SET 1 MACRO QUIZ REVIEW LMS

Which price index measures the average price of things purchased by the typical family in an urban area?

• producer price index.

• minimum wage.

• GDP deflator.

• consumer price index.

Consider two labor markets in which jobs are equally attractive in all respects other than the wage rate. All workers are equally able to do either job. Initially, both labor markets are perfectly competitive. If a union organizes workers in one of the markets, then the wage rates will tend to

• rise for the union jobs, but remain unchanged for the nonunion jobs.

• fall in both markets.

• rise for the union jobs and fall for the nonunion jobs.

• rise in both markets.

Which is the largest component of GDP?

• net exports.

• investment.

• government purchases.

• consumption.

Susie grows corn in her backyard garden to feed her family. The corn she grows is not counted in GDP because

• the corn has no value.

• it is an intermediate good which Susie will process further.

• it was not produced for the marketplace.

• it reduces the amount of corn she will buy at the store.

Yuan recently completed his college degree and is entering the labor market for the first time. He has been submitting applications and has been interviewed twice in the last two weeks, but so far has not found a job. Yuan could be classified as

• structurally unemployed.

• cyclically unemployed.

• seasonally unemployed.

• frictionally unemployed.

The population of Ectenia is 100 people: 40 work full-time, 20 work half-time but would prefer to work full-time, 10 are looking for a job, 10 would like to work but are so discouraged they have given up looking, 10 are not interested in working because they are full-time students, and 10 are retired. What is the number of unemployed?

• 20

• 10

• 30

• 40

Suppose you spend 30 percent of your budget on food, 20 percent on medical care, 40 percent on rent, 5 percent on entertainment, and 5 percent on miscellaneous items. If the price of all parts of your budget rises equally in percentage terms, which would have the most weight on your cost of living increase? (Assume you calculate your index the same way the CPI is calculated.)

• medical care.

• entertainment.

• rent.

• food.

The good that receives the most weight in the CPI is the good that

• has the highest price.

• has experienced the greatest price increase.

• consumers spend the largest fraction of their income on.

• consumers buy most frequently.

• is 110.

• is $12,000.

• cannot be calculated.

• is 200.

Real GDP is nominal GDP

• minus taxes.

• plus depreciation.

• adjusted for changes in the price level.

• minus depreciation.