WorksheetsEcon 2020 Quiz 2 Practice
Total questions: 22
Worksheet time: 34mins
Compound interest is____________.
Interest at 5%
interest paid on interest previously earned
interest calculated once a year
What is the future value of a $500 deposit which earns 6.5% annual interest after 5 years?
$532.50
$469.48
$685.04
$364.96
If an economy is at its Natural Rate of Unemployment...
Only Cyclical Unemployment would be present
There would be no frictional unemployment
Only frictional and structural unemployment would be present
Everyone is working
A labor force of 20 million people has 18.5 million people employed. The adult population has 35 million people. Find the unemployment rate.
10%
8.5%
7.5%
6%
Which of these people is officially unemployed
A secretary who took 6 months off for maternity leave
An aspiring actress who waits tables but would rather act
Maid who got fired and will start a new job in 2 weeks
A student who only works 4 hours a week in the library
A labor force of 20 million people has 18.5 million people employed. The adult population has 35 million people. Find the labor force participation rate.
35.0%
57.1%
92.5%
52.9%
Suppose that the interest rate is 6%. Which has the higher present value — a payment of $100 today or a payment of $112 two years from today?
$100 today
$112 two years from today
they are the same
Suppose that in a closed economy GDP is equal to 15,000, taxes are equal to 4,000, consumption equals 10,000, and government expenditures equal 3,000. What are private saving and public saving?
1,000 and 1,000
1,000 and -1,000
2,000 and 1,000
2,000 and -1,000
Other things constant, if the government increases its expenditures but not taxes
public saving and the interest rate will rise
public saving and the interest rate will fall
public saving will fall and the interest rate will rise
public saving will rise and the interest rate will fall
The problem of moral hazard arises because
life is full of all sorts of risks
after people buy insurance, they have less incentive to be careful about their risky behavior
a high-risk person is more likely to apply for insurance than is a low-risk person
insurance companies go to great effort to avoid paying claims to their policy holders
Which of the following actions best illustrates adverse selection?
A person adds risky stock to his portfolio
A person purchases homeowners insurance and then checks his smoke detector batteries less frequently
A person is unwilling to buy a stock when she believes its price has an equal chance of rising or falling $10
A person who has narrowly avoided many accidents applies for automobile insurance
Which of the following is correct?
Managed funds typically have a higher return than indexed funds. This tends to refute the efficient market hypothesis
Managed funds typically have a higher return than indexed funds. This tends to support the efficient market hypothesis
Index funds typically have a higher rate of return than managed funds. This tends to refute the efficient market hypothesis
Index funds typically have a higher rate of return than managed funds. This tends to support the efficient market hypothesis
Esmerelda worked part-time for her mother’s business without pay. Tabitha was absent from work because she had strep throat. Who is counted as “employed” by the Bureau of Labor Statistics?
Esmerelda but not Tabitha
Tabitha but not Esmerelda
both of them are counted as employed
neither of them are counted as employed
Jenna is searching for a job that suits her tastes about where to live. Mary is looking for a job that makes best use of her skills.
Jenna and Mary are both frictionally unemployed
Jenna and Mary are both structurally unemployed
Jenna is frictionally unemployed, and Mary is structurally unemployed
Jenna is structurally unemployed, and Mary is frictionally unemployed
An increase in the minimum wage
reduces structural unemployment
reduces frictional unemployment
increases structural unemployment
increases frictional unemployment
Skyline Chili wants to finance the purchase of new equipment for its restaurants. The firm has limited internal funds, so Skyline likely will
demand funds from the financial system by buying bonds.
demand funds from the financial system by selling bonds.
supply funds to the financial system by buying bonds.
supply funds to the financial system by selling bonds.
Which of the following could explain an increase in the interest rate and the equilibrium quantity of loanable funds?
The demand for loanable funds shifted rightward.
The demand for loanable funds shifted leftward.
The supply of loanable funds shifted rightward.
The supply of loanable funds shifted leftward.
Cutter is spending less than he’s earning, and he uses his unspent income to buy some stock from Phi Optics Corporation. A macroeconomist will call Cutter’s act:
investing
saving
both saving and investing
neither saving nor investing
In the last few years the U.S. government budget deficit has increased. Other things the same this means the
A.supply of loanable funds shifted right, interest rate increased, and quantity of loanable funds declined.
A.demand for loanable funds shifted left, interest rate decreased, and quantity of loanable funds declined.
A.demand for loanable funds shifted right, interest rate increased, and quantity of loanable funds increased.
A.supply of loanable funds shifted left, interest rate increased, and quantity of loanable funds declined.
If an economy’s investment outlook improves, leading to increased borrowing to finance new building projects, what is likely to happen to interest rates?
Interest rates become 0%.
Interest rates fall.
Interest rates rise.
Interest rates stay the same.
In a small closed economy investment is $50 billion and private saving is $55 billion. What are public saving and national saving, respectively?
$60 billion and $5 billion
$50 billion and -$5 billion
$5 billion and $60 billion
-$5 billion and $50 billion
