1 Which is NOT an example of why a farmer could produce much more in a day in 2017 than Econ 101 Midterm II Practice Problems Increase in research and knowledge about optimal growing seasons her she could 100 years ago a b Tractors that make harvesting easier c More efficient irrigation systems d More available hours to work 2 Which of the following is an example of structural unemployment Juan is laid off of his job at the auto plant after his job becomes automated a Chiron is laid off after his company cannot afford to employ him during a recession b c Kevin leaves his job to look for a better paying job d None of these are examples of structural unemployment 3 Country A has a population of 250 million All of the citizens are over the age of 18 100 million citizens go to college and choose not to work 20 million citizens are looking for jobs but they cannot find one The rest are employed Which of the following statements is true a The Labor Force participation rate is lower than the unemployment rate b The Labor Force participation rate and the unemployment rate are equal c The Employment rate is 42 d None of the above are true 4 Which of the following would NOT result in an increase in the aggregate price level a OPEC decides to reduce its output raising oil prices b The labor force collectively ages resulting in worker productivity declining c A tax reform is implemented drastically decreasing the amount of taxes business d The Federal Reserve begins contractionary monetary policy and reduces the and households pay quantity of money in circulation 5 Why is the Aggregate Demand curve downward sloping a As prices rise consumers buy other domestic goods b Government spending and price level are inversely related c An increase in price level reduces consumers purchasing power d As the price level increases interest rates fall and investment spending decreases e None of the above 6 Which of the following doesn t have an effect on LRAS a Price level b Labor Supply c Capital d Technology 7 Which of the following would not be executed by the Federal Reserve Increasing the discount rate a b Buys and sells U S government securities in the open market c Setting the reserve requirements d Decreasing corporate tax rates 8 Which of the following is an example of the discretionary fiscal policy a An interest rate increase is implemented to control inflation b The operation of the progressive federal income tax c A tax increase policy adopted to control inflation d The existence of the welfare state 9 The United States GDP has been increasing at an unsustainable rate What are examples of policies the United States Congress should pursue a Raise the interest rate b Decrease the reserve rate c Raise the tax rate for all income brackets d Distribute a stimulus check to the head of each household 10 Which of the following actions is NOT conducted by the Federal Reserve regulate banking system a b control the value of money c control the supply of money d make loans to individuals 11 If the bank reserve ratio is 20 and banks do not hold excess reserves when the Fed sells 30 million of bonds to the public bank reserves a decrease by 30 million and the money supply eventually decreases by 120 b increase by 30 million and the money supply eventually increases by 150 c decrease by 30 million and the money supply eventually decreases by 150 d increase by 30 million and the money supply eventually increases by 120 12 Wells Fargo decides to implement new technology that will allow its customers to integrate their credit card information into their eyes Customers will be able to checkout via retina scanners at every major retailer Wells Fargo believes this will greatly increase the world s amount of credit card users The introduction of this new technology will 13 Suppose that Hershey s a chocolate company purchases raw cocoa beans for 0 10 tbsp At the Hershey s factory the cocoa beans are roasted increasing their value to 0 20 tbsp and ground into cocoa powder valued at 0 50 tbsp This powder is then manufactured into a chocolate bar sold for 1 00 candy bar How much value is added when 3 tbsp of roasted cocoa beans are ground into cocoa powder Increase the money supply a b Decrease the money supply c Increase the money demand d Decrease the money demand a 0 30 b 1 20 c 0 90 d 1 50 e 0 40 Use the information below to answer the following two questions Kardiac Arrest a protein exclusive economy only produces eggs and chicken wings The typical consumer buys 40 cartons of eggs and 85 chicken wings each year The base year is 2016 The table below gives the quantities produced and prices for 2016 and 2017 Quantities 2016 2017 200 275 Chicken wings 300 320 2016 2017 3 10 3 75 Eggs by carton Price Eggs by carton Chicken wings 1 1 45 14 Which of the following statements is false a The consumer price index CPI for 2016 is equal to 100 b The CPI inflation rate from 2016 to 2017 is equal to 20 74 c The GDP Deflator for 2016 is equal to 100 d The consumer price index CPI for 2017 is equal to 130 74 15 What is the GDP Deflator for Kardiac Arrest in 2017 a 120 55 b 100 00 c 127 53 d 130 65 Year Real GDP Per Capita in 2015 2016 billions 215 220 16 Alfonso Medici of Italy claims he will double the real GDP of Italy in just twenty five years Looking at the GDP growth table above and assuming that the growth rate he has established in his first year in office will remain constant decide whether he is right or wrong a Alfonso is wrong it will double in about 30 years b Alfonso is right it will double in about 20 years c Alfonso is wrong it won t double in about 40 years d Alfonso is right it will double in a bit over 2 years e Not enough information to answer the question 17 Which of the following statements is true a Frictional unemployment can be reduced with job search websites such as Indeed b The government can reduce cyclical unemployment by offering job training courses c Structural unemployment can only be reduced if people find a way to change their skill set to fit with changing industries d To reduce cyclical unemployment the government must enact policies to reduce consumer spending 18 In a podcast a journalist claims that the Great Recession was nowhere near the scope of the Great Depression because at the worst of the latter over 25 of men women and children were out of work more than double the height of the Great Recession s unemployment rate Why is this a misleading positive statement a The U S population