Macroeconomics Questions
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When the economy is at full employment, which types of unemployment remain?A.frictional and structuralB.cyclical and structuralC.frictional and cyclicalD.None of the above. Full employment means that there is no unemployment, so the unemployment rate would be zero.
The BLS defines a job quit as a "voluntary separation initiated by an employee." The BLS estimated that there were 5.4 million job quits in March 2019.Source: Bureau of Labor Statistics, "Job Openings and Labor Turnover Survey—March 2019," May 7, 2019.Unemployment caused by an increase in job quits would be classified asA.cyclical unemployment.B.structural unemployment.C.frictional unemployment.D.seasonal unemployment.
When a firm pays a wage that is higher than the market wage in order to increase worker productivity, the wage is calledA.a compensating differential.B.a minimum wage.C.an efficiency wage.D.an ideal wage.
Suppose the amount the federal government collects in personal income taxes increases,while the level of GDP remains the same. What will happen to the values of national income, personal income, and disposable personal income?
c. An efficiency wageA.increases the unemployment rate since firms pay a higher-than-market wage that increases the quantity of labor supplied.B.has no impact whatsoever on the unemployment rate.C.decreases the unemployment rate since it increases the labor productivity.D.decreases the unemployment rate since firms pay a lower-than-market wage that decreases the quantity of labor supplied.
How would it affect the unemployment rate if the Bureau of Labor Statistics counted as unemployed both (1) discouraged workers and (2) people who work part-time but would prefer to work full-time?A.The annual unemployment rate would have been close to 50 percent in the last decade.B.The unemployment rate would decrease.C.The unemployment rate would increase.D.The unemployment rate would remain the same because those people are already counted as unemployed.
Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is calledA.seasonal unemployment.B.frictional unemployment.C.cyclical unemployment.D.structural unemployment.
Division of IncomeBillionsof dollarsWages$10,870Interest787Rent760Profit3,357Profit of sole proprietors1,579Profit of corporations1,778Taxes, depreciation and statistical discrepancy4,783The image is a pie chart that shows the division of Gross domestic Product (GDP), measured in terms of income, into its different components: wages, interest, rent, profits of sole proprietors and corporations, and taxes. Wages account for about 54 percent, and taxes account for 23 percent of GDP. Profits of corporations account for 9 percent, and profits of sole proprietors account for 8 percent of GDP. Interest accounts for 4 percent, and rent accounts for 4 percent of GDP.Wages 53%Interest 4%Rent 4%Profits of sole proprietors 8%Profits of corporations 9%Taxes etc 23%The table and figure show GDP measured in terms of the total income received by households. Use the table and figure to help determine which of the following statements about the division of income is false.A.The largest component of income received by households is wages.B.Wages are slightly more than three times as large as the profits received by sole proprietors and the profits received by corporations combined.C.Profits include the profits of sole proprietorships and profits of corporations.D.Gross domestic income is measured precisely.
If prices rise over time, then real GDP will beA.larger than nominal GDP in years after the base year.B.larger than nominal GDP in years before the base year.C.smaller than nominal GDP in the base year.D.smaller than nominal GDP in years before the base year.
Workers who lose their jobs because of a recession are experiencingA.seasonal unemployment.B.structural unemployment.C.cyclical unemployment.D.frictional unemployment.
The "normal" underlying level of unemployment in the economy isA.the natural rate of unemployment.B.the sum of structural unemployment and frictional unemployment.C.the full-employment rate of unemployment.D.All of the above.
Real GDP = (Nominal GDP/GDP Price Deflator)×100The percentage change in real GDP =(New Value − Old Value)/Old Value×100
How does real GDP deal with the problem inflation causes with nominal GDP?A.Real GDP uses the prices of goods and services in the base year to calculate the value of goods in all other years.B.By keeping prices constant, we know that changes in real GDP represent changes in the quantity of output produced.C.Real GDP separates price changes from quantity changes.D.All of the above.E.A and C only.
The type of unemployment most likely to result in hardship for the people who are unemployed isA.frictional because people need to find a new job in the labor market.B.cyclical because people have to wait for a recession to end.C.cyclical and frictional because these two types are closely related.D.structural because this type of unemployment requires retraining to acquire new job skills.
Household production and the underground economyA.are an increasingly large fraction of economic activity in the United States.B.are fully accounted for in the Bureau of Economic Analysis' estimates of GDP.C.are not accounted for in the Bureau of Economic Analysis' estimates of GDP.D.are not considered important and, therefore, are not included when calculating GDP.
Michael Burda of Humboldt University in Germany and Daniel Hamermesh of the University of Texas examined how workers in the United States who lost their jobs between 2003 and 2006 spent their time. They discovered that during the period when they were unemployed, the reduction in the number of hours of paid work was almost completely replaced by an increase in the number of hours spent on household production.Source: Michael Burda and Daniel S. Hamermesh, "Unemployment and Household Production," National Bureau of Economic Research working paper 14676, January 2009.Based on these findings, what can we predict about total production—whether or not that production is included in the calculation of GDP—in the economy when these workers became unemployed?A.If the workers had been paying other people to perform the household activities prior to unemployment, then total production will fall.This is the correct answer.B.When workers lose their jobs, total production falls since workers are no longer earning wages.C.If the workers had been paying other people to perform the household activities prior to unemployment, then total production will rise.D.Since household production is not calculated in GDP, there is a decrease in total production that comes due to unemployment.
The unemployment rate declined from 3.8 percent in March 2019 to 3.6 percent in April. The labor force participation rate also declined from March to April, from 63.0 percent to 62.8 percent.Holding constant the number of people employed in April 2019, if the labor force participation rate had increased instead of decreased, the unemployment rate for April 2019 would beA.less than 3.6 percent because the value in the numerator of the formula for the unemployment rate would increase less than the value in the denominator.B.greater than 3.6 percent because adding the same number to both the numerator and the denominator of a fraction that is less than one increases the value of the fraction.C.greater than 3.6 percent because the value in the numerator of the formula for the unemployment rate would increase less than the value in the denominator.Your answer is not correct.D.less than 3.6 percent because the value in the numerator of the formula for the unemployment rate would increase more than the value in the denominator.
The three types of unemployment areA.voluntary, structural, and cyclical unemployment.B.natural, unnatural, and cyclical unemployment.C.full, frictional, and involuntary unemployment.D.frictional, structural, and cyclical unemployment.
According to research by Rafael La Porta of Tuck School of Business at Dartmouth and Andrei Shleifer of Harvard University, in developing countries, the average firm in the informal sector, or underground economy, employs 4 workers as opposed to 126 workers employed by the average firm in the formal sector.Sources: Rafael La Porta and Andrei Shleifer, "Informality and Development," Journal of Economic Perspectives, Vol. 28, No. 3, Summer 2014, pp. 109-126.What is the informal sector, or underground economy?A.This is the part of the economy where production is heavily taxed by the government.B.This is the part of the economy characterized by the pollution and other negative externalities its production creates.C.The informal sector, or underground economy, is when production occurs in other countries.D.The informal sector is the sector of the economy where production is concealed from the government.
According to most economists, is it a serious shortcoming of GDP that it does not count household production or production in the underground economy?A.Most economists would answer "yes" because these types of production are likely to be a large component of the economy (or a large percentage of measured GDP), especially in countries like the United States.B.Most economists would answer "no" because these types of production do not affect the most important use of the GDP measure, which is to measure changes in total production over short periods of time.This is the correct answer.C.Most economists would answer "yes" because these types of production are likely to change significantly from one year to the next.D.Most economists would answer "no" because the purpose of measuring GDP is to see how the economy performs over fairly long periods of a decade or more.