Macro exam 3 fall 2015 Dr. Nath
Suppose the economy is closed and consumption is 6,500, taxes are 1,500, and government purchases are 2,000. If national savings amounts to 1,000, then what is GDP?
9,500
Assume the following information for an imaginary, closed economy. GDP=$110,000; consumption=$70,000; private saving=$8,000; national savings=$12,000. For this economy, investment amount to
$12,000
The country of Yokovia does not trade with any other country. Its GDP is $30 billion. Its government purchases is $5 billion worth of goods and services each year, collects $7 billion in taxes, and provides $3 billion in transfer payments to households. Private savings in Yokovia amounts to $5 billion. What are consumption and investment in Yokovia?
$21 billion and $4 billion, respectively
Assume the following information for an imaginary, closed economy. GDP=$110,000; consumption=$70,000; private saving=$8,000; national savings=$12,000. For this economy, government purchases amount to
$28,000
the country of Cedarland does not trade with any other country. Its GDP is $20 billion. Its government purchases is $3 billion worth of goods and services each year, collects $6 billion in taxes, and provides $2 billion in transfer payments to households. Private saving in Cederland is $4 billion. What is investment in Cederland?
$5 billion
Suppose a closed economy had a public saving of $3 trillion and private saving of $2 trillion. What are national savings and investment for this country?
$5 trillion, $5 Trillion
If in a closed economy Y= $11 trillion, which of the following combination would be consistent with national savings of $2.5 trillion?
C=$8 trillion, G=$.5trillion
A budget deficit
Changes the supply of loanable demands
Fran buys 1,000 shares of stock issued by Miller Brewing. In return, Miller uses the funds to buy new machinery for one of its breweries.
Fran is saving; Miller is investing
Which of the following causes of unemployment is NOT associated with a wage rate above the market equilibrium level?
Job-search
Four employers have justified their actions as follows. Whose logic is NOT consistent with the logic of efficiency wage theory?
Kay pays her workers less than the equilibrium wage so they wont have the time or money to look for work somewhere else
Meredith is looking for work as a computer programmer. Although her prospects are good, she hasn't taken a job. Julie is looking for work in a steel mill. Every time she shows up for an interview, there are more people looking for a job than their are openings. Someone waiting in line with her tells her it has been that way for a long time
Meredith is frictional unemployed, and Julie is structurally unemployed
Daisy is the newly appointed CEO of a company that manufactures CD drives on an assembly line. Her staff has told her that the output the firms produces, given the number of workers employed, indicates that some workers may be shirking. According to efficiency wage theory, what should she do?
Pay all workers more than the equilibrium wage rate
Suppose that congress were to repeal an investment tax credit. What would happen in the market for loanable funds?
The demand for loanable funds would shift left
If the demand for loanable funds is shifted to the right, then equilibrium interest
and quantity of loanable funds rise
A firm may pay efficiency wages in an attempt to
attract a well-qualified pool of applicants, reduce incentive to shirk, reduce turnover
If Proctor and Gamble sell a bond it is
borrowing directly from the public
Job search
creates frictional unemployment, while firms paying wages above equilibrium to improve workers health creates structural unemployment
The deviation of unemployment from its natural rate is called
cyclical unemployment
In a closed economy, nation saving is
equal to investment
Providing training for unemployment individuals is primarily intended to reduce
fractional unemloyment
Consumers decides to buy more computers and fewer typewriters. As a result, computer companies expand production while typewriter companies lay-off workers. this is an example of
frictional unemployment created by sectoral shifts
From time to time, the demand for workers has risen in one region of the U.S. and fallen in another. This illustrates
frictional unemployment created by sectoral shifts
Suppose that because of the popularity of the low-carb diet, bakeries need fewer workers and steak houses need more workers. This is an example of
frictional unemployment created by sectoral shifts
The efficiency-wage theory of workers turnover suggests that firms with
higher turnover will have a higher production costs and lower profits
When unions raise wages in some sectors of the economy, the surplus of labor in other sectors of the economy
increases, reducing wages in industries that are not unionized
The primary economic function of the financial system is to
match on person's savings to another person's investment
The efficiency-wage theory of workers health is
more relevant for explaining unemployment in less developed countries than in rich countries
The slope of the demand for loanable funds curve represents the
negative relations between the real interest rate and investment
Frictional unemployment can be the consequences of
one industry declining while another is growing, workers leaving exsiting jobs to find ones they like better, changes in the working conditions offered by competing firms
When a union raises the wage rate above the equilibrium level, it
raises the quantity of labor supplied and reduces the quantity of labor demanded resulting in unemployment
If the tax revenue of the federal government exceeds spending, then the government necessarily
runs a budget surplus
Other things the same, a higher interest rate induces people to
save more, so the supply of loanable funds slopes upwards
Given the Lekeisha's income exceeds her expenditures, she is best described as
saver or as a supplier of funds
A bond buyer is a
saver. Bond buyers may sell their bonds prior to maturity
The source of the supply of loanable funds is
saving, and the source of the demand for loanable funds is investment
Which of the following is NOT a reason economies always experience some unemployment
scarcity of resources
Evidence from research studies by economists
shows that increased unemployment benefits decrease the job search efforts of the unemployed
Unions contribute to
structural unemployment
The economy's two most important financial markets are
the bond market and the stock market
If there is a surplus of loanable funds, then
the quantity supplied is greater than the quantity demanded and the interest rate will fall
Most entrepreneurs do not have enough money of their own start a business. When they acquire the necessary funds from someone else,
their investments are being financed by someone else's savings
When a union bargains successfully with employers, in that industry
unemployment and wages increases
