ECON 2105 Practice Problems Questions for Chapter 6

Name: __________________________ Date: _____________

1. Assuming that there are 100 million people in the total population with a labor force of
50 million and 47 million of those worers are emplo!ed" the unemplo!ment rate is:
A# $%.
&# '%.
(# )%.
D# 10%.
*. +ncreasing the total amount of a,ailable producti,e resources is the focus of
__________.
A# macroeconomics
&# fiscal polic!
(# monetar! polic!
D# microeconomics
-age 1
.se the following to answer /uestion $:
0igure: Aggregate 1utput
$. 20igure: Aggregate 1utput# &etween 13$$ and 13$7" aggregate output:
A# increased from about 4'$0 billion to about 4700 billion.
&# decreased from about 4)70 billion to about 4'$0 billion.
(# decreased from about 4310 billion to about 4'$0 billion.
D# increased from about 4'$0 billion to about 4310 billion
4. According to official statistics for the .nited 5tates" between 134) and *004" real 6D-
grew:
A# at its fastest rate during the e7pansion that spanned 1350.
&# at an a,erage of 5.' percent a !ear.
(# at a low" but positi,e rate" during the recession that spanned 13)*.
D# at a surprisingl! constant rate of $.$ percent a !ear.
5. 8he topics studied in macroeconomics include:
A# inflation.
&# monopolies.
-age *
(# spillo,ers lie pollution.
D# mergers.
'. 9eal gross domestic product or real 6D-:
A# is aggregate output.
&# is the total production of final goods and ser,ices.
(# grows during an e7pansion.
D# is all of the abo,e.
7. +f wages grew at a 5% rate last !ear and a,erage prices grew at a $% rate" then the
a,erage worer is:
A# better off.
&# worse off.
(# no better or worse off.
D# unaffected.
). :onetar! polic! attempts to stabili;e the econom! b! changes in:
A# ta7es.
&# ta7es and spending.
(# ta7es and interest rates.
D# interest rates and the /uantit! of mone!.
3. After correcting for higher prices of goods and ser,ices" the pa! pacage of an a,erage
..5. worer in *00* was worth about _______ as much the pa! of an a,erage worer in
134).
A# half
&# the same
(# twice
D# three times
-age $
10. <mplo!ment is:
A# the total labor force.
&# the total population of woring age.
(# the total number of people acti,el! woring.
D# the total number of people not unemplo!ed.
11. =hich of the following economies was one of the hardest>hit during the 6reat
Depression?
A# 8he .nited 5tates
&# (anada
(# 6erman!
D# @apan
1*. =hen the ..5. dollar price of the &ritish pound decreases:
A# &ritish goods become cheaper for Americans.
&# &ritish goods become more e7pensi,e for Americans.
(# American goods become more e7pensi,e for the &ritish.
D# &oth a and c are correct.
1$. :acroeconomics focuses on:
A# the econom! as a whole.
&# indi,idual decisions.
(# wages.
D# the allocation of scarce resources.
-age 4
.se the following to answer /uestions 14>15:
0igures: 8he .nemplo!ment 9ate and Aggregate 1utput
14. 20igures: 8he .nemplo!ment 9ate and Aggregate 1utput# =hich of the following
represents a good estimate of the decline in aggregate output in the .nited 5tates from
13*3 to 13$$?
A# 10%
&# *7%
(# 40%
D# 51%
-age 5
15. 20igures: 8he .nemplo!ment 9ate and Aggregate 1utput# &etween 13$$ and 13$7"
the econom! was in a state of:
A# stagflation.
&# e7pansion.
(# h!perinflation.
D# no growth.
1'. +f a countr! has a woring>age population of *00 million" 1$5 million people with Aobs"
and 15 million people unemplo!ed and seeing emplo!ment" then its unemplo!ment
rate is:
A# 4%.
&# 7.5%.
(# 10%.
D# '7.5%.
17. An e7pansion is a period in which:
A# output declines.
&# the price le,el falls.
(# output rises.
D# the price le,el rises.
1). +f between *005 and *00'" the aggregate price le,el rises:
A# real wages will rise faster than nominal wages.
&# and nominal wages rise at the same rate as prices" real wages will rise.
(# and nominal wages remains constant" real wages will fall.
D# nominal wages will rise faster than real wages.
-age '
13. 8he topics studied in macroeconomics include:
A# the price of a motorc!cle.
&# the wages of engineers.
(# the a,erage price le,el in the econom!.
D# how much ice cream consumers bu!.
*0. 8he ,alue of all the following goods is included in the calculation of aggregate output
<B(<-8:
A# the ,alue of 0irestone tires sold at !our local garage.
&# the ,alue of a new shower installed in a recentl! purchased 13*0Cs house.
(# the ,alue of the '>(D pla!er installed to replace the factor!>mounted radio>cassette
in !our new car.
D# the ,alue of 0irestone tires installed on brand>new Dol,o station wagons.
*1. :onetar! polic! in,ol,es:
A# changes in go,ernment spending.
&# changes in go,ernment ta7 receipts.
(# changes in the /uantit! of mone!.
D# changes in ta7 rates.
**. =hen the ..5. dollar price of the euro increases:
A# <uropean goods become cheaper for Americans.
&# <uropean goods become more e7pensi,e for Americans.
(# American goods become more e7pensi,e for <uropeans.
D# &oth a and c.
-age 7
.se the following to answer /uestion *$:
8able: <conom! of 6raceland
Aggregate output at beginning of *005 45 billion
-opulation at beginning of *005 1 million
1utput increased $% during *005
-opulation increased *.0% during *005
Aggregate price le,el remained constant during *005
*$. 28able: <conom! of 6raceland# -opulation at the end of *005 was:
A# 1"*00"000.
&# 1"0*0"000.
(# 1"00*"000.
D# 1"000"*00.
*4. 8he actual numerical measure of aggregate output t!picall! used b! economists is
called:
A# aggregate output.
&# nominal gross domestic product.
(# net domestic product.
D# real gross domestic product.
*5. According to official statistics for the .nited 5tates" between 134) and *004"
unemplo!ment:
A# peaed during the *001 recession.
&# a,eraged 5.' percent.
(# was ;ero onl! during the !ears of the Eorean =ar.
D# ne,er reached 4 percent" e,en during the longest e7pansions.
-age )
Answer Ke
1. &
*. A
$. D
4. A
5. A
'. D
7. A
). D
3. D
10. (
11. (
1*. D
1$. A
14. &
15. &
1'. (
17. (
1). (
13. (
*0. D
*1. (
**. &
*$. &
*4. D
*5. &
-age 3