Econ Multiple Choice

GDP is all of the following except the total: A) expenditure of everyone in the economy B) income of everyone in the economy C) expenditure on the economy's output of goods and services D) output of the economy

A

If the price level depends on both the current money supply and future expected money supplies, in order to stop a hyperinflation, a central bank may try to establish credibility by: A) achieving increased political independence from the government B) increasing revenue from seigniorage ARE YOU FCKING KIDDING? C) encouraging increased government spending and tax cuts D) undertaking larger open-market purchases

A

The version of Okun's law studied in Chapter 10 assumes that with no change in unemployment, real GDP normally grows by 3 percent over a year. If the unemployment rate rose by 2 percentage points over a year, Okun's law predicts that real GDP would: A) decrease by 1 percent B) decrease by 2 percent C) decrease by 3 percent D) increase by 1 percent

A

To compute the value of GDP: A) goods and services are valued at market prices B) the sale of used goods is included C) production for inventory is not included D) goods and services are valued by weight

A

A woman marries her butler. Before they were married, she paid him $60,000 per year. He continues to wait on her as before (but as a husband rather than as a wage earner). She earns $1,000,000 per year both before and after her marriage. The marriage: A) does not change GDP B) decreases GDP by $60,000 C) increases GDP by $60,000 D) increases GDP by more than $60,000

B

All of the following transactions that occurred in 2009 would be included in GDP for 2009 except the purchase of a: A) book printed in 2009, entitled The Year 3000 B) 2001 Jeep Cherokee C) year 2010 calendar printed in 2009 D) ticket to see the movie 2001

B

An estimate of the number of unemployed workers can be obtained from: A) both the household and the establishment surveys B) from the household survey, but not from the establishment survey C) from the establishment survey, but not from the household survey D) from neither the household nor the establishment survey

B

An example of an imputed value in the GDP is the: A) value-added of meals cooked at home B) housing services enjoyed by homeowners C) services of automobiles to their owners D) value of illegal drugs sold

B

Assume that a firm buys all the parts that it puts into an automobile for $10,000, pays its workers $10,000 to fabricate the automobile for $22,000. In this case, the value added by the automobile company is: A) 10,000 B) 12,000 C) 20,000 D) 22,000

B

Imputed values included in GDP are the: A) market prices of goods and services B) estimated value of goods and services that are not sold in the marketplace C) price of goods and services measured in constant prices D) price of goods and services measured in current prices

B

In principle, the GDP accounts should but do not have an imputation for: A) housing services enjoyed by homeowners B) rental services of automobiles driven by owners C) meals cooked in restaurants D) housing services enjoyed by renters

B

A bank balance sheet consists of only the following items: Deposits- 1,000 Reserves- 100 Securities- 400 Debt- 500 Loans- 2,000 What is the value of bank capital: A) -1,000 B) +500 C) +1,000 D) +1,500

C

If currency held by the public equals $100 billion, reserves held by banks equal $50 billion, and bank deposits equal $500 billion, then the money supply equals: A) $100 billion B) $150 billion C) $600 billion D) $650 billion

C

If inflation is 6 percent and a worker receives a 4 percent nominal wage increase, then the worker's real wage: A) increased 4 percent B) increased 2 percent C) decreased 2 percent D) decreased 6 percent

C

If the nominal interest rate is 1 percent and the inflation rate is 5 percent, the real interest rate is: A) 1 percent B) 6 percent C) -4 percent D) -5 percent

C

The underground economy: A) is included in the latest GDP accounts B) includes only illegal activities C) includes domestic workers for whom Social Security tax is not collected D) excludes the illegal drug trade

C

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 in $0.50 in 2009. If 10 apples and 5 oranges were purchased in 2002, and 5 apples and 10 oranges were purchased in 2009, the CPI for 2009, using 2002 as the base year, is: A) 0.75 B) 0.80 C) 1 D) 1.25

D

Assume that the market basket of goods and services purchased in 2004 by the average family in the United States costs $14,000 in 2004 prices, whereas the same basket costs $21,000 in 2009 prices. However, the basket of goods and services actually purchased b the average family in 2009 costs $20,000 in 2009 prices, whereas the same basket would have cost $15,000 in 2004 prices. Given these data, a Lasypeyres price index for 2009 prices using 2004 as the base year would be: A) 1.05 B) Approximately 1.07 C) 1.33 D) 1.50

D

Assume that the market basket of goods and services purchased in 2004 by the average family in the United States costs $14,000 in 2004 prices, whereas the same basket costs $21,000 in 2009 prices. However, the basket of goods and services actually purchased by the average family in 2009 costs $20,000 in 2009 prices, whereas this same basket would have cost $15,000 in 2004 prices. Given these data, a Paasche index for 2009 using 2004 prices would be: A) 1.05 B) approximately 1.07 C) 1.33 D) 1.50

D

If the currency-deposit ratio equals 0,5 and the reserve-deposit ratio equals 0.1, then the money multiplier equals: A) 0.6 B) 1.67 C) 2.0 D) 2.5

D

If the unemployment rate is 6 percent and the number of employed is 188 million, then the labor force equals _____ million A) 11.28 B) 176.72 C) 188 D) 200

D

Making use of Okun's law, it may be computed that if the Fed reduces the money supply 5 percent and the quantity theory of money is true, then the unemployment rate will rise about: A) 5 percent in both the short run and the long run B) 2.5 percent in both the short run and the long run C) 5 percent in the short run but will return to its natural rate in the long run D) 2.5 percent in the short run but will return to its natural rate in the long run

D