macroeconomics midterm #2

1. The difference between actual unemployment rate and the natural rate of unemployment is called: a. cyclical unemployment. b. inflation. c. frictional unemployment. d. structural unemployment.

a

7. Which of the following would definitely not be included in the measurement of GDP? a. value of the services of a painter who paints your garage b. value of the services of a person who mows his or her own lawn c. value of the services of a maid who cleans your house d. value of the services of a plumber who fixes your kitchen sink

b.

5. Suppose the civilian non-institutional population equals 100,000 persons; the civilian labor force equals 75,000 persons; there are 70,000 employed persons and 5,000 unemployed persons. If 5,000 persons who are currently "not in the labor force" decide to join the civilian labor force, and 3,000 of them are unemployed, then a. both the unemployment and the employment rate rise. b. both the unemployment and the employment rate fall. c. the unemployment rate rises and the employment rate falls. d. the unemployment rate falls and the employment rate rises.

a.

8. Suppose the total market value of all final goods and services produced in economy X this year is $4 million. Of the $4 million worth of goods and services, $3 million is sold and $1 million is held in inventory. For this year, the GDP for economy X is a. $4 million. b. $3 million. c. $1 million. d. $7 million. e. none of the above

a.

9. As the dollar depreciates, foreign goods become more expensive for Americans to purchase. a. True b. False

a.

4. Jamaal lost his job when a mechanical device replaced people with his skills. If Jamaal's skills are non-transferable, he would be considered to be structurally unemployed. a. True b. False

a. true

10. As income taxes rise, disposable income_______, causing __________ the AD curve. a. decreases; movement up along b. decreases; a leftward shift of

b.

11. A short-run aggregate supply curve shows the a. amount of a particular good producers are willing and able to buy at a particular price, ceteris paribus. b. real output (Real GDP) producers are willing and able to sell at different price levels, ceteris paribus. c. real output (Real GDP) people are willing and able to buy and to sell at different price levels, ceteris paribus. d. real output (Real GDP) people are willing and able to buy at different price levels, ceteris paribus.

b.

6. The base year is the year a. in which prices are lowest. b. that serves as a reference point or benchmark.

b.

7. The employment rate equals the number of a. employed persons divided by the civilian labor force. b. employed persons divided by the civilian non-institutional population.

b.

8. If a business firm in Country A produces a good but does not sell it in that same year, that good will not be counted in Country A's GDP. a. True b. False

b.

1. GDP includes some nonmarket goods. a. True b. False

b. false

2. A transfer payment is a payment to a person that is made in return for goods and services supplied. a. True b. False

b. false

3. Compensation of employees is the largest component of GDP when using the expenditure approach to calculate GDP. a. True b. False

b. false

5. The actual rate of unemployment arises from the effects of: a. frictional and structural unemployment. b. frictional, structural, and cyclical unemployment .

b. frictional, structural, and cyclical unemployment .

(Table1-A: Population Data for Estill county) According to the Table: Population Data for Estill County, if marginally attached workers are included in the labor force, the labor force is: a. 7400. b. 6500. c. 6000. d. 5500.

c.

10. Suppose the real exchange rate of 10 Mexican pesos to the dollar changes to 9 pesos to the dollar. In this situation, the dollar has __________________, making American goods __________ expensive for Mexicans. a. appreciated; less b. appreciated; more c. depreciated; less d. depreciated; more

c.

12. Assume the economy is in short-run equilibrium, if domestic consumption increases, a. the SRAS curve will shift rightward, which will push the price level up. b. the SRAS curve will shift leftward, which will push the price level up. c. the AD curve will shift leftward, which will push the price level down. d. the AD curve will shift rightward, which will push the price level up.

d.

2. The change in the purchasing power of dollar-denominated assets (such as cash holdings) is the a. money effect. b. interest rate effect. c. asset effect. d. real balance effect. e. none of the above

d.

6. A simultaneous rise in both aggregate demand and short-run aggregate supply will definitely a. raise the price level, but there is not enough information provided to know how Real GDP will change. b. lower Real GDP, but there is not enough information provided to know how the price level will change. c. raise the price level and Real GDP. d. raise Real GDP, but there is not enough information provided to know how the price level will change. e. raise the price level and lower Real GDP.

d.

9. Suppose there are five goods in the economy, A-E. The current-year quantity of each is 10A, 20B, 30C, 40D, and 50E. Current-year prices are $1 for each unit of A, $2 for each unit of B, $3 for each unit of C, $4 for each unit of D, and $5 for each unit of E. Base-year prices are $1 for each good. Real GDP in the current year equals _________ and nominal GDP equals _________. a. $550; $150 b. $130; $530 c. $150; $550 d. $530; $130

d.

4. The civilian non-institutional population consists of everyone in the population who is a. at least 16 years of age, in the armed forces, or institutionalized. b. at least 16 years of age. c. not in the armed forces. d. not institutionalized. e. b, c, and d

e.