econ 1010 exam 1

According to the law of demand, people buy more of a good when:

the price falls.

Janet is receiving a 5% pay raise. If the rate of inflation is 2%, then Janet's purchasing power is:

rising

Which of the following transactions would NOT be included in the GDP calculation of a country?

supplemental income paid by the government to a disabled person

Gross domestic product is a measure of:

an economy's total output.

When the economy is operating at the natural rate of unemployment:

cyclical unemployment is zero.

Which component is the smallest part of U.S. GDP?

net exports

As your income increases, you are less likely to purchase normal goods.

False

Unemployed workers who voluntarily quit their jobs to search for a better position are categorized as _____ unemployed.

frictionally

Inflation is a:

general rise in prices.

In the formula for GDP (GDP = C + I + G + (X - M)), what does M represent?

imports

A consumer price index change from 130 to 135 reflects a 3.85% inflation rate.

True

If both supply and demand shift, but you don't have information about which curve shifted the most, then the direction of the change in either price or quantity (but not both) can be predicted.

True

The supply is the maximum amount that producers are willing to offer for sale at specific prices.

True

(Table) When you look at "Table: GDP Data for Two Countries," which government purchases do you see that represent a larger share of economic activity in which country?

Econia because its G/GDP is larger.

Discouraged workers are counted in the labor force.

False

Leisure time is included in the GDP accounts.

False

Which of the following would be considered frictional unemployment? I. Alisha has taken a job at a different company in order to accept a promotion. She quit her current job but has one month off until she starts her new job. II. John has lost his job as a book binder as the demand for e-books has replaced demand for traditional books in the country. III. Melissa quit her full-time job to become a full-time student in order to pursue her Ph.D.

I only

Which of the following statements describe(s) the unemployment rate? I. The unemployment rate includes those people who do not have a job and have ended their job search. II. The unemployment rate counts as employed those people who may be only working part-time. III. The unemployment rate is the percentage of the entire U.S. population that does not have a job but is searching for one.

II only.

In the United States, people are considered unemployed if and when they:

do not have a job but are available for work and have been actively seeking work.

The two approaches used by the government in estimating GDP are:

expenditure and income.

When demand increases, the demand curve:

shifts to the right.

At one time, Pittsburgh, Pennsylvania, was known for its poor air quality. Locals said that a man wearing a white shirt when he walked into the city would have a black shirt when he left. Since that time, the city has greatly reduced its air and water pollution. As a result of cleaner air and water:

the standard of living of the citizens of Pittsburgh has increased, even though the improvement in the environment was not reflected in its GDP.

Econoland and Macroland are neighboring countries. Which of the following would NOT be included in the GDP of Econoland?

the value of the output of a factory in Macroland that is owned by a company whose headquarters are located in Econoland

Suppliers of Chia Pets have reduced supply since the gift-giving season has passed. Suppliers are MOST likely responding to:

their expectation that the price of Chia Pets will fall in the marketplace.

(Table) According to the table, what is the value of this country's net exports?

-$35

What is an example of a final good?

bacon purchased at a grocery store

John expects to get a raise equal to the increase in the consumer price index (CPI). The CPI has gone from 160 to 164. If John's salary last year was $50,000, what salary does he expect to earn this year?

$51,250

(Table) The associated table provides a hypothetical bundle of goods. If 2014 is selected as the base year, the value of the GDP deflator in 2017 would be:

108.90

If nominal GDP in 2014 is $20,000 billion while real GDP is $16,000 billion, then the GDP deflator in 2014 is:

125

(Table) Suppose the Bureau of Labor Statistics collects the data presented in the following table: If 2010 is the base year, then the consumer price index for 2012 is:

125.

(Table) According to the table, what is the unemployment rate of this economy?

14.3%

When Mr. Wilson worked full time, he paid a service to have his house cleaned twice a month. Now that he is retired, Mr. Wilson does his own cleaning. What is the effect on GDP?

GDP falls as a result of this change.

Suppose that anticipated inflation is 4% for the coming year, with loan contracts set at 7% with the expectation of a 3% return after inflation. If the actual inflation rate at the end of the year is 2%:

creditors gain at the expense of debtors.

The supply of coffee has increased twice as much as the demand for coffee. As a result, we can predict a(n):

decrease in equilibrium price, but equilibrium quantity increases.

If the demand for iPhones rises as incomes increase, then the iPhone is a(n) _____ good.

normal

Which of the following statements regarding the types of unemployment is TRUE?

Frictional unemployment is generally short-term, whereas structural unemployment is often long-term.

Which event will NOT cause the supply curve for kayaks to shift to the left?

a decrease in the price of a kayak

(Figure: Interpreting Demand Curves) In the demand curve shown, an increase in price from $1 to $2 will:

cause quantity demanded to fall from 30 units to 20 units.

(Figure: Interpreting Supply Shifts) The shift of the supply curve from A to B is an example of a:

change in supply.

Dave brags to his dad that his $45,000 starting salary as a computer programmer is much higher than his dad's $28,000 starting salary some years ago. If the consumer price index the year Dave begins work is 180.5 while the consumer price index the year his dad started work was 110.8, Dave is:

incorrect; adjusting for price changes, his salary is less than his dad's salary.

Which scenario is the MOST likely effect of a decrease in the price of flashlights on the market for batteries?

increased equilibrium price and increased equilibrium quantity

When quantity demanded in a market equals quantity supplied, then the:

market is in equilibrium.

When an economy is going through disinflation:

prices are rising at a slowing pace.

When the supply of coffee decreases and the demand for coffee increases simultaneously, the price of coffee will:

rise.

A decrease in population in a market will cause a:

shift in the demand curve to the left.

Since the invention of automatic teller machines, many bank tellers have lost their jobs. This is an example of _____ unemployment.

structural

If a car is produced in Detroit in 2013 but not sold until 2014, it should be included in _____ GDP, and its value should be counted in _____.

2013's; inventory changes

(Table) According to the table, what is the labor force of this economy?

350

(Table) According to the table, the GDP for 2010 was: GDP Expenditures for 2010

$14,592.3 billion.

There are 15 million people living in Marketstan, of whom 9 million are working and 1 million are actively looking for work. What is the size of Marketstan's labor force?

10 million