Macro Test 2

An example of "investment" in computing real GDP using the expenditure approach is the purchase of A) computer chips by Dell to put in their personal computers. B) a 100 year old house by a married couple. C) 100 shares of IBM stock. D) a new set of tools by an auto mechanic, for use in repairing cars.

D

An example of an contractual financial intermediary is: A. Commercial bank B. Savings and loan C. Hedge fund D. Insurance company

D

As currently calculated, the CPI tends to overstate the true inflation rate because A) the market basket fails to weigh housing costs sufficiently. B) the market basket selected is inappropriate. C) we cannot know what the true inflation rate is. D) it fails to correctly measure quality changes for some products.

D

Because of the biases in calculating the CPI, actual inflation is A) more than the measured inflation rate by about 1 percent per month. B) accurately measured. C) more than the measured inflation rate by about 1 percent per year. D) less than the measured inflation rate by about 1 percent per year.

D

Borrowers like to: A) Take risks B) Borrow in large amounts C) Have long term loans D) Have all of the above.

D

During a recession, the ________. A) employment-to-population ratio increases B) number of discouraged workers decreases C) unemployment rate decreases D) number of marginally attached workers increases

D

Given the following: population- 4,500,000 Less than 16 years old-500,000 unemployed but actively seeking work-100,000 philosophers---(non working) 50,000 house-husbands/housewives (non employed)-20,000 discouraged workers-10,000 people in institutions-30,000 full time students (non working)-100,000 full time workers-3,000,000 part time workers-690,000 What is the labor force participation rate? A) 92.9% B) 87.0% C) 76.1% D) 95.5% E) none of the above

D

A price floor creates a: A) Surplus B) Shortage C) Clears the market D) Has no effect on the market.

A

Looking at inflation rates in the United States since the 1970s we see that A) the 1970s experienced the highest inflation rates. B) inflation fell the most during the 1970s productivity slowdown. C) the inflation rate increased with the increased growth of the 1990s. D) the highest inflation rates were the double digits during the 1990s.

A

Minimum wage is a type of price floor? A) True B) False

A

Structural unemployment is the result of A) technological change, absolute job skills, or foreign competition. B) a slowdown in the rate of economic expansion. C) normal labor market turnover. D) irresponsible workers with poor work habits.

A

Suppose there are currently 100 people unemployed, 1500 people employed, and 2000 people in the working age population. The labor force participation rate equals 100 times A) 1600/2000. B) 1500/2000. C) 100/1600. D) 100/1500.

A

The Laspeyres price index: A) Overstates inflation B) Understates inflation C) Has no effect on inflation D) Measures unemployment

A

The Laspeyres price index: A) Uses base year's quantities B) Uses current year's quantities C) Uses 1984 base year D) Uses 1950 base year

A

The employment-to-population ratio is defined as A) total employment divided by the working-age population then multiplied by 100. B) total employment divided by the labor force then multiplied by 100. C) total employment divided by labor hours then multiplied by 100. D) the labor force divided by the working-age population then multiplied by 100

A

The term "capital," as used in macroeconomics, refers to A) the plant, equipment, buildings, and inventories of raw materials and semi-finished goods. B) financial wealth. C) the sum of investment and government purchases of goods. D) investment.

A

The unemployment rate measures the percentage of A) people in the labor force who can't find a job. B) the working-age population who can't find a job. C) the working age population that can't find a full-time job. D) people who want full-time jobs, but can't find them.

A

Under the classical growth model wages can never be permanently increased. A) True B) False

A

Which type of price index theory averages the base year and current year's quantities? A) Fisher's Mean B) Paasche C) Laspeyres D) Boskin's Index

A

Full employment occurs A) only if unemployment is equal to structural unemployment plus cyclical unemployment. B) only if the unemployment rate is equal to the natural rate of unemployment. C) only if the unemployment rate is zero. D) None of the above answers are correct.

B

If 2017 price index is 250 and 2019 is 300 the cumulative inflation rate is A) 10% B) 20% C) 25% D) 30%

B

Marginally attached workers fall into which of the following population categories? A) unemployed B) not in the labor force C) labor force D) employed

B

Ms. Krupsky has shorthand and typing skills and still finds herself unemployed. In today's economy, Ms. Krupsky is an example of what type of unemployment? A) frictional unemployment B) structural unemployment C) cyclical unemployment D) None of the above answers is correct.

B

Suppose the Consumer Price Index is 143.6. What does that number mean? A) On average, goods cost $243.60. B) Prices rose 143.6 percent over the reference base period, on average. C) On average, goods cost $143.60. D) Prices rose 43.6 percent over the reference base period, on average.

B

The Consumer Price Index is a measure of the average of the prices paid by ________ for a fixed basket of consumer goods and services. A) consumers living in cities with a population greater than 100,000 B) urban consumers C) all consumers D) urban wage earners and clerical workers

B

Unemployment caused by the fluctuation of the business cycle is called ________ unemployment. A) recession-related B) cyclical C) frictional D) structural

B

Which type of price index theory uses current year's quantities? A) Boskin's Index B) Paasche C) Laspeyres D) Fisher's Mean

B

Year---- Nominal Income-- Price Index 1990---- 9800-------- 99 1991---- 10000-------- 95 1992---- 15000------- 100 1993---- 17000------- 110 1994---- 23000------- 115 1995---- 33000------- 123 Calculate the cumulative change in inflation, nominal income, and real income from 1990 to 1995. Just compare year 1990 to 1995 (ignore the other years). A) 75%, 37%, 22% B) 24%, 237%, 171% C) 33%,17%,-12% D) 235%, 233%, -275% E) None of the above

B

An example of an investment financial intermediary is: A) Commercial bank B) Savings and loan C) Hedge fund D) Insurance company

C

Deflation represents: A) a reduction in output. B) a recession. C) a reduction in the aggregate price level. D) an increase in the unemployment rate.

C

Discouraged workers ________ counted as officially unemployed because they ________. A) are; are still in the labor force B) are; are not working C) are not; are not actively seeking work D) are not; are not qualified to work

C

Given the following: population- 4,500,000 Less than 16 years old-500,000 unemployed but actively seeking work-100,000 philosophers---(non working) 50,000 house-husbands/housewives (non employed)-20,000 discouraged workers-10,000 people in institutions-30,000 full time students (non working)-100,000 full time workers-3,000,000 part time workers-690,000 Given the information in the question above, what is the employment-to-population ratio? A) 76.1% B) 89.0% C) 92.9% D) 97.8% E) none of the above

C

If output is increasing 5% per year, it will double in: A. 5 years B. 10 years C. 14 years D. 20 years

C

If the CPI basket of goods cost $200 in the reference base period and $450 in a later year, the CPI in the later year equals A) 250 B) 450 C) 225 D) 300

C

Price indexes can overstate inflation because they A) do not contain the prices of services. B) do not contain the prices of foreign goods. C) omit some quality improvements. D) do not contain the prices of any used goods.

C

The biases in the CPI include the A) substitution, new goods, and old goods biases. B) old goods, new goods, and quality change biases. C) new goods, quality change, and substitution biases. D) old goods, unemployment, and inflation biases.

C

The consumer price index (CPI) A) is the ratio of the average price of a typical basket of goods to the cost of producing those goods. B) measures the increase in the prices of the goods included in GDP. C) compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed in the base period. D) compares the cost of the typical basket of goods consumed in period 1 to the cost of a basket of goods typically consumed in period 2.

C

The currently used method for calculating the CPI A) accounts for people increasing consumption of a good that falls in relative price. B) has no effect on government expenditures. C) probably overstates inflation by about 1 percentage point. D) None of the above answers are correct.

C

The labor force is defined as A) people with full time jobs. B) all people capable of work. C) workers with jobs and unemployed workers. D) All of the above answers are correct.

C

The three types of unemployment are A) voluntary, involuntary, and structural. B) frictional, part-time, and involuntary. C) frictional, structural, and cyclical. D) voluntary, part-time, and cyclical.

C

When a student finishes college and begins looking for work A) cyclical unemployment increases. B) structural unemployment increases. C) frictional unemployment increases. D) frictional and cyclical unemployment increase.

C

Gross domestic product is the total ________ produced within a country in a given time period. A) market value of all final and intermediate goods and services B) market value of all goods and services C) amount of final and intermediate goods and services D) market value of all final goods and services

D

If the number of people unemployed is 100, the number of people employed is 1000, and the working-age population is 1400, then the unemployment rate is A) 10 percent. B) 7.1 percent. C) 6.6 percent. D) 9.1 percent.

D

Suppose the CPI last year is 121 and the CPI this year is 137. The correct method to calculate the inflation rate is A) (137 - 121)/100 = 0.16. B) (137/121) × 100 = 113.2. C) 137 × 121 = 258. D) [(137 - 121)/121] × 100 = 13.2.

D

The ________ is calculated as the number of people ________ divided by the labor force multiplied by 100. A) employment-to-population ratio; unemployed B) employment-to-population ratio; in the working age population C) employment rate; employed D) unemployment rate; unemployed

D

The labor force participation rate is calculated as the A) labor force divided by the unemployment rate then multiplied by 100. B) number of persons unemployed divided by the labor force then multiplied by 100. C) labor force divided by the number of persons employed then multiplied by 100. D) labor force divided by the working age population then multiplied by 100.

D