ECON 104 Sample Test CH7

ECON 104 Sample Test CH7 - MACROECONOMICS — ECON 104 —...

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Unformatted text preview: MACROECONOMICS — ECON 104 — Name # ‘ George Mason University Last Name, First Name Not Student ID sainple’rTest Chapter 7 — Spring 2004 — Section 004 — 7:20 to 10:00 PM Thursday - Instructor: EC Holt 4 March 2004 When you are finished, sign pledge below and turn in both this test and your Scantron. Honor Pledge: I have neither given nor received aide on this exam. Signed: (Student's Signature) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. holding all else constant. 1) Moving along the production function shows the relationship between A) capital input and real GDP B) labor input, capital input, and real GDP C) labor input and real GDP D) technology and real GDP 2) Which of the following can increase human capital? I. learning—bymdoing 11. better education III. increased use of computer technology A) I, II, and III B) I and II C) I and 111 D) II and lll 3) Becky has a part—time job at Wendy‘s after school. When she started Becky could cook only 20 hamburgers per hour; but after the first month of work she was able to cook 30 hamburgers per hour. The most likely explanation for her increased productivity is A) lea rning—byudoing. B) efficiency wages. C) the law of increasing returns. D) technological change. 4) The money wage rate measures the A) constant dollar level of real disposable income. B) number of dollars earned by an hour of labor. C) 1996 dollar value of a unit of labor supplied by a worker. D) quantity of goods and services that can be bought with an hour of labor. 5) The real wage rate equals A) (100) X (money wage rate)/ (price level). 13) (money wage rate) x (price level). C) (100) x (price level) / (money wage rate). D) (money wage) + (number of hours worked) / (price level). 6) If the money wage rate is $10.00 per hour and. the price level is 60, the real wage rate is A) $16.67 per hour. B) $18.75 per hour. C) $12.50 per hour. D) $10.00 per hour. 7) If the real wage rate is $12.50 per hour and the price level is 90, the money wage rate is A) $23.75 per hour. B) $13.40 per hour. C) $11.25 per hour. D) $13.88 per hour. 8) The real wage rate falls if the money wage rate A) rises more slowly than the price level. B) rises more rapidly than the price level. C) is constant and the price level falls. D) and the price level change by the same proportion. 9) If the price level rises by 5 percent and workers' money wage rates remain constant, firms' A) supply of jobs will decrease. B) quantity of labor demanded will increase. C) quantity of labor demanded will decrease. D) None of the above answers are correct. 10) Which pieces of information do you. need to calculate theMPL? I. the change in real GDP 11. the change in the quantity of money lit. the change in the amount of labor input A) I only B) [I and III C) III only D) I and Ill 11) If the real wage increases, the A) income effect causes people to want to work more. B) opportunity cost of not working decreases, so people will want to work less. C) opportunity cost of not working increases, so people will want to work more. D) income effect causes people to maintain their current level of work. 12) At the full-employment equilibrium in the labor market, A) the money wage rate equals the real wage rate. B) there is neither a shortage nor a surplus of labor. C) there are no job vacancies. D) there is no unemployment. L5 15 _t O U1 LD 0 50 100 150 200 250 300 Labor (billions of hours per year) 13) In the above figure, if the real wage is $10 per hour, a labor A) surplus will occur and the real wage will rise. B) shortage will occur and the real wage will rise. C) shortage will occur and the real wage will fall. D) surplus will occur and the real wage will fall. 14) An increase in the economy's population A) lowers the real wage rate. 13) decreases the quantity of labor employed. C) decreases the supply of labor. D) shifts the long—run aggregate supply curve rightward. 15) The real wage rate will fall if the A) labor demand curve shifts rightward more than the labor supply curve shifts rightward. B) labor supply curve shifts leftward and the labor demand curve does not shift. C) labor demand curve shifts rightWard and the labor supply curve does not shift. D) labor supply curve shifts rightward and the labor demand curve does not shift. 16) An advance in technology shifts the production function upward and shifts the labor A) supply curve leftward. B) demand curve rightward. C) demand curve leftward. D) supply curve rightward. 17) Technological change A) has no effect on employment. B) lowers the real wage rate. C) increases potential GDP. D) decreases labor productivity. 18) In the United States, which of the following occurred between 1981 and 2001? A) Increases in labor productivity led to increases in the real wage rate. B) Higher real wage rates increased the labor—force participation rate. C) Total labor hours and working-«age population increased. D) All of the above answers are correct. 19) Which of the following have an immediate effect on the amount of job search? 1. real wage being paid 11. potential GDP III. unemployment benefits A) I and H B) 11 and III C) I only D) I and Ill 20) Which of the following would reduce the natural rate of unemployment? A) Population Changes that reduce the average age of the work—force and increase the proportion of job—market entrants. B) An increase in the proportion of households with two wage—earners. C) Legislation that provides more generous unemployment compensation benefits. D) None of the above reduce the natural rate of unemployment because they would all raise it. 21) If the maximum length of time an individual could collect unemployment compensation were sharply reduced, then A) the natural rate of unemployment would fall. B) the measured unemployment rate would rise. C) unemployment due to job rationing would fall. D) job search unemployment would rise. 22) The efficiency wage paid by a firm is the profit-«maximizing wage that balances the benefits of paying A) higher wages to attract higher quality workers against the costs of making higher payments to labor. B) lower wages to attract higher quality workers against the costs of making lower payments to labor. C) lower wages to attract lower quality workers against the costs of making higher payments to labor. D) higher wages to attract lower quality workers against the costs of making higher payments to labor. 23) Suppose that the money wage rate is $22 per hour and that the price level is 100. If the money wage rate falls to $11 per hour and the price level falls to 50, what happens to the real wage rate? A) The real wage rate falls. B) The real. wage rate rises but does not double. C) The real wage rate doubles. D) The real wage rate does not change. 24) Five workers produce total output of $200; six workers produce total output of $222. The marginal product of th sixth worker equals A) $40. B) $22. C) $37. D) None of the above answers is correct. 2.5) If the economy is at full employment, the A) entire labor force is employed. B) entire population is employed. C) long—run aggregate supply curve is upward sloping. D) quantity of labor supplied equals the quantity of labor demanded. Consumer Spending and Factory Activity Rise Page 1 of 2 590.11,! I I ¢:-:‘2*;‘::E;t #25353. ‘ LVIarch 1, 2004 Consumer Spending and Factory Activity Rise By THE ASSOCIATED PRESS Filed at 7:05 pm. ET WASHINGTON (AP) —~ The economy is in recovery, a trio of reports released Monday suggest, with manufacturing activity and consumer spending on the rise and construction spending solid yet slightly lower. High energy prices and slow job creation are areas of concern for economists, but overall they remain upbeat about the nation‘s financial condition. “I think we're actually in the early stages of an expansion," said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis. “It doesn't look like we're firing on all cylinders yet and there are still some pockets of weakness," Thayer conceded. But the economy as a whole is looking considerably better than it did at this time last year." The nation's manufacturing sector grew for the ninth consecutive month in February, the Institute for Supply Management reported Monday, but the expansion was at a slightly slower pace than expected. The Commerce Department, meanwhile, said consumer spending and disposable income increased in January, while construction spending dipped in January for the first time since May. “Overall, the numbers are very positive,” said John Silvia, chief economist at flachmziamgorp, in Charlotte, NC. The ISM‘s manufacturing index was 61.4 in February, down from a revised 63.6 in January and below the 62 reading forecast by analysts. An index reading above 50 indicates expansion, while one below 50 indicates that manufacturing activity is contracting. Silvia said the most important trends to note in the manufacturing data were in the areas of factory production and new orders, which have grown for 10 straight months. However, while the employment index expanded for fourth months in a row, Silvia said he remains concerned about the actual number of jobs the US. economy is adding. The economy has lost 2.2 million jobs since January 2001. “I think you‘re seeing a lot of manufacturing firms hiring a small number of people, but some big job losses in a few areas,” such as furniture, textiles and apparel, he said. http://wwwnytimes.com/aponline/business/AP~Economy.html?pagewanted=print&position= 3/1f2004 Consumer Spending and Factory Activity Rise Page 2 of 2 Thayer, though, said he was not as concerned about the jobs outlook, arguing there is a natural lag between the time manufacturers say they have begun hiring and the point at which the actual size of the work force can be accurately assessed. He also believes manufacturers will begin to hire more aggressively as productivity slows. That said, Thayer issued a warning about the high price of energy, saying it has already dampened consumer confidence and, if it continues, could cause consumer spending to stagnate. The futures price of oil is about $37 a barrel, and that has made heating oil, gasoline and even natural gas more expensive. “I think that's weighing on consumer confidence right now," Thayer said. The Conference Board reported last week that consumer confidence tumbled in February. Consumers did boost spending by 0.4 percent in January as disposable income —— what's left after taxes - — rose by 0.8 percent, the Commerce Department reported Monday. Consumer spending is a closely watched indicator of the country‘s financial health because it accounts for roughly two—thirds of all economic activity. But there is a growing consensus among economists that business spending needs to pick up if the recovery is to continue. “I think businesses are still generally cautious," Thayer said, adding that the strategy for boosting productivity has rested on making plants and people more efficient. That notion was supported by a Commerce Department report showing that construction spending dipped 0.3 percent in January, primarily because of weakness in non—residential spending. It was the first decrease since May as bad winter weather in some parts of the country delayed the start of new projects. Even with the drop, the level of construction spending hovered near an all~time high. Major stock indexes rose Monday. The Dow Jones jumped 94.22 to 10,678.14. The technology—focused Nasdaq rose 27.98 to 2,057.80 and the Standard & Poor's 500 index was up 11.03 at 1,155.97. On the Net: http://www.ism.ws Qgpyright 2004 The Associatedfigess I Home I Privacy Policy I §ea,[ch I Corrections I Help I Beckie Tpp http ://www.nytimes.com/aponline/business/AP—Economy.html?pagewanted=print&position= 3! 1/2 004 For Wage Law, Mixed Prospects in the Legislature Page 1 of 2 tan firm =1iitit'1ii7333tt‘tfiz _ _ March 1, 2004 For Wage Law, Mixed Prospects in the Legislature By STEVEN GREENHOUSE he main Sponsors of a bill to raise New York State's minimum wage said the State Assembly would approve a higher minimum today, but they voiced fears that the effort would die in the Senate. The bill's backers argue that in New York, which has one of the highest costs of living of any state, it is too difficult to support a family on the state's $5.15—anmhour minimum wage, the same as that established by the federal government. In an interview on Friday, Assembly Speaker Sheldon Silver predicted that his chamber, which is controlled by the Democrats, would easily pass a bill today setting New York‘s minimum wage at $7.10 an hour in January 2006. Were the State Senate to follow suit, New York would be the 13th state with a minimum wage higher than the federal level. “Making $5.15 an hour, you get to about $10,500 a year, and that's clearly inadequate for somebody working full time," Mr. Silver said. “Even at $7.10, many workers would still be left in poverty." The issue has prompted feverish lobbying in Albany. Supporters of a higher minimum include the A.F.L.—C.I.0. and the Working Families Party, while opponents include the New York Farm Bureau and the National Federation of Independent Business, an association of small businesses. "This is very important," said Denis Hughes, president of the New York State A.F.L.-C.I.O. "One of the traditional ideas of the labor movement is to set a wage floor." Most lobbying is directed at the State Senate, particularly its Republican majority leader, Joseph Bruno, who would decide whether to put the bill to a vote after it passed the Assembly. "Politically, it's very hard to vote on the floor against a minimum—wage hike,“ said Mark Alesse, state director of the National Federation of Independent Business. “But a minimum—wage hike will have some negative effects for the economy and small businesses. When business owners get squeezed on payroll costs, they reduce payroll, so they fire people." Mr. Alesse said a higher minimum wage would result in fewer jobs for low—wage workers. He insisted that the best way to help these workers was to increase the earned income tax credit. The executive director of the Working Families Party, Daniel Cantor, asserted that a higher minimum would not hurt the economy because it would give more money to low—income workers and they would quickly spend it, helping business. "We believe it’s both economically and morally right to do this http://www.nytimes.com/2004f03/0 l/nyregion/O l wage.html?pagewanted=print&position= 3/1/2004 For Wage Law, Mixed Prospects in the Legislature Page 2 of 2 because it puts more money in people’s pockets," Mr. Cantor said. The Fiscal Policy Institute, a research group supported by organized labor, estimates that increasing the state minimum to $7.10 would directly raise the wages of 700,000 New Yorkers earning less than that and might push up the wages of an additional 500,000 workers earning $7.10 to $8 an hour. Susan John, a Rochester Democrat who as chairwoman of the Assembly Labor Committee is sponsoring the bill, predicted that a higher minimum would not drive up the state's jobless rate. She noted that Connecticut, with a $7.10 minimum wage, and Massachusetts, with a $6.75 minimum, had lower jobless rates than New York‘s. "I worry the minimum wage is so low that sometimes it's a disincentive for people to work," she said. Ms. John voiced concern that Gov. George E. Pataki would pressure Mr. Bruno not to allow the Senate to vote on the bill out of fears that it would hurt businesses. Two years ago, the Assembly approved a $6.75 minimum wage, but the Senate never got to vote on it, largely because, lawmakers said, Mr. Pataki urged Mr. Bruno to bottle up the bill. A spokesman for the governor, Todd Alhait, said: "We have always maintained that New York’s minimum—wage provision should be consistent with the federal minimum wage. But the governor said he will look at any prOposals that come forward." Mr. Bruno‘s spokesman, John McArdle, indicated that the Senate leader was in no rush to take up the bill. “Our preference is for the feds to act so that New York is not at a competitive disadvantage with neighboring states,” he said. Supporters of a higher state minimum say neither President Bush nor Congress, which Republicans control, appears eager to raise the federal minimum. State Senator Guy Velella, a Bronx Republican who is the bill's chief sponsor in the Senate, where he heads the Labor Committee, said he thought the bill had a good chance of enactment, but he acknowledged that it might not come up for a vote in that chamber. He said the bill, which is overwhelmingly backed by Democrats, had seven Republican co—sponsors. Supporters say that many Republican lawmakers are feeling pressures to back the bill this year, when they are up for re—election, and that it has a better chance of gaining the governor's backing this year than in 2002, when Mr. Pataki was running for re—election. They also said the governor was reluctant to embrace the bill two years ago because he did not want to anger his business backers and contributors. Mr. Velella said a compromise might ease the way to passage. “My prediction," he said, "is that if we ultimately get an agreement for both houses to vote on it and the governor to sign it, then it will probably be at a wage lower than $7.10." Qanrrisnggs Ehefieufiork Times Cmieaay. l home i PrivaciPoliw I Search l Corrections I Belg l Backspin; http://www.nytimes.com/2004/ 03/ 0 l/nyregi0n/ 0 l wage.html?pagewanted=print&position= 3/ 1/2004 ...
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This note was uploaded on 04/07/2008 for the course ECON 104 taught by Professor Holt during the Spring '07 term at George Mason.

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ECON 104 Sample Test CH7 - MACROECONOMICS — ECON 104 —...

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