Econ 2200 Chapters 5,6,7
_____are almost 70% of GDP, while ____are about 15% of GDP? A. Personal consumption expenditures;government expenditures. B. Personal consumption expenditures; gross private domestic investments. C. Government expenditures; gross private domestic investments. D. Government expenditures; net exports.
B. Personal consumption expenditures; gross private domestic investments.
An example of intangible infrastructure is? A. patent laws B. public education facilities C. transportation networks D. power transmission lines
A. patent laws
Holdign other expenditures constant, if imports fall by $20 billion and exports fall by $10 billion, the GDP? A. rises by $10 billion B. falls by $10 billion C. falls by $30 billion D. rises by $30 billion
A. rises by $10 billion
The largest component of national income is? A. corporate profits. B. compensation of employees. C. proproetors' income. D. rental income
B. compensation of employees.
Which of the following technologies most strongly affected the growth in U.S productivity in recent decades? A. railroads B. microcomputers C. ticker tape D. petrochemicals
B. microcomputers
A stable financial system is important for all of the following reasons EXCEPT? A. keeping the purchasing power of the currency stable B. tax rate stability C. facilitating transactions D. permitting credit institutions to arise
B. tax rate stability
Which of the following items is NOT a category of personal consumption expenditures? A. durable goods B. nondurable goods C. residential housing D. services
C. residential housing
The single largest consumer of goods and services in the United States is? A. personal consumption B. businesses C. the government D. industry
C. the government
Labor productivity is NOT a major determinant of? A. economic growth B. per capita GDP C. the money supply D. living standards
C. the money supply
_______ unemployment is the result of the changes in the business cycle. A. structural B. frictional C. seasonal D. cyclical
D. cyclical
Generally, nations with the _______ economic freedom also have the _______ per capita GDP. A. most; mean B. least; highest C. most; lowest D. least; lowest
D. least; lowest
Which of the following activities would NOT qualify a person as being in the labor force? A. going on interviews B. submitting application via the internet C. using social media to reach out to employers D. reading help wanted ads
D. reading help wanted ads
At the peak of the business cycle, the economy is typically operating? A. at its capacity B. above capacity C. below capacity D. at its highest level ever
A. at its capacity
Which of the following is NOT a source of productivity growth? A. decreasing the capital-to-labor ratio B. increasing the quality of the labor force C improvements in technology D. all of these are sources of productivity growth
A. decreasing the capital-to-labor ratio
Simon Kuznets? A. devised the gross national product as a way of measuring a nation's economic output B. set up the National Bureau of Economic Research C. was Secretary of Treasury during World War 11 D. invented the hair net
A. devised the gross national product as a way of measuring a nation's economic output.
The U.S. Patent Office grants Rene a patent for a new method of waterproofing outdoor gear. It is acting in its role to promote economic growth by? A. ensuring a stable legal system B. providing physical and human capital C. ensuring a stable and secure financial system D. promoting free and competitive markets
A. ensuring a stable legal system
What does the X represent in the following formula, used to calculate GDP? GDP= C+I+G+(X-M) A. exports B. imports C. net exports D. government spending
A. exports
Which of the following statements regarding the types of unemployment is TRUE? A. frictional unemployment is generally short-term, whereas structural unemployment is often long-term B. cyclical unemployment is due to expansions in the business cycle C. frictional unemployment is brought about by changes in technology D. structural unemployment is the result of normal labor turnover
A. frictional unemployment is generally short-term, whereas structural unemployment is often long-term
The four types of spending in GDP are personal consumer spending, _____ private domestic investment, government spending, and _____ A. gross; net exports B. gross; net imports C. net; net exports D. net; net imports
A. gross; net exports
Which of the following actions would reduce frictional unemployment? A. holding job fairs B. retraining workers to use computers C. taming the business cycle D. subsidizing obsolete technologies
A. holding job fairs
Which of the following is TRUE within the circular flow of economic activity? A. households are buyers of products and sellers of production factors. B. business firms are buyers and sellers of production factors. C. household are sellers of products and buyers of production factors. D. business firms are buyers of products and sellers of production factors.
A. households are buyers of products and sellers of production factors.
Which of the following increases productivity? A. increased skill in the labor force B. young labor force C. poorly educated labor force D. large labor force
A. increased skill in the labor force
All of the following are considered sources of long-run growth EXCEPT? A. increases in demand B. increases in capital C. increases in productivity D. improvements in technology
A. increases in demand
A production function? A. shows the output that is produced using different combinations of inputs combined with existing technology. B. shows the output that is produced using different combinations of technology combined with existing inputs C. shows the output that is most highly valued by consumers D. shows the most desired production method for a given level of output.
A. shows the output that is produced using different combination of inputs combined with existing technology.
The simple circular flow diagram shows that economic aggregates can be calculated either by the _____ flows in the product market or by the ______ flowing to households in the resource market. A. spending; income B. income; spending C. output; spending D. spending; output
A. spending; income
Increases in _____ often lead to economic growth? A. technology B. public goods C. money supply D. government regulations
A. technology
Which of the following is NOT a concern regarding GDP as a measure of economic activity? A. the value of investments in the stock and bond markets. B. the value of nonmarket natural resources C. the value of nonmarket work D. the value of investments in human capital
A. the value of investments in the stock and bond markets.
A criticism of GDP per capita is that it? A. is hard to calculate B. might not fully reflect the standard of living of the typical citizen C. reduces the effect of outliers skewing the averages D. is only a hypothetical concept that cannot be measured
B. might not fully reflect the standard of living of the typical citizen
The relationship between economic freedom and per capital GDP is? A. negative B. positive C. negative for advanced economies and positive for developing countries D. positive for advanced economies and negative for developing countries
B. positive
Which statement about long-run economic growth is TRUE? A. it occurs when an economy makes use of underutilized resources B. it is easier to achieve than short-run economic growth C. it is likely to occur when the capacity to produce goods and services increases D. it is likely to occur when obstacles preventing resources from being used are reduced
C. it is likely to occur when the capacity to produce goods and services increases
Which is NOT a source of productivity growth? A. raising the capital-to-labor ratio B. increasing the quality of labor C. moving resources from production to pension benefits D. making investments in technological improvements
C. moving resources from production to pension benefits
Which of the following statements describes a difference between the consumer price index (CPI) and the producer price index (PPI)? A. only the CPI is associated with the problem of quality changes B. only the PPI is associated with the problem of deleted products C. only the PPI measures net revenues received by firms D. only the PPI has a fixed market basket
C. only the PPI measures net revenues received by firms
Income payments to the rest of the world are? A. 0 B. added to the GDP C. subtracted from the GDP D. not included in the GDP
C. subtracted from the GDP
According to the table, if 50 discouraged workers suddenly decide to start actively seeking employment again, what will be the unemployment rate of this economy? Population 500 Number employed 300 Number unemployed 50 A. 10% B. 14.3% C. 16.67% D. 25%
D. 25%
If in the past you have always painted your own house but now you hire a painting contractor to do the work, what is the effect on GDP? A. GDP is unaffected by this change. B. GDP falls as a result of this change. C. GDP at first rises but then falls. D. GDP rises as a result of this change.
D. GDP rises as a result of this change.
Which of the following statements is TRUE about the National Activity Index? A. When the index has a zero value, the economy has reached a trough. B. Negative values always mean the economy is in a recession. C. Positive values indicate the economy may face a period of increasing inflation. D. Negative values mean the economy is growing more slowly than its long-term trend.
D. Negative values means the economy is growing more slowly than its long-term trend.
Frictional unemployment occurs when job openings? A. exist and people are willing to take them, but applicants do not have the necessary skill set. B. do not exist, although people are willing to work, so it makes no sense to try to bring the two together. C. exist, but people are not willing to take them, so it makes no sense to bring the two together. D. exist, and people are willing to take them, but it takes some time to bring the two together.
D. exist, and people are willing to take them, but it takes some time to bring the two together.
The two approaches used by government in estimation GDP are? A. statistical and nonstatistical B. survey and nonsurvey C. income and earnings D. expenditure and income
D. expenditure and income
Inflation is a? A. steady rise in the unemployment rate across all labor markets B. general rise in interest rates C. decline in confidence in prices D. general rise in prices
D. general rise in prices
According to the classical model, which of the following developments does NOT contribute to economic growth? A. labor productivity B. more capital C. technological change D. higher interest rate
D. higher interest rate
Jordan Meadows lost his job as an airline pilot and has not been able to find another job as a pilot. Since he is old enough to be eligible for his pension, he decides to retire and devote himself to caring for his elderly parents, according to the Bureau of Labor Statistics, Jordan is? A. employed B. unemployed C. a discouraged worker D. not in the labor force
D. not in the labor force
What is the primary explanation for the rapid growth of the U.S economy over the last century? A. increases in the number of immigrants B. increases in human capital C. increases in government spending for the infrastructure D. technological progress
D. technological progress
Which of the following assumptions is NOT a problem in using the consumer price index (CPI) to accurately state the rate of inflation? A. the CPI assumes that people do not substitute goods B. the CPI does not account for quality changes C. the CPI does not include new products D. the CPI does not deal with producer prices
D. the CPI does not deal with producer prices
The household survey provides a detailed demographic picture of _________, and the payroll survey provides detailed information _________. A. consumer spending; about business spending B. consumer spending; by industry and region C. the labor market; about business spending D. the labor market; by industry and region
D. the labor market; by industry and region
In 2009, a market basket of goods and services cost $100 in Merryland; the same basket cost $200 in Berryland. In 2010, the cost in Merryland was $150 and in Berryland it was $225. Based on the information, which of the following statements is true? A. neither of the countries underwent inflation B. Berryland has more inflation than Merryland C. the countries had the same rate of inflaton D. the rate of inflation is four times as large in Merryland as in Berryland
D. the rate of inflaton is four times as large in Merryland as in Berryland
Which of the following is a problem in measuring consumer prices? A. the consumer price index does not account for product substitution. B. the consumer price index is not easy to adjust to changes in the quality of products. C. it takes time to include new products in the consumer price index D. all answers choices are correct
D. all answer choices are correct
If the nominal GDP is $13 trillion for a given year and the GDP deflator for that year is 115, then the real GDP is? A. $11.3 trillion B. $14.95 trillion C. $12 trillion D. $13 trillion
A. $11.3 trillion
According to the table, the number of people in the labor force is? Employed 85 Unemployed seeking work 25 Discouraged workers 15 Unpaid family members working 15-plus hours 5 Retired 10 A. 115 B. 110 C. 130 D. 120
A. 115
Most of the recessions of the past half century have lasted between? A. 6 and 18 months B. two and four years C. one year and 11 years D. two and three months
A. 6 and 18 months
The government decides to subsidize the development of a new communications network. It is acting in its role to promote economic growth by? A. ensuring a stable legal system B. enhancing physical and human capital C. ensuring a stable and secure financial system D. promoting free and competitive markets.
B. enhancing physical and human capital
Technology? A. is a physical resource B. improves the productivity of all factors C. is a manufactured product used to produce other goods and services D. is another term for entrepreneurial ability
B. improves the productivity of all factors
Hannah is not at work because she broke her leg, but she will return once it heals. She is? A. unemployed B. in the labor force C. temporarily unemployed D. part-time employed
B. in the labor force
The absence of well-defined and enforceable property rights often? A. causes people to work together for the good of all B. inhibits investment because it is difficult to use capital as collateral C. improves society because it avoids the selfish actions of private property owners. D. brings about efficiency
B. inhibits investment because it is difficult to use capital as collateral
Schumpeter's term creative destruction describes the? A. Luddites' destruction of machines B. innovative dynamism of capitalism C. working class communist movement D. destruction of buildings.
B. innovative dynamism of capitalism
The National Bureau of Economic Research? A. is a government agency that dates business cycles in the United States B. is a nonprofit research organization that dates business cycles in the United States. C. consists of elected officials from the U.S Senate. D. is a nonprofit research organization that only determines when recessions begin.
B. is a nonprofit research organization that dates business cycles in the United States.
Which statement about the Weekly Jobs Report is NOT true? A. it is released by the Department of Labor B. it contains an estimate of the total number of people receiving unemployment benefits C. it is used as a way to estimate trends in layoffs D. it is used as a way to estimate trends of hiring
B. it contains an estimate of the total number of people receiving unemployment benefits
The economy is probably heading into a recession when the National Activity Index equals? A. 0 B. 0.62 C. -0.94 D. 0.79
C. -0.94
If the labor force is 20 million and the total employed is 18 million, what is the unemployment rate? A. 20% B. 18% C. 10% D. 2%
C. 10%
If the actual growth rate of U.S GDP was 1.25% from the first quarter to the second quarter, the Bureau of Economic Analysis would report the annualized rate as? A. 0.3125% B. 1.25% C. 5% D. 15%
C. 5%
Developing countries can achieve higher productivity per unit of capital because they can use technologies developed by other countries. This is known as the? A. increasing returns to capital effect B. copycat effect C. catch-up effect D. productivity effect
C. catch-up effect
The idea that all income ultimately goes to households, which then use it to buy goods and services from firms, is a central idea of the? A. production possibilities frontier B. supply and demand model C. circular flow diagram D. classical model
C. circular flow diagram
Workers who want to work but have been frustrated by the inability to find work and have stopped searching are known as? A. the invisible unemployed B. temporary workers C. discouraged workers D. the disgruntled unemployed
C. discouraged workers
Which of the following is NOT a factor in the production function? A. labor B. technology C. money D. capital
C. money
Last year, Megan's salary was $65,000. The consumer price index increased from 109 to 115. If Megan received a cost-of-living adjustment, what would her salary be? A. $61,553 B. $61,320 C. $67,564 D. $68,578
D. $68,578
We are least likely to be heading into a recession when the National Activity Index equals? A. -0.33 B. 0.55 C. -0.98 D. 0.81
D. 0.81
Suppose in 2012 the cost of purchasing a basket of goods was $100. That same basket cost $150 in 2011. If 2011 is the base year, the consumer price index for 2011? A. 100 B. 50 C. 250 D. 150
D. 150
