Doug Orr Ccsf Test 3 Econ 1

Front 1

Between 1979 and 2000, what fraction of thhe US population saw their share of national income fall?

Back 1

the lowest 40%

Front 2

The share of income going to the top 1 percent of households in 2007 was about the same as in 1928.

Back 2

TRUE

Front 3

A family income of $210,000 indicates that family is

Back 3

in the top 5% of the US income distribution.

Front 4

According to the World Bank and OECD study reported in the Reader, if the level of income inequality becomes too great, it has a negativeeffect on the rate of productivity growth in industrialzed countries.

Back 4

TRUE

Front 5

If the demand for a country A's products or financial assets increases relative to thsoe of country B

Back 5

country A's currency will appreciate and country B's currency will depreciate.

Front 6

If the price of a shrit is $27 in Canada and $20 in the US, and the time involed inthe community stores are the same, if the exchange rate is $1 US =$1,.2876 CAD, you should buy the shirt in

Back 6

the US.

Front 7

If the value of the dollar is depreciating relative to other currencies,

Back 7

we would expect an increase in exports and a decrease in imports.

Front 8

A recession is defined as

Back 8

a decline in real GDP for at least two successive quarters.

Front 9

A recession could be represented by a point

Back 9

inside the production-possibilities curve.

Front 10

A recession bar

Back 10

is a graphical technique used to show the time from the peak of the previous cycle to the trough of the recession.

Front 11

To be officially counted as 'unemployed,' one must

Back 11

have applied for a job during the past four weeks and currently not be working.

Front 12

Given the following information, calculate the unemployment rate:
the total population = 309 million
the population over age of 16 = 230 million
the number of employed = 135 million
the number of unemployed = 12 million

Therefore the unemployment rate is

Back 12

8.2 percent.

Front 13

If a person is unemployed for a long period of time while searching for a new job because her old job was moved off-shore, this person would be considered

Back 13

structurally unemployed.

Front 14

In addition to the income lost by individuals who become unemployed, the micro costs of unemployment include the deaths of many people as the result of the increase in domestic violence, murders, heart attacks and suicides.

Back 14

TRUE

Front 15

The unemployment rate underestimates the actual under-utilization of labor resources because

Back 15

it ignores discouraged workers and those who involuntarily work part-time.

Front 16

One definition of the full-employment unemployment rate is the unemployment that is voluntarily chosen or that actually helps make the economy more effective. Using this definition, full-employment unemployment would be

Back 16

seasonal, frictional and 'good' structural unemployment.

Front 17

Friedman's theory of the 'natural rate' of unemployment, or the NAIRU, argues

Back 17

that if the unemployment rate falls too low, the rate of inflation will increase.

Front 18

According to Marx, if the unemployment rate falls too low, the bargaining power of labor increases and wages will rise. In response each individual capitalist will try to replace labor with machines. The result of this process is to maintain what Marx called

Back 18

the reserve army of labor.

Front 19

The macro costs of unemployment are the loss of GDP that results from being inside the production possibilities frontier.

Back 19

TRUE

Front 20

One of the possible benefits of an increase in unemployment rates discussed in class was

Back 20

workers would be more passive and easier to manage.

Front 21

Inflation is defined as

Back 21

an increase in the average level of prices.

Front 22

A statement that claims that everyone is worse off during inflation is wrong because

Back 22

inflation redistributes real income and wealth, making some people better off and other people worse off.

Front 23

If the price of the products you sell goes up faster than the average rate of inflation, you are relatively better off as a result of the

Back 23

income effect.

Front 24

Financial institutions are most strongly opposed to policies that might cause inflation because

Back 24

inflation tends to redistribute wealth from creditors to debtors.

Front 25

Deflation is more costly and dangerous because, while inflation can reduce incomes, deflation can cause waves of bankruptcies.

Back 25

TRUE

Front 26

Different theories blame different groups for causing recessions. Which of the following pairs is incorrect?

Back 26

a. Jevons blamed nature.
b. Malthus blamed workers.
c. Marx blamed capitalists.
d. Keynes blamed the government.

Answer is D

Front 27

Marx predicted all of the following except:

Back 27

a. business cycles would concentrate the ownership of capital in fewer and fewer companies
b. as business became larger, business cycles would get deeper and last longer
c. as capitalism develops, an ever larger fraction of the population would become dependent on wage labor as their primary source of income.
d. as businesses became larger, business cycle would become less severe because large firms can engage in planning activities that small firms can't.

The answer is D.

Front 28

According to the theory of Keynes, some of household consumption autonomous and the rest is primarily determined by

Back 28

the level of income.

Front 29

According to the theory of Keynes, the primary determinate of investment spending is

Back 29

the level of expected sales.

Front 30

The spending multiplier is

Back 30

a process of re-spending , over a period of time, of an injection into the spending stream

Front 31

The size of the spending multiplier effect is always determined by

Back 31

the marginal propensity to leak from the spending stream.

Front 32

The spending multiplier process ends

Back 32

when the initial injection has leaked out of the spending stream.