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2012-12-10 17:07:05

Economic final review of Exam 1&2
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  1. High rates of unemployment are undesirable because:
    • They cause increased levels of societal tension.
    • Society loses potential production of goods and services.
    • Families of the unemployed may find it difficult to survive.
  2. If there are discouraged workers:
    the unemployment rate will tend to understate the true level of unemployment.
  3. Persons who do not hold a job and are not actively seeking work are considered:
    out of the labor force
  4. The portion of unemployment that is attributable to an overall decline in the economy's business activity is called:
    cyclical unemployment
  5. A federal program aimed at retraining the unemployed workers of the declining auto and steel industries is designed to reduce which type of unemployment?
  6. IF firms pay employees an efficiency wage:
    absenteeism would be expected to decrease.
  7. What happen to the real interest rate if originally the nominal interest rate was 14% and the inflation rate was 10%, then the nominal interest rate fell to 7% as the inflation rate fell to 4%? It would go from:
    4% to 3%
  8. Inflation exists whenever:
    the overal price level is rising
  9. Which of the following groups are typically harmed by expected inflation?
    lenders and pensioners on fixed incomes
  10. Economist usually use the term "recession" to reger to:
    2 or more consecutive quarters of declining real GDP
  11. If th eprice index is now 120, it means:
    prices are 20% higher than in the base year
  12. Which of the following would not be counted as a final good for inclusion in GDP?
    a. a piece of glass bought by a consumer to fix a broken window
    b. a sheet of glass purchased by General Motors for the side window of a new car
    c. a sheet of glass produced this year and ending up in the inventory of a retaill hardware store
    d. all of the above counted
  13. Which of the following is not included in GDP?
    a. the fees for legal services rendered by your attorney
    b. the replacement of brake pads on your 6 year old vehicle
    c. cash income paid to a day laborer that is not reported to the tax authorities
    d. the payments for a chiropractor's services
  14. IF individuals were paid for their household production, GDP would: 
  15. Net exports are defined as:
    exports minus imports
  16. Which of the following is not included in the investment category under the expenditure approach to GDP accounting?
    a. newly constructed residential housing
    b. factory buildings
    c. stocks and bonds
    d. additions to inventory
  17. The services rendered by a special agent with the Federal Bureau of Investigation is included in which expenditure category of GDP?
    government purchases
  18. If real GDP increased by 2% and nominal GDP increased by 2% then output:
    increased and the price level remained unchanged
  19. IF the GDP deflator decreases from one year to the next, it can be concluded that the economy has experienced:
  20. Which of the following are not included in GDP?
    a. transfer payments
    b. imports
    c. intermediate goods
    d. all of the above are excluded from GDP
  21. Which of the following is not considered investment in the national income accounts?
    a. the purchase of a drill press by XYZ company
    b. construction of a new housing project
    c. the accumulation of inventories on a grocer's shelves
    d. the purchase of 1000 shares of IBM stock
  22. GDP is:
    the value of all final goods and services produced domestically within a given period of time.
  23. The formula from the expenditure method indicates that GDP is equal to:
  24. If nominal GDP increased from $4,500 billion in 2012 to &5,000 billion in 2011 and the GDP deflator increased form 100 to 105 over the same time period, what would the 2011 real GDP equal expressed in terms of 2012 dollars?
    $4,762 billion
  25. The measure most commonly used by economists to guage the standard of living of a nation is:
    real GDP per capita
  26. Given a constant rate of growth of real GDP, what would lead to an increasing real GDP per capita?
    a rate of population growth that is less than the rate of growth of real GDP
  27. Which of the following affects the rate of economic growth?
    • The quality of available resources
    • The quantity of available resources
    • technological change
  28. The faster the rate of technological progess: 
    the greater the rate of economic growth
  29. Over the last several decades, the amount of government investment in U.S. infrastructure in real terms has:
  30. The per-worker production function is ____ sloped and ______ at a(n) ______ rate.
    positively; increases; diminishing
  31. In the 1700s, Reverend Thomas Malthus predicted that:
    per capita economic growth would eventually become negative since population growth would tend to outstrip production.
  32. Which of the following would not be considered an investment in human capital?
    a. education
    b. training programs
    c. transportation infrastructure
    d. literacy programs
  33. The Malthusian prospect of starvation of the populataion could be prevented by:
    • Increasing the amount of land available for agriculture
    • Investing in research and development of new technologies
    • Expanding food production on available land
  34. Growth in a production possibilities curve diagram is shown as:
    an outward shift of the curve.