Econ 155 Test 2
Which of the following is not correct?
Unemployment insurance decreases frictional unemployment.
Which of the following is not correct?
This economy experienced growth from 1975 to 1976
When the consumer price index rises, the typical family
has to spend more dollars to maintain the same standard of living
The real interest rate tells you
how fast the purchasing power of your bank account rises over time.
Grapes are considered intermediate goods
if the purchaser uses them to make wine to sell others but not if the purchaser eats them.
Which of the following is an example of depreciation
computers becoming obsolete
In the United States, if the price of imported oil rises so that the prices of gasoline and heating oil rise, then the
consumer price index rises much more than does the GDP deflator.
Which of the following examples of household spending is categorized as investment rather than consumption
expenditures on new housing
Unions contribute to
structural but not frictional unemployment.
What was the real interest rate in 2015?
2.0%
The labor force of Aridia in 2011 was
1,900
Since 1960, the natural rate of unemployment in the U.S. has been between
5% and 6%
If the local government imposed a minimum wage of $7 in Productionville, how many people would be unemployed?
5,000
Suppose in the year 2000 Ken earned $60,000 per year. If the CPI in the year 2000 was 172.2 and in 2015 was 236.7, what is the minimum level of income Ken would have needed to earn in 2015 to have maintained the same standard of living he had in 2000?
$82,474
The natural rate of unemployment (i) is the economy's desirable level of unemployment. (ii) arises from a single problem that has a single solution. (iii) is the amount of unemployment that does not go away on its own.
(iii) only
Suppose the consumer price index was 184 in 2009 and 198.17 in 2010. The nominal interest rate during this period was 5.8 percent. What was the real interest rate during this period?
-1.9 percent
If the nominal interest rate is 6 percent and the rate of inflation is 10 percent, then the real interest rate is
-4 percent.
If the government imposes a minimum wage of $4, how many workers will be unemployed?
0
In 1931, President Herbert Hoover was paid a salary of $75,000. Government statistics show a consumer price index of 15.2 for 1931 and 237 for 2015. President Hoover's 1931 salary was equivalent to a 2015 salary of about
$1,169,408.
In the economy of Talikastan in 2015, exports were $200, GDP was $2000, government purchases were $200, imports were $270, and investment was $500. What was Talikastan's consumption in 2015?
$1370
In the economy of Talikastan in 2015, consumption was $700, exports were $200, government purchases were $300, imports were $150, and investment was $400. What was Talikastan's GDP in 2015?
$1450
If in some year nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP
$15 billion
If the CPI was 95 in 1955 and is 475 today, then $100 today purchases the same amount of goods and services as
$20.00 purchased in 1955.
Marion collected Social Security payments of $250 a month in 1985. If the price index rose from 90 to 108 between 1985 and 1986, then her Social Security payments for 1986 should have been
$300
What was country A's consumption in 2010?
$3311
Suppose that the Bureau of Labor Statistics reports that the entire adult population of Mankiwland can be categorized as follows: 25 million people employed, 3 million people unemployed, 1 million discouraged workers, and 1 million people who are either students, homemakers, retirees, or other people not seeking employment.
10.7%
The unemployment rate of Aridia in 2012 was
11.1%.
If 2012 is the base year, then the CPI for 2013 was
132.8
What is the adult male population in Meditor?
135 million
This country's output grew
15.4% from 2016 to 2017.
In June 2009 the Bureau of Labor Statistics reported an adult population of 234.9 million, unemployment of 12.4 million, and employment of 141.6 million. Based on these numbers the labor-force participation rate was
154/234.9.
If the nominal interest rate is 8 percent and the real interest rate is 5.5 percent, then the inflation rate is
2.5 percent.
Suppose that the adult population in the country of Atlantis is 115 million. If 80 million people are employed and 5 million are unemployed, then
30 million are not in the labor force
If 2012 is the base year, then the inflation rate in 2013 was
32.8 percent.
For an imaginary economy, the value of the consumer price index was 140 in 2013 and 146.5 in 2014. The economy's inflation rate for 2014 was
4.6percent
The price index was 150 in the first year, 142.5 in the second year, and 138.2 in the third year. The economy experienced
5.0 percent deflation between the first and second years, and 3.0 percent deflation between the second and third years
A typical American worker covered by unemployment insurance receives
50 percent of his former wages for 26 weeks.
If the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was
6 percent.
In 2014, the Italian adult non-institutionalized population was 38.8 million, the labor force was 25.4 million, and the number of people employed was 22 million. According to these numbers, the Italian labor-force participation rate and unemployment rate were about
65.5% and 13.4%
In 2016 the Bureau of Labor Statistics reported that there were 57.1 million people over age 25 whose highest level of education was some college or an associate degree. Of these, 36.4 million were employed and 1.5 million were unemployed. What were the labor-force participation rate and the unemployment rate for this group?
66.4% and 4.0%
Suppose that the adult population is 4 million, the number of unemployed is 0.25 million, and the labor-force participation rate is 75%. What is the unemployment rate?
8.3%
Which of the following changes in the price index produces the greatest rate of inflation: 80 to 100, 100 to 120, or 150 to 170?
80 to 100
The consumer price index and the GDP deflator are two alternative measures of the overall price level. Which of the following statements about the two measures is correct?
A change in the price of Korean televisions is reflected in the U.S. consumer price index but not in the U.S. GDP deflator.
Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been chosen as the base year. In 2012, the basket's cost was $80.00; in 2013, the basket's cost was $84; and in 2014, the basket's cost was $87.60. The value of the CPI was
All of the above are correct.
Unemployment insurance
All of the above are correct.
Which of the following is included in the investment component of GDP?
All of the above are included in the investment component of GDP.
On the basis of the information presented in the table below, which presents the correct ordering of real GDP per person from highest to lowest?
Atlantis, Bensalem, Merpois
Which of the following is not correct?
Minimum wages are the predominant reason for unemployment in the U.S. economy.
Which of the following statements about GDP is correct?
Nominal GDP values production at current prices, whereas real GDP values production at constant prices
Which of the following is not included in the investment component of GDP?
None of the above are included in the investment component of GDP.
Sophia puts money in the bank and earns a 5 percent nominal interest rate. If the inflation rate is 2 percent, then after one year,
Sophia will have 5 percent more money, which will purchase 3 percent more goods
The Patersons bought a home that was newly constructed in 2007 for $275,000. They sold the home in 2015 for $255,000. Which of the following statements is correct regarding the sale of the house?
The 2015 sale affected neither 2007 GDP nor 2015 GDP.
Buddy is the owner of a firm that bottles beer in St. Louis, Missouri. There are many other such firms in the area. Buddy decides that if he pays his workers a wage higher than the going market wage, his profits will increase. Which of the following is a likely explanation for his decision?
The higher the wage, the less often his workers will choose to leave his firm
Which of the following is not a question addressed by macroeconomists?
What is the impact of foreign competition on the U.S. auto industry?
Net exports equal
Y - (C + I + G).
Which of the following is the correct formula for calculating the inflation rate?
[(CPI in year 2 - CPI in year 1) / CPI in year 1] x 100
A form of government spending that is not made in exchange for a currently produced good or service is called
a transfer payment.
Efficiency wages, minimum-wage laws, and unions all keep wages
above the equilibrium level, causing a surplus of labor.
Minimum-wage laws
and firms paying wages above equilibrium to reduce worker turnover both create structural unemployment
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
Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has
caused measured GDP to rise.
The deviation of unemployment from its natural rate is called
cyclical unemployment
If total spending rises from one year to the next, then
either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both.
For an economy as a whole, income must equal expenditure because
every dollar of spending by some buyer is a dollar of income for some seller
Government purchases include spending on goods and services by
federal, state, and local governments.
Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself. Which of the following is correct? The value of changing the oil is
included in GDP if Susan pays Speedy Lube to change it but not if she changes it herself.
During the current quarter, a firm produces consumer goods and adds some of those goods to its inventory rather than selling them. The value of the goods added to inventory is
included in the current quarter GDP as investment.
Efficiency wages
increase productivity but increase unemployment
Efficiency wages
increase structural unemployment by keeping wages above equilibrium
The cost of the basket
increased by $10 from 2004 to 2005.
The CPI differs from the GDP deflator in that
increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the CPI but not in the GDP deflator.
Satchel loses his job and immediately begins looking for another. Other things the same, the unemployment rate
increases, and the labor-force participation rate is unaffected.
To which of the problems in the construction of the CPI is the invention of pocket-sized computers most relevant?
introduction of new goods
GDP
is used to monitor the performance of the overall economy and is the single best measure of a society's economic well-being.
Which of the following is not an explanation for structural unemployment?
job search
Frictional unemployment results from
job searching. It is often thought to explain relatively short spells of unemployment
The consumer price index is used to
monitor changes in the cost of living over time
Unemployment numbers reported by the Bureau of Labor Statistics are reported based on a
monthly survey of about 60,000 households.
Josh is a full-time college student who is not working or looking for a job. The Bureau of Labor Statistics counts Josh as
neither in the labor force nor unemployed.
Consider a small economy in which consumers buy only two goods: pretzels and cookies. In order to compute the consumer price index for this economy for two or more consecutive years, we assume that
neither the number of pretzels nor the number of cookies bought by the typical consumer changes from year to year.
If the prices of all goods and services produced in the economy rose while the quantity of all goods and services stayed the same, which would rise?
nominal GDP but not real GDP
Suppose an economy produces only eggs and ham. In 2009, 100 dozen eggs are sold at $3 per dozen and 50 pounds of ham sold at $4 per pound. In 2010, the base year, eggs sold at $1.50 per dozen and ham sold at $5 per pound. For 2009,
nominal GDP is $500, real GDP is $400, and the GDP deflator is 125.
Transfer payments are
not included in GDP because they are not payments for currently produced goods or services.
Changes in the GDP deflator reflect
only changes in prices
The Bureau of Labor Statistics counts discouraged workers as
out of the labor force. If they were counted as unemployed the unemployment rate would be higher
By not taking into account the possibility of consumer substitution, the CPI
overstates the cost of living.
More generous unemployment insurance would
raise frictional unemployment
Unions
raise the wages of unionized workers and raise unemployment
In 2017, this country's
real GDP was $900, and the GDP deflator was 138.9
Cyclical unemployment refers to
short-run fluctuations around the natural rate of unemployment.
Cyclical unemployment is closely associated with
short-run ups and downs of the economy
In calculating the CPI, a fixed basket of goods and services is used. The quantities of the goods and services in the fixed basket are determined by
surveying consumers
An important difference between the GDP deflator and the consumer price index is that
the GDP deflator reflects the prices of all final goods and services produced domestically, whereas the consumer price index reflects the prices of goods and services bought by consumers.
Economists use the term inflation to describe a situation in which
the economy's overall price level is rising.
GDP is defined as the
value of all final goods and services produced within a country in a given period of time.