Macroeconomics 1

1. An individual with a Ph D. in physics, who can find employment only a pizza parlor, would be considered

A discounted worker

Underemployed

Overemployed

Unemployed

Not in the labor force

2. 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:

Frictional

Structural

Seasonal

Cyclical

Underemployment

3. If global pollution causes climatic changes that permanently harm corn porduction worldwide, aggregate supply and demand analysis would leave us to expect

Increases in the price level

Decreases in the price level

Outward shift of the aggregate demand and supply curve

A leftward shift of the aggregate demand cureve along a verticla aggreegate supply curve

An increase in the potential level of real GDP

4. Other things being equal, a decrease in economoy's exports will

Increase domestic agg expendituures and the equilibrium level of output

Decrease domestic agg expenditure and the equilibrium level of output

Have no impact on deomestic agg expenditures or output

Decrease the marginal propensity to import

Change autonomout consumption

5. When the U.S. price level increases, OTC, US net exports

Increase

Decrease

Remain constant, since net exports are assumed to be constant

Increase only if the marginal propenstiy to import also increases

Increase onluy if there is lower inflation abroad

6. A drop in stock prices will ________ net wealth and _____ consumpton.

Reduce; increase

Reduce; decrease

Reduce; not change

Increase; decrease

Increase; increase

7. If the price level incrase, OTC, people consume

More because real income rises

Less because the real value of their wealth increases

Less because the real value of their wealth decreases

Less because real income rises

More because nomical income increases

8. 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

Cyclical

Structural

Seasonal

Frictional

Voluntary

9. Which of the following groups has historically had the highest unemployment rate?

Professional workers

White teenagers

Black teenagers

Black adults

White adults

10. 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

13 percent

8 percent

5 percent

3 percent

1 percent

11. The smaller the marginal propensity to save, OTC,

The smaller the margnial propensity to consume

The larger the multiplier

The smaller the multiplier

The flatter the consumption funciton

The steepr the saving funstion

12. The economy will expand if

Leakages exceed injections

Injjections exceed leakages

Leakages equal injection

Expenditures are less than output

Savings exceeds investment

13. The difference between consumption spending and disposable income

Decreases as income increass

Stays proportionally the same as income increases

Decrease if the interest increases

Equlas taxes paid

Is saving

because saving a portion of money

Explanation

because saving a portion of money

14. What resulted form the increase in oil prices of the 1970's

Aggregate demand decreased, causing cost-push inflation

Agg. Demand increased, causing demand pull inflation

Aggg. supply increased, causing demand pulll inflation

Agg supply increased, causing cost puch inflation

Aggregate supply decreased, causing cost push inflation

15. Net exports are

The vbalue of goods produced in the domestic economy but sold in other countries

The value of goods produced in other counties but purchases domestically

The largest catagory oof expenditure in the calculation of GDP

The value of imports mines the value of exportss

The value of exports minus the value of imports

16. Which of the following would NOT be considered as a cost of unemployment

Loss of slef -respect by those who are unepmloyed

Waste oof economy resources

Negative psychological effects on those who have lost heir jobs

Higher rates of inflation

Loss of income by those who are unemployed

17. In the short run, but not in the long run

Actual output can ezual potential output

Cyclical unemployment can exist

Structural employment can exist

Fricational unemployment can exist

Real and nomianl GDO can fidder

18. If the price level turns out to be higher than exp3ected

Business increase production

The potential output level shifts rightward

Initially, the short run aggregate supply curve shifts rightward; later, there is an upward movement along that curve

Initialy, the short run aggregate supply curve shifts rightwars, later, there is a downward movement along that curve

A contractionary gap develops

19. An increase in the price level will

Make the consumption function steeper

Shift the consumption function downward

Result in the movement upward along the consumption function

Result in a movement downward along the consumption function

Make the consumption function flatter

20. The potential output of an economy is the level of output produced when the

Real wage equals the nominal wage

Price level in constant

Expected real wage equals inflation rate

Espected price level equals the unemployemtn rate

Expcted price level equals the actual price level

21. When the economy issimultaneously in the long run adn short run quilibirum, which of the following is NOT TRUE

The actual price level equals the expected price level

Agregate quantitiy supplied equlas potential output

Aggregate quantitiy demanded equals potential output

Aggregate quantity supplied equals aggregate quantity demanded

The aggregate demand curve is horizontal at the potential output level

22. 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?

Saving

Unplanned inventory change

Planned investment

Margnial propensity to save

Marginal propensity to consume

23. 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

30

60

85

90

70

24. I n the lond run, but not in the short run

Output is fixed

Prices can change but the output level is fixed

Some resourse prices are fixed

Prices are fixes but the output level can chane

Both prices and ourput are fixed

25. If autonomous investment incrases by $100 billion, equilibrium real GSP demanded will

Increase by $100 billion

Not change

Increase by ($100) billion/ PMC

Increase by $100 billion*MPS

Increase by $100 billion/MPS

26. The smaller the marginal propensity to save, the OTC

The smaller the marginal propensity to consume

The smaller the multiplier

The flatter the consumption function

The steeper the consumption function

The steeper the savings function

because if you're not saving you are spending, and the rate is the slope

Explanation

because if you're not saving you are spending, and the rate is the slope

27. For the purpose of aggregate supply analysis, the long run is defined as the time period were

Aggregate supply adjust to equal aggfregate demand

Excess affrefate supply is bought

Excess aaggregate demand is fulfilled

Real wages are constant

All resouse prices can be varied

28. 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 downward shift of the agg expenditure line and a movement upward along the agg demand curve

A downward shift of the agg expend line and a shift to the left in the agg demand curve

A downward shift of the agg expenditure line and a shift to the left in the agg demand curve

An upward shit of the agg expenditure line and a rightward shift of the agg demand curve

An upward shift of the agg expenditure line and a leftward shift of the agg dmeand curve

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