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Studying for Macro

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

F

If the current year CPI is 90, then the price level has decreased 10 percent since the base year.

T

Within the U.S. population, women have higher rates of unemployment than men.

T

Only paid workers are included in the Bureau of Labor Statistics' "employed" category.

F

Human capital refers to the percentage of the working-age population in the labor force.

F

Accumulating a greater number of inputs will ensure that an economy will experience economic growth.

F

If there is public dissaving, investment spending in the economy will decline, holding everything else constant.

T

Real GDP per capita is calculated by dividing the value of real GDP for a country by the country's adult population.

F

If the GDP deflator is equal to 100, then for that year nominal GDP is equal to real GDP

T

Eliminating frictional unemployment would be good for the economy.

F

Which of the following statistic is usually regarded as the best single measure of a society's economic well-being?
a. the unemployment rate
b. the inflation rate
c. gross domestic product
d. the trade deficit

C

Gross domestic product is defined as
a. the quantity of all final goods and services demanded within a country in a given period of time.
b. the quantity of all final goods and services supplied within a country in a given period of time.
c. the market value of all final goods and services produced within a country in a given period of time.
d. Both (a) and (b) are correct.

C

An American company operates a fast food restaurant in Romania. Which of the following statements is accurate?
a. The value of the goods and services produced by the restaurant is included in both Romanian GDP and U.S. GDP.
b. One-half of the value of the goods and services produced by the restaurant is included in Romanian GDP, and the other one-half of the value is included in U.S. GDP.
c. The value of the goods and services produced by the restaurant is included in Romanian GDP, but not in U.S. GDP.
d. The value of the goods and services produced by the restaurant is included in U.S. GDP, but not in Romanian GDP.

C

When economists refer to intangible items, they are referring to such things as
a. illegal goods, and the value of such items is included in GDP.
b. illegal goods, and the value of such items is excluded from GDP.
c. consulting services and dental care, and the value of such items is included in GDP.
d. consulting services and dental care, and the value of such items is excluded from GDP.

C

Changes in nominal GDP reflect
a. only changes in prices.
b. only changes in the amounts being produced.
c. both changes in prices and changes in the amounts being produced.
d. neither changes in prices nor changes in the amounts being produced.

C

Suppose an economy's production consists only of corn and soybeans. In 2005, 20 bushels of corn are sold at $4 per bushel and 10 bushels of soybeans are sold at $2 per bushel. In 2004, the price of corn was $2 per bushel and the price of soybeans was $1 per bushel. Using 2004 as the base year, it follows that, for 2005,
a. nominal GDP is $50, real GDP is $100, and the GDP deflator is 50.
b. nominal GDP is $50, real GDP is $100, and the GDP deflator is 200.
c. nominal GDP is $100, real GDP is $50, and the GDP deflator is 50.
d. nominal GDP is $100, real GDP is $50, and the GDP deflator is 200.

D

Suppose a basket of goods and services has been selected to calculate the CPI and 2002 has been chosen as the base year. In 2002, the basket's cost was $75.00; in 2004, the basket's cost was $79.50; and in 2006, the basket's cost was $85.86. The value of the CPI was
a. 100 in 2002.
b. 106 in 2004.
c. 114.48 in 2006.
d. All of the above are correct.

D

In an imaginary economy, consumers buy only shirts and pants. The fixed basket consists of 6 shirts and 4 pairs of pants. A shirt cost $20 in 2006 and $25 in 2007. A pair of pants cost $30 in 2006 and $40 in 2007. Using 2006 as the base year, which of the following statements is correct?
a. For the typical consumer, the number of dollars spent on shirts is equal to the number of dollars spent on pants in each of the two years.
b. The consumer price index is 310 in 2007.
c. The rate of inflation is 29.17% in 2007.
d. None of the above is correct.

C

The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 10 bushels of peaches and 15 bushels of pecans.

Year Price of Peaches Price of Pecans
2005 $11 per bushel $6 per bushel
2006 $9 per bushel $10 per bushel


Refer to Table above. The cost of the basket in 2006 was
a. $200, and if 2005 is the base year, then the inflation rate in 2006 was 16.7 percent
b. $210, and if 2005 is the base year, then the inflation rate in 2006 was 44.1 percent.
c. $240, and if 2005 is the base year, then the inflation rate in 2006 was 20 percent.
d. $245, and if 2005 is the base year, then the inflation rate in 2006 was 40 percent.

C

The consumer price index is used to
a. monitor changes in the level of wholesale prices in the economy.
b. monitor changes in the cost of living over time.
c. monitor changes in the level of real GDP over time.
d. monitor changes in the stock market.

B

One problem with the consumer price index stems from the fact that, over time, consumers tend to buy larger quantities of goods that have become relatively less expensive and smaller quantities of goods that have become relatively more expensive. This problem is called
a. price-change neglect.
b. unmeasured quality change.
c. substitution bias.
d. relative bias.

C

An economy's natural rate of unemployment is
a. the economy's long-run target level of unemployment.
b. the amount of unemployment that the economy normally experiences.
c. the lowest rate of unemployment the economy can achieve.
d. All of the above are correct.

B

In 2004, based on concepts similar to those used to estimate U.S. employment figures, the Japanese adult non-institutionalized population was 109.684 million, the labor force was 65.760 million, and the number of people employed was 62.630 million. According to these numbers, the Japanese labor-force participation rate and unemployment rate were about
a. 57.1% and 2.9%.
b. 57.1% and 4.8%.
c. 60% and 2.9%.
d. 60% and 4.8%.

D

Which of the following is not a cause of the changing role of women in American society over the past several decades?
a. new technologies that have reduced the amount of time required to complete routine household tasks
b. improved birth control
c. changing political and social attitudes
d. scientists have shown that women are better employees than men

D

Unemployment that results because the number of jobs available in some labor markets may be insufficient to give a job to everyone who wants one is called
a. the natural rate of unemployment.
b. cyclical unemployment.
c. structural unemployment.
d. frictional unemployment.

C

Refer to Figure above. At the equilibrium wage, how many workers are unemployed?
a. 0, and If the government imposes a minimum wage of $4, then unemployment will increase by 0 workers.
b. 4000, If the government imposes a minimum wage of $4, then unemployment will increase by 4000 workers.
c. 0, If the government imposes a minimum wage of $4, then unemployment will increase by 4000 workers.
d. 2000, If the government imposes a minimum wage of $4, then unemployment will increase by2000 workers.

A

Oceania buys $40 of wine from Escudia and Escudia buys $100 of wool from Oceania. Supposing this is the only trade that these countries do. What are the net exports of Oceania and Escudia in that order?
a. $140 and $140
b. $100 and $40
c. $60 and -$60
d. None of the above is correct.

C

Which of the following causes of unemployment is associated with a wage rate above the market equilibrium level?
a. minimum-wage laws
b. Unions
c. efficiency wages
d. All of the above are correct.

D

When inflation rises, people tend to go to the bank
a. more often, giving rise to menu costs.
b. more often, giving rise to shoeleather costs.
c. less often, giving rise to redistribution costs.
d. less often, thereby lessening the severity of the inflation tax.

B

. During the recession phase of the business cycle,
a. production is usually rising.
b. interest rates are usually falling.
c. unemployment is usually falling.
d. income is usually rising.

B

Technological advances generally result in
A) decreased incomes.
B) increased life expectancy.
C) increased infant mortality rates.
D) increased average number of hours worked per day.

B

If real GDP per capita doubles between 2005 and 2020, what is the average annual growth rate of real GDP per capita?
A) 4.7%
B) 10.5%
C) 15%
D) 21%

A

Which of the following increases labor productivity?
A) an increase in the aggregate hours of work
B) decreases in the availability of computers and factory buildings
C) inventions of new machinery, equipment, or software
D) a decline in the health of the population

C

Long-run economic growth requires all of the following except
A) technological change.
B) increases in capital per hour worked.
C) government provision of secure property rights.
D) political instability.

D

Actual real GDP will be above potential GDP if
A) firms are producing below capacity.
B) firms are producing at capacity.
C) firms are producing above capacity.
D) inflation is rising.

C

Increasing the amount of consumption spending and reducing the amount of savings ________investment expenditures, and ________ long-run economic growth in the economy.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases

D

Increasing the amount of consumption spending and reducing the amount of savings ________investment expenditures, and ________ long-run economic growth in the economy.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases

B

Financial securities that represent promises to repay a fixed amount of funds are known as
A) bonds.
B) stocks.
C) pension funds.
D) insurance premiums.

A

In a closed economy, private saving is equal to which of the following? (Y = GDP, C =
Consumption, G = Government purchases, T = Taxes, and Tr = Transfers)
A) Y - C - T
B) Y - G - T
C) Y - G - T + Tr
D) Y + Tr - C - T

D

What is investment in a closed economy if you have the following economic data?
Y = $10 trillion, C = $5 trillion, Tr = $2 trillion, G = $2 trillion
A) $2 trillion
B) $3 trillion
C) $5 trillion
D) cannot be determined without information on taxes (T)

B

The demand for loanable funds is downward sloping because the ________ the interest rate, the ________ the number of profitable investment projects a firm can undertake, and the ________the quantity demanded of loanable funds.
A) lower; greater; greater
B) lower; smaller; greater
C) greater; greater; greater
D) greater; smaller; greater

A

Refer to Figure below. Which of the following is consistent with the graph depicted above?
A) An expected expansion increases the profitability of new investment.
B) The government runs a budget surplus.
C) There is a shift from an income tax to a consumption tax.
D) New government regulations decrease the profitability of new investment.

D

Refer to Figure below. Which of the following is consistent with the graph depicted above?
A) An expected expansion increases the profitability of new investment.
B) The government runs a budget surplus.
C) There is a shift from an income tax to a consumption tax.
D) New government regulations decrease the profitability of new investment.

C

Refer to Figure below. Which of the following is consistent with the graph depicted above?
A) An expected expansion increases the profitability of new investment.
B) The government runs a budget surplus.
C) There is a shift from an income tax to a consumption tax.
D) New government regulations decrease the profitability of new investment.

D

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements. This will
A) increase GDP and increase well being in the economy.
B) increase GDP and decrease well being in the economy.
C) decrease GDP and increase well being in the economy.
D) decrease GDP and decrease well being in the economy.

B

If the GDP deflator is less than 100, then for that year nominal GDP ________ real GDP.
A) equals
B) is greater than
C) is less than
D) may be greater than or less than

C

The value of what a U.S.-owned McDonald's produces in South Korea is included in the U.S. ________ and the South Korean ________.
A) GDP; GDP
B) GNP; GDP
C) GDP; GNP
D) GNP; GNP

B

Frictional unemployment is the result of
A) a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs.
B) the search process of matching workers with jobs.
C) the ups and downs in inflation.
D) a slowdown in the economy.

B

Someone who is available for work but has not actively looked for work in the previous week would be classified as
A) employed.
B) unemployed.
C) not in the labor force.
D) not in the working-age population.

C

According to the text, economists consider full employment to occur when
A) everyone who wants a job has a job.
B) frictional unemployment equals zero.
C) the sum of frictional unemployment and structural unemployment equals zero.
D) the unemployment rate consists of only frictional and structural unemployment.

D

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