Macroeconomics TEST 2

In March, California reported a civilian labor force of 18,304,098. The number of unemployed people was 2,242,732. What was the unemployment rate?

12.3%

The state of New York reported a civilian labor force of 9,603,801. The number of unemployed people was 378,371. What was the unemployment rate?

3.9%

If men earned a median income of $6,903 per year in 1970 when the price index was 40.5, and the consumer price index is now 270, then how much is $6,903 worth today?

$46,020

In order to be considered unemployed, a person must: (i) be part of the working-age population. (ii) be actively looking for work. (iii) not have been self-employed. (iv) not be institutionalized. A. (i) and (ii) B. (iii) and (iv) C. (i), (ii), and (iv) D. (ii) and (iv)

(i), (ii), and (iv)

You open a savings account that pays 2% interest a year. What is your real rate of return if the inflation rate is 3%?

-1%

Consider the following basket of goods: 50 bottles of milk, 100 avocadoes, 50 apples, and eight pineapples. Suppose that last year, each bottle of milk was $2.50, each avocado was $1.50, each apple was $0.75, and each pineapple was $4. This year, each bottle of milk is $2.50, each avocado is $1.80, each apple is $0.80, and each pineapple is $4.30. Using last year as the base year, what is the inflation rate between last year and this year?

10.13%

If the CPI was 140.31 last year and is 144.48 this year, then what is the rate of inflation?

2.97%

Which of following people can be classified as structurally unemployed?

Cyrus, who is finding it difficult to get a job in his field because businesses are not hiring due to high unionized wages

Kia Motors announces a plan to produce Kia automobiles in Pakistan. How does this change economic growth in Pakistan?

Economic growth increases due to capital accumulation

Which of the following correctly shows the steps needed to calculate the inflation rate?

Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate.

GDP is not a perfect measure of well-being; for example

GDP does not address the distribution of income. GDP does not address environmental quality. All of the above are correct. GDP excludes the value of volunteer work. All of the above are correct.

In many parts of the world, mobile health clinics travel to villages to treat patients, teach about good nutrition and hygiene, and carry out immunizations. How does this contribute to economic growth?

It helps maintain a healthy population, which leads to development of the labor resource.

You have four friends. Which of your friends can be described as "cyclically unemployed"?

Keele, who lost her job after her company lost a lot of customers during an economic downturn

If the government begins taxing savings in banks, which input in the production function changes, and what is the effect on economic growth in the country?

The capital stock decreases, and economic growth is negatively affected

The government passes a new initiative to provide a tax credit on research and innovation by firms. What is the impact on the production function, and what is the effect on economic growth in the country?

The capital stock increases, and economic growth is positively affected

A U.S. publisher purchases new computers that were manufactured in the U.S.A. This purchase by itself makes

a positive contribution both to investment and to GDP

Southeast Asian countries experience high temperatures and high humidity during the monsoon seasons. This makes working conditions difficult. Because air conditioners are expensive and consume a lot of electricity, an alternative air cooler called an Eco-cooler was invented. This device does not use electricity, is made from readily available soda bottles, and works by funneling air into a room. This scenario is an example of:

a technological innovation that can increase labor productivity and thus increase economic growth.

The menu costs of inflation are the

additional costs of adjusting prices

Which of the following would lead to a rise in economic growth?

an increase in female employment in an economy

The consumer price index is an index that tracks the

average cost that consumers pay over time for a representative basket of goods and services.

New ideas can generate unlimited economic growth because they:

can be freely shared, do not depreciate, and can generate further ideas.

The "moral of the story" of the Solow growth model is that:

capital accumulation alone cannot lead to sustainable economic growth.

Real GDP is the yearly production of final goods and services valued at

constant prices

Devina lost her job a while ago when the economy entered a recession. She no longer believes she can get a job and has lost hope of employment. She has several friends in the same scenario. They have all stopped looking for work. This scenario describes:

discouraged workers

The unemployment rate is computed as the number of unemployed

divided by the labor force, all times 100

The consumption component of GDP includes spending on

durable goods, nondurable goods, and services.

Because every transaction has a buyer and a seller,

every transaction contributes equally to an economy's income and to its expenditure.

In countries where people have few political freedoms, people tend to have

fewer economic opportunities

Which of the following items is included in U.S. GDP?

final goods and services that are purchased by the U.S. federal government

The government of Ontario, Canada, has implemented a frontier college program that is designed to improve literacy and math skills among students who live in remote parts of Canada and in First Nations communities that are underserved by educational facilities. This is an example of a government program designed to build:

human capital

Following a significant recessionary period in which there were periodic wage freezes, workers negotiate higher wages. However, the higher wages lead to a decrease in the number of new workers getting hired, so unemployment persists in the region. The scenario described here is an example of:

hysteresis.

additional costs of adjusting prices

interest rate in terms of changes in purchasing power.

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

longer life expectancy and a higher percentage of the population that is literate.

Which of the following lists the functions of money?

medium of exchange, store of value, and unit of account

Inclusive institutions tend to have

much more secure property rights compared to countries with extractive institutions

According to research by Acemoglu and Robinson, which of the following best explain why some countries are wealthy and some countries have a lot of people living in poverty?

political institutions

The link between access to political institutions and economic opportunities is

positively correlated worldwide.

The equilibrium unemployment rate is the:

rate of unemployment that exists even when cyclical unemployment has gone to zero.

A nation's standard of living is best measured by its

real GDP per person.

Inflation is a:

rise in the overall level of prices

In countries with inclusive institutions, how is economic growth related to tax rates?

tax rates appear unrelated to economic growth

GDP is defined as

the market value of all final goods and services produced within a country in a given period of time

Human capital refers to:

worker skills and knowledge.

Net exports equal

exports minus imports

Large businesses are more likely to be able to reduce or eliminate competition in countries with

extractive institutions

Governments can be categorized according to what is done with tax revenue. Using the scale discussed in class, this range is from

extractive, for which governments use tax revenue to enrich the elite; to inclusive, for which governments use tax revenue to provide goods and services for citizens.

Countries that are the most innovative tend to have

inclusive institutions

Governments provide more public services (ranging from roads, hospitals, and schools, to internet access and childcare) in countries with

inclusive institutions

The table below contains data for the country of Dachsland, which produces only pretzels and books. The base year is 2017. In 2018, Dachsland's

nominal GDP was $760, real GDP was $670, and the GDP deflator was 113.4.

Which of the following people can be described as "structurally unemployed"? (i) Mola is trained as a textile worker but is currently unemployed. He wants to work in the textile industry, which is unionized. Wages are high, but firms in this industry cannot offer jobs at lower wages due to the union requirements. Therefore, no jobs are available. (ii) Agnes believes that she can get a better job in Alaska. Therefore, she quits her job in West Virginia and is looking for a job in Alaska. (iii) Pratt has just retired after working for 40 years in a candle-making factory. (iv) The minimum wage has just been raised, and Philomena finds that fewer jobs are available in the fast-food industry. She is unable to find a job. (v) Cary will graduate in two months, after being a full-time student for the past four years. She wants to find a job in the investment banking sector. Mola and Cary Agnes and Pratt Agnes and Philomena Mola and Philomena

Mola and Philomena