ECON 2120- Final Exam Guide - Comprehensive Notes for the exam ( 35 pages long!)

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29 Mar 2018

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Jobs become obsolete: the typewriter repairman, transition from manufacturing to services. Labor regulations tend to increase the expected cost of employing somebody: unions tend to be exclusive, cyclical unemployment unemployment that is correlated with the business cycle. It is (cid:449)hate(cid:448)er portio(cid:374) of u(cid:374)e(cid:373)ploy(cid:373)e(cid:374)t that is(cid:374)"t fri(cid:272)tio(cid:374)al or stru(cid:272)tural. Low aggregate demand people do(cid:374)"t (cid:449)a(cid:374)t to (cid:271)uy as (cid:373)u(cid:272)h of e(cid:448)erythi(cid:374)g so prices go down: wages do(cid:374)"t fall (cid:448)ery easily (cid:894)(cid:449)ages are (cid:862)sti(cid:272)ky(cid:863)(cid:895, with low prices, firms need to reduce labor costs. If they can"t redu(cid:272)e (cid:449)ages then they conduct layoffs: neoclassical rebuttal to the keynesian plan is that it is bad in the long-run. Key(cid:374)es re(cid:271)uttal to this: (cid:862)i(cid:374) the lo(cid:374)g ru(cid:374), (cid:449)e"re all dead. (cid:863: natural rate of unemployment = frictional unemployment + structural unemployment. If the growth rates of a macroeconomic variable are positively (negatively) correlated with the deviations from trend on real gdp, then that variable is procyclical (countercyclical).

Related Questions

QUESTION 1

Rosina Gonzales quit her job in Pennsylvania and moved to California to be close to her family. She is currently looking for work, so she would be considered

		frictionally unemployed.
		cyclically unemployed.
		a discouraged worker.
		seasonally unemployed.

1 points

QUESTION 2

Discouraged workers

		are counted as unemployed workers when the unemployment rate is calculated.
		would decrease the unemployment rate if they were added to the number of unemployed workers.
		are counted as one-half of a worker in the unemployment statistics.
		would increase unemployment rate if they were added to the number of unemployed workers.

1 points

QUESTION 3

In measuring the unemployment rate, part-time workers are ________ and discouraged workers are ________.

		included as employed; included as unemployed
		excluded; excluded
		excluded; included as unemployed
		included as employed; excluded

1 points

QUESTION 4

Mary has decided that the she does not like Iowa and has decided to quit her job as a medical technician and move to Arizona. Mary's unemployment as she searches for a new job is best classified as

		frictional.
		cyclical.
		structural.
		seasonal.

1 points

QUESTION 5

When a golf caddy in Minnesota (where golf courses close in the winter) is unemployed in December, it is most likely the case that the golf caddy is

		cyclically unemployed during long droughts.
		frictionally unemployed during spring and summer.
		structurally unemployed during spring and summer.
		seasonally unemployed.

1 points

QUESTION 6

After graduating from college, Yunis, age 22, started working for his parent's real estate business as an unpaid assistant. He works 25 hours a week helping manage rental units . In the Current Population Survey, Yunis is considered

		part of the labor force and employed.
		part of the labor force and unemployed.
		a discouraged worker.
		not part of the labor force.

1 points

QUESTION 7

The working-age population includes

		youngsters between the ages of 14 and 16 if they are working at least part time.
		only employed people over the age of 16.
		those in jails and hospitals.
		employed and unemployed people over the age of 16.

1 points

QUESTION 8

Involuntary part-time workers are workers who

		work less than 35 hours but would like to work full time.
		work more than 35 hours but would like to work less than 35 hours.
		work less than 35 hours by choice.
		work have lost their jobs within the last four weeks and are seeking another job.

1 points

QUESTION 9

Frictional unemployment is the result of

		the normal process of jobs being created and destroyed.
		an economic recession.
		people not getting along (having friction) with their employers.
		the economic decline of major industries

1 points

QUESTION 10

Bill just graduated with his degree in economics. Through Career Services he submitted his resume to several companies and he will visit them during the next two weeks. Bill is considered

		not in the labor force.
		cyclically unemployed.
		frictionally unemployed.
		structurally unemployed.

1 points

QUESTION 11

Harry works at the video rental store for 20 hours per week. He's asked his boss to allow him to work 40 hours per week, but has been told that business is too slow. Harry is considered

		an involuntary part-time worker.
		a marginally attached worker.
		a discouraged worker.
		not in the labor force.

1 points

QUESTION 12

Discouraged workers who are over 16 years old are

i.not counted as unemployed.

ii.part of the working-age population.

iii.part of the labor force.

		i and ii
		ii and iii
		ii only
		i only

1 points

QUESTION 13

Higher unemployment benefits create

		higher seasonal unemployment as workers switch jobs.
		a lower number of job leavers.
		incentives for longer job searches and higher frictional unemployment.
		incentives for shorter job searches and higher structural unemployment.

1 points

QUESTION 14

Seasonal unemployment includes people who become unemployed from

		changes in the business cycle.
		technological changes.
		the seasonal weather patterns.
		normal changes in the labor force.

1 points

QUESTION 15

Cyclical unemployment is

		higher when the economy is expanding.
		always greater than the total of structural and frictional unemployment.
		the total of structural and frictional unemployment.
		created by a recession.

1 points

QUESTION 16

Which of the following people would be classified as employed in the Current Population Survey?

		April, who just graduated from college and is looking for work
		Jason, who was laid off from work less than 6 months ago but who has stopped looking for work
		Rich, who is working 20 hours a week but wants a full-time job
		Misty, who just quit her job to return full time to school

1 points

QUESTION 17

People who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called

		discouraged workers.
		involuntarily unemployed.
		part-time lookers.
		unemployed workers.

1 points

QUESTION 18

Discouraged workers are included in the calculation of the

i.unemployment rate.

ii.labor force participation rate.

iii.working-age population.

		i and ii
		i only
		iii only
		ii only

1 points

QUESTION 19

As firms search for the best employee to fill an opening and the unemployed search for the job that best fits their skills, the economy experiences

		changes in the business cycle.
		cyclical unemployment.
		frictional unemployment.
		structural unemployment.

1 points

QUESTION 20

Suppose the U.S. population is 275 million. If 210 million people are of working age, 135 million are employed, and 6 million are unemployed, what is the labor force participation rate?

		64 percent
		67 percent
		76 percent
		49 percent

1 points

QUESTION 21

During a recession the unemployment rate generally ________ and during an expansion the unemployment rate generally ________.

		rises; rises
		rises; does not change
		falls; rises
		rises; falls

1 points

QUESTION 22

In January of 2001, the population of the United States was 276.8 million, the working-age population was 210.2 million, the total number of people employed was 140, and the total number of people unemployed was 5.0 million. What was the labor force participation rate?

		56 percent
		69 percent
		78 percent
		67 percent

1 points

QUESTION 23

If Brian, age 24, had no job but was available for work and had looked for a job the week before the survey, Brian is classified in the Current Population Survey as

		unemployed.
		employed.
		a discouraged worker.
		not in the labor force.

1 points

QUESTION 24

Julie works part-time for economic reasons. She would be considered

		an involuntary part-time worker.
		not in the labor force.
		a job seeker.
		a discouraged worker.

1 points

QUESTION 25

Suppose the population is 300 million people, the labor force is 200 million people, the number of people employed is 185 million, and the working-age population is 170 million people. What is the unemployment rate?

		5 percent
		7.5 percent
		8.8 percent
		92.5 percent

1 points

QUESTION 1

Rosina Gonzales quit her job in Pennsylvania and moved to California to be close to her family. She is currently looking for work, so she would be considered

		frictionally unemployed.
		cyclically unemployed.
		a discouraged worker.
		seasonally unemployed.

1 points

QUESTION 2

Discouraged workers

		are counted as unemployed workers when the unemployment rate is calculated.
		would decrease the unemployment rate if they were added to the number of unemployed workers.
		are counted as one-half of a worker in the unemployment statistics.
		would increase unemployment rate if they were added to the number of unemployed workers.

1 points

QUESTION 3

In measuring the unemployment rate, part-time workers are ________ and discouraged workers are ________.

		included as employed; included as unemployed
		excluded; excluded
		excluded; included as unemployed
		included as employed; excluded

1 points

QUESTION 4

Mary has decided that the she does not like Iowa and has decided to quit her job as a medical technician and move to Arizona. Mary's unemployment as she searches for a new job is best classified as

		frictional.
		cyclical.
		structural.
		seasonal.

1 points

QUESTION 5

When a golf caddy in Minnesota (where golf courses close in the winter) is unemployed in December, it is most likely the case that the golf caddy is

		cyclically unemployed during long droughts.
		frictionally unemployed during spring and summer.
		structurally unemployed during spring and summer.
		seasonally unemployed.

1 points

QUESTION 6

		part of the labor force and employed.
		part of the labor force and unemployed.
		a discouraged worker.
		not part of the labor force.

1 points

QUESTION 7

The working-age population includes

		youngsters between the ages of 14 and 16 if they are working at least part time.
		only employed people over the age of 16.
		those in jails and hospitals.
		employed and unemployed people over the age of 16.

1 points

QUESTION 8

Involuntary part-time workers are workers who

		work less than 35 hours but would like to work full time.
		work more than 35 hours but would like to work less than 35 hours.
		work less than 35 hours by choice.
		work have lost their jobs within the last four weeks and are seeking another job.

1 points

QUESTION 9

Frictional unemployment is the result of

		the normal process of jobs being created and destroyed.
		an economic recession.
		people not getting along (having friction) with their employers.
		the economic decline of major industries

1 points

QUESTION 10

Bill just graduated with his degree in economics. Through Career Services he submitted his resume to several companies and he will visit them during the next two weeks. Bill is considered

		not in the labor force.
		cyclically unemployed.
		frictionally unemployed.
		structurally unemployed.

1 points

QUESTION 11

Harry works at the video rental store for 20 hours per week. He's asked his boss to allow him to work 40 hours per week, but has been told that business is too slow. Harry is considered

		an involuntary part-time worker.
		a marginally attached worker.
		a discouraged worker.
		not in the labor force.

1 points

QUESTION 12

Discouraged workers who are over 16 years old are

i.not counted as unemployed.

ii.part of the working-age population.

iii.part of the labor force.

		i and ii
		ii and iii
		ii only
		i only

1 points

QUESTION 13

Higher unemployment benefits create

		higher seasonal unemployment as workers switch jobs.
		a lower number of job leavers.
		incentives for longer job searches and higher frictional unemployment.
		incentives for shorter job searches and higher structural unemployment.

1 points

QUESTION 14

Seasonal unemployment includes people who become unemployed from

		changes in the business cycle.
		technological changes.
		the seasonal weather patterns.
		normal changes in the labor force.

1 points

QUESTION 15

Cyclical unemployment is

		higher when the economy is expanding.
		always greater than the total of structural and frictional unemployment.
		the total of structural and frictional unemployment.
		created by a recession.

1 points

QUESTION 16

Which of the following people would be classified as employed in the Current Population Survey?

		April, who just graduated from college and is looking for work
		Jason, who was laid off from work less than 6 months ago but who has stopped looking for work
		Rich, who is working 20 hours a week but wants a full-time job
		Misty, who just quit her job to return full time to school

1 points

QUESTION 17

People who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called

		discouraged workers.
		involuntarily unemployed.
		part-time lookers.
		unemployed workers.

1 points

QUESTION 18

Discouraged workers are included in the calculation of the

i.unemployment rate.

ii.labor force participation rate.

iii.working-age population.

		i and ii
		i only
		iii only
		ii only

1 points

QUESTION 19

As firms search for the best employee to fill an opening and the unemployed search for the job that best fits their skills, the economy experiences

		changes in the business cycle.
		cyclical unemployment.
		frictional unemployment.
		structural unemployment.

1 points

QUESTION 20

Suppose the U.S. population is 275 million. If 210 million people are of working age, 135 million are employed, and 6 million are unemployed, what is the labor force participation rate?

		64 percent
		67 percent
		76 percent
		49 percent

1 points

QUESTION 21

During a recession the unemployment rate generally ________ and during an expansion the unemployment rate generally ________.

		rises; rises
		rises; does not change
		falls; rises
		rises; falls

1 points

QUESTION 22

		56 percent
		69 percent
		78 percent
		67 percent

1 points

QUESTION 23

If Brian, age 24, had no job but was available for work and had looked for a job the week before the survey, Brian is classified in the Current Population Survey as

		unemployed.
		employed.
		a discouraged worker.
		not in the labor force.

1 points

QUESTION 24

Julie works part-time for economic reasons. She would be considered

		an involuntary part-time worker.
		not in the labor force.
		a job seeker.
		a discouraged worker.

1 points

QUESTION 25

		5 percent
		7.5 percent
		8.8 percent
		92.5 percent

1 points

1) Which of the following transactions would be included in GDP?

a) The purchase of a Monet painting.

b) The purchase of paper clips.

c) The purchase of Telstra shares.

d) The purchase of a used car.

2) Economics is the study of

a) the choices everybody makes to attain their goals, given their scarce resources.

b) supply and demand.

c) how to make money in a market economy.

d) how to make money in the stock market.

3) The economy is considered to be at full employment when

a) all unemployment is voluntary.

b) all unemployment is frictional or structural.

c) there are no unemployed workers.

d) there are more unemployed workers than job vacancies

4) An example of an intermediate good would be

a) a can of cool drink sold by a super‐market.

b) a microwave used at home.

c) the bread that goes into a sandwich sold by a lunch bar.

d) the petrol purchased by consumers for their cars

5) From 2004 to 2005, the CPI for medical care increased from 260.8 to 272.8. What was the inflation rate for medical care?

a) 12 percent

b) 11.1 percent

c) 4.9 percent

d) 4.6 percent

6) A shift outwards of the nation's production possibility frontier can occur from

a) a reduction in unemployment.

b) an increase in the size of the labour force.

c) a change in the amounts of one good desired.

d) a natural disaster like a hurricane or severe earthquake

7) What assumptions about humans do economists make?

a) People are greedy and selfish.

b) None, because economics takes humans as given.

c) People are rational and respond to incentives.

d) Humans prefer to live in a society that values fairness above all else.

8) The labour force is the

a) a number of people employed minus the number of people unemployed.

b) ratio of the number of people employed by the number of people unemployed.

c) ratio of the number of people employed to the working-age population.

d) the number of people employed plus the number of people unemployed.

9) The production possibility frontier shows

a) attainable combinations of two products that may be produced with available resources.

b) the various products that can be produced now and in the future.

c) what an equitable distribution of products among citizens would be.

d) the rate of substitution between capital and labour.

10) Which of the following transactions would be included in the official calculation of GDP?

a) Bridgestone sells $2 million worth of tyres to General Motors Holden

b) You illegally download music off the Internet to put on your new iPod.

c) A new iPod.

d) A student buys a used textbook at the bookstore.

11) What are the three fundamental questions that any economy must answer?

a) What will be the prices of goods, how will these goods be produced, and who gets them?

b) What will be the prices of goods, what will be produced, and who gets them?

c) What will be produced, how will these goods be produced, and who gets them?

d) How much will be saved, what will be produced, and how can these goods be fairly distributed?

12) If the nominal interest rate is 6% and the inflation rate is 2%, then the real interest rate is

a) 3%.

b) 2%.

c) 4%.

d) 8%.

14) Suppose that a very simple economy produces three goods: movies, burgers, and bikes. Suppose the quantities produced and their corresponding prices for 2004 and 2009 are shown in the following table:

	2004		2009
	Quantity	Price	Quantity	Price
Movies	20	$6	30	$7
Burgers	100	$2	90	$2.5
Bikes	3	$1000	6	$1100

What is real GDP in 2009, using 2004 as the base year?

a) $3690

b) $7035

c) $6360

d) $3320

15) If the production possibility frontier is graphed as a straight line, what does this mean?

a) Opportunity costs are constant as production shifts from one product to the other.

b) It is easy to efficiently produce output.

c) Nothing, there is no significance of a straight line production possibility frontier.

d) Opportunity costs are increasing as production shifts from one product to the other.

16) If you have both an economics exam and a management exam tomorrow, but find that you have time to fully study for only one of them, what are you facing?

a) A failing grade in both exams

b) A zero opportunity cost

c) A trade‐off

d) An impossible situation

17) Which of the following is a problem inherent in centrally planned economies?

a) Production managers do not satisfy consumer wants but the government's orders.

b) Too much production of low‐cost, high‐quality goods and services.

c) There are no problems, everyone, including consumers are satisfied.

d) None of these describe the problem inherent in a centrally planned economy.

18) Inflation is an increase in the

a) average hourly wage rate.

b) general price level in the economy.

c) the overall level of economic activity.

d) rate of growth of GDP.

19) Total production in the economy is measured as the

a) dollar value of all final goods and services produced in the economy.

b) the total number of services produced in the economy.

c) the total number of goods produced in the economy.

d) the total number of goods and services produced in the economy.

20) An increase in the price of dairy products produced domestically will be reflected in

a) Both the GDP deflator and the consumer price index.

b) Neither the GDP deflator nor the consumer price index.

c) The GDP deflator but not in the consumer price index.

d) The consumer price index but not in the GDP deflator.

21) The reason that opportunity cost arises is that

a) money has proven to be an inefficient means of facilitating exchange in a market.

b) sometimes there are no alternative decisions that can be made.

c) resources are limited at any point in time. d) people have unlimited wants.

21) You have an absolute advantage whenever you

a) are better educated than someone else.

b) can produce something at a lower opportunity cost than others.

c) can produce more of something than others with the same resources.

d) prefer to do one particular activity.

22) Which of the following is an example of a worker experiencing cyclical unemployment?

a) A Freightliner employee who was sacked because of a recession.

b) A worker who quits his job because he does not get along with his boss

c) A worker that changes jobs to move closer to her family.

d) An assembly line worker who loses his job because of automation.

23) A company named Home Depot sells new and used doors to contractors who build new homes. Home Depot also sells new and used doors to home‐owners. Which of the following would be counted in GDP?

a) The sale of a used door to a home‐owner

b) The sale of a used door to for construction for installation into a new home.

c) The sale of a new door to for construction for installation into a new home.

d) The sale of a new door to home‐owner.

24) If you buy shares, the dollar value is

a) not included in GDP.

b) included in GDP under consumer expenditure.

c) included in GDP as a business expense.

d) included in GDP under-investment.

25) During the 1930s, Australia and other industrialised countries experienced the Great Depression with a large number of workers and factories unemployed.Which of the following points on a production possibility frontier model would represent this experience?

a) A point on the frontier

b) A point inside the frontier

c) An increase in the opportunity cost of the substitution between capital and labour

d) A point outside the frontier

26) How is the decision about what goods and services will be produced made in a market economy?

a) The government decides on what will be produced.

b) Producing firms decide to produce only what the firms' owners say must be produced.

c) By consumers, firms, and government choosing which goods and services to buy.

d) What will be produced is determined by what society needs the most.

27) In the country of Shem, the CPI is calculated using a market basket consisting of 5 apples, 4 loaves of bread, 3 robes and 2 gallons of gasoline. The per‐unit prices of these goods have been as follows: Using 2002 as the base year, what was the inflation rate between 2003 and 2004?

a) 28.5 percent

b) 34.2 percent

c) 47 percent

d) It is impossible to determine without knowing the base year.

28) Given the following information, calculate the unemployment rate: Full‐time employed = 80 Part‐time employed = 25 Unemployed = 15 Discouraged workers = 5 Members of underground economy = 6 Consumer Price Index = 110

a) 18.8 per cent.

b) 12.5 per cent.

c) 16.7 per cent.

d) 25 per cent.

29) If the quantity of resources available is fixed, as more of a good is produced, the opportunity cost of producing it increases. The most probable reason for this is that

a) as more of a good is produced, the quality of technology available to produce additional units declines.

b) the price of the inputs used to produce the good will rise.

c) consumers are unwilling to pay higher prices to cover the increases in production costs.

d) resources are not equally well‐suited to producing all goods.

30) Which of the following is a normative statement?

a) The current high price of petrol is the result of strong worldwide demand.

b) The price of petrol is too high.

c) Larger vehicles always use more fuel per kilometre than smaller vehicles

d) The supply of petrol has not been able to meet the demand for petrol.

31) Transfer payments are not included in GDP because

a) they do not generate income.

b) their market value is difficult to measure.

c) they are not purchases of goods or services.

d) their value is included in government expenditure.

32) The opportunity cost of going to your economics class

a) depends on the cost of your transport getting to class.

b) is equal to the highest value of alternative use of the time.

c) is zero because there is no admission charged if you are enrolled in the class.

d) depends on the salary of the lecturer.

33) Establishing employment agencies that speeds up the process of matching unemployed workers with unfilled jobs are an attempt to lower

a) cyclical unemployment.

b) seasonal unemployment.

c) structural unemployment.

d) frictional unemployment.

34) Suppose that money GDP for 2009 was $15 000 billion and the price index was 150 and in 2010 money GDP was $17 050 billion with a price index of 155. What is the rate of economic growth?

a) 5%

b) 10%

c) 2%

d) 1%

35) An individual has a comparative advantage in activity whenever she

a) also has an absolute advantage in that activity.

b) can perform the activity at a lower opportunity cost than another person can.

c) can do everything better than everyone else can.

d) can do the activity in less time than anyone else.

36) GDP is not a perfect measure of wellbeing because

a) GDP is adjusted for increases in drug addiction.

b) GDP is not adjusted for the effects of pollution.

c) GDP is adjusted for changes in crime.

d) the value of leisure is included in GDP.

37) What does an entrepreneur do in a market economy?

a) Organise the factors of production in a working unit.

b) Stand to lose the personal funds provided.

c) Develop the vision for the firm and ensure funding for the firm.

d) An entrepreneur does all of these things.

38) An example of a transfer payment is

a) the purchase of a new government office block.

b) a teacher's pay is transferred electronically from the government to the teacher.

c) interest repayments on a loan.

d) an unemployment benefit.

39) Which of the following is a microeconomics question?

a) What will be the level of total production in the national economy?

b) How much income will be saved and how much will be spent on consumer goods?

c) What factors determine the price of computers in the market?

d) Why is the rate of unemployment rising?

40) The measure of production that values production using current prices is called

a) value-added GDP.

b) nominal GDP.

c) black economy GDP.

d) real GDP.

41) Which of the following causes the official measure of the unemployment rate to understate the true extent of joblessness?

a) People who collect unemployment benefits report themselves to be searching for a job.

b) Discouraged workers are counted as unemployed.

c) Discouraged workers are not counted as unemployed.

d) Many full-time workers really want to be part-time workers.

42) A production possibility frontier will shift inwards if

a) inefficiency in production processes arise.

b) there is an increase in the rate of unemployment.

c) productive resources are destroyed due to war.

d) all of these options are correct.

43) Structural unemployment would increase when

a) discouraged workers drop out of the workforce.

b) the economy enters a recession.

c) the number of individuals who quit their job to find another increase.

d) workers are replaced by machines and the workers do not have the skills to perform new jobs.

44) The 2005 CPI was 196 and the 1982 CPI was 96.5. If your parents put aside $1,000 for you in 1982, how much would you have needed in 2005 in order to buy what you could have bought with the $1,000 in 1982?

a) $1,834.20

b) $2,031.09

c) $2,308.89

d) None of the above is correct.

45) What is an economic model?

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ECON 2120- Final Exam Guide - Comprehensive Notes for the exam ( 35 pages long!)

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