Question 1

Human capital investments:

Accepted Answer

A)   include formal education, on-the-job training, and related activities.
B)   increase the stock of knowledge in society but do not contribute to economic growth.
C)   are not productive, whereas investments in "real" capital, such as factories and machines, are productive.
D)   all of the above.E) C) and D)
F) A) and B)

Question 2

A good cost $400 in the base year, and in a later year the price index number for the good was 125.0. In that later year the good cost:

Accepted Answer

A)   $125.
B)   $425.
C)   $500.
D)   $525.E) All of the above
F) B) and D)

Question 3

Being unemployed can:

Accepted Answer

A)   cause a person to alter spending patterns and lifestyle.
B)   affect a person's self-esteem and relationships with others.
C)   cause a person to experience depression and other psychological or physiological problems.
D)   all of the above.E) A) and B)
F) A) and C)

Question 4

Price indexes:

Accepted Answer

A)   have little real world applicability.
B)   are used solely by academics to explain abstract theories.
C)   were developed to provide jobs for out-of-work statisticians during the Great Depression.
D)   are used by government policymakers, businesses, workers, and households in their economic decision-making process.E) B) and C)
F) A) and D)

Question 5

Cyclical unemployment refers to:

Accepted Answer

A)   unemployment that occurs at the same time every year.
B)   people "cycling" through jobs, or holding them for a short period of time.
C)   unemployment caused by a downswing in the overall level of economic activity.
D)   the pattern of people leaving several jobs before they find the one that best suits their interests.E) A) and B)
F) A) and C)

Question 6

None of the following activities are included in the calculation of GDP. Which one does NOT result in understating GDP?

Accepted Answer

A)   Volunteer work.
B)   Home production, such as housekeeping.
C)   The sale of preowned goods, such as used cars.
D)   The sale of illegal goods, such as recreational drugs.E) A) and C)
F) All of the above

Question 7

Use the basis of the following table, which lists population statistics for a hypothetical country.
 
-The unemployment rate is:

Accepted Answer

A)   16.0 percent.
B)   20.0 percent.
C)   25.0 percent.
D)   none of the above.E) A) and B)
F) A) and C)

Question 8

A country where there are extremely rapid increases in the general level of prices is experiencing:

Accepted Answer

A)   stagflation.
B)   hyperinflation.
C)   political inflation.
D)   structural inflation.E) A) and D)
F) B) and C)

Question 9

A decrease in productivity means that:

Accepted Answer

A)   nominal GDP has fallen.
B)   output per worker has fallen.
C)   the economy has experienced disinflation.
D)   the production possibilities curve has shifted to the right.E) A) and D)
F) All of the above

Question 10

-Real GDP in year 4 is:

Accepted Answer

A)   $9.50 trillion.
B)   $9.60 trillion.
C)   $14.50 trillion.
D)   $15.00 trillion.E) None of the above
F) C) and D)

Question 11

Cyclical and structural unemployment differ in that:

Accepted Answer

A)   cyclical unemployment is involuntary, while structural unemployment is voluntary.
B)   full employment occurs when everyone in the labor force other than the structurally unemployed is working.
C)   cyclically unemployed persons have the possibility of regaining their jobs, while structurally unemployed persons have no possibility of regaining their jobs.
D)   all of the above.E) B) and C)
F) C) and D)

Question 12

Lee lost his job because his employer downsized its operations. Ramon resigned from his job to find work closer to his family. Lee's unemployment is:

Accepted Answer

A)   cyclical and Ramon's is frictional.
B)   structural and Ramon's is cyclical.
C)   structural and Ramon's is frictional.
D)   frictional and Ramon's is structural.E) C) and D)
F) All of the above

Question 13

Which of the following statements is true?

Accepted Answer

A)   No reasonable person would willingly become unemployed.
B)   Because of unemployment, some wants and needs that might have been satisfied go unsatisfied.
C)   The only real concern about unemployment is that the unemployed do not have enough savings and may need to borrow.
D)   All of the above are true.E) A) and B)
F) None of the above

Question 14

Richard places $20,000 into a three-year CD that pays a 3% interest rate. Richard benefits the most if the inflation rate over the three-year period averages:

Accepted Answer

A)   1%.
B)   2%.
C)   3%.
D)   4%.E) A) and D)
F) None of the above

Question 15

-Which of the follow statements is true?

Accepted Answer

A)   If output went from point A to point B in Figure A the economy would not experience economic growth.
B)   The economies in Figure A and Figure B are both growing because more of Good X and Good Y are produced at point B than at point A.
C)   The economy in Figure B would have grown if the level of production stayed at point A after the production possibilities curve shifted to the right.
D)   None of the above.E) None of the above
F) A) and B)

Question 16

If the GDP price index number for a particular year is 125.00, money GDP is:

Accepted Answer

A)   25 percent larger than real GDP.
B)   25 percent smaller than real GDP.
C)   125 percent smaller than real GDP.
D)   not enough information to answer the question.E) A) and B)
F) None of the above

Question 17

Which of the following statements is true?

Accepted Answer

A)   Deflation means that the general level of prices is falling.
B)   Deflation benefits everyone in society because it causes prices to drop.
C)   Deflation affects prices of food and other consumer products, but does not affect households' incomes.
D)   All of the statements are true.E) C) and D)
F) None of the above

Question 18

-Real GDP in year 1 is:

Accepted Answer

A)   $1.80 trillion.
B)   $6.48 trillion.
C)   $8.00 trillion.
D)   $9.00 trillion.E) A) and B)
F) None of the above

Question 19

Suppose nominal GDP is $200,000 and the corresponding GDP price index is 125. The value of real GDP is _________.

Accepted Answer

The answer of Suppose nominal GDP is $200,000 and the...

Question 20

-The base year in this price index is year:

Accepted Answer

A)   1.
B)   2.
C)   3.
D)   4.E) A) and C)
F) A) and D)

Exam 4: Goals and Problems of the Macroeconomy: Employment, Prices and Production

Human capital investments:

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Being unemployed can:

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-Which of the follow statements is true?

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A decrease in productivity means that:

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Cyclical unemployment refers to:

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-Real GDP in year 1 is:

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Cyclical and structural unemployment differ in that:

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A good cost $400 in the base year, and in a later year the price index number for the good was 125.0. In that later year the good cost:

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Lee lost his job because his employer downsized its operations. Ramon resigned from his job to find work closer to his family. Lee's unemployment is:

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Suppose nominal GDP is $200,000 and the corresponding GDP price index is 125. The value of real GDP is _________.

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-Real GDP in year 4 is:

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If the GDP price index number for a particular year is 125.00, money GDP is:

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A country where there are extremely rapid increases in the general level of prices is experiencing:

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Use the basis of the following table, which lists population statistics for a hypothetical country. -The unemployment rate is:

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None of the following activities are included in the calculation of GDP. Which one does NOT result in understating GDP?

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Which of the following statements is true?

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-The base year in this price index is year:

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Richard places $20,000 into a three-year CD that pays a 3% interest rate. Richard benefits the most if the inflation rate over the three-year period averages:

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Price indexes:

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Which of the following statements is true?

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