Macro Exam 2
Two countries that may be considered examples of growth miracles are:
South Korea and Japan.
Consider a country that produces only wheat and corn. Based on the data in the table, the growth rate of nominal GDP from 2005 to 2006 is:
27%.
Piped water and flush toilets together can reduce infant mortality from diarrhea by approximately:
70% or more.
Which is NOT an institution that leads to sustained long-term economic growth?
a more equal income distribution
Which of the following is an example of an unemployed person?
a recent college graduate looking for her first job
There is:
a strong positive correlation between per capita GDP and infant survival.
Which scenario has the greatest potential for free riding?
a system in which work effort and pay are not connected
Both unions and minimum wages:
decrease the quantity of labor demanded and increase unemployment.
As the baby boomers retire, the United States labor force participation rate will:
decrease.
Corruption causes investment in physical capital to:
decrease.
Individuals who have given up looking for work but still would take a job are considered:
discouraged workers.
Which of the following would NOT be included in the calculation of GDP as a government purchase?
distribution of food stamps
The value of volunteer services is:
not included in GDP, but should be because a service is produced.
Using the national spending approach to measuring GDP, if Tyler buys 50 shares of Apple stock, it is included in GDP as part of:
nothing; it is not included as part of GDP.
Property rights are important institutions for encouraging investment because:
people won't invest if they feel their property is at risk and that they may not realize a return on their investment.
When economists speak of "long-run economic growth," they mean increasing the:
per capita real GDP of a country.
A tractor is an example of:
physical capital.
GDP per capita is GDP divided by:
population
(Figure: Economic Growth in Major World Regions) Refer to the figure, which shows real GDP per capita over time in different regions of the world. The chart shows that:
significant growth has occurred in some regions only since 1950.
Physical capital is the:
stock of tools, including machines, structures, and equipment, used to produce output.
The natural rate of unemployment is defined as the rate of:
structural plus frictional unemployment.
In 2010, nominal GDP was $14.6 trillion and the GDP deflator was 110.6. What was real GDP for that year?
$13.2 trillion
Suppose an economy produces only the three final goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. What is the real GDP in 2009 if 2009 prices are used in the calculation of real GDP?
$34,310
Refer to the figure. Based on the data in the figure, about how many times wealthier is the richest country when compared to the poorest countries in the world?
100 times
If a country's initial real GDP is $60,000 and its annual growth rate is 5%, use the Rule of 70 to determine approximately how many years it would take for this economy to double its GDP.
14 years
At an annual growth rate of 3.5%, approximately how long does it take for real GDP per capita to increase from $30,000 to $60,000 in a country?
20 years
GDP in the United States was $14,119 billion in 2009, and grew to $14,660.4 billion in 2010. This represents an annual growth rate of:
3.8%.
Using the GDP data in the table, how much did nominal GDP grow between 1995 and 2000?
31.8%
(Table: Unemployment Statistics for Country X) Using the data in the table, what is the natural unemployment rate for this country in the year 1995?
4%
A country has 50 million people, 30 million of whom are adults. Of the adults, 5 million are not interested in working, another 5 million are interested in working but have given up looking for work, and 5 million are still looking for work. Of those who do have jobs, 5 million are working part time but would like to work full time, and the remaining 10 million are working full time. What is this country's labor force participation rate?
66.7%
The rule of 70 states that if the annual growth rate of a variable is x%, the necessary time for doubling is:
70 divided by x.
If the adult population of a country is 200 million, 100 million are employed, and 10 million are unemployed, this country's unemployment rate is:
9.1%.
(Table: Employment, Unemployment, and Labor Force Participation) Refer to the table. What is the employment rate of the country in 2010?
95%
Which statement is TRUE about economic growth?
A country can grow and become wealthy, never grow, or grow and then begin to stagnate.
Which statement is TRUE for the Great Leap Forward period in China?
A lack of private property rights provided no incentive for farmers to be productive.
The value of production by a U.S. worker employed by a firm located in Canada is included in:
Canada's GDP only.
If the GDP of country X is 4 times the GDP of country Y and if the GDP of country X remains constant while GDP of country Y grows at a rate of 7% per year, which of the following statements is true?
Country Y's GDP will be equal to country X's GDP in 20 years.
The least corrupt countries tend to be located on which continent?
Europe
Which of the following statements is TRUE about GDP?
GDP does not account for the distribution of income in a country.
Economic growth refers to the growth rate of:
GDP per capita.
Which of the following is NOT a reason the unemployment rate is considered to be an incomplete indicator of the overall health of the labor market?
It does not correctly define the adult population.
Which statement is TRUE about a recession?
It is a significant decline in economic activity lasting more than a few months and must be widespread geographically.
Which of the following is NOT true of structural unemployment?
It results from scarcity of information.
Which statement best describes the economic growth patterns in the world since World War II?
Japan and South Korea experienced rapid growth while Argentina and Nigeria experienced slow growth.
Which statement is TRUE?
Nominal GDP can rise from one year to the next because of price increases or because of production increases, or both.
Which of the following government outlays is a transfer payment that would NOT be included in GDP?
The Social Security program sends a monthly payment to a senior citizen
Which of the following would NOT be included in this year's GDP for the United States?
The U.S. government distributes $10 million in social security payments.
What is a result of a high level of government corruption?
There are few entrepreneurs.
The ability to collect on a debt in a timely manner is due to:
a good legal system.
Which of the following would most likely NOT be counted in GDP?
You build a shed in your back yard to store your lawn mower.
A set of tires installed on a vehicle in an automobile factory is counted as:
an intermediate good and its market price is not part of GDP.
A computer chip sold to Dell is an example of:
an intermediate good.
A sound system produced by a supplier to Ford Motor Company is an example of:
an intermediate good.
Institutions
are the rules of the game that structure economic incentives.
Which of the following is NOT a reason why there are now more women in the U.S. labor force today than there were before?
banning the sale of contraceptives
Final goods are goods:
consumed or held in personal inventories
Private spending on final goods and services is part of:
consumption
Economies more open to foreign trade are more efficient in production partly because:
economies of scale occur in larger markets.
Which of the following does NOT determine the labor force participation rate?
education
If a country is experiencing inflation, it would mean that:
nominal GDP is growing faster than real GDP.
Countries that are NOT landlocked tend to grow _____ because _____.
faster; easy access to water naturally opens a country to trade
Gross domestic product is the market value of all:
final goods and services produced within a country in a year.
Countries that have high per capita GDP tend to have:
high levels of all three factors of production.
A business that pays for its workers to attend a technical college is increasing its:
human capital.
Knowledge of the computer software used by a business is an example of:
human capital.
Increases in the level of political stability in a country tend to:
increase per capita GDP.
Increasing the amount of physical capital tends to _____ output per hour of workers and _____ the value of workers.
increase; increase
The invention of birth control in pill form substantially _____ labor force participation.
increased female
A country increases its physical capital by engaging in:
investment.
Structural unemployment is a bigger problem in Europe than in the United States because of:
labor market regulations.
Two thousand years ago, per capita GDP (in 2010 dollars) was:
less than $1,000.
Institutions ultimately come from:
luck, culture, and geography.
Technological knowledge:
may continue to increase even if human capital remains relatively constant.
Structural unemployment has been a more serious problem in Europe than in the United States because of:
more generous unemployment benefits.
GDP is calculated by:
multiplying the quantity of all goods and services by their prices and adding together the results
The correlation between infant mortality and real GDP per capita is:
negative.
Beginning in the _____ century, economic growth became a clear trend in parts of the world.
nineteenth
The growth rate of GDP tells how rapidly the country's level of _____ is rising or falling over time.
production
GNP measures:
production by U.S. citizens wherever they work in the world.
Which of the following has the greatest potential for solving free-rider problems?
property rights
Increases in _____ are considered the best measure of increases in living standards because they measure only increases in production.
real GDP
One of the best explanations for why some countries are rich and others are poor is that:
rich countries organize their factors of production more efficiently than poor countries.
Government can influence a person's choice to work or not through:
taxes on workers and benefits paid to nonworkers.
Development of new computer software that increases productivity is an example of:
technical knowledge.
According to the text, we can understand the "wealth of nations" best by examining:
the laws and regulations that affect people's incentives to work and invest.
Which transaction will be included in GDP?
the purchase of a real estate agent's services
Refer to the figure, which shows real GDP per capita over time in different regions of the world. The chart shows that all regions of the world:
were poor at one time.
Discouraged workers and underemployed workers are examples of:
workers not included in the unemployment rate.
Which of the following is NOT part of natural unemployment?
cyclical unemployment
Corruption is like a "tax" on firms because:
firms usually pay bribes to avoid paying corporate taxes.
Active labor market policies:
focus on getting unemployed workers back to work.
In a nonrecession year, the majority of U.S. unemployment is:
frictional
Landlocked countries tend to grow _____ because _____.
slower; lack of water access makes trade more difficult and costly
The persistent, long-term unemployment caused by long-lasting shocks or permanent features of an economy is called:
structural unemployment.
When it occurs at the industry level, Joseph Schumpeter's "creative destruction" results in:
structural unemployment.
A rural village in a developing country has an economy based on agriculture. Then the government of the country provides the village with newly developed hybrid seeds that more than double the agricultural yield per acre. This story illustrates the growth of per capita GDP in the village through which factor(s) of production?
technological knowledge
A developing country could buy (or be given) _____ and _____ more easily than _____.
technological knowledge; physical capital; human capital
The world's poorest country is:
the Democratic Republic of the Congo.
If real GDP per capita in a country was $14,000 in year 1 and $14,140 in year 2, then the economic growth rate for this country from year 1 to year 2 was:
1%.
At an average growth rate of 4%, approximately how long would it take for an economy to double its GDP?
17.5 years
What decade brought an exceptionally large number of women into the labor force?
1970s
If real GDP per capita in a country was $14,000 in year 1 and $14,420 in year 2, then the economic growth rate for this country from year 1 to year 2 was:
3%.
Between 1993 and 2003, Guatemala experienced real GDP growth of about 3.6% a year. Over that same period, population grew at 2.8% a year, so real GDP per capita in Guatemala grew at:
0.8% a year.
If real GDP in an economy increases from $20,000 billion to $20,200 billion from 2010 to 2011, what is the annual growth rate in this economy?
1%
When the Communist Party took over China, "The Great Leap Forward" was instituted as a system to encourage the growth of agricultural production in China. Yet, during this time, millions of people starved to death. Why did this occur?
Farmers' self-interest was not aligned with social interest.
Programmers produce a large amount of software on an unpaid, open-source basis. As a result
GDP undercounts some software production.
Agricultural productivity in China sharply declined during its experiment with communal farming. This was primarily a result of:
a lack of property rights for farm land.
In North Korea, workers are rewarded for:
being loyal to the ruling Communist Party.
One measure of student output is number of completed math problems produced. Using pen and paper only, a student can complete 50 math problems in 2 hours. Using pen, paper, and a calculator, the same student can complete 100 math problems in 2 hours. (The student is already familiar with, and knows how to use, the calculator.) This scenario illustrates the use of which factor of production?
both human capital and technological knowledge
Frictional unemployment is caused by:
creative destruction