Macro test 2

The institution which coordinates actions of consumers and producers to establish prices for goods and services is known as:

Market

The descriptions give the responses of four individuals to a Bureau of Labor Statistics (BLS) survey of employment.1. Mollie just graduated from college and is now looking for work. She has had three job interviews in the past month.2. George works in an automotive assembly plant. He was laid off six months ago as the economy weakened. He expects to return to work in several months when national economic conditions improve.3. Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the Federal government cut defense spending. She has been looking for similar work for a year but no company seems interested in her aircraft design skills.4. Ricardo lost his job last year when his company downsized and laid off middle-level managers. He tried to find another job for a year, but was unsuccessful and quit looking for work. 25. Refer to the above information. Which individual is frictionally unemployed? Mollie George Jeannette Ricardo

Mollie

If product Y is an inferior good, a decrease in consumer incomes will:

Shift the demand curve for product Y to the right

A headline reads: "Steel industry suffers slump as import competition increases; unemployment rises." This type of unemployment can best be characterized in economic terms as:

Structural

A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?

Structural

Hundreds of New York legal jobs permanently disappear when a lot of legal work gets outsourced to lawyers in India.

Structural unemployment

Thousands of bus and truck drivers permanently lose their jobs when driverless, computer-driven vehicles make human drivers redundant.

Structural unemployment

When one speaks of "demand" in a particular market, this refers to:

The whole demand curve

Official unemployment rate statistics may:

Understate the amount of unemployment by excluding part-time workers in the calculations

The GDP price index is

a measure of the price of a specified collection of goods and services compared to the price of a highly similar collection of goods and services in a reference year.

Adding the market value of all final and intermediate goods and services in an economy in a given year would result in:

an amount greater than GDP for that year.

Statistics derived from national income accounting

are useful to assess the health of an economy and formulate policies to maintain and improve that health.

Comparing market values over time has the

disadvantage that prices change over time.

Gross domestic product does not include the value of the stocks and bonds bought and sold because these sales and purchases are not

economic investment and should not be counted as production of final goods and services.

A major new invention can lead to an expansion if there are

increases in investment, consumption, output, and employment.

A nation's gross domestic product (GDP):

is the dollar value of the total output of final goods and services produced within the borders of the nation.

National income accountants compare the market value of the total outputs in various years rather than actual physical volumes of production because

it is impossible to add two different goods, say, oranges and computers.

When measuring GDP for a particular year, economists exclude the value of the used furniture bought and sold because

it was counted in GDP in some previous year.

The largest component of GDP is:

personal consumption expenditures.

In order to compare changes in the standard of living over a series of years, we would use

real GDP

Nominal GDP is

the market or money value of all final goods and services produced by the economy in a given year, whereas real GDP is adjusted for inflation.

The unemployment rate that is consistent with full employment is known as

the natural rate of unemployment

Suppose that an economy has 9 million people working full-time. It also has 1 million people who are actively seeking work but currently unemployed as well as 2 million discouraged workers who have given up looking for work and are currently unemployed. What is this economy's unemployment rate?

10 percent

A nation has a population of 260 million people. Of these, 60 million are retired, in the military, in institutions, or under 16 years old. There are 188 million who are employed and 12 million who are unemployed. What is the unemployment rate?

6 percent

Which is consistent with the law of demand?

A decrease in the price of bagels causes an increase in the quantity of bagels demanded

A recession is defined as:

A fall in real GDP that lasts six months (two quarters) or longer

Which of the following is a final good or service?

A haircut

What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Fiat 500? a. Small automobiles become more fashionable: b. The price of large automobiles rises (with the price of small autos remaining the same): c. Income declines and small autos are an inferior good: d. Consumers anticipate that the price of small autos will greatly come down in the near future: e. The price of gasoline substantially drops:

A) Increase B) Increase C) Increase D) Decrease E) Cannot be determined

How is a market demand curve derived from individual demand curves?

Add up quantities demanded by all individual consumers for each price.

How do you derive a market supply curve from individual supply curves?

Add up quantities supplied by all individual producers for each price

Which statement is consistent with the law of supply?

An increase in market price will lead to an increase in quantity supplied.

Which factor will increase the demand for a product?

An increase in the price of a substitute product

When a group of workers finds that their job skills and work experience have become obsolete and are not needed by industry, this type of unemployment is:

Cyclical

A recession causes a local factory to lay off 30 workers.

Cyclical unemployment

If the income of buyers decrease and good A is an inferior good, the_______ Will _______. This will cause the equilibrium price to _____ and the equilibrium quantity to ______

Demand of good A Increase Increase Increase

In calculating the unemployment rate, "discouraged" workers who are not actively seeking employment are:

Excluded

Which of the following is a determinant of demand?

Income

Which statement is correct?

The production of nondurable consumer goods is more stable than the production of durable consumer goods over the business cycle

Which would be considered an investment (and hence be included in the calculation of GDP) according to economists?

The purchase of a new machine by Ford.

When the price of one fruit increases, consumers buy more of another fruit. This situation is an illustration of:

The substitution effect

An example of a final good in national income accounts would be new:

flowers purchased by homeowner Violet Rose.

Tim just graduated and is looking for a job.

frictional unemployment

Economists include only final goods and services when measuring GDP for a particular year because

if intermediate goods were counted, then multiple counting would occur.

A large underground economy results in an:

understated GDP.

A financial crisis can lead to a recession because it can cause

wealth and income to fall, reducing spending and ultimately reducing employment.