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MSSU ECON 0201 Exam 2 (2014)

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Question;Review Test Submission: Exam 2ContentInstructions Choose the best answer! You have 60 minutes to answer 40 questions. You may have your calculator and 1 3x5 note card with you. You may also want scratch paper while working the exam.Good Luck!Question 12.5 out of 2.5 points A(n) __________ is a person who was previously employed, hasn't worked for some time, and is currently reentering the labor force. Answers: discouraged worker entrant reentrant job loser job leaverQuestion 22.5 out of 2.5 points Suppose there are 65 million employed persons, 5 million unemployed persons, and 35 million persons not in the labor force. What does the civilian noninstitutional population equal? Answers: 70 million 110 million 65 million 105 millionQuestion 32.5 out of 2.5 points Exhibit 6-2 Civilian Civilian Employed Noninstitutional Labor Force PersonsYear Population (millions) (millions) (millions)1 250 200 1752 400 300 2003 500 400 3504 1000 800 720 Refer to Exhibit 6-2. The unemployment rate in year 4 is Answers: 12 1/2 percent. 72 percent. 87 1/2 percent. 10 percent. 90 percent.Question 40 out of 2.5 points Of all the categories of unemployment, most unemployed persons fall into the category of Answers: reentrant. new entrant. job leaver. job loser. none of the aboveQuestion 52.5 out of 2.5 points In an economy with a population of 100 million persons, 40 million hold civilian jobs and 9 million are not working but are looking for jobs. The number counted as unemployed is Answers: 91 million. 9 million. 51 million. 40 million. 49 million.Question 62.5 out of 2.5 points Exhibit 6-2 Civilian Civilian Employed Noninstitutional Labor Force PersonsYear Population (millions) (millions) (millions)1 250 200 1752 400 300 2003 500 400 3504 1000 800 720 Refer to Exhibit 6-2. The labor force participation rate in year 1 is Answers: 12 1/2 percent. 80 percent. 87 1/2 percent. 70 percent. 10 percent.Question 72.5 out of 2.5 points If a person did at least one hour of work as a paid employee during the survey week, how is she classified? Answers: as an employed person as not in the labor force as an unemployed person none of the aboveQuestion 82.5 out of 2.5 points Suppose the civilian non-institutional population equals 100,000 persons, the civilian labor force equals 75,000 persons, there are 70,000 employed persons and 5,000 unemployed persons. If 5,000 persons who are currently "not in the labor force" decide to join the civilian labor force, and 3,000 pf them are unemployed, then Answers: both the unemployment and the employment rate rise. both the unemployment and the employment rate fall. the unemployment rate rises and the employment rate falls. the unemployment rate falls and the employment rate rises.Question 92.5 out of 2.5 points If wages are ?sticky?, a decline in the price level will Answers: raise the real wage and lower the quantity demanded of labor. lower the real wage and lower the quantity supplied of labor. raise the real wage and lower the quantity supplied of labor. a and b none of the aboveQuestion 102.5 out of 2.5 points The purchases made by the foreign sector are called __________, the purchases made by the household sector are called __________, the purchases made by the government sector are called __________, and the purchases made by the business sector are called investment. Answers: net exports, consumption, net interest net exports, domestic spending, government purchases net exports, consumption, government purchases exports, domestic spending, government product imports, consumption, government expendituresQuestion 112.5 out of 2.5 points Which of the following is an example of an adverse supply shock? Answers: a nationwide drought lasting for many months an outbreak of war among several of the Middle Eastern oil-producing countries an influenza virus that affects 50 percent of the labor force for two weeks a, b, and c a and cQuestion 122.5 out of 2.5 points Exhibit 8-2Given Change in Economic Factor Real GDP Price LevelIncrease in foreign real national income (1) (2)Decrease in wage rates (3) (4)Beneficial supply shock (5) (6)Decrease in government purchases (7) (8)Increase in personal income taxes (9) (10)Decrease in labor productivity (11) (12) Refer to Exhibit 8-2. Based on the given change, what word (rises or falls) should go in blank (5) and blank (6), respectively, to summarize the resulting impact on short run equilibrium? Answers: rises, rises falls, falls rises, falls falls, risesQuestion 132.5 out of 2.5 points Exhibit 8-1Refer to Exhibit 8-1. Assume that the economy is originally in equilibrium at point A. If businesses become more optimistic about future sales, at which point is the economy most likely to end up in the short run? Answers: A B C DQuestion 142.5 out of 2.5 points A decrease in the price of electricity will cause Answers: a movement down the SRAS curve. a movement up the SRAS curve. a leftward shift in the SRAS curve. a rightward shift in the SRAS curve. no change regarding the SRAS curve.Question 152.5 out of 2.5 points Suppose Americans buy inputs from foreigners. When the price of foreign inputs falls, the U.S. SRAS curve __________, which tends to __________the U.S. price level. Answers: shifts rightward, reduce shifts leftward, increase shifts leftward, reduce remains constant, increaseQuestion 162.5 out of 2.5 points Exhibit 8-1Refer to Exhibit 8-1. Assume the economy is originally in equilibrium at point A. If wage rates rise, at which point is the economy most likely to end up in the short run? Answers: A B C DQuestion 172.5 out of 2.5 points If foreign real national income rises, the U.S. ____________ curve shifts _____________. When labor productivity increases the _____________ curve shifts _______________. If both of these situations occur simultaneously, the combined result would be a(n) ______________ the price level and a(n) __________________ Real GDP in the United States. Answers: AD, leftward, SRAS, rightward, decrease in, indeterminant impact on AD, rightward, SRAS, leftward, increase in, indeterminant impact on SRAS, leftward, SRAS rightward, indeterminant impact on, indeterminat impact on AD, rightward, SRAS, rightward, indeterminant impact on, increase inQuestion 182.5 out of 2.5 points Personal income taxes rise. This lowers __________, which lowers __________ and the __________ curve shifts __________. Answers: net exports, aggregate demand (AD), AD, leftward consumption, short-run aggregate supply (SRAS), SRAS, rightward government revenue, net exports, AD, rightward consumption, aggregate demand (AD), AD, leftward none of the aboveQuestion 192.5 out of 2.5 points As the price level falls, Answers: the purchasing power of cash holdings rises. the purchasing power of cash holdings falls. the purchasing power of cash holdings remains constant. cash holdings turn into dollar-denominated assets. none of the aboveQuestion 202.5 out of 2.5 points An increase in the money supply may __________ total expenditures, leading to a __________ shift of the AD curve. Answers: increase, rightward increase, leftward decrease, rightward decrease, leftwardQuestion 210 out of 2.5 points Which of the following is a nonmarket good? Answers: the corn you grow in your home garden and consume the clothes you sew and sell to a neighbor who pays you by writing you a check the self-portrait hanging in your den a and c a, b, and cQuestion 220 out of 2.5 points Personal income is Answers: equal to GDP. that portion of national income that can be used for consumption and saving. the sum of all payments to suppliers of the factors of production. the amount of income that individuals actually receive. another term for disposable income.Question 232.5 out of 2.5 points Depreciation refers to a decrease in the value of a good caused by Answers: an increase in the price level. a decrease in the price level. "wear and tear" of capital goods over time. the depreciation allowance. a decrease in purchasing power.Question 242.5 out of 2.5 points When computing national income, which of the following is included in compensation of employees? Answers: wages and salaries paid to employees employers? contributions to Social Security and employee benefit plans the monetary value of fringe benefits, tips, and paid vacations all of the aboveQuestion 252.5 out of 2.5 points Exhibit 7-5Economic Data for Country ZYear GDP Real GDP1 $400 billion $378 billion2 $429 billion $398 billion3 $440 billion $386 billion4 $467 billion $395 billion Refer to Exhibit 7-5. What was Country Z?s economic growth rate between year 2 and year 3? Answers: -3.0% 2.6% 14.0% -2.2%Question 262.5 out of 2.5 points Which of the following is a macroeconomic measurement used to gauge macroeconomic activity? Answers: Net domestic product National income Personal income Disposable income all of the aboveQuestion 272.5 out of 2.5 points The two ways of measuring Gross Domestic Product are the __________ approach and the __________ approach. Answers: expenditure, income expenditure, national product national product, income real gross domestic product, nominal gross domestic product net national product, personal incomeQuestion 282.5 out of 2.5 points Which of the following statements is false? Answers: The market value of all nonmarket goods is omitted from GDP. The sale of used goods is omitted from GDP. The market value of a person mowing his or her own lawn is omitted from GDP. If a good is produced but not sold, it is included in GDP.Question 292.5 out of 2.5 points The classical economists felt that saving would be equal to investment because Answers: wages are flexible. prices of domestic goods are flexible. interest rates are flexible. prices of imports are flexible.Question 302.5 out of 2.5 points A person who believes the economy is self-regulating also believes that Answers: when there is a surplus in the labor market, the wage rate falls, and when there is a shortage in the labor market, the wage rate rises. it is better if the economy is in an inflationary gap than a recessionary gap. prices are flexible but wages are not. the economy is always in long-run equilibrium. the real balance effect does not operate in a recessionary gap.Question 312.5 out of 2.5 points If Real GDP is less than Natural Real GDP, then the (actual) unemployment rate is Answers: less than the natural unemployment rate. equal to the natural unemployment rate. greater than the natural unemployment rate. equal to full employment. b and dQuestion 322.5 out of 2.5 points Which of the following statements is true? Answers: The long-run aggregate supply (LRAS) curve shows the Real GDP the economy is prepared to supply at different price levels, assuming wage rates and all other resource prices have fully adjusted to eliminate a recessionary or inflationary gap. Laissez-faire is a government policy of raising aggregate demand in order to eliminate a recessionary gap. An economy can operate beyond its physical PPF, but not beyond its institutional PPF. If the economy is self-regulating, it is always in long-run equilibrium. a and cQuestion 332.5 out of 2.5 points Exhibit 9-1Refer to Exhibit 9-1. The economy is currently producing Q1. If an economist believes the economy can move itself without government intervention to QN, then he believes that the Answers: LRAS curve will shift leftward until it intersects the SRAS and AD curves at Q1. AD curve will shift rightward and intersect the SRAS curve at point B. SRAS curve will shift rightward and intersect the AD curve at point A. economy will likely stay "stuck" in short-run equilibrium.Question 342.5 out of 2.5 points Exhibit 9-6Refer to Exhibit 9-6. If the economy is self-regulating and currently at point 1, it follows that Answers: the AD curve will shift to the right and pass through point 4. the SRAS curve will shift to the left and pass through point 2. the economy is currently operating below its physical PPF and above its institutional PPF. the SRAS curve will shift to the right and pass through point 3.Question 352.5 out of 2.5 points When the economy is in a recessionary gap, the labor market is experiencing a _____________. In a self-regulating economy, wage rates will then ___________ and the ______________ curve will shift __________________. Answers: shortage, rise, AD, rightward shortage, fall, SRAS, leftward surplus, rise, AD, rightward shortage, fall, SRAS, rightward surplus, fall, SRAS, rightwardQuestion 362.5 out of 2.5 points Suppose the economy's short-run equilibrium point is to the right of the Natural Real GDP. Which of the following is true? Answers: The economy is in an inflationary gap. The economy is in a recessionary gap. The economy is in long-run equilibrium. This situation is actually impossible.Question 372.5 out of 2.5 points If the economy is in long-run equilibrium, Answers: prices will rise but wages will remain constant. neither prices nor wages will change. it is producing Natural Real GDP. prices will remain constant but wages may rise. b and cQuestion 382.5 out of 2.5 points The natural rate of unemployment exists at Answers: some point within the interior of the PPF but outside the limits of the institutional PPF. some point within the interior of the physical PPF, but we cannot locate it with more accuracy. some point within the interior of the institutional PPF, but we cannot locate it with more accuracy. every point on the institutional PPF. every point on the physical PPF.Question 392.5 out of 2.5 points If an economy is operating __________ its institutional production possibilities frontier, it is producing __________ output than it would be at full employment. Answers: below, less below, more above, less above, more a and dQuestion 402.5 out of 2.5 points Suppose the economy is self-regulating, the price level is 150, the quantity demanded of Real GDP and the quantity supplied of Real GDP in the short run both equal $4.3 trillion, and the quantity supplied of Real GDP in the long run is $4.1 trillion. Given all of this information, we can conclude that the economy ____________ in short run equilibrium, and that the price level in long run equilibrium will be _____________ than 150. Answers: is not, less is, more is, less is not, more

 

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