Final review. Multiple Choice Identify the choice that best completes the statement or answers the question.

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1 Final review Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The problem of scarcity is confronted by: A. industrialized societies. B. pre-industrialized societies. C. societies governed by communist philosophies. D. all societies. E. rural, but not urban, societies. 2. Corner offices in high-rise office buildings usually cost more to rent than other offices. This fact best illustrates the economic principle of: A. marginal analysis. B. scarce resources. C. resources should be used as efficiently as possible to achieve society's goals. D. opportunity costs. E. one person s spending is another person s income 3. Which is not an example of a resource? A. Land B. Labor C. Capital D. Production E. Oil reserves 4. If the state government allocates additional spending on education, the opportunity cost is: A. zero. B. the dollar amount of the additional spending. C. only considered if additional taxes need to be raised to fund the spending. D. measured in terms of the alternative uses for that money. E. measured in terms of the number of additional students that graduate from high school. 5. Economists tend to believe that to change people's behavior you must: A. appeal to their concern for society. B. change their incentives. C. legislate the change. D. appeal to their religious values. E. encourage them to vote. 6. Alison is offered two jobs: one pays a salary of $45,000 per year and offers 3 weeks of vacation while the other offer provides 2 weeks of vacation and a salary of $54,000. What is the opportunity cost for Alison if she chooses the job offer of $54,000? A. $45,000 plus the 3 weeks of vacation B. $45,000 per year C. One week of vacation D. Two weeks of vacation E. $9000 and one week of vacation. 7. The current rate of unemployment of 5% is too high. This is an example of: A. a normative statement. B. a positive statement. C. the circular-flow model. D. comparative advantage. E. a testable hypothesis.

2 8. Which of the following is most likely a macroeconomic question rather than a microeconomic question? A. Are prescription drug prices rising faster than the overall rate of inflation? B. Are consumers buying more bottled water and less fruit juice? C. Are salaries for nurses rising or falling? D. Should a tax be levied on each ton of carbon a factory emits? E. Is the national unemployment rate rising or falling? 9. Which of the following would most likely be a microeconomic question? A. Should I go to business school or take a job? B. Have wages been rising more slowly than consumer prices have been rising? C. What government policies should be adopted to promote full employment and growth in the economy as a whole? D. What determines the level of output for the economy as whole? E. If taxes are lowered, with the national debt rise or fall? 10. Economic models are: A. created and used in order to duplicate reality. B. useless if they are simple. C. made generally of wood, plastic, and/or metal. D. often useful in forming economic policy. E. rarely testable using the scientific method. 11. Which of the following measures is typically used as an indicator of the conditions in the labor market? A. The unemployment rate B. The population growth rate C. The inflation rate D. the trade deficit E. The rate at which real gross domestic product is changing. 12. A pattern of expansion, then recession, then expansion again is a(n): A. annual trend. B. secular trend. C. business cycle. D. consumer cycle. E. productivity cycle. 13. An increase in the nation's overall price level is known as. A. long-term economic growth B. unemployment C. inflation D. deflation E. the national debt. 14. Inflation is a situation where: A. the average price level falls. B. the national debt rises. C. the average price level becomes negative. D. the real price level falls. E. the average price level increases. 15. Equity means that: A. everyone gets an equal share of the goods and services produced. B. everyone gets his or her fair share of the goods and services produced. C. more of some goods and services can be produced only if the production of others is reduced. D. more of all goods and services may be produced. E. individuals can consume a good only if he or she is able to afford the market price.

3 16. An economy has achieved if it pass up any opportunities to make some people better off without making others worse off. A. efficiency; does not B. equity; does C. efficiency; does D. equity; does not E. specialization; does not Figure 3-1: Guns and Butter 17. Based on the Guns and Butter Figure 3-1, if the economy were producing 8 units of guns and 12 units of butter per period: A. this is a possible choice, but would involve unemployment and/or inefficiency. B. the notion of increasing opportunity cost is invalidated. C. the economy is still efficient but has made a decision not to buy as much as it could. D. something must be done to reduce the amount of employment. E. the economy would be able to increase gun production, but only if butter production was decreased. 18. All points outside the production possibility curve represent: A. efficient production points. B. inefficient production points. C. nonfeasible production points. D. economic growth. E. a surplus of economic resources. 19. The production possibility curve will shift outward for which of the following reasons? A. a decrease in the labor force B. an upgrade of capital to the best available technology that is currently available C. better technology that improves worker productivity D. a decrease in the unemployment rate E. war, famine or pestilence. Quantity of Hours of Study Time Quantity of Hours of Leisure Time Table 3-3: Trade-off of Study Time and Leisure time

4 20. Use Table 3-3. A student sleeps 8 hours per day and divides the remaining time between study time and leisure time. The table shows the combinations of study and leisure time that can be produced in the 16 waking hours of each day. If a student decides to consume one additional hour of leisure time, how many hours of study time must be given up? A. 4 B..25 C. 1 D. 16 E Use Table 3-3. A student sleeps 8 hours per day and divides the remaining time between study time and leisure time. The table shows the combinations of study and leisure time that can be produced in the 16 waking hours of each day. Suppose the student completes a speed-reading course that allows him to do the same amount of studying in half as many hours. Which of the following is now true of his opportunity costs? A. The opportunity cost of both leisure and of studying has increased. B. The opportunity cost of studying has increased. C. The opportunity cost of leisure has decreased. D. There is no change in the opportunity costs. E. The opportunity cost of leisure has increased. Alternatives A B C D E F Consumer goods per period Capital goods per period Table 3-4: Production Possibilities Schedule 22. Use Table 3-4. If the economy produces 4 units of consumer goods per period, it also can produce at most units of capital goods per period. A. 30 B. 28 C. 10 D. 18 E Use Table 3-4. If the economy produces 24 units of capital goods per period, it also can produce at most units of consumer goods per period. A. 5 B. 4 C. 3 D. 2 E. 1

5 Figure 3-9: Strawberries and Submarines II 24. Use the Strawberries and Submarines II Figure 3-9. Point F: A. it is unattainable, all other things unchanged. B. is attainable if the quantity and/or quality of factors decreases. C. is attainable if the economy is able to reach full employment. D. is feasible, but not efficient. E. it is unattainable until the production possibility curve shifts inward. Figure 3-11: Production Possibilities and Circular-Flow Diagram 25. Use the Production Possibilities and Circular-Flow Diagram Figure Assume the figures represent the same economy. Suppose that in the circular-flow diagram there is a significant decrease in the amount of labor that is flowing to the firms that produce coconuts. If all other variables remain unchanged, then this adjustment in the economy would be best represented in the production possibilities figure by a move from point A toward: A. point A (no movement would occur). B. point B (an increase in fish production). C. point C (a decrease in coconut production). D. point D (an outward shift of the entire curve). E. point B (an increase in coconut production).

6 26. Alexander has a straight line or linear production possibility curve when he produces soybeans and corn. If he uses all of his resources for soybean production, he can produce 200 bushels of soybeans; if he uses all of his resources for corn production, he can produce 400 bushels of corn. Which of the following combinations of corn and soybeans are not possible for him to produce? A. 200 bushels of soybeans and zero bushels of corn B. 600 bushels of corn and 200 bushels of soybeans C. 400 bushels of corn and zero bushels of soybeans D. 100 bushels of soybeans and 200 bushels of corn E. 50 bushels of soybeans and 300 bushels of corn Largetown has a linear production possibility curve and produces socks and shirts. The table below shows the number of units of labor necessary to produce one sock or one shirt. Number of hours of labor to produce one shirt Number of hours of labor to produce one sock 4 2 Scenario 3-1: Linear PPC 27. Use Scenario 3-1. If Largetown has 80 hours of labor, what is the maximum number of socks it can produce? A. 40 socks B. 20 socks C. 2 socks D. 4 socks E. 80 socks 28. Use Scenario 3-1. If Largetown decides to devote half of its 80 hours of labor time toward the production of socks and half of the time to the production of shirts, what is the maximum number of socks and shirts it can produce? A. 10 shirts and 20 socks B. 20 shirts and 10 socks C. 30 socks and 30 shirts D. 30 socks and zero shirts E. 20 shirts and 40 socks Combination Good Z Good X A 0 75 B 5 70 C D E F 25 0 Table 3-5: Production of Good Z and Good X in Urbanville 29. Use Table 3-5. If Urbanville is currently producing at Combination F, what is the opportunity cost of a move to Combination E? A. 5Z B. 20Z C. 25X D. 0X E. 25Z 30. At the point at which it is currently producing, Britain must give up the production of 75 hats to produce 25 additional sweaters. The opportunity cost of producing 4 sweaters is hats. A. 4 B. 3 C. 71 D. 79 E. 12

7 31. On a production possibility curve, opportunity cost is: A. the decrease in the output of one good when the output of the other good is increased. B. the rate at which people are willing to exchange goods as determined by demand and supply. C. the dollar cost of the good given up to get another good. D. independent of the slope of the curve. E. the cost of moving from an interior point to the production possibility curve. 32. Beth and Alice decide to trade services. Beth promises to do Alice's taxes, and in exchange, Alice will create several spreadsheets for Beth's household budget. This mutual agreement of trade will most likely: A. be beneficial to both individuals. B. hurt both individuals. C. help Beth, but hurt Alice. D. help Alice, but hurt Beth. E. neither help nor hurt these individuals as they are not exchanging money for these services. 33. If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United States will: A. export both sweaters and machinery to Britain. B. import both sweaters and machinery from Britain. C. export sweaters to Britain and import machinery from Britain. D. import sweaters from Britain and export machinery to Britain. E. neither import, nor export goods with Britain. Sweden and Finland produce only two goods, herring and cell phones, and this table shows the maximum amount that each nation can produce of the two goods. Sweden Finland Herring 100,000 50,000 Cell phones 10,000 10,000 Table 4-3: Comparative Advantage I 34. Use Table 4-3. Sweden has an absolute advantage in producing: A. cell phones only. B. a combination of cell phones and herring. C. both cell phones and herring. D. neither cell phones nor herring. E. herring only. 35. Use Table 4-3. The opportunity cost of producing 1 unit of cell phones for Sweden is: A. 10 units of herring. B. 1/5 unit of herring. C. 5 units of herring. D. 1/10 unit of herring. E. 10 units of cell phones. 36. Use Table 4-3. The opportunity cost of producing 1 unit of cell phones for Finland is: A. 10 units of herring. B. 1/5 unit of herring. C. 5 units of herring. D. 1/10 unit of herring. E. 5 units of cell phones.

8 Figure 4-2: Comparative Advantage Eastland and Westland produce only two goods, peaches and oranges, and this figure shows each nation's production possibility curve for the two goods. 37. Use the Comparative Advantage Figure 4-2. Westland has a comparative advantage in producing: A. oranges only. B. peaches only. C. both oranges and peaches. D. neither oranges nor peaches. E. a combination of oranges and peaches. 38. Dr. Colgate is a dentist who employs an assistant, Ms. Crest. If Dr. Colgate worked all day at the front desk, she could answer 40 phone calls. If she worked all day with patients, she could clean the teeth of 40 patients. If Ms. Crest worked all day at the front desk, she could answer 60 phone calls. If she worked all day with patients, she could clean the teeth of 20 patients. Which of the following is true? A. Dr. Colgate has an absolute advantage in answering phones. B. Ms. Crest has a comparative advantage in answering phones. C. Ms. Crest has an absolute advantage in cleaning patients' teeth. D. Dr. Colgate has a comparative advantage in answering phones. E. Dr. Colgate has an absolute advantage in answering phones and an absolute advantage in cleaning patients teeth. 39. Mark and Julie are going to sell brownies and cookies for their third annual bake sale fund- raiser. In one day, Mark can make 40 brownies or 20 cookies and Julie can make 15 brownies or 15 cookies. Based on this information, has the comparative advantage in making brownies and has the comparative advantage in making cookies. A. Mark; Julie B. Mark; Mark C. Julie; Mark D. Julie; Julie E. neither person; Julie 40. In a single growing season, the country of Pastoral can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, the country of Bucolic can raise 50 tons of beef or produce 750 boxes of tulips. Without trade, the price of beef: A. is higher in Pastoral than in Bucolic. B. is lower in Pastoral than in Bucolic. C. is the same in Pastoral as in Bucolic. D. cannot be determined in either country. E. will be determined through trade negotiations between countries.

9 Figure 4-3: Production Possibility Curve for Jackson and Tahoe 41. Use Production Possibility Curve for Jackson and Tahoe Figure 4-3. The figure shows the production possibility curves for two countries, Jackson and Tahoe. Without trade, Jackson produces and consumes 30 units of cattle and 80 units of wheat, while Tahoe produces and consumes 80 units of cattle and 60 units of wheat. Assume each nation specializes completely, based on comparative advantage and the price of 1 unit of cattle equals 2 units of wheat. If Jackson exports 120 units of wheat to Tahoe, Tahoe will export units of cattle to Jackson. A. 120 B. 60 C. 240 D. 200 E Taken collectively, people in nations that engage in international trade are not likely to: A. consume more than they were able to consume in the absence of trade. B. raise their standards of living. C. gain from lower opportunity costs of production. D. be made worse off. E. achieve faster rates of economic growth. 43. If a country removes a tariff on imported shoes, we expect the domestic price of shoes to and the quantity of shoes consumed in the domestic market to. A. fall; fall B. fall; rise C. rise; fall D. rise; rise E. fall; be unaffected 44. An example of a quota is a: A. limit on the total number of Honda automobiles imported from Japan. B. regulation specifying that each imported Honda automobile must meet certain emission exhaust guidelines. C. tax of 10% of the value of each Honda automobile imported from Japan. D. subsidy from the Japanese government of $500 for each Honda automobile imported into the United States. E. a subsidy from the United States government of $500 for each Honda automobile imported into the United States.

10 Figure 4-8: Market for Melons in Meloncholy II 45. Use the Market for Melons in Meloncholy II Figure 4-8. In the graph, the demand curve illustrates the domestic demand for melons and the supply curve illustrates the domestic supply of melons. Suppose the country opens to trade and finds the world price to be equal to $10. This means that Meloncholy will: A. import 42 units of melons. B. export 42 units of melons. C. not find it beneficial to trade. D. import 30 units of melons. E. export 8 units of melons. 46. Use the Market for Melons in Meloncholy II Figure 4-8. In the graph, the demand curve illustrates the domestic demand for melons and the supply curve illustrates the domestic supply of melons. Suppose producers lobby effectively for the imposition of a tariff that raises the world price to $15. As a result, tariff revenue accruing to government will equal: A. $150. B. $200. C. $50. D. $5. E. $ Raclette is a popular wintertime dish in Switzerland. It is essentially melted Raclette cheese over boiled new potatoes. If the price of this cheese decreased, we would expect: A. an increase in demand for the cheese. B. an increase in demand for new potatoes. C. there to be no effect on the demand for either the cheese or the new potatoes. D. an increase in demand both for the cheese and for the new potatoes. E. a decrease in the demand for new potatoes 48. A good is normal if: A. when income increases, the demand remains unchanged. B. when income increases, the demand decreases. C. when income increases, the demand increases. D. income and the demand are unrelated. E. when income decreases, the demand increases. 49. A decrease in the price of a good will result in: A. an increase in demand. B. an increase in supply. C. an increase in the quantity demanded. D. more being supplied. E. a rightward shift of the demand curve.

11 50. An inverse relationship between price and quantity is represented by: A. the demand curve. B. the supply curve. C. the production possibility frontier. D. equilibrium. E. the marginal cost curve. 51. When the price of gas goes down and the demand for tires goes up, this means tires and gas are: A. substitutes. B. complements. C. both expensive. D. both inexpensive. E. both inferior goods. 52. A market is composed of three individuals, Nicholas, Benjamin, and Alexander. Their individual demand schedules are given below and are as follows: Nicholas Benjamin Alexander Price Quantity Demanded Price Quantity Demanded Price Quantity Demanded Based on this information, which of the following market demand schedules accurately portrays this market? A. Price Quantity Demanded B. Price Quantity Demanded C. Price Quantity Demanded D. Price Quantity Demanded E. Price Quantity Demanded

12 Figure 6-1: Supply of Coconuts 53. Use the Supply of Coconuts Figure 6-1. If there is an expectation on the part of coconut suppliers that the price of coconuts will be significantly higher in the very near future, then the movement in the model to reflect today's market behavior would be: A. A to B. B. B to A. C. A to C. D. B to E. E. E to B. Price Quantity Demanded Quantity Supplied Table 6-4: Competitive Market for Good Z 54. Use Table 6-4. The equilibrium price and quantity in this market are, respectively: A. $5 and 40 units. B. $20 and 60 units. C. $10 and 30 units. D. $15 and 20 units. E. $10 and 60 units. 55. A shift of a demand curve to the right, all other things unchanged, will: A. increase equilibrium price and quantity. B. decrease equilibrium price and quantity. C. decrease equilibrium quantity and increase equilibrium price. D. increase equilibrium quantity and decrease equilibrium price. E. increase equilibrium price while leaving equilibrium quantity unchanged.

13 Figure 7-1: Demand and Supply of Gasoline 56. Use the Demand and Supply of Gasoline Figure 7-1. What might cause the supply curve to shift from S 2 back to the initial supply curve S 1? A. The Organization of Petroleum Exporting Countries (OPEC. restricts the production of crude oil. B. The government decreases the per-gallon tax on gasoline production. C. Americans want to buy more gasoline. D. Technology in the refinement of gasoline greatly improves. E. The price of crude oil decreases. 57. The market price of airline flights increased recently. Some economists suggest that the price increased because there has been an increase in the number of business travelers. If the economists are correct, it must be the case that: A. supply increased. B. supply decreased. C. supply increased while demand also decreased. D. demand decreased. E. demand increased. 58. Consider the market for corn. What happens if there is an increased demand for corn tortillas and, at the same time, a new corn seed becomes available that increased the per-acre yield dramatically? A. Price and quantity both decrease. B. The change in price is uncertain, quantity decreases. C. The change in price is uncertain, quantity increases. D. Price increases, the change in quantity is uncertain. E. Price and quantity both increase. 59. The market for gasoline is in equilibrium. You have heard that the price of crude oil is falling because of new oil discoveries. You are also aware that the number of car and truck drivers is steadily rising. Knowing this, you predict that the price of gasoline will and the quantity of gasoline bought and sold will. A. rise; rise if the demand increase is larger than the supply increase B. rise if the demand decrease is larger than the supply decrease; fall C. fall if the supply increase is larger than the demand increase; rise D. rise; rise E. rise if the demand increase is larger than the supply increase; fall

14 60. Suppose the input costs associated with manufacturing hair-replacement medication decreases over time. This would lead to: A. an increase in the supply of such treatments, lower prices, and an increase in the equilibrium quantity. B. a decrease in quantity supplied and lower prices. C. an increase in demand and higher prices. D. a decrease in the supply of such treatments, higher prices, and a decrease in the equilibrium quantity. E. a decrease in demand and lower prices. 61. An increase in price and an ambiguous change in quantity is most likely caused by: A. a shift to the left in demand and no shift in supply. B. a shift to the left in supply and no shift in demand. C. a shift to the right in supply and a shift to the left in demand. D. a shift to the right in supply and a shift to the right in demand. E. a shift to the left in supply and a shift to the right in demand. 62. A price control is: A. when a firm controls the price of the good it produces. B. a government policy used to keep prices artificially low, but never used to keep prices artificially high. C. an upper limit on the quantity of some good that can be bought or sold. D. a tax placed on the sale of a good which controls the market price. E. a legal restriction on how high or low a price in a market may go. Rent (per apartment per month) Quantity Demanded (millions of apartments) Quantity Supplied (millions of apartments) $1, , , , , Scenario 8-1: Market for Apartments

15 63. Use Scenario 8-1. This figure represents a competitive market for apartments. If a government price ceiling at $900 is now imposed on this market (in the name of fairness), then an inefficiency will result in the form of a: A. surplus of 0.6 million apartments. B. shortage of 0.6 million apartments. C. surplus of 0.2 million apartments. D. shortage of 0.2 million apartments. E. shortage of 2.1 million apartments. 64. A maximum price set below the equilibrium price is a: A. demand price. B. supply price. C. price floor. D. price ceiling. E. quota limit. 65. Price ceilings that lead to shortages will impose costs on society because they: A. will eliminate long waiting lines. B. may result in black market prices, which are lower than the market-determined price would be. C. lead to a smaller quantity offered on the market. D. help businesses instead of consumers. E. eliminate dead weight losses. Figure 8-2: Price Control 66. Use the Price Control Figure 8-2. In the graph, an effective price ceiling would be the price indicated at and a would exist as the difference between. A. point b; surplus; points f and e B. point b; shortage; points f and e C. point d; shortage; points i and h D. point d; surplus; points e and h E. point d; shortage; points g and h

16 Figure 8-5: Rent Controls 67. Use the Rent Controls Figure 8-5. Without rent controls, the equilibrium quantity is. A. Q 4 B. Q 1 C. Q 0 D. Q 3 E. Q 2 Figure 8-6: Supply and Demand 68. Use the Supply and Demand Figure 8-6. In the market shown in the figure, a price ceiling of P 1 causes: A. a shortage equal to the distance AB. B. a surplus equal to the distance AB. C. a shortage equal to the distance DE. D. no change to the market. E. a surplus equal to the distance BC.

17 Figure 8-8: Shrimp Market 69. Use Shrimp Market Figure 8-8. If the government wants to limit shrimp sales to 500 pounds, it could impose a: A. price floor of $15. B. price floor of $10. C. price ceiling of $10. D. price floor of $15 or a price ceiling of $10. E. impose a price ceiling of $ The likely result of a price floor is: A. a transfer of wealth from producers to consumers. B. a shortage of the good at a price below the market equilibrium price. C. a surplus of the good at a price below the market equilibrium price. D. a shortage of the good at a price above the market equilibrium price. E. a surplus of the good at a price above the market equilibrium price. Figure 8-16: Market I 71. Use the Market I Figure A surplus of the good would result if the price was equal to: A. $3. B. $9. C. $6. D. $0. E. $15.

18 72. Use the Market I Figure If a price floor of $15 was imposed on this market, government would need to buy units of the good, and spend a total amount of on its purchase. A. 5; $75 B. 10; $150 C. 9; $135 D. 9; $81 E. 5; $15 Price (unit) Quantity Demanded (units) Quantity Supplied (units) $1.10 9,000 3, ,000 5, ,000 7, ,000 9, ,000 1,100 Table 9-1: Market for Fried Twinkies 73. Use Table 9-1. Using the table, if the government imposes a quota on the fried Twinkie market of 5,000, the quota rent (per fried Twinkie. collected by the fried Twinkie producers will be: A. $1.20. B. $0.30. C. $1.50. D. $1.00. E. $0.10. Figure 10-1: Circular Flow Model 74. Use the Circular Flow Model Figure If the circular flow model is in equilibrium (the sum of money flows into each box is equal to the sum of the money flows out of that box), which of the following is likely to happen if there is an increase in consumer spending? A. a reduction in investment spending equal to the increase in consumer spending B. a decrease in the nominal GDP C. an increase in the unemployment rate D. a decrease in the inflation rate E. an increase in the nominal GDP

19 75. Use the Circular Flow Model Figure What is disposable income in this economy? A. $0 B. $100 C. $400 D. $500 E. $ The market(s) that channel excess savings of households into investment spending by firms is(are) known as: A. the stock market. B. the financial markets. C. the international market. D. the bond market. E. the foreign exchange market. 77. A nation's exports minus its imports: A. equals its private investment. B. is net exports. C. is always equal to a positive number. D. is equal to net transfer payments. E. can be equal to a positive number or zero, but never a negative number. 78. An intermediate good would be: A. a new boat purchased by a professor to be used on vacation. B. lumber used in building a house. C. payments to military personnel. D. a professor's salary. E. the natural gas used to heat the professor s home. Personal consumption expenditures $500 Gross private domestic investment 200 Net exports -5 State and local government purchases of goods 200 and services Federal government purchases of goods and 100 services Imports 15 Table 10-4: Measuring GDP (billions of dollars) 79. Use Table GDP is: A. $500 billion. B. $850 billion. C. $995 billion. D. $1,000 billion. E. $980 billion. 80. A laptop computer purchased by an accounting firm is considered to be: A. consumption spending. B. government spending. C. private saving. D. a pre-tax dividend. E. investment spending. 81. Suppose that nominal GDP is $1000 in 2006 and nominal GDP is $1500 in If the overall price level between 2006 and 2007, we could say that real GDP. A. increased by more than 50%; stayed constant. B. increased by less than 50%; decreased. C. increased by more than 50%; increased. D. increased by 50%; increased. E. increased by 50%; stayed constant.

20 82. Real GDP is the same as A. current dollar GDP. B. interest rate adjusted GDP. C. nominal GDP. D. value added GDP. E. inflation adjusted GDP. 83. Jim has a part-time job and would prefer to have a full-time job, but has been unable to find full-time work. Jim's labor market status is classified as: A. a discouraged worker. B. an underemployed worker. C. an unemployed worker. D. out of the labor force. E. semi-retired worker. Scenario 12-2: Employment Rate In a group of ten people, there are three retirees, two part time workers, two discouraged workers, one unemployed worker, and two full time workers. 84. Use Scenario For this group, the labor force participation rate is: A. 30%. B. 60%. C. 70%. D. 80%. E. 50%. 85. Last week Stephanie quit her job as a copy-writer at an advertising agency. She has spent the past few days browsing the help-wanted ads, but hasn't found anything that matches her skills. Stephanie is best classified as: A. structurally unemployed. B. frictionally unemployed. C. a discouraged worker. D. out of the labor force. E. cyclically unemployed. Figure 13-2: Effect of Minimum Wage

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