Exam 2 Bonus

Question 1

The key indicator of a country’s living standard and economic well-being is _______

Answer 1

Real GDP per person

Question 2

Growth of a real GDP per person is totally determined by the growth of average ________?

Answer 2

Labor productivity and the proportion of the population employed.

Question 3

Economics refer to the talents, training and education of workers as _______

Answer 3

Human capital

Question 4

Which of the following is an example of an investment in physical captial?

Answer 4

A firm purchases new equipment for a manufacturing process

Question 5

Gamma has 30,000 of capital per worker, while Omega has 7500 of capital per worker. According to the principle of diminishing returns to capital, an additional unit of capital will increase output _______ in Gamma compared to Omega, holding other factors constant.

Answer 5

Less

Question 6

Most economists agree that ________ are the single most important source of productivity improvements.

Answer 6

technological advancements

Question 7

Each of the following statements describe how the political and legal environments encourages productivity except ________

Answer 7

Pay rates determined by a government planning agency provide workers with incentives to work hard

Question 8

The benefits of economic growth are _________, while the costs of economic growth are ________

Answer 8

Increased output per person; the consumption sacrificed in exchange for capital formation

Question 9

In the United States there is evidence of

Answer 9

Increasing wage inequality

Question 10

Holding other factors constant, if computers allow factory workers to manufacture more products per house, then the real wages of factory workers will _______ and employment of factory workers will _______

Answer 10

Increase and increase

Question 11

Two explanations for increasing wage inequality are ______ and _______

Answer 11

Globalization; skill-biased technological change

Question 12

factors increasing the U.S. labor supply and thereby contributing to the slowdown in real-wage growth that began in the 1970s include ______ and ______.

Answer 12

increased labor force participation by women; the coming-of-age of the baby-boom generation

Question 13

Which of the following is an example of cyclical unemployment?

Answer 13

Hector was laid off from his job with the airline because of the recession reduced demand for airline travel. He expects to get his job back when the economy picks up

Question 14

From an economic perspective, the best response to increased wage inequality is to

Answer 14

provide transition aid to disadvantaged workers

Question 15

Graph question with the 7 dollar thing

Answer 15

22

Question 16

Savings equals?

Answer 16

Current income - spending on current needs

Question 17

Which of the following is a liability to a family?

Answer 17

Car loan

Question 18

If Alicia saves 500 per month then Alicia’s _____ will increase by ________

Answer 18

Wealth, 500

Question 19

The three broad reasons for saving, as identified by economists

Answer 19

life cycle
bequest
pre-caution

Question 20

Which of the following hypotheses is a plausible explanation for why U.S. households save so little?

Answer 20

Old people and their government assistance

Question 21

Payments by the government to the public for which the government receives no current goods or services in return are called?

Answer 21

Transfer payments

Question 22

Public savings are ?

Answer 22

Identical to the government budget surplus

Question 23

The costs of investment depend on the _____ and the ______ .

Answer 23

Price of new capital goods; real interest rate

Question 24

Money is

Answer 24

any and all assets used to make purchases

Question 25

the three functions of money are?

Answer 25

Serving as a medium of exchange, unit of account and store of value

Question 26

Savings deposits are _____ the M1 measure of money and _____ and the M2 measure of money

Answer 26

Included in and included in

Question 27

If the public switches from using cash for most transactions to using checks instead, then all else equal, the money supply will

Answer 27

increase

Question 28

The two main responsiblities of the federal reserve system are to ____ and to ______

Answer 28

conduct monetary policy; over see financial markets

Question 29

Enable banks to make affordable mortgages; control the exchange rate of the U.S. dollar the board of governors of _____ governors appointed for staggered _____ terms

Answer 29

7; 14 years

Question 30

In the long run, countries with higher rates of money growth usually have

Answer 30

higher rates of inflation