Test 2 quiz problems
Suppose the economy is closed with national saving of $3 trillion, consumption of $10 trillion, and government purchases of $4 trillion. What is GDP?
$17 trillion
Which of the following is the correct formula for calculating the labor force participation rate?
(labor force/adult population) x 100
Which of the following is the correct formula for calculating the unemployment rate?
(number unemployed/ labor force)x100
Which of the following statements is correct?
The CPI can be used to compare dollar figures from the different points in time
In the small closed economy of San Lorena, the currency is the denar. Statistics for the last year show that private saving was 60 billion denars, taxes were 80 billion denars, government purchases of goods and services were 70 billion denas, there were no transfer payments by the government, and GDP was 400 billion denars. What were consumption and investment in San Lorena?
260 billion denars, 70 billion denars
If the government imposes a minimum wage of $8, then how many workers will be employed?
3,000
If the nominal interest rate is 7 percent and the rate of inflation is 3 percent, then the real interest rate is
4 percent
Suppose that the adult population is 6 million, the number of employed is 3.8 million, and the labor-force participation rate is 70%. What is the unemployment rate?
9.5%
The steps involved in calculating the consumer price index and the inflation rate, in order, are as follows:
Fix the basket, find the prices, compute the baskets's cost, compute the index, and compute the inflation rate
Workers searching for jobs that best suits them is most closely associated with
frictional unemployment
In a closed economy, public saving is the amount of
income that households have left after paying for taxes and consumption
An increase in the saving rate would, other things the same,
increase growth more for a poor country than for a rich country, but raise growth temporarily
The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. Refer to Table above. The cost of the basket
increased from 2004 to 2005 and increased from 2005 to 2006
When public saving falls by $2b and private saving falls by $1b in a closed economy,
investment falls by $1b
According to the definitions of national saving and public saving, if Y,C and G remained the same, an increase in taxes would
leave national saving unchanged and raise public saving
When new goods are introduced, consumers have more variety from which to choose. As a result, each dollar is worth
more, and the cost of living decreases
Labor unions
raise wages in unionized industries
When a minimum-wage law forces the wage to remain above the level that balances supply and demand, it
raises the quantity of labor supplied and reduces the quantity of labor demanded compared to the equilibrium level
A bond buyer is a
saver. Bond buyer 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
Efficiency wages create a
surplus of labor and so raise unemployment
Suppose that over the past year, the real interest rate was 5 percent and the inflation rate was 3 percent. It follows that
the dollar value of savings increased at 8 percent, and the purchasing power of savings increased at 5 percent
Starting at point A, the enactment of an investment tax credit would likely cause
the quantity of loanable funds traded to increase to $125 and the investment rate to rise to 7% (point C)
If the government institutes policies that diminish incentives to save, then in the loanable funds market
the supply of loanable funds shifts leftward
If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,
there is a shortage so interest rates will rise
Unemployment data is collected
through a monthly survey of about 60,000 households
Which of the following is not one of the categories into which the Bureau of Labor Statistics places each adult of each surveyed household?
underemployed
Which of the following statements about real and nominal interest rates is correct?
When the inflation rate is positive, the nominal interest rate is necessarily greater than the real interest rate.
The long-run effects of an increase in the savings rate include
a higher level of productivity
The consumer price index is
a useful measure, but not a perfect measure, of the cost of living
On the horizontal axis, K/L represents capital K per worker L. On the vertical axis, Y/L represents output Y per worker L. The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?
all of the above are correct
The primary advantage of mutual funds is that they
allow people to diversify and reduce risk
The producer price index measures the cost of a basket of goods and services
bought by firms
Suppose the typical household spends $3,500 on goods and services during the month of January, and $4,300 on the same goods and services in February. Using January as the base period, what is the consumer price index for February?
122.9
The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year. What belongs in space D?
12%
Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $50; in 2014, the basket's cost was $51; and in 2016, the basket's cost was $52. The value of the CPI in 2014 was
102.0
Which of the following agencies calculates the CPI?
Bureau of Labor Statistics
