reason that the inflation rate typically underestimates true price level changes.

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Extra Credit Macro Economics Exam Latest 2015

Extra Credit Macro Economics Exam Latest 2015

Question

Extra
Credit Macro Exam 1
Due
by the second exam (you can bring it to
the 2nd exam if you like).

The
largest component of spending in the circular flow model is:

Investment
Consumption
Net
exports
Government
spending

We
deliberately choose to omit some factors from GDP such as:

Government
purchases
Purely
financial transactions
Final
goods
All
of the above.

Which of the following unemployed workers would be an example of structural
unemployment?

John loses his job and can’t find a new one as new
technology is adopted in his industry.
.0pt;’=”” list=”” lfo3;=”” l1=””>Mary gives up looking for a job because of the lousy
economy.
.0pt;’=”” list=”” lfo3;=”” l1=””>Mark decides to reenter the labor force after going
back to school to study economics.
.0pt;’=”” list=”” lfo3;=”” l1=””>Alice loses her construction job because of winter
weather.

The
discouraged worker effect

is
when people decide they would rather not work.
.0pt;’=”” list=”” lfo4;=”” l3=””>is
when people voluntary leave one job to look for a better one.
.0pt;’=”” list=”” lfo4;=”” l3=””>is
when people give up looking for a job because there is little likelihood of
finding one.
.0pt;’=”” list=”” lfo4;=”” l3=””>is
when people involuntarily have hours cut or have to accept a job under their
skill level.

The
number of unemployed is calculated by:

a
large monthly survey of households conducted for the Bureau of Labor
Statistics.
counting
the people currently collecting unemployment benefits.
A
large quarterly survey of businesses conducted for the Labor Department.
counting
the people either currently or recently collecting unemployment benefits.

Stagflation
is when the economy has:

high
unemployment coupled with low inflation at the same time.
.0pt;’=”” list=”” lfo6;=”” l8=””>low
unemployment and inflation at the same time.
.0pt;’=”” list=”” lfo6;=”” l8=””>low
unemployment coupled with high inflation at the same time.
.0pt;’=”” list=”” lfo6;=”” l8=””>high
unemployment and inflation at the same time.

A
“core” inflation rate:

does
not include food and energy prices.
.0pt;’=”” list=”” lfo7;=”” l6=””>tracks
prices on the wholesale level..
.0pt;’=”” list=”” lfo7;=”” l6=””>is
the rate of inflation at the natural rate of output.
.0pt;’=”” list=”” lfo7;=”” l6=””>tracks
the inflation of labor costs.

Menu
costs are:

the
costs of materials.
.0pt;’=”” list=”” lfo8;=”” l7=””>the
cost of changing prices.
.0pt;’=”” list=”” lfo8;=”” l7=””>particularly
low when inflation is high.
.0pt;’=”” list=”” lfo8;=”” l7=””>a
reason that the inflation rate typically underestimates true price level
changes.

A
market basket costs $150 to buy in the base year and $60 to buy in year X.
A. the price index for year X is 250.
B. Year X probably occurred after the base year.
C. Year X is the base year.
D. the price index for year X is .4 or 40%.
A
traditional expansionary gap is created when the aggregate demand curve moves
to the:
A. right of the natural rate of output;
inflation rises and unemployment falls.
B. left of the natural rate of output; inflation
falls and unemployment rises.
C. right of the natural rate of output;
inflation falls and unemployment rises.
D. left of the natural rate of output; inflation
rises and unemployment falls.
Consumers
change their purchases and move ALONG the same consumption function when:

Their
income changes
Their
tastes change
The
price level changes
All
of the above.

12) If MPC is .75 then if consumer income
rises by $10,000 we would predict that consumption will:
A. rise by $7500 while savings
fall by $2500.
B. fall by $2500 while savings
rise by $7500.
C. rise by $7500 while savings
rise by $2500.
D. fall by $2500 while savings
fall by $7500.
13) Autonomous consumption is
A. that part of consumption
that rises or falls with changes in disposable income.
B. the minimum that people will spend even if disposable income is zero.
C. the amount people will spend when the C line crosses the 45-degree
line.
D. the amount people will spend when income is equal to consumption.
14) A low rate of investment could be
explained by a
A. low rate of saving and
low interest rates.
B. low rate of saving and high interest rates.
C. high rate of saving and low interest rates.
D. high rate of saving and high interest rates.
15) Mr. A makes $40,000 a year; Ms. B
makes $20,000 a year. Mr. A pays $6,000
in taxes while Ms. B pays $4,000 in taxes.
Which of the following is true?
A. Taxes are progressive because
Mr. A pays a higher dollar amount in taxes than Ms. B
B. Taxes are neutral because Mr.
A makes more money before and after taxes than Ms. B.
C. Taxes are regressive because
Mr. A pays a lower tax rate than Ms. B.
D. Taxes are progressive because
Ms. B pays a lower dollar amount in tax.
16) The 45 degree line in the full AE
model represents
A. all points where C = Y.
B. all points where AE = Y
C. all points where C + I = G +
Xn
D. all points where C = I + G +
Xn
17) International trade:
A. Allows countries to specialize
in the goods at which they are best at producing.
B. can increase the goods and
services both trading partners have.
C. can be unbalanced where on
partner exports more to the other than the other way around.
D. all of the above.
18) If AD rises in the short run:
A. it pushes up the price level.
B. it decreases national output.
C. it increases full employment.
D. all of the above.
19) We cut down trees and sell the timber
for $8000. The timber is sawn up into
lumber that sells for $18,000. The
lumber is used to build furniture that sells to consumers for $30,000.
A. $30,000 goes into GDP.
B. $4000 goes into GDP.
C. $56,000 goes into GDP.
D. $22,000 goes into GDP.
20) The long run annual growth rate of the
U.S. economy tends to be about:
A. 1% or less.
B. 2%
C. 5%
D. 10% or more.

Extra Credit Macro Economics Exam Latest 2015

 
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