Econ 111

21 Questions | Total Attempts: 73

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Econ Quizzes & Trivia

Test #2


Questions and Answers
  • 1. 
    The three determinants of the supply of real GDP are
    • A. 

      Labor, capital, and potential GDP.

    • B. 

      Labor, capital, and households.

    • C. 

      Labor, capital, and technology.

    • D. 

      Labor, capital, and markets

    • E. 

      Labor, capital, and government.

  • 2. 
    In which spending category would you enter the following transaction? A restaurant purchases fresh fish at the local fish market that it plans to sell as one of its nightly specials
    • A. 

      Consumption

    • B. 

      Government purchases

    • C. 

      Investment

    • D. 

      Net exports

    • E. 

      Intermediate Good

  • 3. 
    The concept of value added refers to 
    • A. 

      The amount paid in the final sale of a product or service

    • B. 

      The amount subtracted from the value of resources because of depreciation.

    • C. 

      The amount subtracted from the value of goods because of inflation

    • D. 

      The increase in the value of a product that occurs at each stage of production.

    • E. 

      The total value of all intermediate goods used in the production of the final good.

  • 4. 
    The unemployment rate
    • A. 

      Is not related to the level of real GDP.

    • B. 

      Increases as real GDP decreases.

    • C. 

      Decreases as real GDP decreases.

    • D. 

      Increases as real GDP increases.

    • E. 

      . increases only if real GDP is below potential.

  • 5. 
    Joe builds himself a garage that is valued at $25,000. To build the garage, he purchased new materials for a total cost of $15,000. The value of GDP in this case would
    • A. 

      Increase by $40,000

    • B. 

      Increase by $25,000.

    • C. 

      Increase by $15,000.

    • D. 

      Increase by $10,000.

    • E. 

      Decrease by $10,000.

  • 6. 
    Which of the following is TRUE?
    • A. 

      If inventories increase in a given year, they should be added in when calculating GDP.

    • B. 

      You buy a new bed that was produced last year. GDP will increase this year by the value of the bed because the bed was sold this year.

    • C. 

      . U. S. GDP includes the value of goods and services produced by U.S. citizens abroad.

    • D. 

      You sell your used calculus book to your friend. This transaction will count in GDP.

  • 7. 
    In a simple economy, Wanda's Weavers grows cotton and weaves it into cloth. In the current year, Wanda's Weavers produces cloth valued at $1,000, half of which it sells directly to consumers for their own personal use and half of which it sells to Joe’s T-shirts. Joe’s T-shirts produces T-shirts valued at $1,500 for the current year. What is the value of GDP in this simple economy?
    • A. 

      $2,500

    • B. 

      $1,500

    • C. 

      $500

    • D. 

      $1,000

    • E. 

      $2,000

  • 8. 
    Increasing the stock of capital enables more output to be produced.
    • A. 

      True

    • B. 

      False

  • 9. 
    Economic growth and economic fluctuations occur simultaneously.
    • A. 

      True

    • B. 

      False

  • 10. 
    Based on the experience of the previous 30 years, there is good reason to expect the rate of inflation to equal zero, on average.
    • A. 

      True

    • B. 

      False

  • 11. 
    The rate of inflation has no effect on the economy.
    • A. 

      True

    • B. 

      False

  • 12. 
    To keep the real interest rate from changing by a large amount as inflation rises, the nominal interest rate has to increase with inflation.
    • A. 

      True

    • B. 

      False

  • 13. 
    When you buy some stock in Disney, it is an investment expenditure so it counts towards GDP.
    • A. 

      True

    • B. 

      False

  • 14. 
    A part time worker does not count as being fully employed when calculating the unemployment rate.
    • A. 

      True

    • B. 

      False

  • 15. 
     A dynamic, free market economy destroys jobs at the same time it creates new jobs.
    • A. 

      True

    • B. 

      False

  • 16. 
    Persons who lose their jobs due to a recession are most likely experiencing: 
    • A. 

      Structural unemployment

    • B. 

      Cyclical unemployment

    • C. 

      Frictional unemployment

    • D. 

      Seasonal unemployment

  • 17. 
    The  labor force consists of:
    • A. 

      Only individuals 16 years of age or older who are actually at work during a given week.

    • B. 

      The employed 16 years of age or older plus the unemployed who are actively seeking jobs.

    • C. 

      All civilians over the age of 16 and who are not in an institution

    • D. 

      All of the above.

  • 18. 
    Structural unemployment is the result of
    • A. 

      Business cycle fluctuations

    • B. 

      Recurring changes in the hiring of certain industries

    • C. 

      Short term movement of workers between jobs

    • D. 

      Job search for first-time job seekers

    • E. 

      Technological change or permanent changes in industry demand

  • 19. 
    Which of the following types of unemployment can exist and the economy still be considered at “full employment?”
    • A. 

      Frictional and cyclical

    • B. 

      Structural and frictional

    • C. 

      Cyclical and structural

    • D. 

      Frictional, structural, and cyclical

  • 20. 
    Which of the following is an example of cyclical unemployment?
    • A. 

      A recent college graduate still looking for her first job

    • B. 

      A car salesman who loses her job because of a recession

    • C. 

      A ski instructor who is out of work for the summer

    • D. 

      An economics journalist who just quit her writing job in order to begin a new career as a college professor next month

    • E. 

      A worker displaced from her factory as a result of greater mechanization in the work place

  • 21. 
    During a recession, people may drop out of the labor force because they cannot find a job and give up looking for work.  This person is called ___________ and while they are out of the labor force, this causes the unemployment rate to be _________ that it would be if they had kept seeking work.
    • A. 

      Discouraged worker; higher

    • B. 

      Discouraged worker; lower

    • C. 

      Underemployed; higher

    • D. 

      Underemployed; lower