Potential multiple choice

An economy produces only 500,000 tables valued at $100 each. Of these 100,000 are sold to consumers, 200,000 are sold to businesses, 100,000 are sold to the government, and 50,000 are sold abroad. No tables are imported. The unsold tables at the end of the year are held in inventory by the table manufacturers. What is the value of GDP? A. $5 millionB. $40 millionC. $45 millionD. $50 million

C.

If the Citrus Growers Association grows $1 million worth of oranges, sells $500,000 worth of oranges to consumers, uses the rest to make orange juice that is sold to consumers for $3 million, Citrus Grower's contribution to GDP is: A. $500,000.B. $1,000,000.C. $3,500,000.D. $4,000,000.

C.

If two countries are identical except that there is significant air and water pollution in one, then the level of GDP: A. will be higher in the country with the pollution.B. will be higher in the country with no pollution.C. will be the same in both countries.D. will be greater than the level of economic well being in each country.

C.

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: 7. What is the sum of the value added of all of the firms? A. $1.50B. $2.00C. $4.00D. $7.00

C.

Which of the following would increase the government purchases component of U.S. GDP? A. The U.S. federal government pays $3 billion in pensions to government workers.B. The U.S. federal government pays $3 billion in interest on the national debt.C. The U.S. federal government pays $3 billion in salaries to soldiers in the military.D. The U.S. federal government pays $3 billion in interest to foreign holders of U.S. government bonds.

C.

Given the following data for an economy, compute the investment component of GDP. A. 300B. 400C. 800D. 900

D.

An American soldier stationed in North Carolina receives a paycheck from the federal government for $300, which she uses to purchase a $100 MP3 player made in China by a Chinese firm and $200 for fruit and vegetables from a local farmers market. As a result, U.S. GDP increases by a. $200. b. $300. c. $500. d. $600.

a.

An economic expansion caused by a shift in aggregate demand causes prices to a. rise in the short run, and rise even more in the long run. b. rise in the short run, and fall back to their original level in the long run. c. fall in the short run, and fall even more in the long run. d. fall in the short run, and rise back to their original level in the long run.

a.

An open-market purchase of government securities by the Fed will: A. increase bank reserves, and the money supply will increase.B. decrease bank reserves, and the money supply will increase.C. increase bank reserves, and the money supply will decrease.D. decrease bank reserves, and the money supply will decrease.

a.

Assume one investor bought a 10-year inflation-protected bond with a fixed annual real rate of 1.5% and another investor bought a 10-year bond without inflation protection with a nominal annual return of 4.2%. If inflation over the 10-year period averaged 2 percent, which investor earned a higher real return? A. The investor who purchased the inflation protected bond.B. The investor who purchased the bond without inflation protection.C. Both investors earned the same real return.D. Neither investor earned a positive real return.

a.

During the 2008 financial crisis velocity decreased. This means that the rate at which money changed hands a. decreased. Other things the same, a decrease in velocity decreases the price level. b. decreased. Other things the same, a decrease in velocity increases the price level. c. increased. Other things the same, an increase in velocity decreases the price level. d. increased. Other things the same, an increase in velocity increases the price le

a.

If people decide to hold more currency relative to deposits, the money supply a. falls. The Fed could lessen the impact of this by buying Treasury bonds. b. falls. The Fed could lessen the impact of this by selling Treasury bonds. c. rises. The Fed could lessen the impact of this by buying Treasury bonds. d. rises. The Fed could lessen the impact of the by selling Treasury bonds.

a.

If people decide to hold more currency relative to deposits, the money supply a. falls. The larger the reserve ratio is, the more the money supply falls. b. falls. The larger the reserve ratio is, the less the money supply falls. c. rises. The larger the reserve ratio is, the more the money supply rises. d. rises. The larger the reserve ratio is, the less the money supply rises.

a.

If the natural rate of unemployment equals 6% and the actual rate of unemployment equals 5%, then cyclical unemployment equals: A. -1%B. 20%C. 1%D. 6%

a.

If the price of motel rooms increases by 10% while the prices of other goods and services increase by 5% on average, the relative price of motel rooms has: A. increased.B. decreased by 5%.C. decreased by 10%.D. remained constant.

a.

On January 1, 2004, Edward invested $10,000 at 5% interest for one year. The CPI on January 1, 2004 stood at 1.60. On January 1, 2005, the CPI was 1.76. The real rate of interest earned by Edward was ____ percent. A. -5B. 0C. 5D. 8

a.

Some persons are counted as out of the labor force because they have made no serious or recent effort to look for work. However, some of these individuals may want to work even though they are too discouraged to make a serious effort to look for work. If these individuals were counted as unemployed instead of out of the labor force, then a. both the unemployment rate and labor-force participation rate would be higher. b. the unemployment rate would be higher ,and the labor-force participation rate would be lower. c. the unemployment rate would be lower, and the labor-force participation rate would be higher. d. both the unemployment rate and labor-force participation rate would be lower.

a.

Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the a. money supply to fall. To reduce the impact of this the Fed could lower the discount rate. b. money supply to fall. To reduce the impact of this the Fed could raise the discount rate. c. money supply to rise. To reduce the impact of this the Fed could lower the discount rate. d. money supply to rise. To reduce the impact of this the Fed could raise the discount rate.

a.

Suppose that a well-respected study published in Child Psychology Today finds that a very high proportion of children raised by stay-at-home fathers are accepted to Harvard University. If a large number of previously working fathers quit their jobs and become stay-at-home dads, which of the following will occur, all else equal? (i) The unemployment rate will decrease. (ii) The size of the labor force will decrease. (iii) The number of unemployed people will increase. (iv) The unemployment rate will increase. a. (i) and (ii) only b. (ii) and (iv) only c. (i), (ii), and (iii) only d. (ii), (iii), and (iv) only

a.

The link between the money supply and prices is strongest in: A. the long run.B. the short run.C. a recession.D. a boom.

a.

The manager of the bank where you work tells you that the bank has $400 million in deposits and $340 million dollars in loans. The Fed then raises the reserve requirement from 5 percent to 10 percent. Assuming everything else stays the same, how much is the bank holding in excess reserves after the increase in the reserve requirement? a. $0 b. $20 million c. $40 million d. $60 million

a.

The market interest rate in Alpha is 7% and the market interest rate in Beta is 10%, but the inflation rate in Alpha is 3% and inflation rate in Beta is 8%. Which of the following statements is true? A. The real interest rate is higher in Alpha, but the nominal interest rate is higher in Beta.B. The real interest rate is lower in Alpha, but the nominal interest rate is lower in Beta.C. Both the real and nominal interest rates are higher in Alpha.D. Both the real and nominal interest rates are higher in Beta.

a.

Which of the following is an example of structural unemployment? A. Dora lost her job when the textile mill closed. She does not have skills to work in another industry and has been unemployed for over a year.B. Marsha was laid off from her job with the airline because the recession has reduced the demand for airline travel. She expects to get her job back when the economy picks up.C. Alan, a software engineer, lost his job when the internet startup he worked for went bankrupt. He interviewed with five companies in the area before taking a job with another firm in the industry.D. Jim had a job as an engineer, but quit when his wife was transferred to another state. He looked for a month before finding a new job that he liked

a.

A newspaper article informs you that most businesses reduced production in the last quarter but also sold from their inventories during the last quarter. Based on this information GDP likely a. increased. b. decreased. c. stayed the same. d. may have increased, decreased, or stayed the same.

b.

According to the quantity equation, the price level would change less than proportionately with a rise in the money supply if there were also a. either a rise in output or a rise in velocity. b. either a rise in output or a fall in velocity. c. either a fall in output or a rise in velocity. d. either a fall in output or a fall in velocity.

b.

An increase in the unemployment rate can be the result of either _____ or _____ holding the other factors constant. A. more unemployed workers; more people in the labor forceB. more unemployed workers; fewer people in the labor forceC. more employed workers; more people in the labor forceD. fewer unemployed workers; more people in the labor force

b.

Compared to older workers, younger workers change jobs more frequently, so they are more prone to _____ unemployment, and they have fewer skills, so they are more prone to ____ unemployment. A. cyclical; frictionalB. frictional; structuralC. structural; frictionalD. frictional; cyclical

b.

Despite some problems with equating GDP with economic well-being, real GDP per person does imply greater economic well-being because it tends to be positively associated with: A. crime, pollution, and economic inequality.B. better education, health and life expectancy.C. poverty, depletion of nonrenewable resources, and congestion.D. unemployment, availability of goods and services, and better education.

b.

For policymakers the problem with a recessionary gap is _____ and the problem with an expansionary gap is _____. A. a tendency for inflation to develop; wasted resourcesB. wasted resources; a tendency for inflation to developC. an increase in cyclical unemployment; an increase in structural unemploymentD. an increase in structural unemployment; an increase in cyclical unemployment

b.

Fred purchases a bond, newly issued by the Big Time Corporation, for $10,000. The bond pays $400 to its holder at the end of the first, second, and third years and pays $10,400 upon its maturity at the end of four years. The principal amount of this bond is ___, the coupon rate is ____, and the term of this bond is _____. A. $400 ; 40%; four yearsB. $10,000; 4%; four yearsC. $10,000; $400; 4%D. $10,400; 4%; four years

b.

If a borrower and lender agree to an interest rate on a loan when inflation is expected to be 7% and inflation turns out to be 10% over the life of the loan, then the borrower _____ and the lender ______. A. gains; gainsB. gains; losesC. is not affected; gainsD. loses; gains

b.

If the Fed raised the reserve requirement, the demand for reserves would a. increase, so the federal funds rate would fall. b. increase, so the federal funds rate would rise. c. decrease, so the federal funds rate would fall. d. decrease, so the federal funds rate would rise.

b.

If the Federal Reserve increased the money supply by 4 percent per year, real GDP grew by 3 percent per year, and the rate of inflation was 3 percent per year, then velocity must have increased by approximately _______ percent per year. A. 1B. 2C. 3D. 6

b.

If the federal funds rate were above the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by a. buying bonds. This buying would reduce reserves. b. buying bonds. This buying would increase reserves. c. selling bonds. This selling would reduce reserves. d. selling bonds. This selling would increase reserves.

b.

In which case can we be sure aggregate demand shifts left overall? a. people want to save more for retirement and the Fed increases the money supply. b. people want to save more for retirement and the Fed decreases the money supply. c. people want to save less for retirement and the Fed increases the money supply. d. people want to save less for retirement and the Fed decreases the money supp

b.

Other things the same, if reserve requirements are increased, the reserve ratio a. increases, the money multiplier increases, and the money supply increases. b. increases, the money multiplier decreases, and the money supply decreases. c. decreases, the money multiplier increases, and the money supply increases. d. decreases, the money multiplier decreases, and the money supply increases.

b.

Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the a. money supply to fall. To reduce the impact of this the Fed could sell Treasury bonds. b. money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds. c. money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds. d. money supply to rise. To reduce the impact of this the Fed could buy Treasury bonds.

b.

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to a. rise. This rise in price expectations shifts the short-run aggregate supply curve to the right. b. rise. This rise in price expectations shifts the short-run aggregate supply curve to the left. c. fall. This fall in price expectations shifts the short-run aggregate supply curve to the right. d. fall. This fall in price expectations shifts the short-run aggregate supply curve to

b.

The aggregate quantity of goods and services demanded changes as the price level rises because a. real wealth falls, interest rates rise, and the dollar appreciates. b. real wealth falls, interest rates rise, and the dollar depreciates. c. real wealth rises, interest rates fall, and the dollar appreciates. d. real wealth rises, interest rates fall, and the dollar depreciates.

b.

There is evidence that the rate at which money changed hands rose during the German hyperinflation. This means that a. velocity rose. If monetary neutrality holds the rise in velocity increased the ratio M/P. b. velocity rose. If monetary neutrality holds the rise in velocity decreased the ratio M/P. c. velocity fell. If monetary neutrality holds the fall in velocity increased the ratio M/P. d. velocity fell. If monetary neutrality holds the fall in velocity decreased the ratio M

b.

When the Fed sells government securities, the banks': A. reserves will increase and lending will expand causing an increase in the money supply.B. reserves will decrease and lending will contract causing a decrease in the money supply.C. reserve requirements will increase and lending will contract causing a decrease in the money supply.D. reserves/deposit ratio will increase and lending will expand causing an increase in the money supply.

b.

Which of the following is an example of cyclical unemployment? A. Dora lost her job when the textile mill closed. She does not have skills to work in another industry and has been unemployed for over a year.B. Marsha was laid off from her job with the airline because the recession has reduced the demand for airline travel. She expects to get her job back when the economy picks up.C. George is an unskilled worker who mows lawns in the summer, but is unemployed the rest of the year.D. Jim had a job as an engineer, but quit when his wife was transferred to another state. He looked for a month before finding a new job that he liked.

b.

Who of the following would necessarily be included in the Bureau of Labor Statistics' "unemployed" category? a. Huey, who did not work during the previous four weeks b. Dewey, who tried to find new employment during the previous four weeks c. Louie, who was an unpaid worker during the previous four weeks d. None of the above is correct.

b.

A German citizen buys an automobile produced in the United States by a Japanese company. As a result, a. U.S. net exports increase, U.S. GDP is unaffected, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected. b. U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, German GNP is unaffected, and German GDP decreases. c. U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected. d. U.S. net exports and GDP are unaffected, Japanese GNP increases, and German net exports, GNP, and GDP decrease.

c.

A report indicated that the average real wage in manufacturing declined by 2% between 1990 and 2000. If the CPI equaled 1.30 in 1990, 1.69 in 2000, and the average nominal wage in manufacturing was $35 in 2000, what was the average nominal wage in manufacturing in 1990? A. $20.71B. $21.12C. $26.92D. $27.46

c.

AA Appliances sells refrigerators. In 2015 it added $100,000 to its inventory. $10,000 of this addition was from used refrigerators, and the remaining $90,000 was from their purchases of newly manufactured refrigerators. How much of AA's inventory is included in 2015 GDP? a. $0 b. $10,000 c. $90,000 d. $100,000

c.

Based on the following information, what is the unemployment rate? A. 7.2%B. 8.0%C. 10.0%D. 28.0%

c.

Extremely rapid rates of money growth are usually the result of: A. rapid population growth.B. excessively high interest rates.C. large government budget deficits.D. sharp increases in productivity.

c.

GA wind farm in Iowa buys a large turbine generator from a Swedish-owned factory located in Connecticut that uses workers who live in Connecticut. As a result, a. U.S. investment, GDP, and GNP all increase by the same amount. b. U.S. investment increases, but GDP and GNP are unaffected by the purchase. c. U.S. investment and GDP increase by the same amount, but U.S. GNP increases by a smaller amount. d. U.S. investment and GNP increase by the same amount, but U.S. GDP increases by a smaller amount.

c.

If output is above its natural rate, then according to sticky-wage theory a. workers and firms will strike bargains for lower wages. In response to the lower wages firms will produce less at any given price level. b. workers and firms will strike bargains for lower wages. In response to the lower wages firms will produce more at any given price level. c. will strike bargains for higher wages. In response to the higher wages firms will produce less at any given price level. d. workers and firms will strike bargains for higher wages. In response to the higher wages firms will produce more at any given price level.

c.

If the economy is initially at long-run equilibrium and aggregate demand declines, then in the long run the price level a. and output are higher than in the original long-run equilibrium. b. and output are lower than in the original long-run equilibrium. c. is lower and output is the same as the original long-run equilibrium. d. is the same and output is lower than in the original long-run equilibrium.

c.

If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by a. buying bonds. This buying would reduce reserves. b. buying bonds. This buying would increase reserves. c. selling bonds. This selling would reduce reserves. d. selling bonds. This selling would increase reserves.

c.

In Macroland potential GDP equals $8 trillion and real GDP equals $7.52 trillion. Macroland has a(n) _________ gap equal to _____ percent of potential GDP. A. expansionary; -48B. expansionary; 6C. recessionary; 48D. recessionary; -6

c.

In the long run total spending affects ______ and output is determined by _______. A. inputs and productivity; pricesB. inputs and productivity; total spendingC. prices; inputs and productivityD. prices; meeting demand at preset prices

c.

In the short run ______ determines output and in the long run ____ determines output. A. potential output; pricesB. potential output; total spendingC. total spending; potential outputD. total spending; prices

c.

Joy's Java Café needs $4,000 cash per day for customer transactions. Joy has a choice between going to the bank first thing on Monday morning to withdraw $20,000 - enough cash for the whole week - or going to the bank first thing every morning for $4,000 each time. Joy puts the cost of going to the bank at $3 per trip. Assume that funds left in the bank earn precisely enough interest to keep their purchasing power unaffected by inflation. Joy's Java Cafe is open 5 days a week for 50 weeks each year. When the inflation rate is 10% Joy goes to the bank everyday instead of once a week. Joy's annual shoe leather costs of inflation equal _____. A. $ 3B. $150C. $600D. $750

c.

Other things the same if reserve requirements are decreased, the reserve ratio a. decreases, the money multiplier increases, and the money supply decreases. b. increases, the money multiplier increases, and the money supply increases. c. decreases, the money multiplier increases, and the money supply increases. d. increases, the money multiplier increases, and the money supply decreases.

c.

Pat pays $10,000 for a newly issued two-year government bond with a $10,000 face value and a 6 percent coupon rate. One year later, after receiving the first coupon payment, Pat sells the bond. If the current one-year interest rate on government bonds is 5 percent, then the price Pat receives is: A. $10,000.B. $500.C. greater than $10,000.D. less than $10,000.

c.

Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2008, Quality Motors produced $25 million worth of automobiles and sold $12 million in the U.S. and $13 million in Mexico. In addition, it sold $2 million from the previous year's inventory in the U.S. The transactions just described contribute how much to U.S. GDP for 2008? a. $12 million b. $14 million c. $25 million d. $27 million

c.

Sally purchased a log-splitter five years ago. This year, she purchases some new parts, gasoline, oil, and spends 2 hours repairing the log-splitter. Which of the following is included in this year's GDP? a. the amount she paid to buy the new parts b. the amount she paid to buy new parts and gasoline c. the amount she paid to buy new parts, gasoline, and oil. d. the amount she paid to buy new parts, gasoline, oil, and the market value of the 2 hours spent to repair the log-splitter.

c.

Suppose banks decide to hold fewer excess reserves relative to deposits. Other things the same, this action will cause the a. money supply to fall. To reduce the impact of this the Fed could sell Treasury bonds. b. money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds. c. money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds. d. money supply to rise. To reduce the impact of this the Fed could buy Treasury bonds.

c.

The Soviet government in the 1980's never abandoned the ruble as the official currency. However, the people of Moscow preferred to accept a. cigarettes in exchange for goods and services, because they were convinced that cigarettes were going to soon become hard to come by. b. American dollars in exchange for goods and services, because rubles were extremely hard to come by. c. goods such as cigarettes or American dollars in exchange for goods and services, reminding us of the fact that government decree by itself is not sufficient for the success of a commodity money. d. All of the above are correct.

c.

When inflation rises people will a. demand more money so the price level rises. b. demand more money so the price level falls. c. demand less money so the price level rises. d. demand less money so the price level falls.

c.

Which of the following rises when the U.S. price level falls? a. interest rates b. the value of the dollar in the market for foreign-currency exchange c. real wealth d. All of the above are correct.

c.

56. Suppose that some people report themselves as unemployed when, in fact, they are working in the underground economy. If these persons were counted as employed, then a. both the unemployment rate and labor-force participation rate would be higher. b. both the unemployment rate and labor-force participation rate would be lower. c. the unemployment rate would be higher, and the labor-force participation rate would be higher. d. the unemployment rate would be lower, and the labor-force participation rate would be unaffected.

d.

83. Which of the following is correct? a. An increase in the money supply causes the interest rate to decrease so that aggregate demand shifts left. b. An increase in stock prices reduces consumption spending so that aggregate demand shifts left. c. An increase in the price level causes the exchange rate to rise so that aggregate demand shifts left. d. A recession in other countries reduces U.S. net exports so that U.S. aggregate demand shifts left.

d.

According to the quantity equation if velocity and real GDP are constant and the Federal Reserve increases the money supply by 5 percent, then the price level: A. decreases by 10 percent.B. decreases by 5 percent.C. increases by 10 percent.D. increases by 5 percent.

d.

Bob's Barber Shop cut 3,000 heads of hair in the year 2005 and 3,100 in the year 2006. The price of a hair cut was $7 in 2005 and $8 in 2006. If the year 2005 is the base year, what was Bob's contribution to real GDP in the year 2006? A. $21,000B. $21,700C. $24,000D. $24,800

d.

If the frictional rate of unemployment equals 2 percent, the structural rate of unemployment equals 3 percent, and the cyclical rate of unemployment equals 1 percent, then the natural rate of unemployment equals: A. 6%. B. 1%.C. 3%.D. 5%.

d.

If the principal amount of a bond is $2,000,000, the coupon rate is 6%, and the inflation rate is 4%, then the annual coupon payment made to the holder of the bond is _____. A. $12,000B. $40,000C. $80,000D. $120,000

d.

If the reserve ratio is 15 percent, and banks do not hold excess reserves, and people hold only deposits and no currency, then when the Fed sells $25.5 million worth of bonds to the public, bank reserves a. increase by $25.5 million and the money supply eventually increases by $382.5 million. b. increase by $25.5 million and the money supply eventually increases by $170 million. c. decrease by $25.5 million and the money supply eventually decreases by $382.5 million. d. decrease by $25.5 million and the money supply eventually decreases by $170 million.

d.

In December 1999 people feared that there might be computer problems at banks as the century changed. Consequently, people wanted to hold relatively more in currency and relatively less in deposits. In anticipation banks raised their reserve ratios to have enough cash on hand to meet depositors' demands. These actions by the public a. would increase the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have sold bonds. b. would increase the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds. c. would reduce the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have sold bonds. d. would reduce the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds.

d.

In a country with 200 million people aged 16 years and older, 120 million in the labor force, and 114 million employed, what is the participation rate? A. 5 percentB. 57 percentC. 75 percentD. 60 percent

d.

In the context of the aggregate-demand curve, the interest-rate effect refers to the idea that, when the price level increases, a. the real value of money decreases; in turn, the real value of the dollar increases in foreign exchange markets, which decreases net exports. b. the real value of money decreases; in turn, interest rates increase, which decreases net exports. c. households increase their holdings of money; in turn, interest rates decrease, which reduces spending on investment goods. d. households increase their holdings of money; in turn, interest rates increase, which reduces spending on investment goods.

d.

Involuntary part-time workers are: A. chronically unemployed.B. considered out of the labor force.C. short-term unemployed workers.D. not counted as unemployed.

d.

Michigan Cranberry Company sold $10 million worth of cranberries it produced. In producing cranberries, it purchased $1 million dollars worth of supplies from foreign countries and paid workers who reside in Canada but commute to the U.S. $1 million. How much did these transactions add to U.S. GDP? a. $12 million b. $11 million c. $10 million d. $9 million

d.

Other things the same, a decrease in the price level causes real wealth to a. fall, interest rates to fall, and the dollar to appreciate. b. fall, interest rates to rise, and the dollar to depreciate. c. rise, interest rates to rise, and the dollar to appreciate. d. rise, interest rates to fall, and the dollar to depreciate.

d.

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 a. one of them must be lying. b. both of them could be telling the truth if the labor force, and employment grew at the exact same rate. c. both of them could be telling the truth if the labor force grew slower than employment. d. both of them could be telling the truth if the labor force grew faster than employ

d.

Rank the countries from highest to lowest based on underground economic activity as a percentage of GDP. a. Bolivia, Thailand, United States, Sweden. b. Thailand, United States, Sweden, Bolivia. c. United States, Bolivia, Sweden, Thailand. d. Bolivia, Thailand, Sweden, United States.

d.

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: 8. If the corn was grown and the jar of popcorn produced in the year 2005, but the jar was sold at Friendly Groceries in the year 2006, what is the contribution of these transactions to GDP in the year 2005? A. $0.00B. $0.50C. $1.50D. $2.50

d.

Suppose that the total expenditures for a typical household in 2000 equaled $5,500 per month, while the cost of purchasing exactly the same items in 2005 was $6,875. If 2000 is the base year, the CPI for the year 2005 equals: A. 0.80B. 1.00C. 1.20D. 1.25

d.

Suppose the economy is in long-run equilibrium. If there is a sharp decline in government purchases combined with a significant increase in immigration of skilled workers, then in the short run, a. real GDP will rise and the price level might rise, fall, or stay the same. In the long-run, real GDP will rise and the price level might rise, fall, or stay the same. b. the price level will fall, and real GDP might rise, fall, or stay the same. In the long-run, real GDP and the price level will be unaffected. c. the price level will rise, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall. d. the price level will fall, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall.

d.

The BLS reports the U-6 measure of labor underutilization. Which of the following is how it computes U-6? a. (total unemployed + marginally attached workers)/adult population b. (total unemployed + marginally attached workers + part-time employed for economic reasons)/adult population c. (total unemployed + marginally attached workers)/(labor force + marginally attached workers) d. (total unemployed + marginally attached workers + part time employed for economic reasons)/(labor force + marginally attached workers)

d.

The Fed can reduce the federal funds rate by a. decreasing the money supply. To decrease the money supply it could sell bonds. b. decreasing the money supply. To decrease the money supply it could buy bonds. c. increasing the money supply. To increase the money supply it could sell bonds. d. increasing the money supply. To increase the money supply it could buy bonds.

d.

Which of the following is an example of frictional unemployment? A. Dora lost her job when the textile mill closed. She does not have skills to work in another industry and has been unemployed for over a year.B. Marsha was laid off from her job with the airline because the recession has reduced the demand for airline travel. She expects to get her job back when the economy picks up.C. George is an unskilled worker who mows lawns in the summer, but is unemployed the rest of the year.D. Hector looked for a job for five weeks after finishing college. He turned down several jobs that didn't use his skills, but now has a job requiring the expertise he gained in college.

d.

Which of the following workers is least likely to lose his/her job during a recession? A. carpenterB. automobile assembly line workerC. rooferD. police officer

d.

Who of the following would be classified as employed? A. Brenda Smith, an 18 year old full-time college student.B. Mario Faubert, a NHL hockey player at home sick with the flu.C. Jack Little, a 21 year old new college graduate actively looking for his first job.D. Sarah Lopez, a retired public school teacher.

d.

Who of the following would classified as out of the labor force? A. A person with a part-time job.B. A person with a full-time job.C. A person willing to work, who had looked for a job in the last week.D. A person willing to work who had not looked for a job in two months.

d.