Macroeconomics Exam 2

The Bureau of Labor Statistics counts a member of a surveyed household as an adult if that person is at least

16 years old

The Bureau of Labor Statistics produces data on unemployment and other aspects of the labor market from a regular survey of about

60,000 households

Fran buys 1,000 shares of stock issued by Miller Brewing. In turn, Miller uses the funds to buy new machinery for one of its breweries.

Fran is saving; Miller is investing.

Who of the following would be included in the Bureau of Labor Statistics' "unemployed" category?

Halim, who is on temporary layoff

labor force participation rate

(the labor force divided by the adult population) times 100.

According to the loanable funds model, which of the following events would result in higher interest rates and greater saving?

Congress passes a reform of the tax laws that encourages greater investment

Waldo works eight hours and produces 7 units of goods per hour. Emerson works six hours and produces 10 units of goods per hour.

Emerson's productivity and output are greater than Waldo's

Which of the following events would shift the demand curve from D1 to D2?

Firms become optimistic about the future and, as a result, they plan to increase their purchases of new equipment and construction of new factories.

The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

Returns to capital become increasingly smaller as the amount of capital per worker increases.

Which of the following is not a requirement for the Bureau of Labor Statistics to place someone in the "unemployed" category?

The person must not have been fired from their previous job

Suppose that Congress were to repeal an investment tax credit. What would happen in the market for loanable funds?

The demand for loanable funds would shift left.

Which of the following is correct?

The financial system channels funds from savers to borrowers.

what is not correct?

The ranking of countries by average income changes very little over time.

not in labor force

adult pop. minus labor force

Which of the following would necessarily create a surplus at the original equilibrium interest rate in the loanable funds market?

an increase in the supply of or a decrease in the demand for loanable funds

discouraged workers

are correctly counted as out of the labor force.

Alyssa is opening a bicycle shop, and her monthly expenditures to get the shop up and running exceed her monthly income. Alyssa is best described as a

borrower or as a demander of funds.

President Bigego is running for re-election against Senator Pander. Bigego proclaims that more people are working now than when he took office. Pander says that the unemployment rate is higher now than when Bigego took office. You conclude that

both of them could be telling the truth if the labor force grew faster than employment.

Suppose that a large number of men who used to work or seek work now no longer do either. Other things the same, this makes

both the number of people unemployed and the labor force fall.

Suppose that some people are counted as unemployed when, to maintain unemployment compensation, they search for work only at places where they are unlikely to be hired. If these individuals were counted as out of the labor force instead of as unemployed, then

both the unemployment rate and labor-force participation rate would be lower.

Technological knowledge

can be discovered but it can never be kept secret.

A bond is a

certificate of indebtedness

The curve becomes flatter as the amount of capital per worker increases because of

diminishing returns to capital.

labor force

employed plus unemployed

productivity

explains most of the differences in the standard of living across countries.

Which of the following would be human capital and physical capital, respectively?

for an accounting firm, the accountants' knowledge of tax laws and computer software

Suppose that an American opens and operates a candy factory in Finland. This is an example of

foreign direct investment. American saving is used to finance Finish investment

Which of the following is generally an opportunity cost of investment in human capital?

forgone present wages

Despite its status as one of the richest countries in the world, Japan

has few natural resources

Sheamous loses his job and decides to sit on the beach rather than look for work during the next few months. Other things the same, the unemployment rate

increases & the labor force participation rate decreases

Satchel loses his job and immediately begins looking for another. Other things the same, the unemployment rate

increases and the labor-force participation rate is unaffected

When a society decides to increase its quantity of physical capital, the society

is in effect deciding to consume fewer goods and services in the present.

The catch-up effect refers to the idea that

it is easier for a country to grow fast and so catch-up if it starts out relatively poor.

human capital is

knowledge and skills that workers have acquired.

unemployment

labor force minus employment

In countries that experience political instability, standards of living tend to be low because of

lack of respect for property rights

According to the definitions of national saving and private saving, if Y, C, and G remained the same, an increase in taxes would

leave national saving unchanged and reduce private saving.

Acarapi is a full-time homemaker not currently searching for other work. Ximena 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?

neither

Jai Li just lost her job, and she hasn't yet started looking for a new one. The Bureau of Labor Statistics counts Jai Li as

neither in labor force or unemployed

If a country's saving rate increases, then in the long run

neither productivity nor real GDP per person is higher

Egzon is working part-time. Dijana is on temporary layoff. Who is included in the Bureau of Labor Statistics' "employed" category?

only egzon

productivity

output divided by labor hours

Suppose a country reduces trade restrictions. This country would be pursing an

outward policy, which most economists believe has beneficial effects on the economy

It has been suggested that a possible benefit of rapid population growth is the likelihood that when there are more people, then there are more

people to discover things, and so technological progress is rapid.

The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to produce furniture are called

physical capital

In a closed economy, what does (Y - T - C) represent?

private saving

The quantity of goods and services produced from each unit of labor input is called

productivity

output

productivity x labor hours

Other things the same, a government budget deficit

reduces both public and national saving

Other things the same, a higher interest rate induces people to

save more, so the supply of loanable funds slopes upward.

A bond buyer is a

saver. Bond buyers may sell their bonds prior to maturity.

The source of the supply of loanable funds is

saving, and the source of the demand for loanable funds is investment.

how do you get T?

taxes-transfer payments

An understanding of the best ways to produce goods and services is called

technology

The economy's two most important financial markets are

the bond market and the stock market.

What is measured along the horizontal axis of the graph?

the real interest rate

unemployment rate

unemployed divided by labor force times 100

percentage change

year 2 - year 1 / year 1 x 100