eco121

Which of the following statements about GDP is correct? a. Nominal GDP values production at current prices, whereas real GDP values production at constant prices. b. Nominal GDP values production at constant prices, whereas real GDP values production at current prices. c. Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process. d. Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.

a. Nominal GDP values production at current prices, whereas real GDP values production at constant prices.

In 1931, President Herbert Hoover was paid a salary of $75,000. Government statistics show a consumer price index of 15.2 for 1931 and 207 for 2007. President Hoover's 1931 salary was equivalent to a 2007 salary of about a. $5507. b. $1,021,382. c. $1,140,000. d. $15,525,000.

b. $1,021,382.

A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute a. $150 to GDP. b. $250 to GDP. c. between $250 and $400 to GDP, depending on the profit earned by the bicycle company when it sold the bicycle. d. $400 to GDP.

b. $250 to GDP.

In the United States, if the price of imported oil rises so that the prices of gasoline and heating oil rise, then the a. GDP deflator rises much more than does the consumer price index. b. consumer price index rises much more than does the GDP deflator. c. GDP deflator and the consumer price index rise by about the same amount. d. consumer price index rises slightly more than does the GDP deflator.

b. consumer price index rises much more than does the GDP deflator.

Anna, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included a. in both German GDP and U.S. GDP. b. in German GDP, but it is not included in U.S. GDP. c. in U.S. GDP, but it is not included in German GDP. d. in neither German GDP nor U.S. GDP.

b. in German GDP, but it is not included in U.S. GDP.

Gross domestic product measures two things at once: a. the total spending of everyone in the economy and the total saving of everyone in the economy. b. the total income of everyone in the economy and the total expenditure on the economy's output of goods and services. c. the value of the economy's output of goods and services for domestic citizens and the value of the economy's output of goods and services for the rest of the world. d. the total income of households in the economy and the total profit of firms in the economy.

b. the total income of everyone in the economy and the total expenditure on the economy's output of goods and services.

Suppose a basket of goods and services has been selected to calculate the CPI and 2002 has been selected as the base year. In 2002, the basket's cost was $50; in 2004, the basket's cost was $52; and in 2006, the basket's cost was $54.60. The value of the CPI in 2004 was a. 96.2. b. 102.0. c. 104.0. d. 152.0.

c. 104.0

Which of the following is correct? a. The market value of rental housing services is included in GDP, but the market value of owner-occupied housing services is not. b. The market value of owner-occupied housing services is included in GDP, but the market value of rental housing services is not. c. The market values of both owner-occupied housing services and rental housing services are included in GDP. d. Neither the market value of owner-occupied housing services nor the market value of rental housing services is included in GDP.

c. The market values of both owner-occupied housing services and rental housing services are included in GDP.

People who are unemployed because of job search are best classified as a. cyclically unemployed. b. structurally unemployed. c. frictionally unemployed. d. discouraged workers.

c. frictionally unemployed.

1. Efficiency wages a. increase frictional unemployment by keeping wages above equilibrium. b. decrease frictional unemployment by keeping wages at equilibrium. c. increase structural unemployment by keeping wages above equilibrium. d. decrease structural unemployment by keeping wages at equilibrium.

c. increase structural unemployment by keeping wages above equilibrium.

13. Consumption consists of spending by households on goods and services, with the exception of a. purchase of intangible services. b. purchases of durable goods. c. purchases of new houses. d. spending on education.

c. purchases of new houses.

A COLA automatically raises the wage when a. GDP increases. b. taxes increase. c. the consumer price index increases. d. the producer price index increases.

c. the consumer price index increases.

The steps involved in calculating the consumer price index and the inflation rate, in order, are as follows: a. Choose a base year, fix the basket, find the prices, compute the basket's cost, compute the index, and compute the inflation rate. b. Choose a base year, fix the basket, find the prices, compute the inflation rate, compute the basket's cost, and compute the index. c. Fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index, and compute the inflation rate. d. Fix the basket, find the prices, compute the inflation rate, compute the basket's cost, and choose a base year and compute the index.

c.Fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index, and compute the inflation rate.

In 2004, based on concepts similar to those used to estimate U.S. employment figures, the Italian adult non-institutionalized population was 45.020 million, the labor force was 24.065 million, and the number of people employed was 22.105 million. According to these numbers, the Italian labor-force participation rate and unemployment rate were about a. 49.1% and 4.4%. b. 49.1% and 8.1%. c. 53.5% and 4.4%. d. 53.5% and 8.1%.

d. 53.5% and 8.1%.

Spots, Inc. produces ink and sells it to Write on Target, which makes pens. The ink produced by Spots, Inc. is called a. an inventory good. b. a transitory good. c. a preliminary good. d. an intermediate good.

d. an intermediate good.