Quiz 9

Question 1

A sustained increase in per capita GDP arises from:
Select one:
a. population growth.
b. lower prices.
c. higher productivity.
d. importing more goods.

Answer 1

c. higher productivity.

Question 2

A binding minimum wage results in:
Select one:
a. higher wages for those who were working prior to the minimum wage implementation.
b. greater amounts of structural unemployment.
c. a decrease in the amount of cyclical unemployment.
d. lower actual unemployment rates since higher wages encourage more people to enter the work force.

Answer 2

b. greater amounts of structural unemployment.

Question 3

Unemployment rates tend to:
Select one:
a. be the same across geographic areas.
b. vary depending upon age groups and ethnicities.
c. increase when an expansion in the economy occurs.
d. stay the same only when there is cyclical unemployment.

Answer 3

b. vary depending upon age groups and ethnicities.

Question 4

Unit-of-account costs of inflation are the:
Select one:
a. costs associated with money being a less reliable unit of measurement.
b. costs of transactions associated with avoiding the inflation tax.
c. costs associated with businesses changing prices.
d. transfers the government gets from printing money.

Answer 4

a. costs associated with money being a less reliable unit of measurement.

Question 5

When the economy is at full employment:
Select one:
a. there is no unemployment.
b. cyclical unemployment is zero
c. frictional unemployment is zero.
d. the natural rate of unemployment is zero.

Answer 5

b. cyclical unemployment is zero

Question 6

Which of the following is an example of someone who is cyclically unemployed?
Select one:

a. an autoworker who is laid off because of a decline in sales caused by a recession
b. a geologist who is permanently laid off from an oil company due to a new technological advance
c. a worker at a fast-food restaurant who quits work and attends college
d. a real estate agent who leaves a job in Texas and searches for a similar, higher-paying job in California

Answer 6

a. an autoworker who is laid off because of a decline in sales caused by a recession

Question 7

Which of the following is true?
Select one:
a. Unexpected inflation benefits lenders and hurts borrowers.
b. Unexpected inflation benefits borrowers and hurts lenders.
c. Unexpected inflation benefits borrowers but does not affect lenders.
d. Unexpected deflation benefits lenders but does not affect borrowers.

Answer 7

b. Unexpected inflation benefits borrowers and hurts lenders.

Question 8

Which of the following situations is likely to increase the natural rate of unemployment?
Select one:

a. the entrance of many new people into the work force
b. a decrease in unemployment compensation benefits
c. a decrease in job search time due to information advances like the Internet
d. the elimination of the minimum wage

Answer 8

b. a decrease in unemployment compensation benefits

Question 9

Which of the following statements is FALSE?
Select one:

a. Both frictional and structural unemployment can occur even if unemployment is at its natural level.
b. Cyclical unemployment is unemployment that is in excess of that associated with the natural level of employment.
c. A new college graduate looking for his or her first professional job may experience frictional unemployment.
d. Efficiency wages may cause frictional unemployment.

Answer 9

d. Efficiency wages may cause frictional unemployment.

Question 10

Which of the following statements is true?
Select one:

a. The number of people not working but who have looked for work in the past year are unemployed.
b. The labor force is the total number of people working plus those who are unemployed.
c. The unemployment rate is the number of people unemployed expressed as a percentage of the population.
d. The labor force is the same as the population.

Answer 10

b. The labor force is the total number of people working plus those who are unemployed.

Question 11

East Asia’s “economic miracle” has been attributed to all of the following EXCEPT:
Select one:
a. its very good basic education.
b. its very high savings rates.
c. its substantial technological progress.
d. important discoveries of new sources of natural resources.

Answer 11

d. important discoveries of new sources of natural resources.

Question 12

In order to increase its stock of physical capital, an economy must:
Select one:

a. engage in investment spending.
b. have a high level of consumption spending.
c. have a high level of government spending.
d. have a generous endowment of natural resources.

Answer 12

a. engage in investment spending.

Question 13

he convergence hypothesis asserts that:
Select one:

a. all economies grow at the same rate.
b. wealthier countries will grow more rapidly than poorer countries will.
c. those countries with political freedom will also have economic freedom.
d. relatively poor countries will have higher growth rates than prosperous countries will.

Answer 13

d. relatively poor countries will have higher growth rates than prosperous countries will.

Question 14

Total factor productivity measures the economic effect of:
Select one:

a. increases in human capital.
b. increases in physical capital.
c. technological progress.
d. the income distribution.

Answer 14

c. technological progress.

Question 15

When more physical capital is added to the production process but the number of workers remains constant:
Select one:

a. the amount of output per worker declines.
b. the amount of output per worker increases, but at a decreasing rate.
c. the amount of output per worker increases at an increasing rate.
d. productivity declines.

Question 16

Which of the following is NOT a determinant of productivity?
Select one:

a. the level of technology
b. the level of wages
c. the amount of physical capital per worker
d. the amount of human capital per worker

Answer 16

b. the level of wages

Question 17

he economic success observed over the past 25 years in the tropical savannah land in Brazil known as the cerrado is due to:
Select one:

a. an increase in the size of the labor force.
b. a change in climate.
c. government-sponsored research and development.
d. government policies that encourage imports.

Answer 17

c. government-sponsored research and development.

Question 18

Those who question whether long-run economic growth is sustainable emphasize that:
Select one:

a. technological innovations have more of an impact when they are new.
b. there is a limited supply of natural resources.
c. productivity is not always increased by adding to physical and human capital.
d. rates of population growth are too high.

Answer 18

d. rates of population growth are too high.

Question 19

In an economy with a government but no interaction with other countries:
Select one:

a. consumption spending equals savings.

b. consumption spending equals investment spending.
c. investment spending equals national savings.
d. the amount of the budget surplus will be equal to the amount of tax revenue collected.

Answer 19

c. investment spending equals national savings.

Question 20

ith the exception of infrastructure, physical capital is created by:
Select one:

a. education.
b. total factor productivity.
c. private investment spending.
d. increases in the size of the labor force.

Answer 20

c. private investment spending.