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UGBA 101B: Midterm 1 (chapters 1-6) Exam Questions And Answers
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Chapter 1/2: What was the initial response of most central banks to the Covid-19 pandemic and subsequent lockdowns of most nation's economies? - correct answer ✅Central banks reduced interest rates to near zero. Chapter 1/2: Politicians are very shortsighted and prefer to run deficits rather than increase taxes. This is known as ______. - correct answer ✅Deficit bias Chapter 1/2: Which of the following data types do economists generally use to compare GDP across countries? - correct answer ✅Purchasing power parity (PPP) numbers Chapter 1/2: From 1960 to 2019 China's growth rate has averaged______. - correct answer ✅5.6% Chapter 1/2: Overall, inequality across countries has ____ over the past 40 years. - correct answer ✅Decreased
Chapter 1/2: In 2021 the top 10% of U.S. wage earners received ____ of total pretax income. - correct answer ✅45% Chapter 1/2: Since 1960 inequality in the United States has ____. - correct answer ✅Increased Chapter 1/2: Which of these statements is the most accurate with respect to global warming? - correct answer ✅There is overwhelming evidence that shows that global warming does exist. Scientific consensus is clear that global warming is occurring and has significant consequences. Chapter 1/2: Forecasts show that the earth's temperature will increase by another _______ degrees celsius by the end of the century if we elect to do nothing to stop global warming. - correct answer ✅3 degrees celsius
What was a major disadvantage of using the old method? - correct answer ✅1. When the base year changed, all of the old measures of real GDP had to be recalculated. Recalculating past GDP every time the base year changed was cumbersome and resource-intensive.
decimal places. Do not multiply by 100) - correct answer ✅1.
Chapter 1/2: In which year, a year where output growth is 2% or a year where output growth is − 2%, will the unemployment rate rise more? - correct answer ✅A year with output growth of -2% will see a higher rise in the unemployment rate because negative growth in output means firms will need fewer workers, which will cause unemployment to rise. Chapter 1/2: The Phillips curve is a relation between the inflation rate and the level of the unemployment rate. Using the Phillips curve, what will happen to the unemployment rate when the rate of inflation is 2%? - correct answer ✅It will be about 5.5% Chapter 1/2: The Phillips curve is often portrayed as a line with a negative slope. In the text, the slope is about − 0.17. Is this a "better" economy than one that has a Phillips curve with a large slope, say − 0.5 or a smaller slope, say -0.1? - correct answer ✅No, the slope does not indicate whether one economy is better than another; it simply shows how much inflation rises or falls given a change in the unemployment
Chapter 1/2: Using official data, U.S. GDP was 47 times higher in 2022 than it was in 1960 (T/F)? - correct answer ✅True Based on available data, U.S. nominal GDP in 1960 was approximately $543.3 billion, while in 2022 it was about $25. trillion. To calculate the increase: (25.44)/(0.543) = 46.84 = 47 (rounded) Chapter 1/2: When the unemployment rate is high, the participation rate is high (T/F)? - correct answer ✅False Historically, when the unemployment rate is high, it is often accompanied by a decline in the labor force participation rate. This is because, during periods of high unemployment, discouraged workers may stop actively seeking employment, which reduces the participation rate. The labor force participation rate measures the percentage of people either working or actively seeking work, so if many unemployed people give up looking for jobs, the participation rate declines.
Chapter 1/2: Okun's law shows that when output growth is lower than normal, the unemployment rate tends to rise (T/F)? - correct answer ✅True Okun's law suggests a relationship between output growth and unemployment, where lower output growth is associated with higher unemployment. Chapter 1/2: Periods of negative GDP growth are called recessions (T/F)? - correct answer ✅True Negative GDP growth is commonly used to define recessions. Chapter 1/2: When the economy is functioning normally, the unemployment rate is zero (T/F)? - correct answer ✅False Even in a well-functioning economy, there is always some level of unemployment due to factors like frictional and structural unemployment.
The Phillips curve is a relation between the level of prices and the level of unemployment (T/F)? - correct answer ✅False The Phillips curve shows the relationship between inflation and unemployment, not price levels directly. Chapter 1/2: Factors that one might explore to understand the pace at which a country's capital stock and its level of technology are advancing include: - correct answer ✅1. Quality of its education system A strong education system fosters innovation and helps develop a skilled workforce, which is crucial for technological progress.
Chapter 1/2: Which statement about capital income is NOT correct?
correct answer ✅It refers to a firm's revenue.
jobs; 10 million would like jobs but are not searching; and 10 million do not want jobs at all. The official unemployment rate in percentage points is? - correct answer ✅33% This correctly calculates the unemployment rate based on the working-age population actively looking for work. 10/(10+20) = 33% Chapter 1/2: The GDP deflator provides a measure of? - correct answer ✅The ratio of nominal GDP to real GDP.
Chapter 1/2: Why do economists care about inflation? - correct answer ✅1. Inflation affects income distribution when not all prices and wages rise proportionally
Chapter 1/2: The Phillips curve describes the relationship between?
correct answer ✅Inflation and Unemployment Chapter 1/2: Changes in GDP in the short run are caused primarily by: - correct answer ✅Demand factors
Chapter 3/4: What best explains the difference between endogenous and exogenous variables? - correct answer ✅Endogenous variables are explained within the model while exogenous variables are not; they are simply taken as given. Chapter 3/4: Imagine a world in which all variables were exogenous. Could policymakers change economic outcomes? In such a world policymakers would have (1) control over economic outcomes since their policy tools would (2). - correct answer ✅(1) Little to no (2) Not have a direct influence over any economic variables Chapter 3/4: The largest component of GDP is consumption (T/F)? - correct answer ✅True Chapter 3/4: Government spending, including transfers, was equal to 17.4 % of GDP in 2022 (T/F)? - correct answer ✅False