Macro Midterm Questions 1-23

23 Questions

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United States Quizzes & Trivia

Questions and Answers
  • 1. 
    • A. 

      Expenditures on intermediate goods

    • B. 

      Interest

    • C. 

      Profits

    • D. 

      Wages

  • 2. 
    GDP understates the value of output produced by an economy because it
    • A. 

      Includes transactions that do not take place in organized markets, such as home-cooked meals

    • B. 

      Excludes the value of the wages and benefits of government employees

    • C. 

      Includes environmental degradation caused by increased output production

    • D. 

      Excludes value added from the underground economy, such as tips take "under the table"

  • 3. 
    If current unemployment is close to the natural rate of unemployment, the level of the _________ GDP is likely to be close to the level of potential output.
    • A. 

      Structural

    • B. 

      Nominal

    • C. 

      Real

    • D. 

      Estimated

  • 4. 
    On average, Europeans work one-third fewer hours than do Americans and the Japanese.  European workers also pay higher taxes and recieve more government benefits than do their American and Japanese counterparts. Compared to American and Japanese workers, Europeans work fewer hours, leaving them with more leisure time.  Increased leaisure time for European workers would tend to shirft the European
    • A. 

      Labor demand curve to the right

    • B. 

      Labor demand curve to the left

    • C. 

      Labor supply curve to the right

    • D. 

      Labor supply curve to the left

  • 5. 
    The unemployment rate
    • A. 

      Rises during recessions and falls during booms

    • B. 

      Rises during times of rapid economic growth and falls during times of slow economic growth

    • C. 

      Rises during booms and falls during recessions

    • D. 

      Tends to remain the same in booms and recessions

  • 6. 
    The downward sloping labor demand curve demonstrates that as the _________ increases the ____________ decreases.
    • A. 

      Real wage; amount of labor hired

    • B. 

      Nominal wage; amount of labor hired

    • C. 

      Real wage; amount of labor supplied

    • D. 

      Nominal wage; amount of labor supplied

  • 7. 
    When a country is experienceing persistent deflation, then:
    • A. 

      Real GDP is greater than nominal GDP before the base year

    • B. 

      Real GDP is greater than noinal GDP after the base year

    • C. 

      Real GDP is less than nominal DP before the base year

    • D. 

      Both B and C are correct

  • 8. 
    Scenario 1:  Imagine that an economy produces two goods, flashlights and fishing lures.  In 1009, the economy produced 70 flashlights and 40 fishing lures, and th eprices of flashlights nad fishing lures were $5 and $12, respectively.  In 2010, the economy produced 85 flashlights and 50 fishing lures, and the prices of flashligts and fishing lures were $7 and $15, respectively. Based on the information in scenario 1, real GDP in 2010 (in 2009 dollars) in this economy was
    • A. 

      $830

    • B. 

      $1025

    • C. 

      $1090

    • D. 

      $1345

  • 9. 
    Scenario 1:  Imagine that an economy produces two goods, flashlights and fishing lures.  In 1009, the economy produced 70 flashlights and 40 fishing lures, and th eprices of flashlights nad fishing lures were $5 and $12, respectively.  In 2010, the economy produced 85 flashlights and 50 fishing lures, and the prices of flashligts and fishing lures were $7 and $15, respectively. Based on the information in scenario 1, real GDP grew by about ________ percent from 2009 to 2010.
    • A. 

      23

    • B. 

      31

    • C. 

      62

    • D. 

      162

  • 10. 
    • A. 

      How has the price of gold increased over time?

    • B. 

      How have the retirement benefits in the auto industry changed over time?

    • C. 

      How has the number of commercial airline flights decreased over time?

    • D. 

      How has inflation increased over time?

  • 11. 
    • A. 

      A new county jail

    • B. 

      A restaurant meal

    • C. 

      A motorcycle

    • D. 

      A digital camera

  • 12. 
    Suppose that a new tax on hiring labor is imposed.  The demand for labor will ________, and as a result real wages will _________ and employment will _______.
    • A. 

      Increase; decrease; increase

    • B. 

      Decrease; decrease; decrease

    • C. 

      Increase; increase; increase

    • D. 

      Increase; increase; decrease

  • 13. 
    We measure gross deomestic product by multiplying the quantities of goods by their prices because it allows us to
    • A. 

      Directly compre the output of one economy to that of another

    • B. 

      Express the values of products in a commun unit of measurement

    • C. 

      Correct for inflation

    • D. 

      Calculate the total number of units of goods produced in an economy

  • 14. 
    Real  business cycle theory emphasizes the role of _________ in causing economic fluctuations.
    • A. 

      Natural disasters

    • B. 

      Agriculture

    • C. 

      Wars

    • D. 

      Technological change

  • 15. 
    One of the necessary conditions for the classical model to be true is that
    • A. 

      Wages were flexible and prices are fixed

    • B. 

      Wages and prices are partly flexible

    • C. 

      Wages and prices will not change

    • D. 

      Wages and prices are fully flexible

  • 16. 
    The typical relationship between inflation and unemployment is
    • A. 

      Unemployment changes do not directly lead to changes in inflation, but inflation changes may cause changes in unemployment

    • B. 

      As unemployment falls, inflation falls

    • C. 

      An unemployment falls, inflation increases

    • D. 

      As unemployment falls, nothing happens to inflation

  • 17. 
    Consider a two-input production function, one of which is increasing while the other is fixed.  At that point of diminishing returns, output will
    • A. 

      Increase at an increasing rate

    • B. 

      Decrease at an increasing rate

    • C. 

      Increase at a decreasing rate

    • D. 

      Decrease at a decreasing rate

  • 18. 
    Suppose that workers develop a greater taste for leisure, and thus require more time away from work.  What is likely to happen to wages and the quantity of labor hired?
    • A. 

      Wages decrease, quantity of labor hired decreases

    • B. 

      Wages decrease, quantity of labor hired increases

    • C. 

      Wages increase, quantity of labor hired increases

    • D. 

      Wages increase, quantity of labor hired decreases

  • 19. 
    During periods of poor economic performance, real GDP
    • A. 

      Declines but unemployment typically does not change

    • B. 

      Is unchanged but unemployment rises sharply

    • C. 

      Declines and unemployment rises

    • D. 

      Declines and unemployment declines

  • 20. 
    Imposing an employment tax leads to
    • A. 

      Decreased potential output in the economy

    • B. 

      A decreased supply of labor

    • C. 

      More employment

    • D. 

      Greater demand for labor

  • 21. 
    Economists define the labor force to include
    • A. 

      People who are working

    • B. 

      Only people who are working full time

    • C. 

      People who are not working but are actively looking for a job, and people who are working

    • D. 

      All individuals of work age, regardless of whether they are working or looking for a job

  • 22. 
    When the quantity of labor supplied is equal to the quantity of labor demanded at the equilibium wage rate,
    • A. 

      The economy is at a peak point during an inflationary period

    • B. 

      The economy operates at full-employment output

    • C. 

      There is a lack of unemployment

    • D. 

      Frictional unemployment is zero

  • 23. 
    Macroeconomics differs from microeconomics in that
    • A. 

      Macroeconomics is the study of individual markets, while microeconomics deals with the nation's economy as a whole

    • B. 

      Macroeconomics focuses principally on social and political issues, while microeconomics involves the study of a nation's monetary system

    • C. 

      Microeconomimcs focuses principally on social and political issues, while macroeconomics involves the study of a nation's monetary system

    • D. 

      Microeconomics is the study of individual markets, while macroeconomics deals with the nation's economy as a whole