Exam 2

Question 1

Cyclical unemployment occurs when
  the supply of labor exceeds the demand for labor 
  people lack skills desired by employers 
  unemployment changes with the business cycle 
  people are in between jobs 
 
Question 2

The price of hand sanitizer rises from $2.50 to $3.00 per bottle. Quantity demanded changes from 500 bottles to 400 bottles. Calculate the elasticity.

  |E| = 1.2 Demand is elastic 
  |E| = 1.5 Demand is elastic 
  |E| = 0.67 Demand is inelastic 
  |E| = 0.82 Demand is inelastic 
 
Question 3

The nominal interest rate is 0.2% and the inflation rate is 2.7%. What is the real interest rate?

  -2.9% 
  2.9% 
  2.5% 
  -2.5% 
 
Question 4

Which of the following goods is likely to have an elastic demand?

  gas 
  hearing aid 
  sports car 
  water 
 
Question 5

A trade surplus occurs when a country 

  exports less than it imports 
  does not engage in trade 
  imports more than it exports 
  exports more than it imports 
 
Question 6

India’s GDP is $2.7 trillion USD and the GDP growth rate is 6.8%. What will India’s GDP be in 10 years?

  $2,250,659,474 USD 
  $570,759,161 USD 
  $483.6 trillion USD 
  $5.2 trillion USD 
 
Question 7

When |E| > 1, indicating a high responsiveness of quantity demanded to changes in price, demand is said to be

  perfectly elastic 
  perfectly inelastic 
  inelastic 
  elastic 
 
Question 8

How might the unemployment rate be understated?

  more women join the workforce 
  seniors come out of retirement and return to work 
  full time students graduate from school and find work 
  unemployed people may become discouraged and stop looking for work 
 
Question 9

Which of the following choices would lead to an increase in human capital?

  investments in healthcare 
  investments in the military 
  investments in small businesses 
  investments in infrastructure 
 
Question 10

The real GDP of Coruscant is $715 billion and nominal GDP is $785 billion. Calculate GDP deflator.

  109.8 
  1.097 
  91 
  0.91 
 
Question 11

Which of the following can lead to capital deepening?

  trade wars 
  poor rule of law 
  good rule of law 
  corruption 
 
Question 12

How might sticky wages keep the unemployment rate high?

  
sticky wages quickly adjust during a recession

  
sticky wages automatically adjust during a recession

  sticky wages are flexible 
  
wages cannot adjust when the economy slows

 
Question 13

Which measures how responsive quantity demanded is to changes in price?

  price elasticity of supply 
  income elasticity of supply 
  income elasticity of demand 
  price elasticity of demand 
 
Question 14

The Industrial Revolution gave rise to all of the following except

  collective bargaining 
  military jobs 
  pollution 
  manufacturing towns 
 
Question 15

There are 7.4 million people unemployed and 32.6 million employed with an adult population of 71.7 million people. What is the unemployment rate?

  0.185% 
  10.3% 
  18.5% 
  0.103% 
 
Question 16

Which of the following statements is true about GDP?

  GDP counts goods made outside of the country 
  GDP includes government purchases 
  GDP includes second hand goods 
  GDP includes illegal drugs 
 
Question 17

Which of the following can lead to higher labor productivity?

  technological advancements 
  low wages 
  poor education system 
  poor working conditions 
 
Question 18

Why is real GDP a better measurement than nominal GDP when comparing different years of data?

  nominal GDP adjusts for inflation 
  real GDP adjusts for inflation 
  real GDP includes government purchases 
  real GDP includes imported goods 
 
Question 19

Income rises by 10% and quantity demanded falls by 22%. What is the income elasticity of demand and what type of good is this?

  normal good, |E| = 2.2 
  inferior good, |E| = 0.455 
  normal good, |E| = 0.455 
  inferior good, |E| = 2.2 
 
Question 20

Who is considered not in the labor force?

  self employed people 
  unemployed people looking for work 
  full time employees 
  full time students 
 
Question 21

Convergence occurs when low-income countries grow at  ______________ rate than high-income countries

  a decreasing 
  the same 
  a slower 
  a faster 
 
Question 22

There are 7.4 million people unemployed and 32.6 million employed with an adult population of 71.7 million people. What is the labor force participation rate?

  55.8% 
  10.3% 
  45.5% 
  0.56% 
 
Question 23

Which is likely to have an inelastic supply?

  digital clock 
  a calculator 
  antique clock 
  a watch 
 
Question 24

How might unemployment benefits keep the unemployment rate high?

  unemployed people try to find work quickly 
  when unemployed people are receiving a paycheck, there is no incentive to find work 
  unemployed people receive a paycheck to help pay for living expenses 
  unemployed people may become discouraged and stop looking for work 
 
Question 25

What is the GDP growth rate from 2018 to 2019?

  1.08% 
  2.9% 
  0.029% 
  0.01% 

Exam 2 Answers

Question 1

Cyclical unemployment occurs when
  the supply of labor exceeds the demand for labor 
  people lack skills desired by employers 
  unemployment changes with the business cycle 
  people are in between jobs 
 

Answer:  unemployment changes with the business cycle