Macroeconomics 1
Final exam study
- 1.
Consider an economy made up of 100 people, 60 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The number of people in the labor force is
- A.
30
- B.
60
- C.
85
- D.
90
- E.
70
Correct Answer
D. 90 -
- 2.
An individual with a Ph D. in physics, who can find employment only a pizza parlor, would be considered
- A.
A discounted worker
- B.
Underemployed
- C.
Overemployed
- D.
Unemployed
- E.
Not in the labor force
Correct Answer
B. Underemployed -
- 3.
Which of the following groups has historically had the highest unemployment rate?
- A.
Professional workers
- B.
White teenagers
- C.
Black teenagers
- D.
Black adults
- E.
White adults
Correct Answer
C. Black teenagers -
- 4.
Juanita earned a BS in engineering and went to work for a large defense contractor in a small town in Cal. When the government cut spending, Jaunita and 99 others were laid off. The only other business in the town is growing grapes, but the growers refuse to hire laid- off engineers, knowing they will leave at the first opportunity. The unemployment Juanita is experiencing is
- A.
Cyclical
- B.
Structural
- C.
Seasonal
- D.
Frictional
- E.
Voluntary
Correct Answer
B. Structural -
- 5.
Jack, a brilliant new PhD in economics, has turned down many job offers because she hopes eventrually to teach at one of the top universities in her filed. The ype of unemployment she is experiencing is:
- A.
Frictional
- B.
Structural
- C.
Seasonal
- D.
Cyclical
- E.
Underemployment
Correct Answer
A. Frictional -
- 6.
What resulted form the increase in oil prices of the 1970's
- A.
Aggregate demand decreased, causing cost-push inflation
- B.
Agg. Demand increased, causing demand pull inflation
- C.
Aggg. supply increased, causing demand pulll inflation
- D.
Agg supply increased, causing cost puch inflation
- E.
Aggregate supply decreased, causing cost push inflation
Correct Answer
E. Aggregate supply decreased, causing cost push inflation -
- 7.
An increase in the price level will
- A.
Make the consumption function steeper
- B.
Shift the consumption function downward
- C.
Result in the movement upward along the consumption function
- D.
Result in a movement downward along the consumption function
- E.
Make the consumption function flatter
Correct Answer
B. Shift the consumption function downward -
- 8.
A drop in stock prices will ________ net wealth and _____ consumpton.
- A.
Reduce; increase
- B.
Reduce; decrease
- C.
Reduce; not change
- D.
Increase; decrease
- E.
Increase; increase
Correct Answer
B. Reduce; decrease -
- 9.
When the U.S. price level increases, OTC, US net exports
- A.
Increase
- B.
Decrease
- C.
Remain constant, since net exports are assumed to be constant
- D.
Increase only if the marginal propenstiy to import also increases
- E.
Increase onluy if there is lower inflation abroad
Correct Answer
B. Decrease -
- 10.
The distance between the agg expenditure function and the 45-degree line at every level of real GDP shows the level of which of the following?
- A.
Saving
- B.
Unplanned inventory change
- C.
Planned investment
- D.
Margnial propensity to save
- E.
Marginal propensity to consume
Correct Answer
B. Unplanned inventory change -
- 11.
The smaller the marginal propensity to save, OTC,
- A.
The smaller the margnial propensity to consume
- B.
The larger the multiplier
- C.
The smaller the multiplier
- D.
The flatter the consumption funciton
- E.
The steepr the saving funstion
Correct Answer
B. The larger the multiplier -
- 12.
If autonomous investment incrases by $100 billion, equilibrium real GSP demanded will
- A.
Increase by $100 billion
- B.
Not change
- C.
Increase by ($100) billion/ PMC
- D.
Increase by $100 billion*MPS
- E.
Increase by $100 billion/MPS
Correct Answer
E. Increase by $100 billion/MPS -
- 13.
Other things being equal, a decrease in economoy's exports will
- A.
Increase domestic agg expendituures and the equilibrium level of output
- B.
Decrease domestic agg expenditure and the equilibrium level of output
- C.
Have no impact on deomestic agg expenditures or output
- D.
Decrease the marginal propensity to import
- E.
Change autonomout consumption
Correct Answer
B. Decrease domestic agg expenditure and the equilibrium level of output -
- 14.
If the price level incrase, OTC, people consume
- A.
More because real income rises
- B.
Less because the real value of their wealth increases
- C.
Less because the real value of their wealth decreases
- D.
Less because real income rises
- E.
More because nomical income increases
Correct Answer
C. Less because the real value of their wealth decreases -
- 15.
In the early 1930's many US banks failed , wiping out the savings of millions of US households =. The result of these mass bank failures might be graphed as
- A.
A downward shift of the agg expenditure line and a movement upward along the agg demand curve
- B.
A downward shift of the agg expend line and a shift to the left in the agg demand curve
- C.
A downward shift of the agg expenditure line and a shift to the left in the agg demand curve
- D.
An upward shit of the agg expenditure line and a rightward shift of the agg demand curve
- E.
An upward shift of the agg expenditure line and a leftward shift of the agg dmeand curve
Correct Answer(s)
B. A downward shift of the agg expend line and a shift to the left in the agg demand curve
C. A downward shift of the agg expenditure line and a shift to the left in the agg demand curve -
- 16.
The potential output of an economy is the level of output produced when the
- A.
Real wage equals the nominal wage
- B.
Price level in constant
- C.
Expected real wage equals inflation rate
- D.
Espected price level equals the unemployemtn rate
- E.
Expcted price level equals the actual price level
Correct Answer
E. Expcted price level equals the actual price level -
- 17.
I n the lond run, but not in the short run
- A.
Output is fixed
- B.
Prices can change but the output level is fixed
- C.
Some resourse prices are fixed
- D.
Prices are fixes but the output level can chane
- E.
Both prices and ourput are fixed
Correct Answer
A. Output is fixed -
- 18.
In the short run, but not in the long run
- A.
Actual output can ezual potential output
- B.
Cyclical unemployment can exist
- C.
Structural employment can exist
- D.
Fricational unemployment can exist
- E.
Real and nomianl GDO can fidder
Correct Answer
B. Cyclical unemployment can exist -
- 19.
If the price level turns out to be higher than exp3ected
- A.
Business increase production
- B.
The potential output level shifts rightward
- C.
Initially, the short run aggregate supply curve shifts rightward; later, there is an upward movement along that curve
- D.
Initialy, the short run aggregate supply curve shifts rightwars, later, there is a downward movement along that curve
- E.
A contractionary gap develops
Correct Answer
A. Business increase production -
- 20.
For the purpose of aggregate supply analysis, the long run is defined as the time period were
- A.
Aggregate supply adjust to equal aggfregate demand
- B.
Excess affrefate supply is bought
- C.
Excess aaggregate demand is fulfilled
- D.
Real wages are constant
- E.
All resouse prices can be varied
Correct Answer
E. All resouse prices can be varied -
- 21.
When the economy issimultaneously in the long run adn short run quilibirum, which of the following is NOT TRUE
- A.
The actual price level equals the expected price level
- B.
Agregate quantitiy supplied equlas potential output
- C.
Aggregate quantitiy demanded equals potential output
- D.
Aggregate quantity supplied equals aggregate quantity demanded
- E.
The aggregate demand curve is horizontal at the potential output level
Correct Answer
E. The aggregate demand curve is horizontal at the potential output level -
- 22.
If global pollution causes climatic changes that permanently harm corn porduction worldwide, aggregate supply and demand analysis would leave us to expect
- A.
Increases in the price level
- B.
Decreases in the price level
- C.
Outward shift of the aggregate demand and supply curve
- D.
A leftward shift of the aggregate demand cureve along a verticla aggreegate supply curve
- E.
An increase in the potential level of real GDP
Correct Answer
A. Increases in the price level -
- 23.
The economy will expand if
- A.
Leakages exceed injections
- B.
Injjections exceed leakages
- C.
Leakages equal injection
- D.
Expenditures are less than output
- E.
Savings exceeds investment
Correct Answer
B. Injjections exceed leakages -
- 24.
The smaller the marginal propensity to save, the OTC
- A.
The smaller the marginal propensity to consume
- B.
The smaller the multiplier
- C.
The flatter the consumption function
- D.
The steeper the consumption function
- E.
The steeper the savings function
Correct Answer
D. The steeper the consumption functionExplanation
because if you're not saving you are spending, and the rate is the slopeRate this question:
-
- 25.
The difference between consumption spending and disposable income
- A.
Decreases as income increass
- B.
Stays proportionally the same as income increases
- C.
Decrease if the interest increases
- D.
Equlas taxes paid
- E.
Is saving
Correct Answer
E. Is savingExplanation
because saving a portion of moneyRate this question:
-
- 26.
Net exports are
- A.
The vbalue of goods produced in the domestic economy but sold in other countries
- B.
The value of goods produced in other counties but purchases domestically
- C.
The largest catagory oof expenditure in the calculation of GDP
- D.
The value of imports mines the value of exportss
- E.
The value of exports minus the value of imports
Correct Answer
E. The value of exports minus the value of imports -
- 27.
Which of the following would NOT be considered as a cost of unemployment
- A.
Loss of slef -respect by those who are unepmloyed
- B.
Waste oof economy resources
- C.
Negative psychological effects on those who have lost heir jobs
- D.
Higher rates of inflation
- E.
Loss of income by those who are unemployed
Correct Answer
D. Higher rates of inflation -
- 28.
If two parties to a loan contract agree that the lender should earn an 8 percent increase in purchasing prower as a resul of a loan, and the inflation rate is 5 percent, what is the nominal interest rate
- A.
13 percent
- B.
8 percent
- C.
5 percent
- D.
3 percent
- E.
1 percent
Correct Answer
A. 13 percent -
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Dec 31, 2012Quiz Edited by
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May 10, 2009Quiz Created by
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