Econ Midterm Part 2
Other things the same, the higher the rate of saving and investment in a country, the higher will be the standard of living.
True
As capital per worker rises, output per worker rises. However, the increase in output per worker from an addition to capital is smaller the larger the existing amount of capital per worker.
True
Jack is a full-time unpaid homemaker not currently searching for other work. Jill is a full-time student who is not looking for a job. Who does the Statistics Canada count in the labor force? a. only Jack b. only Jill c. both Jack and Jill d. neither Jack nor Jill
A
Since World War II, the labor-force participation rate a. has increased for both men and women. b. increased for women and decreased for men. c. has decreased for both men and women. d. decreased for women and increased for men.
B
Both the standard of living and the growth of real GDP per person vary widely across countries.
True
Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 2,500 Consumption equals 7,500 and Government purchases equal 2,000. What are private saving, public saving, and national saving? a. 1500, 1000, 500 b. 1000, 500, 1500 c. 500, 1500, 1000 d. None of the above is correct.
B
. Which of the following is not correct? a. The unemployment rate is computed using the number of unemployment insurance claims filed. b. Each adult included in the unemployment statistics is classified as employed, unemployed, or not in the labor force. c. Unemployment numbers are based only on people aged sixteen and older. d. The Bureau of Labor Statistics gathers data on monthly unemployment and employment.
A
Cedar Valley Furniture uses 5 workers working 8 hours to produce 80 rocking chairs. What is the productivity of these workers? a. 2 chairs per hour. b. 1 hour per chair. c. 80 chairs. d. None of the above is correct.
A
Drug companies can usually obtain patents on new drugs. This turns new ideas into a. private goods, and increase the incentive to engage in research. b. private goods, but decrease the incentive to engage in research. c. public goods, and increase the incentive to engage in research. d. public goods, and decrease the incentive to engage in research.
A
If the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded, a. there is a surplus and the interest rate is above the equilibrium level. b. there is a surplus and the interest rate is below the equilibrium level. c. there is a shortage and the interest rate is above the equilibrium level. d. there is a shortage and the interest rate is below the equilibrium level.
A
In 2019 real GDP in Latania was 750 billion and the population was 3 million. In 2020 real GDP was 907.5 billion and the population was 3.3 million. What was the approximate growth rate of real GDP per person? a. 10 percent b. 14 percent c. 17 percent d. 21 percent
A
In the calculation of the CPI, coffee is given greater weight than tea if a. consumers buy more coffee than tea. b. the price of coffee is higher than the price of tea. c. it costs more to produce coffee than it costs to produce tea. d. coffee is more readily available than is tea to the typical consumer.
A
If the nominal interest rate is 5 percent and the inflation rate is 2 percent, then the real interest rate is 7 percent.
False
Samantha goes to the grocery store to make her monthly purchase of ginger ale. As she enters the soft drink section, she notices that the price of ginger ale has increased 15 percent, so she decides to buy some peppermint tea instead. To which problem in the construction of the CPI is this situation most relevant? a. substitution bias b. introduction of new goods c. unmeasured quality change d. income effect
A
Suppose the CPI was 95 in 1955, and suppose currently the CPI is 475. According to the CPI, $100 today purchases the same amount of goods and services as a. $20.00 purchased in 1955. b. $33.33 purchased in 1955. c. $47.50 purchased in 1955. d. None of the above is correct.
A
Ted is working part time. Alice is on temporary layoff. Who is counted as employed by the Statistics Canada? a. only Ted b. only Alice c. both Ted and Alice d. neither Ted nor Alice
A
The term inflation is used to describe a situation in which a. the overall level of prices in the economy is increasing. b. incomes in the economy are increasing. c. stock-market prices are rising. d. the economy is growing rapidly.
A
When the consumer price index rises, the typical family a. has to spend more dollars to maintain the same standard of living. b. can spend fewer dollars to maintain the same standard of living. c. finds that its standard of living is not affected. d. can offset the effects of rising prices by saving more.
A
Which of the graphs in the figure above shows the effects of an increase in the tax rate on saving? a. graph 1 b. graph 2 c. graph 3 d. None of the above is correct.
A
Anna has just finished high school and started looking for her first job, but has not yet found one. As a result, the unemployment rate a. increases, and the labor-force participation rate is unaffected. b. increases, and the labor-force participation rate increases. c. is unaffected, and the labor-force participation rate increases. d. increases, and the labor-force participation rate decreases.
B
Discouraged workers a. are not counted either as part of the adult population or as part of the labor force. b. are counted as part of the adult population, but not as part of the labor force. c. are counted as part of the adult population, and as unemployed. d. None the above are correct.
B
In 2019, based on concepts similar to those used to estimate Canadian employment figures, the Japanese adult non-institutionalized population was 109.684 million, the labor force was 65.760 million, and the number of people employed was 62.630 million. According to these numbers, the Japanese labor-force participation rate and unemployment rate were about a. 60%, 2.9% b. 60%, 4.8% c. 57.1%, 2.9% d. 57.1%, 4.8%
B
Laura bought word-processing software in 2019 for $50. Laura's twin brother, Laurence, buys an upgrade of the same software in 2020 for $50. What problem in the construction of the CPI does this situation best represent? a. substitution bias b. unmeasured quality change c. introduction of new goods d. income bias
B
Lekeisha's income exceeds her expenditures. Lekeisha is a a. saver who demands money from the financial system. b. saver who supplies money to the financial system. c. borrower who demands money from the financial system. d. borrower who demands money from the financial system.
B
Megasoft wants to finance the purchase of new equipment for developing security software called Doors, but they have limited internal funds. Megasoft will likely a. demand loanable funds by buying bonds. b. demand loanable funds by selling bonds. c. supply loanable funds by buying bonds. d. supply loanable funds by selling bonds.
B
Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has more capital and so more real GDP per person than the other. Finally, suppose that the saving rate in both countries increases from 5 percent to 6 percent. Over the next ten years we would expect that a. the growth rate will not change in either country. b. the country that started with less capital will grow faster. c. the country with started with more capital will grow faster. d. both countries will grow at the same rate.
B
The consumer price index is used to a. differentiate gross national product from net national product. b. turn dollar figures into meaningful measures of purchasing power. c. characterize the types of goods and services that consumers purchase. d. measure the quantity of goods and services that the economy produces.
B
The slope of the demand for loanable funds curve represents the a. positive relation between the real interest rate and investment. b. negative relation between the real interest rate and investment. c. positive relation between the real interest rate and saving. d. negative relation between the real interest rate and saving.
B
What basket of goods is used to construct the CPI? a. a random sample of all goods and services produced in the economy b. the goods and services that are typically bought by consumers as determined by government surveys c. only food, clothing, transportation, entertainment, and education d. the least expensive and the most expensive goods and services in each major category of consumer expenditures
B
If there is a surplus of loanable funds a. the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is above equilibrium. b. the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium. c. the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium. d. the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is below equilibrium.
C
Lucy starts her own psychiatric practice, but her expenditures to open the practice exceed her income. Lucy is a a. saver who demands money from the financial system. b. saver who supplies money to the financial system. c. borrower who demands money from the financial system. d. borrower who supplies money to the financial system.
C
Which of the following would necessarily raise the interest rate? a. The demand for and the supply of loanable funds shift right. b. The demand for and the supply of loanable funds shift left. c. The demand for loanable funds shifts right and the supply of loanable funds shifts left. d. The demand for loanable funds shifts left and the supply of loanable funds shifts right.
C
Which of the following would not be considered physical capital? a. a new factory building b. a computer used to help Mercury Delivery Service keep track of its orders c. on-the-job training d. a desk used in an accountant's office
C
According to the definitions of national saving and private saving, if Y, C, and G remained the same, an increase in taxes would a. raise national saving and private saving. b. raise national saving and reduce private saving. c. leave national saving and private saving unchanged. d. leave national saving unchanged and reduce private saving.
D
Dilbert's Incorporated produced 5,000,000 units of accounting software in 2019. At the start of 2020 the pointy-haired boss reduced total annual hours of employment from 10,000 to 8,000 and production was 4,800,000. These numbers indicate that productivity a. fell by 4%. b. fell by 20%. c. rose by 12%. d. rose by 20%.
D
Frictional unemployment can be the consequence of a. workers leaving existing jobs to find ones they like better. b. an industry declining while another is growing. c. changes in the working conditions offered by competing firms. d. All of the above are correct.
D
If one wants to know how the material well-being of the average person has changed over time in a given country, one should look at the a. level of real GDP. b. growth rate of nominal GDP. c. growth rate of real GDP. d. growth rate of real GDP per person.
D
If the prices of Australian-made shoes imported into Canada increase, then, as a result, a. both the GDP deflator and the consumer price index increase. b. neither the GDP deflator nor the consumer price index increases. c. the GDP deflator increases but the consumer price index does not increase. d. the consumer price index will increase, but the GDP deflator will not increase.
D
If this year the CPI is 125 and last year it was 120, then a. the cost of the CPI basket of goods and services has increased this year by 4.17 percent. b. the price level as measured by the CPI has increased by 4.17 percent. c. the inflation rate for this year is 4.17 percent. d. All of the above are correct.
D
One of the widely-acknowledged problems with the consumer price index (CPI) as a measure of the cost of living is that the CPI a. fails to account for consumer spending on housing. b. accounts only for consumer spending on food, clothing, and energy. c. fails to account for the fact that consumers spend larger percentages of their incomes on some goods and smaller percentages of their incomes on other goods. d. fails to account for the introduction of new goods.
D
[Challenging Question] Suppose the CPI was 108 in 1967, and suppose one must spend $936 today to obtain the same basket of goods and services that could be bought for $200 in 1967. Then today's CPI is
D
[Challenging] Suppose some country had an adult population of about 46.5 million, the labor-force participation rate was 63.5 percent, and the unemployment rate was 5.8 percent. What were the number of people employed and the number of people unemployed? a. about 29.5 million and 2.7 million. b. about 29.5 million and 1.7 million. c. about 27.8 million and 2.7 million. d. about 27.8 million and 1.7 million.
D
If the current year CPI is 140, then, since the base year the price level has increased 40 percent.
True
Full-time students, retirees, and unpaid stay-at-home fathers are counted as unemployed.
False
Rupert is collecting unemployment insurance benefits. To continue to receive his benefits he must be looking for work. Because he'd like to continue collecting benefits rather than take a job, he applies at places that are unlikely to hire him. People like Rupert make the reported unemployment rate less than it would otherwise be.
False
Someone who is without work but is not looking for work would be counted as unemployed by the Statistics Canada.
False
The CPI is computed by finding the price of a market basket of goods whose contents vary each year.
False
Two countries with the same saving rates must have the same growth rate of real GDP per person.
False
In a closed economy, investment must be equal to private saving.
True
A country that made their courts less corrupt and their government more stable would likely see their standard of living rise.
True
Alberta buys a paint sprayer and a lift for her car customizing shop. A macroeconomist would refer to these purchases as investment.
True
Although they sometimes diverge, generally the CPI and the GDP deflator move in the same direction.
True
Mutual funds are a type of financial intermediary.
True
Substitution bias in computing the CPI tends to make the CPI overstate the true increase in the cost of living.
True
Suppose a small closed economy has GDP of $5 billion, Consumption of $3 billion, and Government expenditures of $1 billion. Then domestic investment and national saving are both $1 billion.
True
Suppose the CPI today is 120 and five years ago it was 80. Then in today's prices something that cost $1 five years ago now costs $1.50.
True
The unemployment rate is defined as the percentage of the labor force that is unemployed. The labor force participation rate is the percentage of the adult population that is either employed or unemployed.
True
