ECON 2002.01 Study Guide - Midterm Guide: Nominal Interest Rate, Gdp Deflator, Apple Iie

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Published on 28 Sep 2018
Midterm 2 2002.01 Spring 2014 Name _______________________________
Multiple choice. Fill in the best answer on the scantron form. It is recommended that you mark
your answer on this exam as well.
1) Jack lost his job six months ago, and he's been actively looking for a new job ever since. The
Bureau of Labor Statistics would classify Jack as
A) unemployed.
B) out of the labor force.
C) a discouraged worker.
D) all of the above.
2) Sarah is a full-time student who is not looking for work. What kind of unemployment is Sarah
A) cyclical
B) structural
C) frictional
D) Sarah is not experiencing unemployment of any kind because she is not currently part of the
labor force.
3) In 1986, an Apple IIe computer with 65 kilobytes of memory cost around $1,500. Today, a
$1,500 iMac computer (also made by Apple) comes with 8 gigabytes of memory. This illustrates
the potential for what kind of bias in CPI calculations?
A) new product bias
B) increase in quality bias
C) substitution bias
D) outlet bias
4) The most widely used measure of inflation is based on which of the following price indices?
A) the producer price index
B) the consumer price index
C) the GDP deflator
D) the wholesale price index
5) If the nominal interest rate is 6% and the inflation rate is 2% then the real interest rate is
A) 8%.
B) 4%.
C) 3%.
D) 2%.
E) 1%.
6) The best measure of the standard of living is
A) nominal GDP.
B) real GDP.
C) nominal GDP per capita.
D) real GDP per capita.
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8) If GDP grows at a rate of 3% per year, approximately how long will it take for GDP to double
in size?
A) 12 years
B) 21 years
C) 23 years
D) 35 years
9) ________ depend on increases in labor productivity
A) Advances in technology
B) Increases in real GDP per capita
C) Decreases in the inflation rate
D) Decreases in the unemployment rate
10) A financial intermediary's main function is to match ________ with excess funds to
________ with a shortage of funds.
A) savers; borrower
B) borrower; savers
C) governments; households
D) firms; insurance companies
11) Private saving is defined as
A) Y + TR - C - T.
B) T + G + TR.
C) T - G + TR.
D) Y + TR + C - T.
12) In a closed economy, what is the relationship between saving and investment?
A) Saving is greater than investment.
B) investment is greater than saving.
C) Investment is equal to saving.
D) Investment may be greater or smaller than saving.
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