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EC111 - test 2 cengage practice test questions

Terms in this set (45)

Which of the following is an example of foreign direct investment?
a.An American entrepreneur opens and operates a candy factory in Finland.
b.American saving is being used to finance Mexican investment.
c.A New York based interior design firm opens a store in San Francisco, CA.
d.In the 1800s, Europeans purchased stock in American companies that used the funds to build railroads and factories.
a.An American entrepreneur opens and operates a candy factory in Finland.
According to 2012 data for U.S. teenagers (ages 16-19) ______ had the highest unemployment rate and _______ had the lowest unemployment rate.
a.black males, white females.
b.black males, white males.
c.white males, black females.
d.white females, black males.
a.black males, white females.
Jenny earned a salary of $55,000 in 2015 and a salary of $60,000 in 2019. The consumer price index in 2015 was 220.5. The consumer price index was 236.2 in 2019. Jenny's 2015 salary in 2019 dollars is $56,012.
True
False
false
Over the last century, which of the following countries had the highest growth rate of real GDP per person?
a.Japan
b.Mexico
c.The United Kingdom
d.China
a.Japan
The government of a country, which has adopted American GDP accounting conventions, reported that seasonally adjusted GDP in third quarter was $36 billion at an annual rate. This means that the seasonally-adjusted market value of all final goods and services produced within this country in the third quarter was
a.$36 billion.
b.$3 billion.
c.$12 billion.
d.$9 billion.
d.$9 billion.
Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of productivity in the short- run.
True
False
true
Which of the following is not among the four industries with the largest employment in the United States today?
a.electrical components
b.communication
c.automobiles
d.cotton goods
cotton goods
Jenny earned a salary of $52,000 in 2015 and a salary of $60,000 in 2019. The consumer price index in 2015 was 220.5. The consumer price index was 236.2 in 2019. Jenny's 2015 salary in 2019 dollars is
a.$52,660.
b.$50,540.
c.$56,012.
d.$55,702.
d.$55,702.
Which of the following is not correct?
a.Right-to-work laws allow workers in a unionized firm to choose not to join the union.
b.The National Labor Relations Board is the U.S. government agency that enforces workers' right to unionize.
c.The Wagner Act of 1935 prevents U.S. employers from interfering when workers try to organize unions.
d.Unions are subject to antitrust laws.
d.Unions are subject to antitrust laws.
Consider two economies with diminishing returns to capital. The economies are identical except one has a higher capital per worker than the other. Suppose that the saving rates in both countries increase.
a.Over the next few years, the growth rate of real GDP per worker will be higher in the country that started with less capital per worker.
b.Over the next few years, the growth rate of human capital will be higher in the country that started with less capital per worker.
c.Over the next few years, the growth rate of technological knowledge will be lower in the country that started with less capital per worker.
d.Over the next few years, the growth rate of real GDP per worker will be higher in the country that started with more capital per worker.
a.Over the next few years, the growth rate of real GDP per worker will be higher in the country that started with less capital per worker.
In February 2015 the Bureau of Labor Statistics reported an adult population of 250 million, unemployment of 10.4 million, employment of 142.8 million, and .8 million marginally attached workers. Based on these numbers the labor force participation rate was
a.100 x 153.2/250.
b.100 x 143.6/160.
c.100 x 142.8/250.
d.100 x 142.8/153.2.
a.100 x 153.2/250.
unions

a.are not cartels and cannot balance a firm's power and so protect workers.
b.are not cartels but can balance a firm's power and so protect workers.
c.are cartels but they cannot balance a firm's power and so protect workers.
d.are cartels and they may balance a firm's power and so protect workers
d.are cartels and they may balance a firm's power and so protect workers
Which of the following statements about GDP is correct?
a.GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services.
b.The sum of wages, rents, and profits is less than a nation's income.
c.GDP is generally not regarded as a measure of a society's economic well being.
d.Money continuously flows from households to firms and then back to households, but GDP does not measure this flow of money.
a.GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services.
Jenny earned a salary of $48,000 in 2015 and a salary of $60,000 in 2019. The consumer price index in 2015 was 220.5. The consumer price index was 236.2 in 2019. Jenny's 2015 salary in 2019 dollars is
a.$56,012.
b.$53,652.
c.$56,660.
d.$51,418.
d.$51,418.
Suppose the consumer price index is 89 in 2012, 94 in 2014, 100 in 2016, and 103 in 2018. If Social Security Benefits were $1,000 in 2018 and we index them for inflation, the Social Security benefits would have been ________ in 2012.
a.$864.08
b.$886.04
c.$970.87
d.$1,000
a.$864.08
Discouraged workers, as defined by the Bureau of Labor Statistics, are
a.excluded from the number of unemployed but included in the labor force
b.excluded from both the number of unemployed and the labor force.
c.included in the number of unemployed and the labor force
d.included in the number of unemployed but excluded from the labor force
b.excluded from both the number of unemployed and the labor force.
A manufacturer produces 500,000 MP3 players in the first quarter of the year. It sells 400,000 of them and adds 100,000 of them to inventory. All the players added to inventory are purchased by consumers in the second quarter. How are the 100,000 that go into inventory counted in GDP?
a.Since the MP3 players eventually will be bought by consumers, they will be included as consumption in the first quarter.
b.The MP3 players will be counted as a change in inventory in the first quarter, and when sold in the second quarter will raise GDP by the value of the MP3 players.
c.Since the MP3 players were purchased by consumers in the second quarter, they will be counted as an increase in second- quarter GDP.
d.The MP3 players will be counted as a change in inventory in the first quarter, and so will be included in first quarter GDP as part of investment.
d.The MP3 players will be counted as a change in inventory in the first quarter, and so will be included in first quarter GDP as part of investment.
If workers increase the amount of training that they obtain, they are increasing their ____
a.human capital.
b.natural resources.
c.physical capital.
d.technology.
a.human capital.
The CPI value in 2018 is 100 and the annual inflation rate is 6%. The CPI value in 2019 is 106.
True
False
true
Which of the following is measured by the growth rate of real GDP per person?
a.Changes in the level of well-being in a country.
b.Human capital.
c.Foreign direct investment.
d.Growth rate of nominal GDP.
a.Changes in the level of well-being in a country.
A soft drink cost $1.00 in 2019. The value for the CPI in 1965 is 60.2 and the value of the CPI for 2019 is 236.2, what is the price of a soft drink in 1965 dollars?
a.$0.20
b.$0.15
c.$0.30
d.$0.25
d.$0.25
Efficiency wages
a.decrease productivity but increase profits.
b.decrease productivity and profits.
c.increase productivity but decrease profits.
d.increase productivity and profits.
d.increase productivity and profits.
In the circular-flow diagram households receive income only from wages.
True
False
false
GDP
a.Excludes the value of government and services and the value of services provided by major household appliances purchased in a previous period.
b.Includes both the value of services provided by major household appliances purchased in a previous period and the value of government services.
c.Includes the value of government services but not the value of services provided by major household appliances purchased in a previous period.
d.Includes the value of services provided by major household appliances purchased in a previous period but not the value of government services.
c.Includes the value of government services but not the value of services provided by major household appliances purchased in a previous period.
In Germany, real GDP per person was $2,422 in 1870 and $50,369 in 2017. The growth rate was 2.09% per year. Which of the following is true?
a.The growth rate of 2.09% per year ignores short-run fluctuations around the long-run trend and represents an average rate of growth for real GDP per person over the period.
b.2.09% per year is an average rate of growth for real GDP per person, actual growth in each year was much lower.
c.The growth rate of 2.09% per year accounts for short-run fluctuations around the long-run trend.
d.Each year, for 147 years, real GDP per person increased by 2.09%
a.The growth rate of 2.09% per year ignores short-run fluctuations around the long-run trend and represents an average rate of growth for real GDP per person over the period.
Which of the following pairs of values of the consumer price index (CPI) is consistent with an inflation rate of 5% from 2018 to 2019?
a.CPI in 2018 = 102; CPI in 2019 = 105.4
b.CPI in 2018 = 100; CPI in 2019 = 110.3
c.CPI in 2018 = 90; CPI in 2019 = 94.5
d.CPI in 2018 = 90; CPI in 2019 = 100.2
c.CPI in 2018 = 90; CPI in 2019 = 94.5
A typical American worker covered by unemployment insurance receives _____ percent of his former wages for up to ________ weeks.
a.75, 26
b.75, 13
c.50, 26
d.50, 13
c.50, 26
EZ Rental Car buys cars from a Japanese owned car manufacturer who produces the cars in the U.S. Which of the following is correct?
a.There is no effect on U.S. investment, or U.S. GDP.
b.U.S. investment increases, but GDP increases by a smaller amount.
c.U.S. investment increases, but U.S. GDP does not.
d.U.S. investment and GDP increase by the same amount.
d.U.S. investment and GDP increase by the same amount.
The consumer price index is a perfect measure of inflation in our economy.
True
False
false
Coffee is weighted more than tea in the calculation of the CPI if
a.consumers buy more coffee than tea.
b.coffee is more accessible to the typical consumer.
c.it costs more to produce coffee than it costs to produce tea.
d.the price of coffee is greater than the price of tea.
a.consumers buy more coffee than tea.
The unemployment that results from the process of matching workers and jobs is called frictional unemployment.
True
False
true
Which of the following pairs of values of the consumer price index (CPI) is consistent with an inflation rate of 2% from 2018 to 2019?
a.CPI in 2018 = 110; CPI in 2019 = 107.8
b.CPI in 2018 = 110; CPI in 2019 = 112.2
c.CPI in 2018 = 100; CPI in 2019 = 105 .2
d.CPI in 2018 = 90; CPI in 2019 = 94.2
b.CPI in 2018 = 110; CPI in 2019 = 112.2
In 2018, real GDP in an imaginary economy was $1 billion and the population was 1 million. In 2019, real GDP was $1.2 billion and the population increased to 1.1 million. What was the growth rate of real GDP per person during the year?
a.9%
b.-10%
c.10%
d.-9%
9%
Sam quit his job because he wanted to move somewhere else. Amy just started looking for work after being out of the labor market for a couple of years. Mason was laid off because his employer's sales had fallen due to economic conditions. Who is currently eligible for unemployment insurance benefits?
a.Only Mason.
b.Amy and Mason.
c.Sam, Amy, and Mason.
d.Only Sam.
only mason
Which of the following describes natural resources?
a.The hospital building and the doctors' knowledge of medicine
b.The pumps and the cash register at a gas station
c.The inputs into production of goods and services that are provided by nature, such as land, rivers, and mineral deposits
d.The chefs' cooking skills and the kitchen equipment
c.The inputs into production of goods and services that are provided by nature, such as land, rivers, and mineral deposits
The GDP deflator equals
a.nominal GDP divided by real GDP multiplied by 100.
b.nominal GDP divided by the inflation rate multiplied by 100.
c.real GDP divided by nominal GDP multiplied by 100.
d.real GDP divided by the inflation rate multiplied by 100.
a.nominal GDP divided by real GDP multiplied by 100.
If workers increase the amount of education that they earn, they increase their _____
a.natural resources.
b.human capital.
c.physical capital.
d.technology.
b.human capital.
During recessions what happens to profits and the unemployment rate?
a.profits rise and the unemployment rate falls.
b.the unemployment rate rises and profits fall.
c.both rise.
d.both fall.
b.the unemployment rate rises and profits fall.
Spells of unemployment end with job seekers exiting the labor force about
a.1/3 of the time.
b.1/2 of the time.
c.1/10 of the time.
d.1/5 of the time.
b.1/2 of the time.
In Canada, real GDP per person was $2,633 in 1870 and $46,705 in 2017. The growth rate was 1.98% per year. Which of the following is true?
a.The growth rate of 1.98% per year ignores short-run fluctuations around the long-run trend and represents an average rate of growth for real GDP per person over the period.
b.1.98% per year is an average rate of growth for real GDP per person, actual growth in each year was much lower.
c.The growth rate of 1.98% per year accounts for short-run fluctuations around the long-run trend.
d.Each year, for 147 years, real GDP per person increased by 1.98%.
a.The growth rate of 1.98% per year ignores short-run fluctuations around the long-run trend and represents an average rate of growth for real GDP per person over the period.
Suppose the consumer price index is 89 in 2012, 94 in 2014, 100 in 2016, and 103 in 2018. If Social Security benefits were $1,000 in 2012 and we indexed them for inflation, the Social Security benefits would have been ________ in 2016.
a.$1,000
b.$1,056.18
c.$1,123.60
d.$1,157.30
c.$1,123.60
Which of the following items is included in U.S. GDP?
a.both intermediate and final goods
b.goods produced by Mexican citizens working in the United States
c.all known illegal activities
d.the difference in the price of the sale of an existing home and its original purchase price
b.goods produced by Mexican citizens working in the United States
Suppose the consumer price index is 89 in 2012, 94 in 2014, 100 in 2016, and 103 in 2018. If Social Security benefits were $1,000 in 2012 and we indexed them for inflation, the Social Security benefits would have been ________ in 2014.
a.$1,000
b.$1,056.18
c.$1,123.60
d.$1,157.30
b.$1,056.18
Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called
a.structural unemployment.
b.frictional unemployment.
c.voluntary unemployment.
d.cyclical unemployment.
b.frictional unemployment.
About 25% of U.S. workers belong to unions.
True
False
false
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