Midterm 2

How do you find GDP per person?

Real GDP / Total Population = GDP Per Person

Esmerelda worked part-time for her mother's business without pay. Tabitha was absent from work because she had strep throat. Who is counted as "employed" by the Bureau of Labor Statistics? A. Both Esmerelda and Tabitha B. Esmerelda but not Tabitha C. Neither Esmerelda nor Tabitha D. Tabitha but not Esmerelda

A. Both Esmerelda and Tabitha

Which of the following is an explanation for the existence of frictional unemployment? A. Job search B. Efficiency wages C. Unions D. Minimum-wage laws

A. Job search

You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate? A. Medium of exchange B. Unit of account C. Liquidity D. Store of value

A. Medium of exchange

To be counted as "employed" in the U.S. labor force statistics, a person A. does not have to be working for pay if they are working for a family business and does not have to be working full time. B. must be working for pay and be working full time. C. does not have to be working for pay if they are working for a family business but must be employed full time. D. must be working for pay but does not have to be working full time.

A. does not have to be working for pay if they are working for a family business and does not have to be working full time.

Esther is considering expanding her dress shop. If interest rates rise she is A. less likely to expand. This illustrates why the demand for loanable funds slopes downward. B. more likely to expand. This illustrates why the supply of loanable funds slopes upward. C. more likely to expand. This illustrates why the demand for loanable funds slopes upward. D. less likely to expand. This illustrates why the supply of loanable funds slopes downward.

A. less likely to expand. This illustrates why the demand for loanable funds slopes downward.

When the government's budget deficit increases the government is borrowing A. more and public savings falls. B. less and public savings falls. C. more and public savings increases. D. less and public savings increases.

A. more and public savings falls.

The slope of the demand for loanable funds curve represents the A. negative relation between the real interest rate and investment. B. negative relation between the real interest rate and saving. C. positive relation between the real interest rate and saving. D. positive relation between the real interest rate and investment.

A. negative relation between the real interest rate and investment.

Cyclical unemployment refers to A. short-run fluctuations around the natural rate of unemployment. B. the portion of unemployment created by wages set above the equilibrium level. C. the portion of unemployment created by job search. D. changes in unemployment due to changes in the natural rate of unemployment.

A. short-run fluctuations around the natural rate of unemployment.

Which of the following is included in M2? A. Credit cards B. Money market mutual funds C. Corporate bonds D. Large time deposits

B. Money market mutual funds

Which of the following is included in M2 but not in M1? A. Demand deposits B. Savings deposits C. Traveler's checks D. Currency

B. Savings deposits

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to decrease barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies do most economists say promote growth? A. The second but not the first B. The first but not the second C. Both the first and the second D. Neither the first nor the second

B. The first but not the second

Which of the following can be measured by the level of real GDP per person? A. Productivity and the standard of living B. The standard of living but not productivity C. Productivity but not the standard of living C. Neither the standard of living nor productivity

B. The standard of living but not productivity

Janet is a farmer. Which of the following are included in her human capital? A. Her tractor and what she's learned from experience B. What she's learned from experience but not her tractor C. Neither her tractor nor what she's learned from experience D. Her tractor but not what she's learned from experience

B. What she's learned from experience but not her tractor

Dollar bills, rare paintings, and emerald necklaces are all A. extremely liquid assets. B. stores of value. C. units of account. D. media of exchange.

B. stores of value.

The natural rate of unemployment A. cannot be changed by government policy. B. varies less than the measured unemployment rate. C. is set by the Federal Reserve. D. is closely associated with the ups and downs in economic activity.

B. varies less than the measured unemployment rate.

If the demand for loanable funds shifts to the right, then the equilibrium interest rate A. rises and the quantity of loanable funds falls. B. and quantity of loanable funds fall. C. and quantity of loanable funds rise. D. falls and the quantity of loanable funds rises.

C. and quantity of loanable funds rise.

If the natural rate of unemployment is 5.2 percent and the actual rate of unemployment is 5.7 percent, then by definition there is A. search unemployment amounting to 0.5 percent of the labor force. B. structural unemployment amounting to 0.5 percent of the labor force. C. cyclical unemployment amounting to 0.5 percent of the labor force. D. frictional unemployment amounting to 0.5 percent of the labor force.

C. cyclical unemployment amounting to 0.5 percent of the labor force.

Other things the same, when the interest rate rises, people would want to lend A. less, making the quantity of loanable funds supplied decrease. B. more, making the supply of loanable funds increase. C. more, making the quantity of loanable funds supplied increase. D. less, making the supply of loanable funds decrease.

C. more, making the quantity of loanable funds supplied increase.

In a closed economy, private saving is A. the amount of income that businesses have left after paying for the factors of production. B. the amount of tax revenue that the government has left after paying for its spending. C. the amount of income that households have left after paying for their taxes and consumption. D. always equal to investment.

C. the amount of income that households have left after paying for their taxes and consumption.

Who of the following is not included in the Bureau of Labor Statistics' "employed" category? A. Those who worked in their own business B. Those who were temporarily absent from work because of vacation C. Those who worked as unpaid workers in a family member's business D. Those waiting to be recalled to a job from which they had been laid off

D. Those waiting to be recalled to a job from which they had been laid off

Sheila is on a temporary layoff from her automobile factory job but has not looked for work in the last four weeks. The Bureau of Labor Statistics counts Sheila as A. unemployed and not in the labor force. B. employed and not in the labor force. C. employed and in the labor force. D. unemployed and in the labor force.

D. unemployed and in the labor force.

Define, in a closed economy, (T-G) and what is the meaning of the value

Excess of Tax Revenue - Government Spending = Public Saving

Calvin is a retired finance professor. Last applied for work 10 weeks ago. Is he considered to be in the labor force?

No

How do you find Real GDP?

Productivity * Labor = Output; Output is equal to Real GDP

True or false if it could increase it's growth rates slightly, a country with low income would catch up with rich countries in about 10 years

False

What is the equation for private savings...

= Y- T- C

What is cyclical unemployment?

= unemployment rate - natural unemployment rate negative is good; positive is bad the deviation of unemployment from its natural rate. associated with business cycles

John and Jane decide to go on a vacation. As a result, they withdraw $2,500 from their savings account to purchase $2,500 worth of traveler's checks. As a result of these changes, A. M1 increases by $2,500 and M2 stays the same. B. M1 increases by $2,500 and M2 decreases by $2,500. C. M1 and M2 stay the same. D. M1 decreases by $2,500 and M2 increases by $2,500.

A. M1 increases by $2,500 and M2 stays the same.

Which of the following is included in both M1 and M2? A. Currency, demand deposits, and savings deposits B. Currency and money market mutual funds C. Currency, demand deposits, and other checkable deposits D. Traveler's checks, demand deposits, and savings deposits

C. Currency, demand deposits, and other checkable deposits

Tatiana is waiting to be recalled to a job from which she was laid off. Ivan was fired but has not looked for work during the last two months. Who does the Bureau of Labor Statistics count as "unemployed"? A. Ivan but not Tatiana B. Neither Ivan nor Tatiana C. Tatiana but not Ivan D. Both Ivan and Tatiana

C. Tatiana but not Ivan

In a closed economy, what does the difference between the tax revenue and government purchases, (T − G), represent? A. National saving B. Investment C. Private saving D. Public saving

D. Public saving

What does it mean to be "not in the labor force?"

Full time students, homemakers, retirees

Give an example of commodity money.

Gold Coins, Cigaretts in POW camps

What is the equation for investment...

I = Y - C - G

Explain what the quantity of loanable funds demanded is equal to and how to find it...

It;s equal to investment and is founded by; I = Y - C- G

What is the monetary base, M1, and M2 consist of?

MB = reserve Deposits & Currency M1 = Currency & checkable deposits M2 = M1 + small time deposits, money market mutual funds, savings deposits

Given that Monika's income exceeds her expenditures, Monika is best described as a...

Saver or as a supplier of funds

Define foreign portfolio investment

a capital investment financed with foreign money but operated by domestic residents

Define foreign direct invesment

a capital investment that is owned and operated by a foreign entity

What is a medium of exchange?

an item buyers give to sellers when they want to purchase goods and services

What is a store of value?

an item people can use to transfer purchasing power from the present to the future

What is the requirement to be in the adult population?

means you are 16 years old or older

How can you find the reserve requirement?

money supply / reserves

What is frictional unemployment?

occurs when workers spend time searching for the jobs that best suit their skills and tastes. short-term for most workers. there are jobs but takes time to form matches.

if the production function has the property constant returns to scale: changing all inputs by the same percentage causes...

output to change by that percentage

What are the requirements to be counted as "unemployed?"

people not working who are available for work, and have tried to look for a job in the past 4 months

Explain how to fine the U-1 measure of labor utilization?

persons unemployed for 15 weeks or longer / civilian labor force

The equipment and structures available to produce goods and services are called...

physical capital

An increase in the government's budget surplus means public saving is...

positive and increasing

How do you find productivity?

productivity = quantity of output produced / quantity of labor

If the government's expenditures exceeded its receipts, it would likely...

sell bonds directly to the public.

Define technological knowledge

society's understanding of the best ways to produce g and s

Give an example of fiat money.

the US dollar

Define human capital

the knowledge and skills workers acquire through education, training, and experience

What does the labor force consist of?

total number of workers, employed and unemployed

What is a budget deficit and how do you find it?

when expenses exceeds income (G-T) - (Public Savings)

What is a budget surplus and how do you find it?

when government revenue's exceeds the government expenditure (T-G)