front 1 If the consumer price index was 96 in 2012, 100 in 2013, and 102 in 2014, then the base year must be | back 1 2013 |
front 2 Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the baskets cost was $50, in 2014 the baskets cost was $51, and in 2016 the baskets cost was $52. The value of the CPI in 2014 was: | back 2 102.0 |
front 3 If the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was | back 3 6 percent. |
front 4 The price index was 136 in one year and then 142 the next year, what was the inflation rate between the two years? | back 4 4.41 percent. |
front 5 Janelle earned a salary of $62,000 in 2004, and $80,000 in 2014. The consumer price index was 126 in 2004 and 170 in 2014. Janelle's 2004 salary in 2014 dollars is | back 5 $83,651. |
front 6 If the nominal interest rate is 8 percent and the rate of inflation is 3 percent, then the real interest is: | back 6 5 percent. |
front 7 Which of the following items plays a role in determining productivity? | back 7 All of the above. |
front 8 All else equal, if there are diminishing returns, then which of the following is true if a country increases its capital by 1 unit? | back 8 Output will rise but by less than it did when the previous unit was added. |
front 9 Assuming diminishing returns, | back 9 The increase in output growth from an increase in the savings rate falls over time, and that, other things the same, poor countries should grow faster than rich ones. |
front 10 The logic behind the catch up effect is that | back 10 New capital adds more to production in a country that doesnt have much capital than in a country that already has much capital. |
front 11 Thomas Malthus's predictions turned out to be wrong due to | back 11 Technological advances such as those in the Industrial Revolution. |
front 12 In a small closed economy, investment is $50 billion and private saving is $45 billion. What are public saving and national saving? | back 12 $5 billion and $50 billion. |
front 13 When public saving falls by $2b and private saving falls by $1b, in a closed economy | back 13 Investment falls by $3b. |
front 14 Suppose the economy is closed with national saving is $3 trillion, consumption of $10 trillion, and government purchases of $4 trillion. What is GDP? | back 14 $17 trillion. |
front 15 If the inflation rate is 2 percent and the real interest rate is 7 percent, then the nominal interest rate is | back 15 9 percent. |
front 16 If the nominal interest rate is 7 percent and the real interest rate is 2 percent, what is inflation rate? | back 16 5 percent. |
front 17 If the government institutes policies that diminish incentives to save, then in the loanable funds market | back 17 The supply of loanable funds shift leftwards. |
front 18 Suppose you put $500 into a bank account today. Interest is paid annually and the annual interest rate is 8 percent. The future value of the $500 after 2 years is | back 18 $583.20 |
front 19 If the interest rate is 7 percent, then what is the present value of $4000 to be received in 6 years? | back 19 $2,591.85 |
front 20 A manufacturing company is thinking about building a new factory. If built, the factory will yield the company $300 million in 7 years, and it would cost $220 million today to build. The company will decide to build the factory if the interest rate is | back 20 No greater than 4.53 percent. |
front 21 At an annual interest rate of 14 percent, about how many years will it take $100 to double in value? | back 21 5 years |
front 22 What is an example of adverse selection? | back 22 A high risk person being more likely to apply for insurance. |
front 23 What best illustrates moral hazard? | back 23 After a person obtains life insurance, she takes up sky diving. |
front 24 The value of a stock is based on: | back 24 The present values of a the dividend stream and final price. As a result, the value of a stock falls when interest rates rise. |
front 25 An economy's natural rate of unemployment is the | back 25 amount of unemployment that the economy normally experiences. |
front 26 The deviation of unemployment from its natural rate is called: | back 26 Cyclical unemployment |
front 27 The Bureau of Labor Statistics reported in 2005 that there were 53.23 million people over age 25 who had at least a bachelor's degree, 40.59 million of whom were employed and 0.98 million oh whom were unemployed. What were the labor-force participation rate and the unemployment rate for this group? | back 27 78.1% and 2.4% |
front 28 Suppose that some country has an adult population of about 50 million, a labor-force participation rate of 60 percent, and an unemployment rate of 5 percent. How many people were employed? | back 28 28.5 million. |
front 29 The natural unemployment rate includes | back 29 Both frictional and structural unemployment. |
front 30 From time to time, the demand for workers has risen in one region of the United States and fallen in another. This illustrates | back 30 frictional unemployment created by sectoral shifts. |
front 31 What does not help reduce frictional unemployment? | back 31 unemployment insurance |
front 32 When a union raises the wage above equilibrium, | back 32 it raises the quantity of labor supplied and reduces the quantity of labor demanded. |
front 33 When a union bargains successfully with employers, in that industry | back 33 both wages and unemployment increase |
front 34 What is not included in either M1 or M2? | back 34 US treasury bills. |
front 35 In a 100 percent reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits, then | back 35 M1 would not change. |
front 36 If the reserve ratio is 10 percent, then the money multiplier is | back 36 10 |
front 37 The bank's reserve ratio is | back 37 8.5 percent. |
front 38 If all banks in an economy have the same reserve ratio as the bank, then the value of the economies money multiplier is | back 38 11.76 |
front 39 When the Fed conducts open market purchases, | back 39 It buys treasury securities, which increases the money supply. |
front 40 When the fed conducts open market sales, | back 40 It sells treasury securities, which decreases the money supply. |
front 41 If the money multiplier is 3 and the fed buys $50,000 worth of bonds, what happens to the money supply? | back 41 It increases by $150,000 |
front 42 The interest rate that the Fed charges banks that borrows reserves from it is the | back 42 discount rate |
front 43 When the fed decreases the discount rate, banks will | back 43 borrow more from the Fed and lend more to the public. The money supply increases. |
front 44 A problem that the Fed faces when it attempts to control the money supply is that | back 44 Since the US has a fractional reserve banking system, them amount of money in the economy depends in part on the behavior of depositors and bankers. |