Sample Midterm 2 macroeconomics

Which of the following is an explanation for the existence of frictional unemployment

job search

If an American based firm opens and operates a new clothing factory in Honduras, then it is engaging in

Foreign direct investment

Janet is a farmer. What she has learned from experience but not her tractor is

Human capital

Greg learns how to bake from his grandmother. This is an example of

Human capital but not technological knowledge

Esmeralda worked part time for her mother's business without pay. Tabitha was absent from work because she had strep throat. Who is counted as "employed"

Both Esmeralda and Tabitha

Which of the following functions as both a store of value and a medium of exchange

Cash but not stocks

What promotes growth

Decrease barriers to trade

If it could increase its growth rates slightly, a country with low income would catch up with rich countries in about ten years.

False

Esther is considering expanding her dress shop. If interest rates rise she is

Less likely to expand. This illustrates why the demand for loanable funds slopes downward

John and Jane decide to go on a vacation. As a result, they withdraw $2,500 from their savings account to purchase $2,500 worth of traveler's checks. As a result of these changes,

M1 increases by $2,500 and M2 stays the same.

When the government's budget deficit increases, the government is borrowing

More and public savings falls

Other things the same, when the interest rate rises,people would want to lend

More, making the quantity of loanable funds supplied increase

An increase in the government's budget surplus means public saving is

Positive and increasing

What does not promote growth

Restricting foreign portfolio investment

Tatiana is waiting to be recalled to a job from which she was laid off. Ivan was fired but has not looked for work during the last two months. Who does the Bureau of Labor Statistics count as "unemployed"?

Tatiana but not Ivan

The quantity of loanable funds demanded is

Taxes(minus transfers)+government purchases

In a closed economy, private saving is

The amount of income that households have left after paying for their taxes and consumption

If a production function has constant returns to scale, then if all inputs double so does production

True

Sheila is on a temporary layoff from her automobile factory job but has not looked for work in the last four weeks. The BLS counts Sheila as

Unemployed and in the labor force

The natural rate of unemployment

Varies less than the measured unemployment rate

If the demand for loanable funds shifts to the right, then the equilibrium interest rate

and quantity of loanable funds rise

Which of the following is included in both M1 and M2

currency, demand deposits, other checkable deposits

If the natural rate of unemployment is 5.2 percent and the actual rate of unemployment is 5.7 percent, then by definition there is

cyclical unemployment amounting to 0.5 percent of the labor force.

To be counted as "employed" in the U.S. labor force statistics, a person

does not have to be working for pay if they are working for a family business and does not have to be working full time

You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate?

medium of exchange

The slope of the demand for loanable funds curve represents the

negative relation between the real interest rate and investment.

The equipment and structures available to produce goods and services are called

physical capital

Which of the following is not a function of money

protection against inflation

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

public saving

Given that Monika's income exceeds her expenditures, Monika is best described as a

saver or as a supplier of funds

Which of the following is included in M2 but not in M1

savings deposits

If the government's expenditures exceeded its receipts, it would likely

sell bonds directly to the public

Cyclical unemployment refers to

short-run fluctuations around the natural rate of unemployment

Dollar bills, rare paintings, and emerald necklaces are all

stores of value

What can be measured by the level of real GDP per person

the standard of living but not productivity

Who of the following is not included in the Bureau of Labor Statistics' "employed" category?

those waiting to be recalled to a job from which they had been laid off