macro final exam

24) Full employment occurs when the A) Actual unemployment rate equals the natural unemployment rate meaning there is no cyclic unemployment B) Actual unemployment rate is zero. C) natural unemployment rate is zero. D) frictional unemployment rate is zero. E) structural unemployment rate equals zero.

A) Actual unemployment rate equals the natural unemployment rate meaning there is no cyclic unemployment

42. Say total output is 100 apples and total labor-hour is 50. What is labor-productivity (Though to keep things simple in the lecture I maintained labor productivity is output per worker, actually it is output per labor-hour. So it doesn't matter whether 1 worker worked for 50 hours or 100 workers worked for 50 hours, all we need is how many hours in total were worked. Having said that, in real data no. of workers and no. of labor-hours are highly positively correlated.) A. 2 B. 1 C. 3

A. 2

33. For more than 1 million years until 1750 there was almost ___ change in living standard. Soon after 1750 the world experienced rapid acceleration in economic growth which resulted in rapid improvement of living standard. In 1850 living standard was __ times higher than in 1650. Then, only in 100 years (1850- 1950) living standard increased by more than __ times. Then, only in 50 years (1950 - 2000) living standard has increased by __ times. A. No, 2, 5, 4 b. No, 1, 2, 3 c. No, 2, 3, 4

A. No, 2, 5, 4

45. What is the linear trend of annual labor productivity growth in the US between 1996-2015: Q1. A. falling b. rising c. constant d. no trend

A. falling

4) The unemployment rate equals A) (number of people employed ÷ working-age population) × 100. B) (number of people unemployed ÷ labor force) × 100. C) (labor force ÷ working-age population) × 100. D) (number of people employed ÷ number of people age 16 and over) × 100. E) (number of people unemployed ÷ number of people employed) × 100.

B) (number of people unemployed ÷ labor force) × 100.

3. Assume the U.S. population is 300 million. If 200 million people are adult (16 years of age or older), 125 million are employed, and 15 million are unemployed, what is the size of the labor force? A) 200 million B) 140 million C) 125 million D) 215 million E) 175 million

B) 140 million

5) Suppose the population is 300 million people, the labor force is 200 million people, the number of people employed is 185 million, and the adult population is 170 million people. What is the unemployment rate? A) 92.5 percent B) 7.5 percent C) 8.8 percent D) 5 percent E) 20 percent

B) 7.5 percent

67. How may FED offset the negative impact on aggregate demand of a falling consumer confidence. A) By decreasing money supply B) By increasing money supply C) By reducing tax tax rate D) By increasing tax rate E) By imposing tariff on import

B) By increasing money supply

61. An appreciation of US Dollar (increase of US dollar's value against other currencies) exchange rate will ___________ US Export and will ____ aggregate demand. A) Increase, increase B) Decrease, decrease C) Not affect, not affect D) Increase, decrease E) Decrease, increase

B) Decrease, decrease

64. If real GDP is less than potential (long-run) GDP, then the money wage rate ________, aggregate supply ________ so that the price level ________. (Use AS-AD diagram) A) rises; decreases; rises B) falls; increases; falls C) rises; increases; falls D) falls; decreases; rises E) does not change; increases; falls

B) falls; increases; falls

23) When the economy is at full employment, the A) natural unemployment rate is equal to 0 percent. B) natural unemployment rate equals the actual unemployment rate meaning there is no cyclic unemployment C) natural unemployment rate is equal to 10 percent. D) unemployment rate is equal to 0 percent. E) frictional unemployment rate is equal to 0 percent.

B) natural unemployment rate equals the actual unemployment rate meaning there is no cyclic unemployment

19) Joe has long been unable to find a job in IT sector because he lacks the necessary computer skills. As a result, he has been trying for job in his old sector, manufacturing. However, in manufacturing there are many such labors like him looking for job but the number of jobs is shrinking in manufacturing because of automation. Joe is A) frictionally unemployed. B) structurally unemployed. C) educationally unemployed. D) cyclically unemployed. E) skill-set unemployed.

B) structurally unemployed.

25) Potential GDP is A) the value of the maximum amount of output that can be produced at any given time. B) the amount of real GDP that the economy would produce if it were at full employment. C) another name for real GDP. D) the amount of real GDP that the economy would produce if the unemployment rate was zero. E) the amount of real GDP that the economy would produce if all unemployment was cyclical unemployment.

B) the amount of real GDP that the economy would produce if it were at full employment.

70. When the macroeconomic equilibrium is such that real GDP is less than potential (long-run) real GDP, the economy is suffering from ________, and the government policy to eliminate this gap will ________ real GDP and to ________ the price level. (Use AS-AD diagram) A) a recessionary gap; decrease; decrease B) an inflationary gap; increase; decrease C) a recessionary gap; increase; increase D) an inflationary gap; decrease; increase E) a recessionary gap; decrease; increase

C) a recessionary gap; increase; increase

60. If FED _______ money supply, interest rate ________, investment _____ and aggregate demand ________. A) increases, increases, decreses, decreases B) decreases, decreases, increses, increases C) increase, decrease, increases, increases D) increases, decreases, increases, increases. E) decreases, increases, increases, increases

C) increase, decrease, increases, increases

6) Part-time workers are defined as people who are working A) less than 20 hours per week. B) between 20 and 35 hours per week. C) less than 35 hours per week. D) more than 10 hours per week. E) fewer hours than they would want.

C) less than 35 hours per week.

52. In 2010 USA had 100 people and RGDP was $100. In 2011, USA had 102 people and RGDP was $103. What is the growth rate of RGDP Per person? A. 1% B. 2% C. 3%

C. 3%

66. A fiscal stimulus works to close a recessionary gap by shifting the A) AD curve leftward. B) AS curve leftward. C) AD curve leftward and AS curve leftward. D) AD curve rightward. E) potential GDP line leftward

D) AD curve rightward.

22) Cyclical unemployment includes people who become unemployed from A) changes in the seasons. B) changes in international competition. C) technological changes. D) changes in the business cycle. E) normal labor market turnover.

D) changes in the business cycle.

7) Suppose the population of Timmy Town is 1000 people and the adult population is 800. If 200 of these people are unemployed, the unemployment rate in Timmy Town is A) 2 percent. B) 1/5 × 100. C) 1/8 × 100. D) 1/4 × 100. E) There is not enough information provided to calculate the unemployment rate.

E) There is not enough information provided to calculate the unemployment rate.

34. Which of the following order is correct in terms of 'highest to lowest' Growth rate of Real GDP Per Person in the US a) 1940s, 1960s, 1990s, 2000s b) 1960s, 1940s, 1990s, 2000s c) 2000s, 1990s, 1940s, 1960s

a) 1940s, 1960s, 1990s, 2000s

2. In a country total population is 160. Of them 60 are younger than 16 years of age. Of those who are 16-year old or older, 10 are full time students, 5 are homemakers and 4 are retired and 1 is not currently looking for job for various reasons. 20 are unemployed. The unemployment rate is a) 25% b) 20% c) 50% d) 30%

a) 25%

1. In a country total population is 160. Of them 60 are younger than 16 years of age. Of those who are 16-year old or older, 10 are full time students, 5 are homemakers and 4 are retired and 1 is not currently looking for job for various reasons. What is the labor force participation rate: a) 80% b) 50% c) 90% d) 60%

a) 80%

20) The actual unemployment rate is a) Natural Unemployment rate + Cyclic Unemployment rate b) Structural Unemployment rate + Frictional Unemployment rate c) Natural Unemployment Rate d) Cyclic Unemployment rate

a) Natural Unemployment rate + Cyclic Unemployment rate

41. Labor productivity is measured by a) Output per worker (more precisely output per labor-hour) b) Output per person c) consumption per worker d) Savings per worker

a) Output per worker (more precisely output per labor-hour)

53. In a country, if the growth rate of RGDP per person is 5%, how long it will take to double its RGDP per person? a. 14 years b. 5 years c. 10 years

a. 14 years

47. Which of the following is not an example of physical capital? a. Bond b. Desktop computer c. Roads d. Chair

a. Bond

50. Human capital is a. The knowledge and skills that workers acquire through education, training and experience. b. Computer c. Internet

a. The knowledge and skills that workers acquire through education, training and experience.

31. Rapid economic growth and thus rapid improvement of living standard started soon after the first industrial revolution around 1750. a. True b. False

a. True

43. If labor-force participation rate is not too small, labor productivity (output per worker or per labor-hour) may mimic/represent living standard (output per person). a. True b, False

a. True

44. There is usually high positive correlation between labor productivity and standard of living in a country. a. True b. False

a. True

54. Public policy like, tax, can change today's savings and investment rate to change future's capital stock. a. True b. false

a. True

35. Which of the following order is correct in terms of achieving ,consistently, good economic growth (which resulted in high RGDP Per person) between 1900 -2000. a. USA, Western Europe, Latin America, China b. USA, Latin America, China, Western Europe c. Western Europe, USA, China, Latin America

a. USA, Western Europe, Latin America, China

30. For more than 1 million years before the first industrial revolution (1750), RGDP per person hovered around $100 per year meaning that there was no mentionable _______ and no improvement in __________. a. economic growth, living standard b. economic growth, population c. none of the above

a. economic growth, living standard

38. Labor force participation rate in the US has been _____ since 2000. a. falling b. rising c. no trend

a. falling

27. Economic growth may not be very successful in eliminating poverty if there is huge________ in the society. a. income inequality b. extreme poverty c. population d. all of the above

a. income inequality

40. What will happen if labor force participation rate falls (meaning labor force is much smaller than the population) a. living standard, measured by RGDP Per Person, may decrease as there will be too many dependent people. b. living standard, measured by RGDP Per Person, may increase as there will be too many dependent people.

a. living standard, measured by RGDP Per Person, may decrease as there will be too many dependent people.

36. In term of RGDP Per Person South Korea and Nigeria were at ______ level on 1950. However, now RGDP per person is much ___ in South Korea than in Nigeria. a. same, higher b. same, lower

a. same, higher

48. How physical capital are formed? Households save out of their current income, that savings go to the business firms through financial markets in the form of financial capital, then the business firms use/invest that financial capital to acquire/purchase/form physical capital like computer, infrastructure etc. a. true b. false

a. true

49. If there is no domestic savings (by government or private citizens) and there is no inflow of foreign capital (Foreign direct investment or foreign portfolio investment) or aid, there will be no capital formation in that country. a. true b. false

a. true

51. Bob and Jill have equal access to physical capital and technology. However, Bob will be more productive if he has more human capital than Jill. a. true b. False c. Uncertain

a. true

32. In 1850, RGDP Per person was __ its 1650 level; In 1950 RGDP Per person is more than ___ times its 1850 level; By 2000 RGDP Per person___ times its 1950 level. a. twice, five, four b. twice, four, three c. twice, three, two

a. twice, five, four

62. Long-run aggregate supply curve is a. vertical b. horizontal c. upward sloping d. downward sloping

a. vertical

11. According to 2014 data on the U.S. population, which of the following groups of adults of prime working age (ages 25-54) had the lowest unemployment rate? a. white males b. white females c. black males d. black females

a. white males

65. When market corrects a recession it shifts__________ curve, when government corrects recession it shifts_________ curve. a) aggregate demand, aggregate supply b) aggregate supply, aggregate demand c) aggregate supply, aggregate supply d)aggregate demand, aggregate demand e) consumption, money supply

b) aggregate supply, aggregate demand

8. Suppose that the adult population is 6 million, the number of employed is 3.8 million, and the labor-force participation rate is 70%. What is the unemployment rate? a. 6.7% b. 9.5% c. 10.5% d. 28%

b. 9.5%

17. People who are unemployed because wages are, for some reason, set above the level that brings labor supply and demand into equilibrium are best classified as a. cyclically unemployed. b. structurally unemployed. c. frictionally unemployed. d. discouraged workers.

b. structurally unemployed.

9. Suppose that some country had an adult population of about 50 million, a labor-force participation rate of 60 percent, and an unemployment rate of 5 percent. How many people were employed? a. 1.5 million b. 28.5 million c. 30 million d. 47.5 million

b. 28.5 million

68. What is the main argument of the economists who want government intervention during recession a. Market can never fix the problem b. Nominal wage is downward rigid and it will take long time for market to fix it. c. Market will increase wage d. Market can't change aggregate supply e. Market can't change aggregate demand

b. Nominal wage is downward rigid and it will take long time for market to fix it.

26. Why is Economic growth important? a. To have a better living standard than previous generation b. To eradicate poverty c. both a and b d. none of the above

b. To eradicate poverty

56. Recessions are a. Predictable b. Unpredictable c. Sometimes predictable, sometimes unpredictable

b. Unpredictable

28. A nation's standard of living is best measured by its a. real GDP. b. real GDP per person. c. nominal GDP. d. nominal GDP per person.

b. real GDP per person.

10. According to 2014 data on the U.S. population, which of the following groups of adults of prime working age (ages 25-54) had the lowest labor-force participation rate? a. white males b. white females c. black males d. black females

b. white females

14. Since 1960, the natural rate of unemployment in the U.S. has been between a. 0% and 1%. b. 5% and 6%. c. 10% and 12%. d. 12% and 24%.

c. 10% and 12%.

18. John is a stockbroker. He has had several job offers, but he has turned them down because he thinks he can find a firm that better matches his tastes and skills. Curtis has looked for work as an accountant for some time. While the demand for accountants does not appear to be falling, there seems to be more people applying than jobs available. a. John and Curtis are both frictionally unemployed. b. John and Curtis are both structurally unemployed. c. John is frictionally unemployed, and Curtis is structurally unemployed. d. John is structurally unemployed, and Curtis is frictionally unemployed.

c. John is frictionally unemployed, and Curtis is structurally unemployed.

12. Which of the following is not a commonly-cited explanation for the dramatically increasing labor-force participation rates for women from 1950 to the present? a. availability of reliable birth control b. invention of household labor-saving devices such as dishwashers and microwave ovens c. an increasing number of women who work to support their parents d. changing social attitudes about working mothers

c. an increasing number of women who work to support their parents

16. 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. structural unemployment.

13. Which of the following is not a cause of the decline in the U.S. men's labor-force participation rate over the past several decades? a. young men now stay in school longer than their fathers and grandfathers did b. older men now retire earlier and live longer c. with more women employed, there are fewer jobs now available to men d. more fathers now stay at home to raise their children

c. with more women employed, there are fewer jobs now available to men

29. In the US, RGDP Per person in 1980 is ____ of RGDP per person in 2010. a. 18% b. 23% c. 60% d. 92%

c. 60%

69. Suppose an economy has been hit by a negative demand shock and has fallen below the long-run trend (a recession). Now if government tries to bring the economy back to the long-run trend by policy intervention, the Real GDP will be back to the pre-recession long-run trend level but price will be ____________ pre-recession price level. (Use AS-AD diagram) a. more than b. less than c. equal to

c. equal to

57. A change in price level affects Aggregate demand through a)The buying power of money b)The interest rate c)The real prices of exports and imports d) all of the above

d) all of the above

21) During a recession, Actual Unemployment rate is ___ than Natural Unemployment rate because there is also a ____ unemployment. a) greater, cyclic b) less, frictional c) greater, frictional d) greater, structural

d) greater, structural

15. Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called a. the natural rate of unemployment. b. cyclical unemployment. c. structural unemployment. d. frictional unemployment.

d. frictional unemployment.

46. Why is the growth rate of labor productivity falling in US between 1996 - 2015Q1 (Caution: Labor productivity may be increasing, but it is increasing at a decreasing rate meaning the growth rate of labor productivity is falling). A. May be this is a short term phenomenon b. may be the 'dot.com' technology is yet to be productivity-enhancing c. may be enough people don't have high skill like 'coding' to reap maximum from technology d. maybe all of the above

d. maybe all of the above

59. Which of the following US government (not FED) may do to increase aggregate demand a) increase government expenditure b) decrease income tax c) Increase money supply d) all a, b, c e) a and b only

e) a and b only

37. Total output or RGDP of a country depends on a) Quantity of labor or worker b) Quantity of physical and human capital c) Quantity of natural resources d) Level of technology e) all of the above

e) all of the above

55. Which of the following is not growth enhancing a. Encouraging savings and investment b. Investing in education. Health, and research c. promoting market economy d. Protecting property rights and institutions e. Obstructing free international trade.

e. Obstructing free international trade.

39. What of the following are the reasons for falling labor force participation rate in USA a. Increase of retirees b. More years in school c. Low birth rate d. Generous unemployment allowance e. all of the above

e. all of the above