Econ exam 2 practice questions

if firms pay the market-clearing wage, all workers will shirk.

According to the Shapiro-Stiglitz model of efficiency wages

the U.S. CPI, but not the U.S. GDP deflator.

An increase in the price of Irish whiskey imported into the United States will be reflected in

frictional unemployment created by sectoral shifts.

Consumers decide to ride bikes more and drive cars less. Bicycle companies expand production while automobile companies fire workers. This is an example of

poorer countries have higher growth rates.

For countries with similar levels of technology, human capital, saving rates and population growth, conditional convergence means that

sectoral shifts are always happening

Frictional unemployment is inevitable because

consumers buy more books than magazines.

In the calculation of the CPI, books are given greater weight than magazines if

faster than relatively rich countries; this is called absolute convergence.

Other things equal, relatively poor countries tend to grow

the volatility in the prices of food and energy can lead to wrong inferences.

Policymakers should look at core inflation, instead of overall inflation, because

may depress economic prosperity by reducing the amount of capital which each worker has to work with.

Rapid population growth

positively related to the rate of investment and negatively related to the rate of population growth.

Recent evidence suggests that output per worker is

substitution bias and introduction of new goods.

Suppose OPEC succeeds in raising world oil prices by 300 percent. This price increase causes inventors to look at alternative sources of fuel for internal-combustion engines. A hydrogen-powered engine is developed which is cheaper to operate than gasoline engines. Which problems in the construction of the CPI does this situation represent?

a typical consumer, and the CPI is computed and reported by the Bureau of Labor Statistics.

The CPI is a measure of the overall cost of the goods and services bought by

the richest countries, but not the poorest countries.

There is evidence that income per worker is converging in

introduction of new goods.

To which of the problems in the construction of the CPI is the invention of pocket-sized computers most relevant?

wages and unemployment increase.

When a union bargains successfully with employers, in that industry,

The changes in the distribution of income in Nigeria in the last 40 years suggest that people are becoming, on average, poorer.

Which of the following is true about the distribution of income in the world?

those waiting to be recalled to a job from which they had been laid off

Who of the following is not included in the Bureau of Labor Statistics' "employed" category?