Economics

Supposed a closed economy had a public saving of -$1 trillion and private saving of $3million What are the national savings and investment for this country?

$2trillion, $2trillion

In a small closed economy investment is $50 billion and private saving is $45 billion. What are public saving and national saving?

$5billion and %50 billion

CPI formula

100 x (cost of basket in current year/cost of basket in base year)

Educated people may generate ideas that increase production. These ideas

All of the above are correct

Natural Resources

All of the above are correct

Which of the following is included in the consumption component of GDP?

All of the above are included in the consumption component of GDP

Which of the following are not correct?

Countries that have had higher output growth per person have typically done so without higher productivity

GDP includes the value of paper clips but does not count the value of metal used to make them

False

Most entrepreneurs finance their purchases of real capital using their past saving

False

Productivity can be computed as the number of hours worked divided by output

False

The basic tools of supply and demand are central to microeconomic analysis but are little to use in macroeconomics

False

The majority of economist believe that future innovations will not be transformational enough to sustain high economic growth rates in the U.S. and western europe

False

When consumer spending is broken down into the major categories of goods and services, the largest single category is spending in transportation

False

The steps involved in calculating the consumer price index and inflation rate, in order, are as follows:

Fix the basket, find the prices, compute the baskets cost, choose a base year and compute the index. and compute your inflation rate.

Measured in 2014 dollars, real GDP per person in the United States in 2014 was about 10 times that in

India

A farmer produces oranges and sells them to Fresh Juice, which makes orange juice. The oranges produced by the farmer are called

Intermediate goods

National savings is the sum of_______and________in a closed economy it is equal to________in equilibrium

Private saving and public saving ; investment

In which of the following countries has economic growth been sufficiently high that income would double every ten years?

Singapore

Explain how the prices of goods and services used in the CPI differ from the prices used in the PPI

The CPI focuses on goods and services bought by the typical consumer, while the PPI focuses on goods and services bought by firms

National GDP is $15 trillion and real GDP is $10 trillion. What is the GDP deflator? Show your work.

The GDP Deflator = Nominal GDP/Real GDP = 100 x $15trillion/$10trillion = 150

Which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate?

The real interest rate

Which of the following could explain an increase in the equilibrium interest rate and decrease in the equilibrium quantity of loanable funds?

The supply of loanable funds shifted left

Basket of goods

These are a collective of prices for goods analysed for the Consumer Price Index

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise

True

A country's standard of living depends on its ability to produce goods and services.

True

Both the standard of living and the growth of real GDP per person vary widely across countries

True

By keeping the basket of goods and services the same when computing the CPI, the Bureau of Labor Statistics isolates the effects of price changes from the effect of any quantity changes that might be occurring at the same time

True

Countries with high population growth rates tend to have lower levels of education attainment

True

Credit risk refers to the probability that the issuer of a bond will fail to pay some or all of the interest or principal.

True

GDP adds together many different kinds of production into a single measure of the value of economic activity by using market prices

True

If your company opens and operates a branch of a foreign company, your company engages in foreign direct investment

True

In the United States, in 2014 real GDP per person was about $56,000, while in some poor countries real GDP per person was less than $5,000

True

Recessions are associated with lower incomes, rising unemployment, and falling profits

True

The goal of the consumer price index is to gauge how much income must rise to maintain a constant standard of living

True

The output of goods and services produced in the United States as grown an average 3 percent per year since 1965

True

The purpose of measuring the overall level of prices in the economy is to permit comparison between from different items

True

Which of the following is the correct formula for calculating the Consumer Price Index?

[(price of basket goods and services in current year / price of basket in base year)] x 100

In a closed economy, national savings equal

all of the above are correct

Which of the following items plays a role in determining productivity?

all of the above are correct

in a simple circular flow diagram, households, buy goods and services with the income they get

all of the above are correct

All else equal which of the following would tend to cause real GDP per persons to rise?

an increase in investment in human capital

The level of GDP per person

and the growth rate of real GDP per person varies wildly across countires

Which of the following counts as part of the supply of loanable mutual funds?

bank deposits and purchases of bonds

A_________does not engage in international trade in goods and services and it does not engage in international borrowing and lending

closed economy

a________does not engage in international trade in goods and services and it does not engage in international borrowing and lending

closed economy

Which of the following lists correctly identifies the four expenditure categories of GDP?

consumption, government purchases, investment, net-exports

The amount of revenue of a firm receives for a sale of its production minus its costs of production as measured by its accountings is the firm

earnings

The level of real GDP is a good measure of economic prosperity, and the growth of real GDP is a good measure of

economic progress

Northwest Wholesale Foods sells common stock. The company is using

equity financing and the return shareholders earn depends on how profitable the company is

If the supply of loanable funds shifts to the right, then the equilibrium interest rates

falls and the quantity if loanable funds rises

Joan uses some of her income to buy mutual fund shares. A macroeconomist refers to Joan's purchase as investment.

false

By far the largest category of goods and services in the CPI basket is

housing

An increase in the price of imported coffee shows up

in the consumer price index, but not in the GDP deflator

In a closed economy, if Y, C, and T remained the same, a decrease in G would

increase public saving but not private saving

the average income in a rich country

is more than ten times that in a poor country. Further, people in rich countries have a longer life expectancy

a municipal bond is

issued by state and local governments

When the government has a budget surplus

it buys more of its bonds from the public than it sells to the public.

The catch-up effect refers to the idea that

it is easier for a country to grow fast and so catch-up if it starts out relatively poor.

Which is the following is not a characteristic of a bond

its dividend yield

An identity is an equation that

must be true because of how the variables in the equation are defined.

The inputs into production of goods and services that are provided by nature, such as land, rivers,and mineral deposits are called

natural resources

If your firm's final production function has constant returns to scale, and if you double all of your inputs, then your firm's productivity will

not change

A country experiencing a growth rate of 12% per year can go from being one of the poorest to one of the richest countries in the world in how many generations?

one

A high-price earnings ratio for a stock indicates that either the stock is

overvalued or people are relatively optimistic about the corporations prospects

A rapid increase in the numbers of workers, other things the same, is likely in the short term to

raise real GDP, but decrease real GDP per person

The dividend yield is

reported as a percentage of the stock's price

As an alternative to selling shares of stock as a means of raising funds, a large company could, instead

sell bonds

Public saving is the difference between______and_______

tax revenue and government purchases

A COLA automatically raises the wage when

the consumer price index increases

Total income from the domestic production of final goods and services equals

the expenditures on these goods and services by whoever buys them

Real GDP

the production of goods and services valued at constant prices

Nominal GDP

the production of goods and services valued at current prices

GDP

the total market value of all final goods and services produced annually in an economy

index funds

typically have a higher rate of return and lower cost than managed mutual funds