Q1
If the nominal value of wages in 1990 was 800 euros and 1000 euros in 2010 and the CPI was 100 in 1990 and 150 in 2010 we can conclude that:
Ø The increase in the price level was smaller than the increase in nominal wages.
Ø The value of wages of 1990 at prices of 2010 was 1200 euros.
Ø The purchasing power of wages increased between 1990 and 2010.
Ø The other three are incorrect.
Q2
Suppose the total population older than 16 of Littletown is 400,000. Out of this 400,000 people, 270,000 are employed and 30,000 are unemployed. Then:
Ø The participation rate is 50%.
Ø The unemployment rate cannot be determined.
Ø None of the other answers is correct.
Ø The labor force is equal to 300,000.
Q3
The newly elected government of Wonderland decides to decrease government spending. Given that taxes remain constant, this implies that:
Ø National savings increase and consequently the supply of loanable funds decreases.
Ø The supply of loanable funds increases and the equilibrium interest rate in the market for loanable funds increases.
Ø National savings decrease and there is a budget deficit.
Ø There is an increase in the supply of loanable funds and investment increases.
Q4
Because of the economic crisis, one thousand households leave Spain:
Ø If all the migrants that left Spain were unemployed, the participation rate and the unemployment rate will not change.
Ø If half of the migrants that left Spain were unemployed and the other half were under 16, the unemployment rate will decrease.
Ø If all the migrants that left Spain were employed, the unemployment rate will decrease and the participation rate will not change.
Ø If half of the migrants that left Spain were employed and other half were unemployed, the unemployment rate will decrease and the participation rate will not change.
Q5
Consider a closed economy (this is with foreign sector) with GDP=1000 and private consumption C=500 in 2014. We know that in 2015 government spending increased by 100 units and that consumption was equal to 600 (C=600) while GDP remained constant. Then, it must be the case that:
Ø Investment increased by 100 units.
Ø Consumption increased by 200 units.
Ø Investment decreased by 200 units.
Ø Investment remained constant.
Q6
A worker decides to become a retiree and to not participate any further in the labor market. If nothing else changes then,
Ø The unemployment and participation rates increase.
Ø The unemployment rate increases and the participation rate decreases.
Ø The unemployment rate decreases and participation rate increases.
Ø The unemployment and participation rates decrease.
Q7
The government of Uglyland has good news for its citizens: the inflation rate, measured by the CPI, has dropped from 5 % in 2014 to 2 % in 2015. Therefore it must be the case that in 2015:
Ø The price of at least one good of the basket has increased.
Ø All prices of the basket have dropped.
Ø All prices of the basket have increased.
Ø Some prices of the basket have dropped.
Q8
John Guapo got fired from his job and he decided to return to school to finish his degree in economics. If nothing else changes then,
Ø The unemployment rate decreases.
Ø The participation rate increases.
Ø The participation rate decreases.
Ø None of the others.
Q9
The price tag on a tennis ball in 1975 read $0.10, and the price tag on a tennis ball in 2005 read $1.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3. In 1975 dollars, a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost
$0.27, so tennis balls were cheaper in 1975.
$3.66, so tennis balls were cheaper in 1975.
$3.66, so tennis balls were cheaper in 2005.
$0.27, so tennis balls were cheaper in 2005.
Q10
Discouraged workers that no longer look for a job are included in:
Ø The number of unemployed.
Ø Cyclical unemployment.
Ø The labor force.
Ø Out of the labor force.