume that I = Sprivate + Sgovernment + (IM - X). Furthermore, let's say that imports are equal to exports. Given this situation, which of the following would be true? A) Private saving plus government saving would be equal to investment. B) Private saving plus government saving would exceed investment. C) Private saving would exceed investment. D) Private saving plus government saving would be less than investment.

A) Private saving plus government saving would be equal to investment.

Joey is working part-time. Elaina is on temporary layoff and not looking for a job. Who is included in the Bureau of Labor Statistics' "employed" category? A) only Joey B) only Elaina C) both Joey and Elaina D) neither Joey nor Elaina

A) only Joey

Look at the following data: The frictional unemployment rate is 3%, the natural rate of unemployment is 6.5%, and the cyclical unemployment rate is 2.4%. The structural unemployment rate is___% and the actual unemployment rate in this economy is____%. A) 3, 8.9 B) 3.5, 8.9 C) 3, 9.5 D) 3.5, 2.4

B) 3.5, 8.9

The savings-investment spending identity says that: A) each person in the economy must invest as much as he or she saves. B) savings and investment spending are always equal for the economy as a whole. C) savings must equal government investment for the economy as a whole. D) each person in the economy must save as much as he or she invests.

B) savings and investment spending are always equal for the economy as a whole.

M1=

Currency in circulation + travelers' checks + demand deposits + other checkable bank deposits

Cyclical unemployment

Cyclical unemployment- Unemployment that occurs during fluctuations in real GDP.

Frictional unemployment

Frictional unemployment - occurs when workers spend time searching for the jobs that best suit their skills and tastes - The possible reason for frictional unemployment is job search.

CLOSED ECONOMY GDP = I= PRIVATE SAVINGS= PUBLIC SAVING = NATIONAL SAVING= SO, INVESTMENT SPENDING =

GDP = C + I + G ___(1) I = GDP - C - G___(2) Private Saving = GDP + Tr − T − C___(3) Public saving = Government revenue - Government spending Public Saving = T − Tr −G (4) National saving (NS) = Private S. + Public S. = (GDP + Tr − T − C) + (T − Tr − G) National saving = GDP − C − G__(5) So, Investment Spending (I) = National Saving

OPEN ECONOMY: GDP= I= I= I= SO, INVESTMENT SPENDING =

GDP = C+I+G+X-IM___(1) I = GDP-C-G-X+IM___(2) I = (GDP-C-G) + (IM-X)(3) I = (National saving) + (Net capital inflow) (4) So, Investment Spending (I) = National Saving + NCI

The supply of loanable funds slopes a. upward because an increase in the interest rate induces people to save more. b. downward because an increase in the interest rate induces people to save less. c. downward because an increase in the interest rate induces people to invest less. d. upward because an increase in the interest rate induces people to invest more.

a. upward because an increase in the interest rate induces people to save more.

The slope of the supply of loanable funds curve represents the a. positive relation between the interest rate and investment. b. positive relation between the interest rate and saving. c. negative relation between the interest rate and investment. d. negative relation between the interest rate and saving.

b. positive relation between the interest rate and saving.

QUIZ 10 HAS TO BE LOOKED @

HAS GRAPH

If there is a surplus of loanable funds, then a. the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is above equilibrium. b. the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium. c. the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium. d. the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is below equilibrium.

c. the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium.

If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied, a. there is a surplus and the interest rate is above the equilibrium level. b. there is a surplus and the interest rate is below the equilibrium level. c. there is a shortage and the interest rate is above the equilibrium level. d. there is a shortage and the interest rate is below the equilibrium level.

d. there is a shortage and the interest rate is below the equilibrium level.

POP AGE 16& OLDER=

# OF EMPLOYED + # OF UNEMPLOYED +#OF NOT IN LABOR FORCE

CU rate =

CU rate = Actual U-rate - NROU

LABOR FORCE PARTICIPATION RATE=

(LABOR FORCE/ POPULATION AGE 16 &OLDER) X100

UNEMPLOYMENT RATE=

(NUMBER OF UNEMPLOYED WORKERS/LABOR FORCE) X 100

Which of the following statements is correct? A) The total income in the economy that remains after paying for consumption and government purchases is called private saving. B) The sum of private saving and national saving is called public saving. C) For a closed economy, the sum of private saving and public saving must equal investment. D) For an open economy, the sum of consumption, national saving, and net capital inflow must equal investment.

C) For a closed economy, the sum of private saving and public saving must equal investment.

You are a college student who is not working or looking for work. You are: A) unemployed. B) considered in the labor force but not employed. C) not part of the labor force. D) not described by any of the above.

C) not part of the labor force.

In national income accounting, we use which of the following pairs of terms interchangeably? A) "investment" and "public saving" B) "investment" and "purchases of stocks and bonds" C) "private saving" and "national saving" D) "public saving" and "government tax revenue minus government spending"

D) "public saving" and "government tax revenue minus government spending"

If an economy is closed and if it has no government, then A) National saving = Private saving. B) GDP = Consumption + Investment. C) National saving = GDP - Consumption. D) All of the above are correct.

D) All of the above are correct.

Which one of the following statements is (are) true? A) The natural rate of unemployment is the amount of unemployment that the economy normally experiences. B) Economists consider an economy to be at "full employment" when the actual unemployment rate equals the natural rate of unemployment. C) Full employment simply means that there is no cyclical unemployment D) All of the above are true.

D) All of the above are true.

Abby is a full-time homemaker not currently searching for other work. Nicole is a full-time student who is not looking for a job. Who is included in the labor force by the Bureau of Labor Statistics? A) only Abby B) only Nicole C) both Abby and Nicole D) neither Abby nor Nicole

D) neither Abby nor Nicole

M2= **M2 is the broader measure of money commonly used and is used by economists to estimate the entire supply of money within an economy. The most basic measure of money in the US is M1. M2 is a key economic indicator used to forecast inflation.

M1+ savings deposits + small time deposits + money market mutual funds + miscellaneous categories of M2

NROU =

NROU = FU rate + SU rate

The natural rate of unemployment is the amount of unemployment that the economy normally experiences NATURAL RATE OF UNEMPLOYMENT (NROU)=

NROU = FU rate + SU rate

In a simplified (closed) economy, NX=

NX=0

National saving =? is the total amount of savings generated within the economy.

National saving = Private saving + Public saving --(1) National saving = GDP- C - G --(2)

Private saving is the amount of income that households have left after paying for their taxes and consumption. Private Saving = ?

Private Saving = GDP + Tr − T − C

Public saving (Government saving or Government budget balance) is amount of tax revenue that the government has left after paying for its spending. Public saving =?

Public saving = T - (G + Tr)

Structural unemployment

Structural unemployment -occurs when there are fewer jobs than workers -3 possible reasons for structural unemployment are minimum-wage laws, labor unions, and efficiency wages.

The term loanable funds refers to

The term loanable funds refers to To the amount of money that people have chosen to save and lend out, and to the amount of money that borrowers have chosen to borrow