Econ 201 Exam 2 Linan Peng

If two countries have the same steady-state levels of output, the country that is _____ today will _____ in per capita output. A. poorer; always lag behind B. poorer; catch up C. richer; eventually fall behind D. richer; become even further ahead

B

Minimum wage laws and unions tend to: A. lower wages and raise unemployment. B. raise wages and raise unemployment. C. lower wages and lower unemployment. D. raise wages and lower unemployment.

B

The source of the _____ for loanable funds is investment. A. supply B. demand C. market D. interest rate

B

Which of the situations is an example of the crowding-out effect on investment as it pertains to macroeconomics? A. The government of Walla Walla spent $4.3 billion dollars and collected $2.2 billion dollars in tax revenue. B. Jack wants to borrow money to create a cowboy-themed inflatable bounce house for kids called "Wild Wild West." However, the government is running a deficit which has increased interest rates so much that Jack can no longer afford to borrow the money. C. The government deficit is at an all-time high in the United States. As such, people begin to save more money in fear that takes will increase in the future. D. Candex, an eyeglass frame company, decides to cut the price on all of its frames to $10, which successfully drives out all other firms from the market.

B

A binding and effective interest rate ceiling creates _____ loanable funds. A. a shortage of B. a surplus of C. an equilibrium quantity of D. an increase in

A

Consider a hypothetical model for the loanable funds market. Suppose that the government decides to reduce the federal Goods and Services Tax (GST). How does this tax reduction impact investment and why? The tax reduction A. reduces investment because lowering the GST reduces savings. B. reduces investment because lowering the GST increases savings. C. increases investment because lowering the GST increases savings. D. increases investment because lowering the GST reduces savings.

A

Laws that make it more difficult (and more expensive) to fire workers: A. lead to higher rates of long-term unemployment. B. may raise unemployment rates but typically only in the short term. C. lead to higher rates of employment. D. typically lead to higher wages on average.

A

Many people say that if people save more, that is bad for the economy. They say that spending money on consumer goods keeps the money moving through the economy. Does the Solow model say that? A. No; a higher savings rate is good for the economy. B. Yes; a higher savings rate leads to lower future consumption. C. No; a higher savings rate decreases the depreciation rate. D. Yes; a higher savings rate means the investment rate will be lower

A

Someone who recently moved to Florida because of its warmer climate will need to spend some time looking for a new job. This is an example of A. frictional unemployment. B. structural unemployment.

A

Suppose that Congress decided to exempt seniors from paying income tax on labor income. What would happen to the labor force participation rate for seniors? A. It would increase. B. It would decrease. C. It would remain the same. D. It is impossible to tell.

A

When workers lose their jobs and become officially unemployed, the number of people in the labor force: A. remains constant. B. increases. C. decreases. D. becomes difficult to predict

A

Which of the statements is the best description of a business cycle? A. alternating periods of increasing and decreasing economic output B. a calendar year divided into four quarters, each containing three months C. the time it takes a firm to convert raw materials into a final good or service D. the relationship between the returns on Treasury securities and the time to maturity

A

Which person can be categorized as a discouraged worker? A. Andy Friese was formerly employed at Mama's Used Cars. He has not worked there for six months and has given up looking for work. B. Mildred Ender currently works for Mama's Used Cars. She is unhappy when she realizes that there are no promotion opportunities at Mama's Used Cars. C. Candy Kane worked at Mama's Used Cars until two months ago. She is trying to find work in her dream profession as a chocolatier. D. Dan Druff currently works at Mama's Used Cars. He expects to be laid off in two weeks.

A

A business that pays for its workers to attend a technical college is increasing its: A. physical capital. B. human capital. C. organizational skills. D. technical knowledge.

B

For most of recorded history, economic growth has been: A. about the same as today. B. virtually nonexistent. C. a source of continuously rising living standards. D. a way to equalize the distribution of wealth around the world.

B

A rural village in a developing country has an economy based on agriculture. Then the government of the country provides the village with newly developed hybrid seeds that more than double the agricultural yield per acre. This story illustrates the growth of per capita GDP in the village through which factor(s) of production? A. physical capital, B. human capital C. technological knowledge D. both human capital and technological knowledge

C

According to the Solow growth model, which of these would not increase economic output in a developing nation? A. foreign aid going towards expanding their secondary education programs B. increasing funding towards construction of roadways and airports C. increasing their government ownership of agricultural land D. a wealthier nation sharing their technological advances with them

C

Akemi, who is a Japanese citizen, works in the United States as a computer programmer. The value of her output is included in: A. both U.S. and Japan's GDP. B. both U.S. and Japan's GNP. C. U.S. GDP and Japan's GNP. D. U.S. GNP and Japan's GDP.

C

All else equal, which hypothetical scenario exhibits a country with the most economic growth? A. Mirari, a country embroiled in a civil war B. Dos Rios, a country under a communist regime, where property is communal C. Froland, a country that resolves most trials and legal issues within a year D. Katanga, a country that experiences a high level of inflation that tends to be unpredictable

C

The labor force consists of: A. employed workers only. B. adults who do not have a job but who are looking for work. C. employed workers and adults who do not have jobs but who are looking for work D. all adult non-institutionalized civilians.

C

Which of the following do economists consider an investment? A. the purchase of bonds B. the purchase of stocks C. the construction of a new factory D. the acquisition of gold

C

Which of the following is NOT an example of the need to borrow to finance large investments? A. Megan takes out a mortgage in order to purchase her first home. B. The government issues additional bonds in order to build a new interstate highway system. C. Jamie pays for college by working two jobs on the weekends. D. A real estate developer applies for a S1 million loan in order to build a new golf course.

C

A set of tires installed on a vehicle produced by an automobile factory is counted as: A. a finished good and its market price is part of GDP. B. a finished good and its market price is not part of GDP. C. an intermediate good and its market price is part of GDP. D. an intermediate good and its market price is not part of GDP.

D

A worker repairing VHS cassette-tape players was laid off because most of his customers have started using DVD players and streaming services. This worker is now: A. a discouraged worker. B. frictionally unemployed. C. cyclically unemployed. D. structurally unemployed.

D

Consider an economy that is operating at its steady state. An increase in the investment rate in this economy will lead to: A. an increase in the growth rate of output in both the short run and long run. B. no change in the growth rates of either capital or output in either the short run or the long run, since the economy is already in the steady state. C. an increase in the growth rate of output in the short run but lower overall growth in the long run as a result of increased depreciation. D. an increase in the growth rate of output in the short run but zero growth in output in the long run.

D

Economics is characterized by many statistics and measurements. Suppose that an analyst is interested in comparing the economy of today with the economy ten years ago. Which term is least likely to be useful for this purpose? A. Real GDP B. Inflation C. Unemployment D. Nominal GDP

D

If the recent financial crisis raises awareness about the dangers of not saving, leading to an increase in overall savings rates across the country, the loanable funds market will experience an increase in the ____ loanable funds and _____ in equilibrium interest rates. A. demand for; an increase B. supply of; an increase C. demand for; a decrease D. supply of; a decrease

D

If the supply of loanable funds increases and the demand for loanable funds increases at the same time, interest rates will: A. increase. B. decrease. C. remain the same. D. increase, decrease, or remain the same.

D

Suppose a doctor spends half of the year in the United States and the other half in Canada and works in both places. How does his production get allocated between U.S. and Canadian GDP? A. Half of the doctor's income counts toward U.S. GDP and half toward Canadian GDP. B. The full income is counted in the GDP of the country in which the doctor is a permanent resident. C. The full income gets counted in both U.S. GDP and Canadian GDP. D. The value of the services produced in the United States gets counted in U.S. GDP and the value of the services produced in Canada gets counted in Canadian GDP.

D

Suppose the country of Altaria only produces one style of good, pink tutu. Last year, nominal GDP was $50,000 and this year it is S200,000. What can be definitively concluded? A. Output in Altaria quadrupled. B. The rate of unemployment decreased. C. The standard of living in Altaria increased. D. None of the statements are necessarily true.

D

Which of the following is considered unemployed? A. Jason, a full-time college student, has a part-time job. B. Julie, a full-time housewife, was searching for a part-time position two months ago, but hasn't since. C. Joe, a retired college professor, does community volunteer work. D. John, on temporary layoff from his work awaits recall.

D

Which of the following would be considered unemployed? A. Mark, laid off from his job as a bricklayer, returned to school full time. B. Sarah, who earned nearly S80,000 per year in her previous job, is a stay-at-home mom. C. Tim, a 13-year-old high-school student, is looking for a part-time job. D. Janice, who graduated from the university in May, is waiting for her new job to start in July.

D

Which transaction is not included in gross domestic product? A. Francis buys ice-cream at a local grocer. B. Julian, a public school teacher, receives a paycheck. C. John buys 55 cent tacos at a food truck. D. Francis receives her social security check.

D