ECON Test 2 practice quizzes – Flashcards
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During the 2007-2009 Great Recession, the United States witnessed:
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a decrease in the labor force participation rate
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During healthy economic periods:
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only frictional and structural unemployment exist.
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An economic downturn can lead to mainly which type of unemployment?
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cyclical unemployment
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Anything that lengthens the job search process:
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increases frictional unemployment.
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Frictional unemployment is:
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unemployment caused by time delays in matching available jobs and workers.
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During periods of recession:
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the unemployment rate rises
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Employment data is released:
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the first friday of every month.
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An unemployment rate that is above the natural rate indicates ____________, and we say that the economy is producing at ____________.
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cyclical unemployment; less than the full-employment output level.
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Asking whether people are unemployed for short spells or whether the duration of joblessness is long term is:
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a question that can be answered because the Bureau of Labor Statistics keeps an alternative measure of unemployment that tracks the length of time workers have been unemployed.
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Brian Murphy is a political consultant for a candidate in Massachusetts. Mr. Murphy's candidate is defeated in the November election, and as a result, Mr. Murphy finds himself unemployed. Mr. Murphy's unemployment is classified as:
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frictional unemployment
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Assuming the price level increased, if real GDP is less than nominal GDP for a given year, then:
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the given year is after the base year.
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Consider the following data that gives the quantity produced and unit price for three different goods across two different years to answer the questions that follow: Assume that the base year is 2012. Good 2012p 2012q 2013p 2013q A 2.00 500 2.50 600 B 4.00 1000 5.00 900 C 2.00 200 1.00 300 What was the real GDP in 2013?
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$5,400
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What is the nominal GDP in 2013
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$6,300
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A shortcoming of nominal GDP is that:
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an increase in nominal GDP can be caused by changes in either price or quantity.
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Company X sells paper to company Y for $100,000. Company Y uses the paper to make textbooks, selling them to consumers for $500,000. The total contribution to GDP is:
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$500,000.
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What is the inflation between the two years?
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16.67%
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A computer company builds a new factory. This is included in the ________ category of GDP.
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investment
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Company X sells leather to company Y for $60,000. Company Y uses the leather to make shoes, selling them to consumers for $180,000. The total contribution to GDP is:
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$180,000
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Between two given years, if real GDP and nominal GDP grow at the same rate, then:
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prices must have remained constant between the two years.
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A doctor receives $50,000 per month from her patients (and their insurance companies) as payment for her services. Each month she buys medical supplies for $10,000 and she pays a lab $15,000 for analyzing slides. The total contribution to GDP this month is:
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$50,000.
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According to the consumer price index (CPI), in a particular year, the price of gasoline rises in the United States by 22%; simultaneously, the price of all food items falls by 8%. Which statement is correct
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Based solely on the information given, we cannot conclude what happened to the CPI
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Deflation is best described as:
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when the overall level of prices of goods falls.
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According to the price confusion problem, if the price of a product increases, then:
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the market demand has increased, and the firm's output should increase.
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Assume tuition at the University of Virginia cost $2,962 (per semester) in 2004 and $11,584 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say:
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tuition has increased much more rapidly than inflation
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Deflation:
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will make you better off if your nominal wages fall more slowly than prices
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Assume the price of salt increased from $0.30 in 1985 to $0.50 in 1995. If we calculate the average rate of price increase for salt over this period, we could accurately say:
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the price of salt increased at about a 5% rate per year during this period
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Based on the weight of the consumer price index (CPI), the price of rental housing increases by 15% and that of owned housing by 5%. During the same year, the price of gasoline falls by 22%. We can say that:
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all other factors being constant, it is likely the CPI would rise during the year in question
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Consider a nation in which the price index was 150 last year and this year it is 130. Which statement is correct?
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Deflation was 13.33% this year
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A price confusion problem is best described as:
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the difficulty producers have in determining whether higher prices are due to increased demand or inflation.
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Donna Newton made $0.30 per hour in 1946 at a small restaurant in Clearfield, Pennsylvania. If the consumer price index (CPI) was 18.3 in 1946 and 202.4 in 2011, then Donna's inflation-adjusted wage would be:
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$3.32.
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A firm's human capital would increase with:
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on-the-job training
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A(n) _____________ in the amount of resources will tend to _____________ economic growth.
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increase; increase
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According to the World Bank, the 31 wealthiest countries in the world tended to have much lower rates of ___________ and much higher rates of ___________ when compared to the 40 poorest countries
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infant mortality; adult literacy
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Average income in Western Europe in 1600 was roughly:
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1400
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"Living standards" refer to the well-being of the residents of a country. Generally speaking, higher economic growth leads to higher living standards. But higher living standards today can further contribute to economic growth in the future. Which of the following aspects of higher living standards would contribute most to future economic growth?
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improved education for young people
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An example of physical capital is:
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a factory
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Access to lifesaving medicine is very limited in parts of Africa; as a result, over 10% of children do not reach the age of five. What effect would an increase in medical aid to African children have on overall economic growth for the continent?
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Economic growth would increase because the health and productivity of the labor supply would increase
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As they relate to economic growth, institutions are:
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significant practices, relationships, or organizations in society
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Beginning in the late 1970s, economic reform in China allowed farmers, for the first time, to keep a portion of their crops and to sell them to others. Previously, all food was collectively farmed and shared. How did this basic reform improve China's economic growth?
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It gave farmers an incentive to be more productive.
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Average world income began to rapidly rise during the Industrial Revolution because:
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the pace of technological innovation outpaced population growth.
