1. Which of the following is not a topic studied in macroeconomics? Gross Domestic Product the unemployment rate the price of IBM computers the inflation rate
2. Macroeconomics is concerned with: only long-run trends in economic activity. only short-run fluctuations in the business cycle. both long-run trends and short-term fluctuations in economic activity. only with changes in the overall price level.
3. In the circular flow diagram, the different payments made by firms to households are: wages and salaries. interest on borrowed money. rent on office and factory buildings. all of the above.
4. Consider product markets. Households: only supply to these markets. only demand from these markets. both supply to and demand from these markets. neither supply to nor demand from these markets.
5. As depicted in the circular flow diagram, firms:
a) supply the goods and services that households demand in product markets.
b) demand the inputs that households supply in product markets.
c) demand the goods and services that households supply in product markets.
d) supply the inputs that households demand in factor markets.
6. The major lesson of the circular flow diagram is that: saving must always be less than investment. taxes must always be greater than government expenditures. total income in the economy must always equal total spending. all of the above
7. GDP is:
a) a measure of all spending in the economy on foreign and domestic goods and services.
b) the total market value of all final goods and services produced in an economy in a given year.
c) the value of all output produced within an economy.
d) made up of three components: consumption, investment, and government expenditure.
8. The equation for GDP using the expenditure approach is:
a) GDP= Consumption + Investment + Government Purchases + Exports - Imports.
b) GDP= Consumption + Investment + Government Purchases + Imports - Exports.
c) GDP= Consumption + Investment + Government Purchases + Imports + Exports.
d) GDP= Consumption + Investment + Government Purchases - Imports - Exports.
9. The unemployment rate equals: a) labor force/population b) unemployed/employed c) (employed- unemployed)/labor force d) (labor force - employed)/labor force
10. Janie graduated from college a month ago and is now without work. She accepted a job that will start next month. Today, Janie is:
a) not in the labor force
b) in the labor force
c) employed
d) a discouraged worker
11. Unemployment means that:
a) at the current wage, there are people who want to work but cannot find work
b) people are willing to work at the current wage
c) there are some people who will not work at the current wage
d) there is excess demand in the labor market
12. The number of people classified as employed is 220,000 and the number of people classified as unemployed is 30,000. The size of the civilian labor force:
a) equals 200,000
b) equals 250,000
c) equals 300,000
d) cannot be determined from this information
13. The number of people classified as employed is 550,000 and the number of people in the civilian labor force is 700,000. The total number of people classified as unemployed is: 200,000 110,000 150,000 1,5 million
14. If the number of unemployed is 50,000 and the number of people classified as employed is 620,000, what is the unemployment rate?
a) 15.6%
b) 9.2%
c) 7.5%
d) 8.1%
15. In 1999, the U.S. population 16 years old or older was 207.8 million, the number employed was 133.5 million, the number unemployed was 5.9 million, and the civilian labor force was 139.4 million. The labor-force participation rate in 1999 was ------%.
a) 64.2
b) 67.1
c) 4.2
d) 95.8
16. When an economics professor quits his job from a university and starts looking for a better job in another university, he is:
a) frictionally unemployed
b) structurally unemployed
c) cyclically unemployed
d) naturally unemployed
17. A man is fired from his job because he was late for work too many times. While he is searching for another job he would be classified as:
a) not in the labor force because his employer had a legitimate reason for firing him
b) structurally unemployed
c) cyclically unemployed
d) frictionally unemployed
18. An auto worker in Ohio who loses her job because the company relocated the plant to another country represents an example of: frictional unemployment
b) structural unemployment
c) cyclical unemployment
d) natural unemployment
19. An individual who cannot find a job because his or her job skills have become obsolete is an example of: frictional unemployment
b) structural unemployment
c) cyclical unemployment
d) seasonal unemployment
20. The sum of the frictional and structural unemployment rates is thought of as the:
a) natural rate of unemployment
b) normal rate of unemployment
c) cyclical rate of unemployment
d) seasonal rate of unemployment
21. A price index is:
a) a measurement showing how the average price of a bundle of goods changes over time.
b) a measurement showing the cost of a bundle of goods at a point in time.
c) a sustained increase in the overall price level.
d) a decrease in the overall price level.
22. The index used most often to measure prices paid by households is the: producer price index
b) consumer price index
c) wholesale price index
d) GDP deflator
23. The cost of basket of goods in Year 1 is $200 and the cost of the basket of goods in Year 2 is $225. If Year 1 is used as base year, the Year 2 price index is: 80
b) 112.5
c) 66.67
d) 150
24. The cost of the basket of goods in 1999 is $550 and the cost of the basket of goods in 2000 is $700. If 1999 is used as the base year, the price index for 2000 is: 127.2 155 78.5 100
25. Inflation is an increase in: the price of one item the average price level the average income level real GDP
26. Suppose that the CPI in 2010 was 125.2 and the CPI in 2011 was 139.1. The rate of inflation between 2010 and 2011 is:
a) 11.1%.
b) 12.9%
c) 13.9%.
d) 14.3%.
27. Suppose that the CPI in Year 1 is 150 and the CPI in Year 2 is 200. The rate of inflation between Year 1 and Year 2 is:
a) 14.28%.
b) 25%.
c) 33.33%
d) 50%