Econ 2301 Midterm 1 Review Question

John has been laid off from his job because of a general downturn in the economy. John's unemployment is best classified as A) cyclical. B) full. C) structural. D) frictional E) avoidable.

A) cyclical.

When a home builder decides to computerize all of its production schedules, it directly answers the ________ question.

how

In 2009 in the United States, consumption expenditure was $9,996 billion, investment was $1,559 billion, government expenditures on goods and services were $2,927 billion, and total exports were $1,492 billion. GDP equaled

some amount, but there is not enough information given to calculate GDP. -to calculate gdp you need consumption, investment, government spending and net exports.

As part of its proposal to win the 2012 Olympics, London developed a carbon offset plan to reduce the Games' impact on the environment. In 2011, the organizers decided to drop this plan to reduce emissions. We can conclude that

the marginal cost of reducing emissions exceeded the marginal benefits of reducing emissions.

The following table reports transactions that occurred in Whoville. Nominal GDP in Whoville is Item Price per Unit Quantity -Bottles of French Wine $20 10 -Boxes of Cereal $4 20 -Used Tires $15 5 -Shares of Twitter Stock $10 15 -Hours of Swimming Lessons $5 8

$120.

One bag of coffee beans is sold for $7 to a cafe that uses it to brew coffee which it sells to customers for a total of $15. A second bag of coffee is sold directly to Joan for $7, who uses it to brew coffee for her family every morning. What is the contribution to GDP from the purchases of coffee beans and coffee?

$22

Last year in Candamica, consumption expenditure was $20 billion, interest, rent, and profit were $2.5 billion, government expenditure on goods and services was $7 billion, net exports of goods and services was $5 billion, and investment was $2 billion. Hence total expenditure was

$34 billion. profit is not counted

Suppose GDP is $10 billion, consumption expenditure is $7 billion, investment is $2 billion, and government expenditure on goods and services is $2 billion. Net exports of goods and services must be

-$1 billion.

Which of the following is a macroeconomic topic: -China increases interest rates to slow its economic growth. -Congress lowers tax rates to try and lower the unemployment rate. -Nissan decides to produce more electric Leaf models and fewer Altima sedans

1,2

4) Which of the following is a microeconomic topic? -Gas prices increase after a hurricane hits the gulf coast. -Xavier starts a new business designing web pages. -Abby decides to practice an extra hour of soccer instead of studying.

1,2,3

74) Using the table above, the unemployment rate is: number of unemployed/labor force x 100

5.71%

Rick lost his job as a logistics and distribution coordinator nearly three years ago. After a long and failed search, Rick finally gives up and stops looking for a new job. Rick's decision to suspend his job search causes the unemployment rate to ________ and the labor force participation rate to ________.

B) decrease; decrease

As firms search for the best employee to fill an opening and the unemployed search for the job that best fits their skills, the economy experiences A) structural unemployment. B) frictional unemployment. C) cyclical unemployment. D) changes in the business cycle. E) avoidable unemployment.

B) frictional unemployment.

73) Using the table above, the number of people in the labor force is

C) 175 million.

72) Using the table above, the working-age population is

C) 195 million.

79) Which of the following people would be considered unemployed? A) Sam, a part-time worker who wishes to work full time B) Pat, who gave up looking for a job because he was discouraged about his job prospects C) Victoria, who does not have a job and has been actively searching for work, but turned down a job paying less than she desired D) Shirley, who is working but expects to be laid off at the end of the month E) Bobby, a full-time student in his last term before he graduates and who has not yet started to look for a job

C) Victoria, who does not have a job and has been actively searching for work, but turned down a job paying less than she desired

The labor force includes people who i. are less than 16 years of age. ii. are in institutions. iii. are actively seeking a job but do not have a job.

D) iii only

Which of the following BEST defines economics?

Economics studies how to choose the best alternative when coping with scarcity.

If a wealthy woman marries her butler, quits paying him and does not hire a new butler, then

GDP definitely decreases.

Which of the following BEST describes macroeconomics?

It analyzes the aggregate effects on the national economy of the choices made by individuals, firms, and governments.

Which of the following people would be classified as employed in the Current Population Survey? A) Rich, who is working 20 hours a week but wants a full-time job B) Misty, who just quit her job to return full time to school C) April, who just graduated from college and is looking for work D) Jason, who was laid off from work less than 6 months ago but who has stopped looking for work E) Laura, who is unpaid but is working 10 hours a week in the family business she and her husband run

Rich, who is working 20 hours a week but wants a full-time job

Which of the following is an example of a normative economic statement?

Universal access to quality health insurance is the most important domestic policy issue of our time.

Your marketing professor offers 10 points extra credit if you attend a review session before your next exam. This extra credit is an example of

an incentive to attend the review session.

When unskilled teens earn less than college graduates, society answers the ________ question.

for whom

Suppose that, instead of taking this test, you could either have worked and earned income or partied and had a pleasurable time. Your opportunity cost of taking the test is the

forgone working or partying, depending on which was your next best choice.

Which of the following is NOT directly included in Canadian GDP?

gasoline purchased by a tour bus operator in Quebec

Which of the following would be considered unemployed as part of normal labor market turnover? i. ii. iii. A) B) C) D) E) Juliet, who was fired when the company where she worked went bankrupt in a recession Hannah, who quit her job to find one that better suited her skills Charlotte, who started looking for a job upon graduation from high school

ii and iii

When an American college student in Davis, California spends $200 on a pair of Louis Vuitton jeans (a famous French brand), U.S. consumption ____, U.S. net exports ____, and U.S. GDP ___

increases by $200; decreases by $200; does not change

Scarcity

is the limited nature of resources used to satisfy our wants.

69) If Jose is 22-years old, is available to work but does not have a job and made no specific efforts to find a job for the previous month, Jose is classified in the Current Population Survey as A) unemployed. B) employed. C) not in the working-age population. D) not in the labor force. E) in the labor force but not in the working-age population.

not in the labor force.

"Lower ticket prices would lead to more people attending ballgames." This statement is a

positive statement.

Choices that are best for the society as a whole are choices in pursuit of

the social interest.