econ exam 3
if the nominal interest rate is 6 percent and the rate of inflation is 2 percent, then the real interest rate is...
4%
last year real GDP per person is the imaginary nation of Olympus was 4,500. the year before it was 4,250. by about what percentage did Olympian real GDP per person grow during the period?
5.9 percent
the price index was 120 in 2006 and 127.2 in 2007. what was the inflation rate?
6.0 percent
in a closed economy, what does (Y-T-C) represent?
private saving
the one variable that stands out as the most significant explanation of large variations in living standards around the world is?
productivity
a nations standard of living is best measured by its..
real GDP per person(capita)
as an alternative to selling shares of stock as a means of raising funds, a large company could, instead,
sell bonds
what calculates CPI?
the Bureau of Labor Statistics
a COLA automatically raises the wage when..
the consumer price index increases
Gross domestic product is defined as?
the market value of all final goods and services supplied within a country in a given period of time
in the economy of Wrexington in 2008, nominal GDP deflator was 50. what was Wrexington's real GDP in 2008?
$40 Billion
which of the following is not included in GDP?
-a can of bug spray -the services of an exterminator -the honey produced and sold by a beekeeper -all the above are included in GDP
which of the following is not included in GDP?
-carrots grown in your garden and eaten by your fam -carrots purchased at a farmers market and eaten by fam -carrots purchased at a grocery store and eaten by fam -more than one of the above is not included in GDP
what plays a role in determining productivity?
-physical capital -natural resources -technological knowledge
widely acknowledged problems with the CPI as a measure of the cost of living?
-substitution bias -introduction of new goods -unmeasured quality change
suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 2,500 consumption equals 7,500 ad government purchases equal 2,000. what are priv. saving, pub sav, and national saving?
1,000, 500, 1,500, respectively
in one day Alpha Cabinet company made 40 cabinets with 320 hours of labor. what was the productivity?
1/8 cabinet per hour
in the base year, the GDP deflator is always
100
if the consumer price index was 80 in 2004, 100 in 2005, and 110 in 2008, then the base year must be?
2005
if the nominal interest rate is 5 percent and the rate of inflation is 2 percent, then the real interest rate is
3 percent
ABC co. sells newly issued bonds. JLG co. sells newly issued stocks. which company is raising funds in financial markets?
Both ABC and JLG
if Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself, then GDP...
Necessarily falls
the GDP deflator is the ratio of?
Nominal GDP to real GDP multiplied by 100
suppose that an American opens and operates a candy factory in Finland. this is an example of
foreign direct investment. American saving is used to finance finish investment.
the equipment and structures available to produce goods and services are called..
physical capital
if a firm sells a total of 100 shares of stock, then
each share represents ownership of 1 percent of the firm
other things equal, relatively poor countries tend to grow...
faster than relatively rich countries; this is called catch-up effect
if there are diminishing returns to capital, then...
increases in the capital stock increase output by ever smaller amounts.
a mutual fund
is an institution that sells shares to the public and uses the proceeds to buy a selection of various types of stocks, bonds, or both stocks and bonds
the sources of the supply of loanable funds
is saving and the source of demand for loanable funds is investment
The consumer price index is used to...
monitor changes in the cost of living over time
other things the same, bonds are likely to have higher interest rates if they have...
no tax exemptions and long terms
Transfer payments are...
not included in GDP because they are not payments for currently produced goods or services.
the inflation rate is defined as the...
percentage change in the price level from the previous period
example of human capital
understanding how to repair cars
