Weekly Review Quiz as of 2010-08-12 Economics: Macro

Vital Signs 08/11/2010 http://online.wsj.com/article/SB20001424052748704164904575421722099753604.html

1. Productivity growth (where productivity is defined as output per hour) fell in the second quarter of 2010, as compared to both the first quarter of 2010 and last year. Why? a) A slowdown in productivity means that workers are not working as hard as they previously were. * b) Businesses had been seeing gains in productivity by laying off workers and having existing workers work more efficiently; this is no longer as effective in keeping productivity up. c) Workers are being hired by firms; the hiring of new, relatively inexperienced workers are causing productivity to fall d) Companies are cutting back on production due to the fragile economy, while still keeping workers on payrolls e) None of the above.

Fed Sees Recovery Slowing by Sudeep Reddy 08/11/2010 http://online.wsj.com/article/SB10001424052748704164904575421481861512518.html

2. The FOMC announced that the pace of the U.S. economic recovery has slowed; it responded by ______U.S. Treasury bonds, which ______the prices and ______the yields of the associated bonds. a) buying; raised; raised b) selling; raised, lowered c) buying; lowered; raised d) selling; lowered; raised * e) buying; raised; lowered

German Exports Rise Again by Brian Blackstone 08/10/2010 http://online.wsj.com/article/SB10001424052748704388504575418632462454288.html

3. Germany's economy is estimated to have grown by at least 5% in the second quarter; this growth can be attributed to all of the following reasons except a) a depreciating Euro, relative to the U.S. dollar and Japanese yen, helping exports surge b) low domestic interest rates, which made it cheap for German businesses to borrow * c) rising consumption, as German consumers have begun to spend more freely d) warmer temperatures, which allowed construction projects to resume after a cold winter e) none of the above. U.S. Job Market Loses Steam by Sudeep Reddy 08/07/2010 http://online.wsj.com/article/SB10001424052748703309704575412990024153682.html

4. The Bureau of Labor Statistics reported that the U.S. unemployment rate remained at 9.5% in July, unchanged from the previous month. Why then was this news so unwelcome to policymakers, households and businesses? (the Dow Jones Industrial Average initially fell 160 points after the report was released) a) The economy lost 131,000 jobs in June as temporary Census workers left payrolls b) The unchanged unemployment rate masked the fact that many discouraged workers gave up looking for jobs and so left the ranks of the civilian labor force. c) Temporary unemployment, a leading indicator for job hiring, fell in July d) Jobs were lost in both state and local governments due to new budget years in which cuts were needed to help pare budget deficits * e) All of the above

Wider Trade Gap Signals Weak Growth by Sudeep Reddy And Emmeline Zhao 08/12/2010 http://online.wsj.com/article/SB10001424052748704901104575423051863102666.html

5. Why is the widening U.S. trade deficit in June of such a concern to policymakers? a) Rising imports, due to strong consumer spending, shows that U.S. exports are no longer competitive * b) A larger trade deficit means a lower level of GDP, reducing U.S. economic growth c) A larger trade deficit leads to a depreciation of the U.S. dollar, which hurts U.S. consumers d) The larger trade deficit was fueled by a substantial drop in U.S. exports e) All of the above