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Macroeconomics > Test 2 > Flashcards

Test 2 Flashcards

1
Q 
The value, at current market prices, of the final goods and services produced during a particular period is
A. disposable personal product
B. gross foreign factor output
C. gross personal product
D. gross domestic product
A

gross domestic product

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2
Q 
The point at which a recession ends and an expansion begins is called the 
A. trough
B. downturn
C. peak
D. lag
A

trough

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3
Q 
A period of rising real GDP is
A. a peak
B. a trough
C. an expansion
D. a recession
A

an expansion

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4
Q 
A pattern of expansion, then recession, then expansion again is called
A. an annual trend
B. a secular trend
C. a business cycle
D. a consumer cycle
A

A business cycle

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5
Q 
A recession will lead to a rise in what kind of unemployment
A. Frictional
B. Cyclical
C. Transitional
D. Structural
A

cyclical

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6
Q

The terms inflation and deflation
A. refer to what happens to the average level of prices
B. refer to what is happening to particular prices
C. refer to an increase or decrease in the price of gasoline
D. mean that prices are high (inflation) or low (deflation)

A

refer to what happens to the average level of prices

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7
Q

When inflation is not anticipated
A. borrowers will be hurt and lenders will benefit
B. lenders will be hurt and borrowers will benefit
C. both borrowers and lenders will be hurt
D. both borrowers and lenders will benefit

A

lenders will be hurt borrowers will benefit

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8
Q

A major macroeconomic goal of nearly every society is
A. maintaining stable prices
B. maintaining high levels of employment
C. achieving high rates of economic growth
D. all of the above

A

maintaining stable prices
maintaining high levels of employment
achieving high rates of economic growth

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9
Q 
Economic growth is measured by changes in
A. nominal GDP
B. the money supply
C. real per capita GDP
D. the rate of unemployment
A

real per capita GDP

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10
Q

The unemployment rate is the number of people classified as unemployed as a percentage of
A. the entire population
B. the population over the age of 16
C. the labor force
D. the number of people over the age of 16 who are employed

A

the labor force

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11
Q 
The labor force consists of
A. the entire population
B. the population over the age of 16
C. the number of employed persons
D. the number of employed persons plus the number of unemployed persons
A

the number of employed persons plus the number of unemployed persons

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12
Q

Frictional unemployment is
A. unemployment that is due to normal turnover in the labor market
B. unemployment caused by automation in the workplace
C. unemployment caused by lack of training and education
D. unemployment due to the friction of competing ideological systems

A

unemployment that is due to normal turnover in the labor market

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13
Q

Structural unemployment includes
A. unemployment caused by workers who leave their jobs to find better jobs
B. unemployment caused by technology that displaces workers from their jobs
C. unemployment caused by a decline in the economy’s total production
D. unemployment caused by the geographic and occupational mobility of the labor force

A

unemployment caused by technology that displaces workers from their jobs

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14
Q

Cyclical unemployment arises when
A. the business cycle enters the expansionary phase
B. business activity in the economy declines
C. labor unions strike for higher wages
D. the agriculture sector completes the cycle of planting, cultivating, and harvesting the nations food supply

A

business activity in the economy declines

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15
Q

According to the official unemployment rate a person who is not working and not looking for work is
A. unemployed
B. underemployed
C. A member of the labor force not working
D. not a member of the labor force

A

not a member of the labor force

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16
Q 
If the labor force totals 100 million workers and 90 million are actively working then the unemployment rate is
A. 1%
B. 5%
C. 10%
D. 90%
A

10% (r=un/L)
100-90= 10 unemployed
10/100= 10%

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17
Q 
Part-time workers who would prefer full-time work are counted as
A. employed
B. unemployed
C. discouraged workers
D. not in the labor force
A

employed

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18
Q 
The natural level of unemployment contains no \_\_\_\_\_\_ employment
A. teen
B. structural
C. frictional
D. cyclical
A

cyclical

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19
Q

Which of the following best illustrates the concept of “derived demand”
A. An increases in the wages of autoworkers leads to an increase in the demand for robots in auto factories
B. A car manufacturer decides to supply more minivans when there is a decrease in the demand for station wagons
C. An increase in price of gas leads to an increase in the demand for small cars
D. An automobile firm facing an increase in the demand for cars leads to an increase in the demand for autoworkers

A

an automobile firm facing an increase in the demand for cars leads to an increase in demand for autoworkers

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20
Q

Demand for inputs (factors of production) is a derived demand because
A. it is derived from the need for income
B. the demand for output leads producers to demand inputs used to produce finished goods
C. it corresponds to the derived supply of the inputs
D. Of the diminishing marginal product of inputs

A

the demand for output leads producers to demand inputs used to produce finished goods

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21
Q

The main reason that the market demand curve for labor slopes downward is
A. At lower wage rates workers are less willing to supply labor to the market
B. At higher wage rates workers are more willing to supply labor to the market
C. because of the law of diminishing marginal product
D. because of the law of diminishing marginal resource cost

A

because of the law of diminishing marginal product

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22
Q

In a competitive market a worker’s contribution to revenue is given by
A. the production function
B. The marginal revenue product of labor
C. the marginal resource cost of labor
D. the marginal product minus the marginal cost

A

the marginal revenue product of labor

23
Q

Worker productivity may increase if
A. there is a technological improvement
B. more capital is available to work with
C. employees receive more on the job training
D. all of the above

A

there’s a technological improvement
increased capital
employees receive more on the job training

24
Q

Which of the following would cause the demand for carpenters to increase?
A. Decrease in immigration
B. Increase in demand for housing
C. Increase in price of lumber
D. Decrease in productivity of carpenters

A

an increase in demand for housing

25
Q

The market supply curve for labor
A. shows the relationship b/w the wage rates and the # of employees firms are willing to hire
B. shows the relationship b/w the price of output and the number of employees firms are willing to hire
C. shows the relationship b/w the wage rate and the quantity of labor that workers are willing to supply
D. shows the relationship b/w the price of output and the quantity of labor that workers are willing to supply

A

shows the relationship between the wage rate and the quantity of labor that workers are willing to supply

26
Q

When wages increase
A. the quantity of labor supplied by an individual always increases
B. the quantity of labor supplied by an individual always decreases
C. the opportunity cost of leisure time increases
D. the opportunity cost of leisure time decreases

A

the opportunity cost of leisure time increases

27
Q 
A backward bending portion of an individual labor supply curve is most likely to be observed
A. at lower wages
B. at higher wages
C. in manufacturing industries
D. in service industries
A

at higher wages

28
Q

If leisure is a normal good for a worker and the income effect of a wage change dominates the substitution effect, then if wages increase
A. there will be decrease in quantity of labor supplied by the worker
B. there will be increase in quantity of labor supplied by the worker
C. there will be no change
D. the workers individual supply curve will shift left

A

there will be a decrease in the quantity of labor supplied by the worker

29
Q

The substitution effect of a wage increase
A. results in an increase in quantity of labor supplied
B. results in a decrease in quantity of labor supplied
C. has no impact on quantity of labor supplied
D. results in an increase of the quantity of leisure enjoyed

A

results in an increase in quantity of labor supplied

30
Q 
Which of the following will not result in a rightward shift in the market supply curve for labor?
A. increase in immigration
B. increase in working age population
C. increase in labor productivity
D. decrease in unemployment insurance
A

An increase in labor productivity

31
Q 
The additional costs to society that result from additional production are called the
A. marginal external benefits
B. marginal external costs
C. marginal social costs
D. marginal social benefits
A

marginal social costs

32
Q 
Private costs are those borne by
A. the victims of pollution
B. the government
C. all of society
D. the polluting firm
A

the polluting firm

33
Q

A negative externality exists when
A. firms fail to produce the profit maximizing level of output
B. firms charge a price in excess of their marginal costs
C. the total cost of producing a good exceeds the private cost of production
D. all of the above

A

the total cost of producing a good exceeds the private cost of production to the firm

34
Q 
Pollution:
A. is a positive externality
B. should be reduced to zero, the socially efficient level
C. is not an economic problem
D. is a negative externality
A

an example of a negative externality

35
Q

If the government were able to make a firm internalize the external cost of its production we would expect to see
A. the firm produce more to make up for incurring a higher private cost
B. the marginal social cost curve shift up, and the firm produce more and charge higher price as result
C. the firm produce less and charge higher price as result of incurring higher marginal private costs
D. the firm lower the price to compensate for incurring a higher private cost

A

the firm produce less
charge a higher price
as result of incurring higher marginal private costs

36
Q

Economic growth is
A. the annual % change in nominal GDP
B. the annual % change in real GDP
C. the annual % change in disposable income
D. the annual % change in per capita real GDP

A

the annual percentage change in per capita real GDP

37
Q

Given a constant rate of growth of real GDP what would cause a fall in real GDP per capita
A. a rate of pop growth that is less than the rate of growth of real GDP
B. a rate of pop growth that is greater than the rate of growth of real GDP
C. an increase in the size of labor force
D. none of the above

A

A rate of population growth that is greater than the rate of growth of real GDP

38
Q

How much the economy can produce at its natural rate depends on
A. technology
B. the quantity of available natural resources
C. the productivity
D. all of the above

A

technology
quantity of available resources
productivity of labor

39
Q

An economy’s production possibilities curve will shift outward if
A. technological progress occurs
B. the stock of available capital decreases
C. the size of the labor force decreases
D, all of the above

A

technological progress occurs

40
Q 
Which of the following will not cause the production possibilities curve to shift outward?
A. improvements in the capital stock
B. increased educational opportunities
C. a very low birth weight
D. Increased entrepreneurial activity
A

a very low birth weight

41
Q

Which of the following will cause the production possibilities curve to shift outward?
A. Improved public education
B. Improved healthcare systems
C. Larger budgets for research and development
D. All of the above

A

improved public education
improved health care systems
larger budgets for research and development

42
Q 
What rule shows approximately how long it will take a nation to double its output
A. rule of rapid growth
B. rule of 70
C. rule of 1950
D. duopoly rule
A

rule of 70

43
Q 
According to the rule of 70 if a nation grows at a rate of 10% per year roughly how long will it take for its output to double
A. 10 years
B. 7 years
C. 70 years
D. 5 years
A

7 years

70/10

44
Q 
According to the rule of 70 if a nation grows at a rate of 5% per year roughly how long will it take for its output to double
A. 10 years
B. 7 years
C. 70 years
D. 14 years
A

14 years

70/5

45
Q

The unemployment rate may underestimate the true extent of unemployment if
A. employees increase the # of hours they work overtime
B. many people become discouraged and stop looking for work
C. there are a large number of people working in the underground economy
D. all of the above

A

many people become discouraged and stop looking for work

46
Q

If the unemployment rate is 8% that means
A. 8% of the pop is unemployed
B. 8% of the pop over age 16 is unemployed
C. 8% of the labor force is unemployed
D. the number of unemployed people is 8% of the number of employed people

A

8% of the labor force is unemployed

47
Q

A person who chooses to go to college full time rather than work is
A. not part of the labor force
B. is part of the labor force but what economists call a “discouraged worker”
C. is considered unemployed
D. is considered employed

A

not part of the labor force

48
Q 
If the number of employed people is 24 million, the number of unemployed people is 8 million and the number of people over 16 years of age is 40 million the unemployment rate is
A. 8%
B. 20%
C. 25%
D. 32%
A

25%
(r=un/L)
24+8=32
8/32= 25%

49
Q

A discouraged worker is
A. someone who decides to quit work and go to college
B. someone who quits searching for work after unsuccessfully seeking employment
C. a part time worker who would prefer to work full time
D. none of the above

A

someone who quits searching for work after unsuccessfully seeking employment

50
Q 
A person who works part-time is considered to be
A. employed
B. unemployed
C. out of the labor force
D.  none of the above
A

employed

51
Q

Economic rent
A. applies as a concept to other factors besides land
B. is the payment for a resource in excess of its opportunity cost
C. will increase when the demand for that resource increases as the supply is perfectly inelastic
D. all of the above

A

payment for a resource in excess of its opportunity cost

52
Q

If 12 million people are unemployed and 288 million are actively working then the unemployment rate is

A

4%
(r=un/L)
12+288=300
12/288= 4%

53
Q

Marginal revenue falls as more labor is hired in a competitive labor market because
A. marginal cost increases as more labor is hired
B. workers that are added are inferior in terms of ability
C. of the law of diminishing marginal product
D. all of the above

A

of the law of diminishing marginal product

54
Q

list the 3 components that make up interest (or discount) rates

A

real rates
inflation
risk premium

Macroeconomics (4 decks)

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