Exam 2

Question 1

Productivity is generally measured as:

Answer 1

Output per worker.

Question 2

Increases in productivity per person lead to:

Answer 2

Increases in per capita income
Economic growth
Increase in GDP per capita

Question 3

When people are educated, they become:

Answer 3

More productive to society, because they have more skills to apply to a job

Question 4

Countries with low levels of GDP per capita usually also have:

Answer 4

Low levels of schooling

Question 5

An example of a natural resource is:

Answer 5

A river
A forest
A coal deposit

Question 6

If a country has a high level of growth in income, it:

Answer 6

Must be rapidly increasing its GDP per capita

Question 7

The convergence theory states that:

Answer 7

Poorer countries will grow faster than rich ones

Question 8

A reduction in current consumption to pay for the investment in capital intended to increase future production is known as the:

Answer 8

Investment trade- off effect

Question 9

The poorer a country is:

Answer 9

The more difficult it is to pay for things that will bring it out of poverty.

Question 10

According to the rule of 70, if a country grows at an average rate of 2 percent per year, what would happen after 35 years?

Answer 10

The country’s real GDP per capita would double

Question 11

During periods of recession:

Answer 11

Unemployment is more common

Question 12

Unemployment occurs when someone:

Answer 12

Wants to work but can’t find a job

Question 13

The labor demand curve:

Answer 13

Is provided by firms who want to hire workers at each given wage

Question 14

The equilibrium price of labor is called:

Answer 14

The wage

Question 15

Structural employment:

Answer 15

Is unemployment that results from a mismatch between the skills workers can offer and the skills that are in demand

Question 16

Real- wage unemployment can be caused by which of the following?

Answer 16

Minimum wage laws

Question 17

The business cycle matters for unemployment because:

Answer 17

it affects the demand for labor

Question 18

Those who oppose minimum wage legislation argue that:

Answer 18

Setting a wage above the market- clearing equilibrium creates unemployment

Question 19

If the minimum wage is set at a level above the equilibrium wage:

Answer 19

It could cause unemployment

Question 20

Unemployment insurance is:

Answer 20

Money that is paid by the government to people who are unemployed

Question 21

In the macroeconomic model of aggregate supply and aggregate demand, price is:

Answer 21

Calculated as a weighted average of the prices of all goods and services

Question 22

The aggregate demand curve slopes:

Answer 22

Downward, like individual demand curves

Question 23

Higher interest rates make it:

Answer 23

More expensive to borrow

Question 24

If prices increase only in the Unites States, then:

Answer 24

U.S. Goods become relatively more expensive than goods from other countries

Question 25

If U.S. Prices increase relative to the rest of the world, we would expect:

Answer 25

Exports to decrease and NET EXPORTS to decrease

Question 26

There is no relationship between the price level and which component of GDP?

Answer 26

(G) Government purchases

Question 27

A decrease in consumer confidence will cause:

Answer 27

A shift in aggregate demand to the left

Question 28

In the short run the aggregate supply curve:

Answer 28

Slopes upward

Question 29

In the long run:

Answer 29

Aggregate supply is fixed

Question 30

The effect of a shift in the aggregate demand curve due to an increase in consumer confidence will be:

Answer 30

An increase in both prices and output in the short run