ECON 110 - Exam 2 - Sellak

Suppose a country has government expenditures of $3,500, taxes of $2,200, consumption of $9,000, exports of $2,500, imports of $2,700, transfer payments of $750, and investment of $3,000. GDP equals

$15,300

Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006. The consumer price index was 160 in 1996 and 266 in 2006. Janelle's 2006 salary in 1996 dollars is

$39,097.74

Henri earned a salary of $50,000 in 2001 and $60,000 in 2012. The consumer price index was 177 in 2001 and 225 in 2012. Henri's 2001 salary in 2012 dollars is

$63,559.32

If the nominal interest rate is 6 percent and the rate of inflation is 10 percent, then the real interest rate is

-4 percent

In one day Portal Computer Company made 400 laptops with 1200 hours of labor. What was its productivity?

1/3 laptop per hour

Allied Business Consultants employs five researchers that each work 8 hour days. In one day the researchers prepared 10 reports for its 2 largest clients. What was Allied Business Consultants' productivity?

1/4 report per hour

Wilson is offered a job in Kansas City that pays $50,000 and a job in Dallas that pays $60,000. Which pair of CPIs would ensure that the two salaries have the same purchasing power?

125 in Kansas City and 150 in Dallas

Hit-It produces 320 baseball bats per day using 2 workers who each work 8 hours per day. What is Hit-It's productivity?

20 baseball bats per hour

A good is produced by a firm in 2009, added to the firm's inventory in 2010, and sold to a household in 2010. As a result, on net,

2009 GDP increased and 2010 GDP did not change.

If the nominal interest rate is 8 percent and the rate of inflation is 3 percent, then the real interest rate is

4 percent

In the simple circular flow diagram, with households and firms, GDP can be computed...

As the income received by households, in the form of wages, rent and profit.

Sam, and American citizen, prepares meals for his family at home. Ellen, a Canadian citizen, commutes to the US to help prepare meals at a restaurant in Idaho. Whose value of services preparing meals is included in US GDP?

Ellen's but not Sam's

One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells it to a consumer for $2.00. Taking these four transactions into account, what is the effect on GDP?

GDP increases by $5.00.

Beth, an American citizen, travels to Italy on vacation and buys an espresso machine to bring home. Her purchase increases

Italy's GDP.

Jennifer lives in a home that was newly constructed in 2011 for which she paid $240,000. In 2014 she sold the house for $260,000. Which of the following statements is correct regarding the sale of the house?

The 2014 sale affected neither 2014 GDP nor 2011 GDP.

Which of the following items is counted as part of government purchases?

The city of Athens, Ohio pays $10,000 to a tree-trimming firm to trim trees along city boulevards.

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

The value of the goods and services produced by the restaurant is included in French GDP, but not in U.S. GDP.

The natural unemployment rate includes

both frictional and structural unemployment.

The goal of the consumer price index is to measure changes in the

cost of living

The deviation of unemployment from its natural rate is called

cyclical unemployment.

Dilbert's Incorporated produced 6,000,000 units of software in 2010. At the start of 2011 the pointy-haired boss raised employment from 10,000 total annual hours to 14,000 annual hours and production was 7,000,000 units. These number indicate that productivity

fell by about 16.7%.

Which of the following is a determinant of productivity?

human capital per worker, physical capital per worker, natural resources per worker

Real Foods produced 400,000 cans of diced tomatoes last year and 460,000 cans of diced tomatoes this year. It employed the same number of labor hours each year. Real Foods' productivity

increased 15%.

Which of the following is an explanation for the existence of frictional unemployment?

job search

Cyclical unemployment is caused by

neither frictional nor structural unemployment

Real GDP will increase...

only when output increases

Over the last ten years productivity grew faster in Mapoli than in Romeria while the population and total hours worked remained the same in both countries. It follows that

real GDP per person grew faster in Mapoli than in Romeria, real GDP per person must be higher in Mapoli than in Romeria, and the standard of living must be higher in Mapoli than in Romeria.

If nominal GDP doubles and the GDP deflator doubles, then real GDP...

remains constant

A decrease in the price of domestically produced industrial robots will be reflected in

the GDP deflator but not in the consumer price index.

If the price of Italian shoes imported into the United States increases, then

the consumer price index will increase, but the GDP deflator will not increase.

The key determinant of the standard of living in a country is

the total amount of goods and services produced within the country.