Econ exam Part 2

Over time, people have come to rely more on market-produced goods and less on goods that they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has a. caused GDP to rise. b. probably changed GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted. c. caused GDP to fall. d. not caused any change in GDP.

a

A professor of economics gets a $100 a month raise. She figures that even with her new monthly salary she will be unable to buy as many goods and services as she could 12 months ago. Given this scenario, which of the following is true? a. Her real and nominal salary have fallen. b. Her real salary has fallen and her nominal salary has risen. c. Her real salary has risen and her nominal salary has fallen. d. Her real and nominal salary have risen.

b

If an economy operates at a short-run equilibrium output that exceeds its long-run capacity, which of the following will be most likely to direct the economy toward full employment? a. The unemployment rate will increase, causing the economy's aggregate supply curve to shift to the right. b. Resource prices will increase, causing the SRAS curve to shift to the left c. Improvements in technology will the shift the LRAS curve to the right. d. Interest rates will decline, shifting the aggregate demand curve to the right.

b

If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980, while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2009, then a. credit was more expensive in 1980. b. real rates were higher in 2009. c. real rates were higher in 1980. d. credit was cheaper in 2009 because the nominal rate was lower.

b

Suppose, over the past year, the real interest rate was 3 percent and the inflation rate was 1 percent. a. The dollar value of savings increased at 4 percent, and the value of savings measured in goods increased at 3 percent. b. The dollar value of savings increased at 3 percent, and the value of savings measured in goods increased at 1 percent. c. The dollar value of savings increased at 1 percent, and the value of savings measured in goods increased at 2 percent. d. The dollar value of savings increased at 2 percent, and the value of savings measured in goods increased at 3 percent.

a

The actual rate of unemployment will be greater than the natural rate of unemployment when a. the actual output is less than the economy's potential output. b. the inflation rate has been relatively constant for several years. c. the actual output is equal to the economy's potential output. d. the actual output is greater than the economy's potential output.

a

When an economy is in long run equilibrium, a. the actual and natural rates of unemployment will be equal. b. the foreign exchange value of the dollar will tend to appreciate. c. the interest rate will decline. d. it will be impossible to sustain the current rate of output in the future.

a

As the dollar appreciates, which of the following is most likely to occur? a. American firms will reduce their purchases of financial assets abroad. b. More Americans will travel abroad. c. American imports will fall. d. More foreigners will visit the United States.

b

Sally is on a temporary layoff from her factory job. If Sally participates in the BLS survey, she will be classified as a. employed and in the labor force. b. unemployed and in the labor force. c. employed and out of the labor force. d. unemployed and out of the labor force.

b

What is the effect on GDP if a used car dealer purchases a used car for $3,000, refurbishes it, and sells it for $8,000? a. The dealer contributes nothing to production because only existing goods are involved. b. The dealer contributes value added equal to $5,000, and consequently $5,000 is added to GDP. c. The dealer contributes value added equal to $5,000, but nothing is added to GDP. d. The dealer contributes value added equal to $8,000, but only $5,000 is added to GDP.

b

Which of the following is true when an economy is operating at its full employment rate of output? a. The rate of unemployment will be zero. b. The actual rate of unemployment will equal the natural rate. c. The economy's potential rate of output will exceed actual GDP. d. Output will exceed the economy's maximum sustainable rate.

b

Which of the following statements about real GDP per person is true? a. Real GDP per person in the current period minus real GDP per person from the previous period equals the growth rate of real GDP per person. b. Real GDP per person provides more meaningful comparisons across time and countries than real GDP. c. Real GDP per person provides a less useful measure of the standard of living than nominal GDP per person. d. All of the above are correct.

b

Which of the following will most likely accompany an unanticipated increase in short-run aggregate supply? a. An increase in the natural rate of unemployment. b. An increase in real GDP. c. An increase in the actual rate of unemployment. d. An increase in the general level of prices.

b

Which of the following would cause prices and real GDP to rise in the short run? a. Aggregate demand shifts left. b. Aggregate demand shifts right. c. Short-run aggregate supply shifts right. d. Short-run aggregate supply shifts left.

b

Imagine that there are only two nations in the world, the United States and Mexico. Ceteris paribus, what will happen if Americans buy more goods made in Mexico? a. U.S. supply curve of Mexican pesos will shift leftward. b. U.S. demand curve for Mexican pesos will shift leftward. c. U.S. demand curve for Mexican pesos will shift rightward. d. U.S. supply curve of Mexican pesos will shift rightward.

c

Tom loses his job and immediately begins looking for another. Other things the same, the unemployment rate a. increases, and the labor-force participation rate decreases. b. decreases, and the labor-force participation rate is unaffected. c. increases, and the labor-force participation rate is unaffected. d. is unaffected, and the labor-force participation rate increases.

c

When full employment is present, a. the actual rate of unemployment will be less than the actual rate. b. the actual rate of unemployment will exceed the natural rate. c. the actual rate of unemployment will equal the natural rate. d. everyone who would like to have a job will be employed.

c

When is the economy considered to be at full employment? a. When frictional plus structural unemployment is less than the natural rate. b. When structural unemployment is zero. c. When the rate of cyclical unemployment is zero. d. When the actual rate of unemployment is less than the natural rate. e. When the leading economic indicators are unchanged for two consecutive quarters.

c

Which of the following is true if the actual price level is lower than the expected price level reflected in long-term contracts? a. The actual rate of unemployment will be less than the natural rate of unemployment. b. The natural rate of unemployment will rise. c. The actual rate of unemployment will exceed the natural rate of unemployment. d. The natural rate of unemployment will fall.

c

Which of the following will most likely occur in the United States as the result of an unexpected rapid growth in real income in Canada and Mexico? a. A decrease in the natural rate of unemployment in the United States. b. A reduction in the price level. c. An increase in aggregate demand and output in the short run. d. An reduction in aggregate demand and output in the short run.

c

How will increased usage of the Internet by employers and employees influence the job search process? a. It will make job-related information more costly and, therefore, tend to reduce the rate of unemployment. b. It will make job-related information less costly and, therefore, tend to increase the rate of unemployment. c. It will make job-related information more costly and, therefore, tend to increase the rate of unemployment. d. It will make job-related information less costly and, therefore, tend to reduce the rate of unemployment.

d

If net exports are positive, then a. there will be net capital inflow, so foreign assets bought by Americans are greater than American assets bought by foreigners. b. there will be net capital outflow, so American assets bought by foreigners are greater than foreign assets bought by Americans. c. there will be net capital inflow, so American assets bought by foreigners are greater than foreign assets bought by Americans. d. there will be net capital outflow, so foreign assets bought by Americans are greater than American assets bought by foreigners.

d

If nominal GDP increased 2 percent during a year, while real GDP increased 4 percent, the a. price level must have increased approximately 2 percent compared to the prior year. b. price level must have decreased approximately 50 percent compared to the prior year. c. unemployment rate must have increased during the year. d. price level must have decreased approximately 2 percent compared to the prior year.

d

The stability of consumption over the business cycle and the ability of changes in the real interest rate to redirect aggregate demand indicate that a. government policy can improve the performance of the economy. b. recessions will be lengthy, and high rates of unemployment will persist for a period of time even after the economy recovers. c. market economies are inherently unstable. d. a market economy has a self-correcting mechanism that will help guide it toward full employment.

d

When the economy is operating at an output rate below its full-employment level, the a. current rate of output will tend to persist into the future. b. strong demand for resources will cause resource prices to rise. c. actual unemployment rate will be less than the natural rate of unemployment. d. actual level of unemployment will exceed the natural rate of unemployment.

d