econ 202 exam 2
If the actual unemployment rate is 7% and the cyclical unemployment rate is 2%, then the natural rate of unemployment is:
5%.
The country of Livonia has an adult population of 100 million. 60% of Livonia's population are employed, but 10% of the people are unemployed. The Labor Force Participation Rate in Livonia is:
70%
Last week Stephanie quit her job as a copy-writer at an advertising agency. She has spent the past few days browsing the help-wanted ads, but hasn't found anything that matches her skills. Stephanie is best classified as:
frictionally unemployed.
Suppose the government increases its spending by $100 billion as a stimulus package. If the MPC is 0.6, then equilibrium income will:
increase by $250 billion.
If the aggregate consumption equals $100,000,000 + .75 x YD, then autonomous consumption is:
$100,000,000.
You and a co-worker have been trying to develop a linear equation that describes the local household consumption function. Your co-worker has sent you a very short email that simply says he has finished the project and the consumption function is: C = 100 + .75(YD). Your job is to explain this result to your supervisor. According to this consumption function, how much consumption spending would occur if a household had disposable income of $1000?
$850
If the Consumer Price Index (CPI) for 2007 was 148.3 and 152.5 in 2008, what was the inflation rate between the two years?
2.83%
Suppose the real interest rate is 2.1% and the nominal interest rate is 5.4%. Then the inflation rate is:
3.3%.
Suppose investment spending increases by $50 billion, and as a result the equilibrium income increases by $200 billion. The investment multiplier is:
4.
T/F People not interested in working or can't work (students, homemakers, incarcerated people, retirees) are included in the Labor Force Participation Rate
False
A survey reveals that on a small island initially 1,000 people have jobs, 250 people are looking for jobs, and 450 people are neither working nor looking for work. Suppose that 150 of the 450 people who weren't looking for work now begin looking for work. There are now 400 people looking for work and 1,000 people working. What happens to the unemployment rate?
It rises to 28.6%.
The consumer price index reflects the:
changes in the prices of goods and services typically purchased by consumers.
Other things being equal, expectations of lower disposable income in the future would ________ and shift the consumption function _________.
decrease autonomous consumption; down
The most important determinant of consumer spending is:
disposable income.
The MPC plus the MPS must:
equal 1.
An increase in the MPC:
increases the multiplier.
The purpose of indexing Social Security payments to the CPI is to:
maintain the purchasing power of retirees.
You are a college student who is not working or looking for work. You are:
not part of the labor force
An unplanned fall in inventories leads to:
production increasing.
If money income remains the same, while the average price level doubles, then:
real income will fall.
Cyclical unemployment:
rises during recession.
Sam, who is 55 years old and has been a steel worker for 30 years, is unemployed because the steel plant in his town closed and moved to Mexico. Sam is experiencing:
structural unemployment.
In the consumer price index of the United States:
the current cost of a basket of goods is compared to the base-period cost of the same basket of goods, the calculation of the base-period index is always equal to 100, and the base period is 1982-1984.
Income-expenditure equilibrium GDP is:
the level of GDP at which GDP equals planned aggregate spending.
the unemployment rate is
the percent of the labor force that is unemployed
Inflation can be measured by:
the percentage change in the CPI.
the labor force is
the total of people employed and unemployed
In the aggregate expenditures model, if real GDP equals $700 billion and aggregate expenditures equal $400 billion:
unplanned inventory accumulation equals $300 billion.