Practice Exam 1 Flashcards
What type of unemployment is Danit classified as after being laid off during a recession?
Cyclically unemployed
Which individual is NOT considered part of the labor force?
a. Kimberly, who has retired from the military and now works at the post
office
b. Kostas, who is working part-time but wants to be working full-time
c. Aileen, who is a full-time student working part-time
d. Justine, who is a full-time homemaker
e. Thomas, who is not working and has been actively searching for a job
Justine, who is a full-time homemaker
If the economy is expanding beyond its long-run capabilities, what can we infer about actual unemployment?
Actual unemployment is less than its natural rate.
What is Keller Accounting increasing by conducting at least ten interviews for a new position?
Structural unemployment
What happens to the quantity demanded for haircuts when the price increases?
The quantity demanded for haircuts decreases.
When John buys new tires for his car, how is it counted toward GDP?
Counts toward GDP as final goods; when Ford buys tires, it does not count toward GDP as intermediate goods.
How is gross domestic product (GDP) best defined?
The total market value of all final goods and services produced within a country within a given time.
How many weeks must a jobless person not seek a job to be excluded from unemployment statistics?
Four weeks
What was the U.S. unemployment rate in December of 2021?
3.9%
What happens to the supply curve for lemonade if the cost of lemons falls?
The supply curve for lemonade would shift to the right.
What level of unemployment is the government trying to reduce by giving grants for job training?
Structural unemployment
What happens to the price of apples when tornadoes affect apple production?
The supply curve shifts to the left.
The State of Florida’s expenditure to repave highways is included in which GDP category?
Government purchases
What happens to the equilibrium price and quantity of faux leather purses if income decreases?
The equilibrium price will be indeterminate and the equilibrium quantity will go up.
What could happen to the price of textbooks if professors stop assigning homework from them?
The price of textbooks decreases to $400 because of a demand shift.
Which example illustrates structural unemployment?
a. Cameron quits his job to go back to school.
b. Jasmine loses her job as a newspaper distributor because the
publication has gone digital.
c. Chad graduates with his master’s degree in economics and is
searching for an analyst job in Oklahoma.
d. Raymond loses his job as an automotive worker because the economy
is in a downturn.
e. Edith has decided to retire after 35 years of working at the state prison.
Jasmine loses her job as a newspaper distributor because the publication has gone digital.
Why do grocery stores have similar prices for green beans?
The grocery stores form a competitive market, so neither consumer nor producer has a large influence on the price.
What type of unemployment has the invention of the Internet reduced?
Frictional unemployment
What happens to the demand curve for yams during a recession when income decreases?
The demand curve for yams shifts to the right, causing the equilibrium price to increase and the equilibrium quantity to increase.
How much did your stock transactions contribute to GDP if you bought shares for $500 and sold them for $750 with a $100 broker fee?
$1,250
How is Ellen’s purchase of a new computer for her business counted in GDP?
Included as investment; when bought for personal use, it counts as consumption.
What trend has occurred in the employment sectors over the past 300 years in the US?
The number of workers employed in services in the US has increased.
What are the three types of unemployment?
Frictional, structural, and cyclical
Who is officially considered unemployed?
Jenna, who just graduated from college and is searching for a job.
Dr. Smith’s economics class has 100 students. No students in the class have full-time jobs. Twenty students in the class have part-time jobs. Six students in the class would like to have part-time jobs, and one of the six is looking for a part-time job. What is the unemployment rate in the class?
4.8%
What does the investment spending category of GDP NOT include?
Purchases of stocks and bonds.
What does a small per capita GDP indicate about a country?
It has low living standards.
What dollar amount contributes to GDP from a car that sells for $35,000 with $17,500 in materials and $15,000 in labor?
$35,000
How is government payment to an unemployed worker classified in GDP?
Included in the consumption category.
What happens to the demand curve for Trix cereal if the price of Cinnamon Toast Crunch increases?
The demand curve for Trix cereal shifts to the right.
Country A has a real gross domestic product (GDP) of $750,000 and a population of 200. Country B has a real GDP of $500,000 and a population of 100. Which of the following is true?
The average living standard is higher in Country A.
The value of real per capita GDP is higher in Country A.
The value of total output is higher in Country B.
The value of real per capita GDP is higher in Country B.
The value of income is higher in Country A.
Country A has a higher average living standard.
As a government official, Nolan wants people to be healthier and consume less sugar. He has decided to use taxes to discourage people from drinking non-diet soda. How would he describe his decision to an economist?
If I increase taxes on non-diet soda, there will be an increase in demand, which means fewer people are drinking non-diet soda.
If I decrease taxes on non-diet soda, there will be an increase in the quantity demanded, which means fewer people are drinking non-diet soda.
If I increase taxes on non-diet soda, there will be a decrease in demand, which means fewer people are drinking non-diet soda.
If I decrease taxes on non-diet soda, there will be a decrease in demand, which means fewer people are drinking non-diet soda.
Taxes will have no effect on demand for non-diet soda.
If I increase taxes on non-diet soda, there will be a decrease in demand, which means fewer people are drinking non-diet soda.
What can cause both a shift in supply and a shift in demand?
Expectations of future prices.
What happens to the equilibrium price and quantity in the cereal market if the price of milk decreases and corn becomes more expensive?
The demand for cereal increases, the supply decreases. Price for cereal increases, quantity change is indeterminate.
