Unit 2 Practice Problem Set_4

GDP & Unemployment Practice Questions #4 1. GDP does not reflect a. the value of leisure. b. the value of volunteer work c. the quality of the work environment. d. All of the above e. B & C only 2. Which of the following transactions adds to U.S. GDP for 2006? a. In 2006, Ashley sells a car that she bought in 2002 to William for $5,000. b. An American management consultant works in Mexico during the summer of 2006 and earns the equivalent of $30,000 during that time. c. John and Jennifer purchase a new German car (made in Germany) d. Bob purchases $10,000 of IBM stock e. none listed would count towards GDP 3. Which of the following are true if an american purchases a new Volvo car produced in Sweden for $30,000. a. Consumption increases by $30,000 b. GDP decreases by $30,000 c. Net Exports fall by $30,000 d. GDP does not change e. A, C & D are all true 4. Goods that go into inventory and are not sold during the current period are a. counted as intermediate goods and so are not included in current period GDP. b. counted in current GDP only if the firm that produced them sells them to another firm. c. included in current period GDP as inventory investment. d. included in current period GDP as consumption. e. included in current period GDP only when they are “pre - sold” for a future date 5. Which of the following is not true regarding GDP = C + I + G + (X-M) a. C stands from consumption (or consumer) and represents 2/3rds of GDP b. I stands for Business Investment c. G stands for Government and is approximately 18% of GDP d. (X-M) stands for net exports and is currently a positive number for USA e. All listed are True 6. The natural rate (full employment) of unemployment can be viewed as: a. the rate without cyclical unemployment b. the rate without seasonal unemployment c. the rate of fricitional & structural unemployment d. Both A & C e. Both A & B 7. If you are laid off from your job due to automation. (technology) You would be classified as a. not in labor force d. seasonally unemployed b. structurally unemployed e. cyclically unemploed c. frictional unemployed

8. Who would be considered unemployed” a. A new graduate currently looking for a job b. A new graduate who decides to attend graduate school c. An unemployed toll booth collector not looking for a job d. A person working part-time who wants full-time work e. Both A & C are true statements 9. If you are laid off from your job and take 6 months to find a new job you are considered: a. not in labor force d. seasonally unemployed b. structurally unemployed e. cyclically unemploed c. frictional unemployed 10. Which are true statements regarding Unemployment: a. The Federal Government may provide job training to lower structural unemployment b. The Federal Government may raise taxes to lower cyclical unemployment c. The Federal Government may provide job training to lower seasonal unemployment d. The Federal Government may provide job training to reduce cyclical unemployment e. Both B & C are true statements

6. The natural rate (full employment) of unemployment can be viewed as: a. the rate without cyclical unemployment b. the rate without seasonal unemployment c. the rate of fricitional & structural unemployment d. Both A & C e. Both A & B ANSWER: D Full Employment lowest possible sustainable rate in an economy. It means you are on the PPF curve & everyone is fully employmed. Cyclical = 0.0% and you are left with only frictional & structural which together = about 4.0% in USA. (seasonal is factored out of number) 7. If you are laid off from your job due to automation. (technology) You would be classified as a. not in labor force d. seasonally unemployed b. structurally unemployed e. cyclically unemploed c. frictional unemployed ANSWER: B structural unemployment = skills not in demand in labor force 8. Who would be considered unemployed” a. A new graduate currently looking for a job b. A new graduate who decides to attend graduate school c. An unemployed toll booth collector not looking for a job d. A person working part-time who wants full-time work e. Both A & C are true statements ANSWER: A You need to be looking for a job to be in the labor force Part-time work = a job for the unemployment number 9. If you are laid off from your job and take 6 months to find a new job you are considered: a. not in labor force d. seasonally unemployed b. structurally unemployed e. cyclically unemploed c. frictional unemployed ANSWER: C frictional unemployment = between jobs 10. Which are true statements regarding Unemployment: a. The Federal Government may provide job training to lower structural unemployment b. The Federal Government may raise taxes to lower cyclical unemployment c. The Federal Government may provide job training to lower seasonal unemployment d. The Federal Government may provide job training to reduce cyclical unemployment e. Both B & C are true statements ANSWER: A structural unemployment = skills are not in demand in labor force You need new “human capital” to get a job => so training helps.