Question 1

Suppose an economist stated that Brazil had achieved its potential GDP 2008.This would imply that at this level of real GDP, Brazil experienced

Accepted Answer

A)  peak in its business cycle in 2008. 
B)  unemployment equal to zero. 
C)  inflation equal to zero. 
D)  full employment. 
E)  a negative Okun gap. 
A)  peak in its business cycle in 2008. 
B)  unemployment equal to zero. 
C)  inflation equal to zero. 
D)  full employment. 
E)  a negative Okun gap.

Question 2

When the labor market is in equilibrium, i. the quantity demanded of labor equals the quantity supplied.
Ii) there is full employment.
Iii) potential GDP is produced.

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i, ii, and iii

Question 3

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Real wage rate } \
\text { (2005 dollars } \
\text { per hour) }
\end{array} & \begin{array} { c } 
\text { Quantity of labor demanded } \
\text { (millions of hours } \
\text { per month) }
\end{array} & \begin{array} { c } 
\text { Quantity of labor supplied } \
\text { (millions of hours } \
\text { per month) }
\end{array} \
\hline 5 & 360 & 260 \
10 & 325 & 275 \
15 & 300 & 300 \
20 & 280 & 330 \
25 & 250 & 350
\end{array}$$
-According to the above table, if the minimum wage is set at $20 per hour, then

Accepted Answer

A)  there is an excess demand for labor. 
B)  the quantity of labor supplied exceeds the quantity of labor demanded by 50 million hours per month. 
C)  the quantity of labor demanded will increase until it is equal to the quantity of labor supplied. 
D)  the labor demand curve will shift until $20 is the new equilibrium real wage. 
E)  the labor supply curve will shift until $20 is the new equilibrium real wage. 
A)  there is an excess demand for labor. 
B)  the quantity of labor supplied exceeds the quantity of labor demanded by 50 million hours per month. 
C)  the quantity of labor demanded will increase until it is equal to the quantity of labor supplied. 
D)  the labor demand curve will shift until $20 is the new equilibrium real wage. 
E)  the labor supply curve will shift until $20 is the new equilibrium real wage.

Question 4

Which of the following statement or statements are correct about potential GDP?
i. Actual real GDP equals potential GDP when the economy is at full employment.
ii. Real GDP can be less than potential GDP.
iii. When real GDP equals potential GDP, it also equals nominal GDP.

Accepted Answer

A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and ii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and ii 
E)  i, ii, and iii

Question 5

The two fundamental causes of unemployment at full employment are

Accepted Answer

A)  seasonal jobs and technological change. 
B)  foreign competition and financial bankruptcies. 
C)  job search and job rationing. 
D)  decreases in labor productivity and more generous retirement benefits. 
E)  demographic change and decreases in the demand for labor. 
A)  seasonal jobs and technological change. 
B)  foreign competition and financial bankruptcies. 
C)  job search and job rationing. 
D)  decreases in labor productivity and more generous retirement benefits. 
E)  demographic change and decreases in the demand for labor.

Question 6

To maximize profits, firms hire labor as long as

Accepted Answer

A)  each additional hour hired produces more additional output than the real wage rate. 
B)  the total hours hired produces more additional output than the real wage rate. 
C)  each additional hour hired produces more additional output than the nominal wage rate. 
D)  the quantity of labor supplied increases as the real wage rate increases. 
E)  workers continue to supply labor to the firm. 
A)  each additional hour hired produces more additional output than the real wage rate. 
B)  the total hours hired produces more additional output than the real wage rate. 
C)  each additional hour hired produces more additional output than the nominal wage rate. 
D)  the quantity of labor supplied increases as the real wage rate increases. 
E)  workers continue to supply labor to the firm.

Question 7

Households increase the quantity of labor supplied when the

Accepted Answer

A)  real wage rate rises because the opportunity cost of not working falls. 
B)  nominal wage rate rises because the real wage rate must also rise. 
C)  real wage rate rises because the opportunity cost of not working rises. 
D)  nominal wage rate falls because the opportunity cost of not working rises. 
E)  income tax rises because an increase in the income tax increases the demand for labor. 
A)  real wage rate rises because the opportunity cost of not working falls. 
B)  nominal wage rate rises because the real wage rate must also rise. 
C)  real wage rate rises because the opportunity cost of not working rises. 
D)  nominal wage rate falls because the opportunity cost of not working rises. 
E)  income tax rises because an increase in the income tax increases the demand for labor.

Suppose an economist stated that Brazil had achieved its potential GDP 2008.This would imply that at this level of real GDP, Brazil experienced

When the labor market is in equilibrium, i. the quantity demanded of labor equals the quantity supplied. Ii) there is full employment. Iii) potential GDP is produced.

Real wage rate (2005 dollars per hour) Quantity of labor demanded (millions of hours per month) Quantity of labor supplied (millions of hours per month) 5 360 260 10 325 275 15 300 300 20 280 330 25 250 350 -According to the above table, if the minimum wage is set at $20 per hour, then

Which of the following statement or statements are correct about potential GDP? i. Actual real GDP equals potential GDP when the economy is at full employment. ii. Real GDP can be less than potential GDP. iii. When real GDP equals potential GDP, it also equals nominal GDP.

The two fundamental causes of unemployment at full employment are

To maximize profits, firms hire labor as long as

Households increase the quantity of labor supplied when the

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 8: Potential Gdp and the Natural Unemployment Rate

Suppose an economist stated that Brazil had achieved its potential GDP 2008.This would imply that at this level of real GDP, Brazil experienced

When the labor market is in equilibrium, i. the quantity demanded of labor equals the quantity supplied. Ii) there is full employment. Iii) potential GDP is produced.

Real wage rate (2005 dollars per hour) Quantity of labor demanded (millions of hours per month) Quantity of labor supplied (millions of hours per month) 5 360 260 10 325 275 15 300 300 20 280 330 25 250 350 -According to the above table, if the minimum wage is set at $20 per hour, then

Which of the following statement or statements are correct about potential GDP? i. Actual real GDP equals potential GDP when the economy is at full employment. ii. Real GDP can be less than potential GDP. iii. When real GDP equals potential GDP, it also equals nominal GDP.

The two fundamental causes of unemployment at full employment are

To maximize profits, firms hire labor as long as

Households increase the quantity of labor supplied when the

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters