Macro bandy midterm 1 – Flashcards
Unlock all answers in this set
Unlock answersquestion
1. The major labor market problem in the United States is ______ and in Western Europe the problem is _______. A. high persistent unemployment; low average wages B. high persistent unemployment; increasing wage inequality C. increasing wage inequality; increasing wage inequality D. increasing wage inequality; high persistent unemployment.
answer
D
question
2. Holding other factors constant, if food prices decline relative to the prices of other products, then the real wages of agricultural workers will _____ and employment of agricultural workers will _____. A. increase; increase B. increase; decrease C. decrease; not change D. decrease; decrease
answer
D
question
3. Slower growth in labor demand in combination with increases in labor supply explain ____________ accompanied by __________. A. a slowdown in real wage growth; a decline in employment B. a slowdown in real wage growth; rapid employment growth C. a slowdown in real wage growth; increasing wage inequality D. accelerated real wage growth; a decline in employment
answer
B
question
4. Factors increasing the labor supply and thereby contributing to the slowdown in real-wage growth that began in the 1970s include ____ and _____. A. skill-biased technological change; globalization B. increased labor force participation by women; the coming-of-age of the baby-boom generation C. technological progress; diminishing returns to labor D. increasing wage inequality; globalization
answer
B
question
5. Initially, workers in the shoe industry and the computer industry earn the same wage. Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, so domestic shoe prices fall. At the same time, foreign consumers purchase more computers, raising the relative price of computers. As a result of these changes, wages in the shoe industry ____ and wages in the computer industry ______. A. increase; increase B. increase; decrease C. decrease; increase D. decrease; decrease
answer
C
question
6. Globalization can increase wage inequality in the United States, if international competition is primarily in industries requiring ____ workers. A. many B. few C. highly-skilled D. low-skilled
answer
D
question
7. In a small town of 100 people, there are 10 children under 16, 10 retired people, 60 people with full-time jobs, 3 people with part-time jobs, 3 full-time students over 16, and 4 full-time homemakers. The remaining people did not have jobs, but wanted them. All but one of these had actively looked for a job in the previous four weeks. What is the unemployment rate in this town? A. 10.0% B. 11.0% C. 12.5 % D. 14.3%
answer
C
question
8. Data for an economy shows that the unemployment rate is 6%, the participation rate 60 percent, and 200 million people 16 years or older are not in the labor force. How many people are unemployed this economy? A. 6 million B. 12 million C. 18 million D. 20 million
answer
C
question
9. The towns of Jekyll and Hyde each have a labor force of 2,000 people. In Jekyll, 500 people were unemployed for the entire year, while the rest of the labor force was employed continuously. In Hyde, every member of the labor force was unemployed for three months and was employed for nine months. The average duration of unemployment spells over the year was ____ months in Jekyll and ____ months in Hyde. A. 3; 3 B. 3; 9 C. 12; 3 D. 12; 9
answer
C
question
10. In an economy of 100 people in the labor force, if 10 people are unemployed for 4 weeks during the year, and 30 people are unemployed for 8 weeks during the year, and the rest are employed continuously throughout the year, then the average duration of unemployment in this economy is: A. 4 weeks. B. 7 weeks. C. 8 weeks. D. 20 percent.
answer
B
question
11. Which of the following is an example of structural unemployment? A. Dora lost her job when the textile mill closed. She does not have skills to work in another industry and has been unemployed for over a year. B. Marsha was laid off from her job with the airline because the recession has reduced the demand for airline travel. She expects to get her job back when the economy picks up. C. Alan, a software engineer, lost his job when the internet startup he worked for went bankrupt. He interviewed with five companies in the area before taking a job with another firm in the industry. D. Jim had a job as an engineer, but quit when his wife was transferred to another state. He looked for a month before finding a new job that he liked.
answer
A
question
12. Assume the minimum wage exceeds the market-clearing wage. If there is an increase in the labor supply, then current number of unemployed will ________ and the number of employed will _______. A. increase; increase B. increase; decrease C. increase, not change D. decrease; increase
answer
C
question
13. Unemployment insurance contributes to structural unemployment by: A. keeping wages above the market-clearing level. B. keeping wages below the market-clearing level. C. allowing unemployed workers to search longer or less intensively for jobs. D. forcing unemployed workers to take the first job offered to them.
answer
C
question
14. Structural unemployment will decrease when: A. the minimum wage is increased. B. the minimum wage is decreased. C. unemployment insurance benefits are increased. D. union wages are increased.
answer
B
question
15. The high rates of unemployment in Western Europe can be explained by: A. slow productivity growth and large increases in the labor supply. B. rapid productivity growth and small increases in the labor supply. C. labor market rigidities and decreases in the marginal productivity of low-skilled workers. D. labor market reforms and increases in the marginal productivity of low-skilled workers.
answer
C
question
1. The rise in average living standards experienced by most industrialized countries: A. has been continuous over the course of human history. B. was more rapid before 1870 than after 1870. C. has been more rapid since 1950 than before 1950. D. has resulted primarily from an increase in population worldwide.
answer
C
question
2. Real GDP per person in the United States was $9,864 in 1950. Over the next 48 years, it grew at a compound annual rate of 2.0%. If, instead, real GDP per person had grown at an average compound annual rate 2.5%, then real GDP per capita in the United States in 1998 would have been approximately ______ larger. A. $3,420 B. $6,750 C. $9,900 D. $25,500
answer
B
question
3. In 1998, average labor productivity in the U.S. was $66,381 per worker and 48.9% of the population was employed. What is the per capita GDP in 1998? A. $33,921. B. $32,460. C. $66,381. D. cannot be determined.
answer
B
question
4. Growth in the share of population employed in the United States is likely to decline in the future because: A. increasing female labor force participation is predicted. B. increasing male labor force participation is predicted. C. population growth is expected to increase. D. an increasing proportion of those currently employed will be retiring.
answer
D
question
5. Which of the following is an example of investing in human capital? A. A firm replaces manually controlled production with a computer controlled procedure. B. A firm pays for workers to take college classes. C. A chemical firm supports research to develop new chemicals. D. A firm purchases new equipment for a manufacturing process E. All of the above.
answer
B
question
6. Mike and Tom debone chicken breasts for Ted's Chicken Co. Mike is new and can only debone 30 chicken breasts per hour by hand, while Tom's experience allows him to debone 60 chicken breasts per hour by hand. Ted buys one new machine that can debone 100 chicken breasts per hour. Both Mike and Tom work the same 40 hours per week, but one of them is assigned to operate the machine instead of deboning the chicken breasts by hand. To obtain maximum average hourly productivity, ____ is assigned to use the machine and their combined average hourly productivity as a team is ____ chicken breasts A. Mike; 65 B. Mike; 80 C. Tom; 65 D. Tom; 100
answer
B
question
7. Based on the table below, if the production process described below is subject to diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than _____ packages. 1 10000 2 13000 3 15000 A. 2,000 B. 15,000 C. 16,000 D. 17,000
answer
D
question
8. Most economists agree that ______ is/are the single most important source of productivity improvements. A. increases in human capital B. increases in physical capital C. technological advances D. discoveries of natural resources
answer
C
question
9. Entrepreneurs contribute to increased average labor productivity in each of the following ways EXCEPT by: A. introducing new production methods. B. implementing new technological processes. C. developing new products. D. assigning workers to jobs.
answer
D
question
10. The productivity slowdown of the 1970's occurred: A. only in the U.S. B. only in the U.S. and the United Kingdom. C. only in the U.S, the United Kingdom, and Japan. D. around the world.
answer
D
question
11. High rates of saving and investing in the private sector promote economic growth by: A. increasing human capital. B. improving the social and legal environment. C. increasing physical capital. D. improving technology.
answer
C
question
12. Empirical studies indicate that the maximum amount of air pollution occurs _______ levels of real GDP per person. A. at the highest B. at the lowest C. at intermediate D. equally at all
answer
C
question
13. International data on the relationship between the amount of capital per worker and average labor productivity indicates strong positive relationship between the two variables for developing and less developed nations and a much weaker relationship between the two variables for richer nations. A possible explanation for this is: A. diminishing returns to physical capital B. larger populations putting pressure on limited natural resources in poorer nations C. low human capital accumulation in poorer nations D. none of the above.
answer
A
question
14. Governments contribute to increased average labor productivity in each of the following ways EXCEPT by: A. establishing well-defined property rights. B. maintaining political stability. C. imposing taxes on wages. D. allowing the free and open exchange of ideas.
answer
C
question
15. The costs of economic growth include current consumption sacrificed for: A. physical capital formation. B. acquiring new human capital. C. research and development into new technologies. D. all of the above.
answer
D
question
1. The additional goods and services produced by women in the United States as their labor force participation increases represent (e.g. Jane produces water filter membranes for a company that produces reverse osmosis products): A. an increase in economic activity. B. a switch from market to non-market production. C. a switch from non-market to market production. D. a decrease in economic activity.
answer
A
question
2. National defense services provided by the military are: A. included in GDP at market prices. B. included in GDP at cost. C. excluded from GDP because they are not sold in markets. D. excluded from GDP because they are intermediate goods.
answer
B
question
3. Which of the following is an example of a final good? A. New computer software sold to a computer manufacturer for installation in new computers B. The services provided by lawyers to a computer manufacturer C. Computer chips sold to a computer manufacturer for installation in new computers D. A new computer sold to a business firm.
answer
D
question
4. Which of the following is NOT a capital good? A. Batteries purchased by a car manufacturer to install in new cars B. Machines purchased by a car manufacturer to measure metal thicknesses C. A new house purchased by a family D. A new apartment building purchased by a corporation
answer
A
question
5. If Bountiful Orchard grows $100,000 worth of peaches, sells $50,000 worth of peaches to consumers and uses to rest to make jam that is sold to consumers for $100,000, Bountiful Orchard's contribution to GDP is: A. $50,000. B. $100,000. C. $150,000. D. $200,000.
answer
C
question
6. Summing the value added of firms yields the value of final goods and services produced because both measures: A. exclude the value of capital goods. B. exclude the value of intermediate goods and services. C. use constant prices. D. are adjusted for population growth
answer
B
question
7. Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: NAME REVENUE COST CITRUS GROWERS .75 0 FLORIDA JAM 2 .75 CORNER STORE 2.50 2 7. What is the value added of Citrus Growers Inc.? A. $0.00 B. $0.50 C. $0.75 D. $1.25
answer
C
question
8. What is the sum of the value added of all the firms? NAME REVENUE COST CITRUS GROWERS .75 0 FLORIDA JAM 2 .75 CORNER STORE 2.50 2 A. $2.00 B. $2.50 C. $2.75 D. $4.50
answer
B
question
9. If the oranges were grown and the jam produced in the year 2005, but the marmalade was sold at The Corner Store in the year 2006, what is the contribution of these transactions to GDP in the year 2005? NAME REVENUE COST CITRUS GROWERS .75 0 FLORIDA JAM 2 .75 CORNER STORE 2.50 2 A. $0.00 B. $0.75 C. $2.00 D. $2.50
answer
C
question
10. In the year, 2005 Janice Quinn sells a five-year-old car to Used Car, Inc. for $3,000. In the same year, Used Car, Inc. resells the car to Ima Goner for $3,500. What is the contribution of this transaction to GDP in the year 2005? A. $0 B. $500 C. $3,000 D. $6,500
answer
B
question
11. The market value of all domestically produced final goods and services is also equal to the total amount spent by ______________ less spending on imported goods and services. A. households and firms B. households, firms, and governments C. households, firms, and the foreign sector D. households, firms, governments, and the foreign sector.
answer
D
question
12. Which of the following would increase the government purchases component of U.S. GDP? A. The U.S. federal government pays $3 billion in pensions to government workers. B. The U.S. federal government pays $3 billion in interest on the national debt. C. The U.S. federal government pays $3 billion in salaries to soldiers in the military. D. The U.S. federal government pays $3 billion in interest to foreign holders of U.S. government bonds.
answer
C
question
13. Given the following data for an economy, compute the value of GDP. CONSUMPTION EXPENDITURES 1000 IMPORTS 600 GOV'T PURCHASES 700 CONSTRUCTION OF NEW HOMES 500 SALES OF EXISTING HOMES 600 EXPORTS 500 GOVT PAYMENT TO RETIREES 200 HOUSEHOLD PURCHASES OF DURABLE GOODS 300 BEGINNING OF YEAR INVENTORY 500 END OF YEAR INVENTORY 600 BUSINESS FIXED INVESTMENT 300 A. 2,400 B. 2,500 C. 2,600 D. 2,700
answer
B
question
14. An economy produces only 1,000,000 computers valued at $2,000 each. Of these, 200,000 are sold to consumers, 300,000 are sold to businesses, 300,000 are sold to the government, and 100,000 are sold abroad. No computers are imported. The unsold computers at the end of the year are held in inventory by the computer manufacturers. What is the value of the investment component of GDP? A. $0.3 billion B. $0.4 billion C. $0.6 billion D. $0.8 billion
answer
D
question
15. Despite some problems with equating GDP with economic well-being, real GDP per person does imply greater economic well-being because it tends to be positively associated with: A. crime, pollution, and economic inequality. B. better education, health and life expectancy. C. poverty, depletion of nonrenewable resources, and congestion. D. unemployment, availability of goods and services, and better education.
answer
B
question
1. If the total expenditures of a typical family equaled $35,000 per year in 2000 and the exact same basket of goods and services cost $40,000 in the year 2005, the family's cost of living: A. increased by 14 percent. B. decreased by 12.5 percent. C. decreased by 14 percent. D. increased by 12.5 percent.
answer
A
question
2. If the Consumer Price Index increased from 1.52 to 1.65, then it must be the case that _____ relative to prices in the base year. A. all prices rose B. the weighted average level of prices rose C. all prices fell D. some prices rose and some prices fell
answer
B
question
3. A consumer expenditure survey reports the following information on entertainment spending: 2005 2006 PRICE QUANTITY PRICE QUANTITY MOVIES 7 5 8 7 CONCERTS 30 2 35 2 CDs 16 7 15 10 Using 2005 as the base year, by how much does a "cost of entertainment" index increase between 2005 and 2006? A. 3.86% B. 8.65% C. 13.43% D. 29.41%
answer
A
question
4. A CPI that equals 1.34 in 2005 (when 2000 is the base year) means that: A. prices in 2005 are 34 percent higher than in 2004. B. the CPI equals 1.34 in 2000. C. the inflation rate in 2005 is 134 percent. D. the average level of prices is 34 percent higher in 2005 than in the base year.
answer
D
question
5. The CPI in 1930 equaled 0.17. The CPI in 1931 equaled 0.15. The rate of inflation between 1930 and 1931 was ____ percent. A. -13.3 B. -11.8 C. 1.5 D. 13.3
answer
B
question
6. The price of a gallon of gasoline at the pump increased by 10 percent at the same time that the inflation rate was 15 percent. The nominal price of gasoline _____ and the real price of gasoline _____. A. increased; increased B. increased; decreased C. increased; did not change D. decreased; increased
answer
B
question
7. A year's tuition at a state university cost $250 in 1972 when the CPI equaled 0.418. The cost of a year's tuition at the same state university cost $3000 in 2005 when the CPI equaled 1.68. The real cost of tuition between 1972 and 2005: A. increased. B. decreased. C. remained constant. D. may have either increased or decreased.
answer
A
question
8. A report indicated that the average real wage in manufacturing declined by 2% between 1990 and 2000. If the CPI equaled 1.30 in 1990, 1.69 in 2000, and the average nominal wage in manufacturing was $35 in 2000, what was the average nominal wage in manufacturing in 1990? A. $20.71 B. $21.12 C. $26.92 D. $27.46
answer
D
question
9. A labor contract provides for a first-year wage of $10 per hour, and specifies that the real wage will rise by 3 percent in the second year of the contract and by another 3 percent in the third year. The CPI is 1.00 in the first year, 1.07 in the second year, and 1.15 in the third year. What dollar wage must be paid in the third year? A. $10.00 B. $10.61 C. $11.15 D. $12.20
answer
D
question
10. The Boskin Commission's concluded that the CPI _____ the true inflation rate by 1 to 2 percent points. If this is correct then the actual improvement in living standards over time is ___________________. A. understates; overestimated B. understates; underestimated C. overstates; underestimated D. measures; overestimated
answer
C
question
11. Inflation in the health-care sector apparently is overstated because the CPI does not adequately adjust for _____ changes. A. price B. quality C. volume D. quantity
answer
B
question
12. If the price of motel rooms increases by 10% while the prices of other goods and services increase by 5 % on average, the relative price of motel rooms has: A. increased. B. decreased by 5%. C. increased by 2%. D. remained constant.
answer
A
question
13. Joy's Java Café needs $4,000 cash per day for customer transactions. Joy has a choice between going to the bank first thing on Monday morning to withdraw $20,000 - enough cash for the whole week - or going to the bank first thing every morning for $4,000 each time. Joy puts the cost of going to the bank at $3 per trip. Assume that funds left in the bank earn precisely enough interest to keep their purchasing power unaffected by inflation. Joy's Java Cafe is open 5 days a week for 50 weeks each year. When the inflation rate is 10% Joy goes to the bank everyday instead of once a week. Joy's annual shoe leather costs of inflation equal _____. A. $ 3 B. $150 C. $600 D. $750
answer
C
question
14. On January 1, 2004, Anna invested $5,000 at 5% interest for one year. The CPI on January 1, 2004 stood at 1.60. On January 1, 2005, the CPI was 1.68. The real rate of interest earned by Anna was ____ percent. A. -5 B. 0 C. 5 D. 8
answer
B
question
15. To counteract inflation, the government could implement all of the following EXCEPT: A. monetary policy. B. fiscal policy. C. polices that affect the supply and demand for a specific good. D. policies that affect the supply and demand for all goods and services.
answer
C
