Economics Exam 2 - V1 Ch. 19, 20, 26-29, 31-33, 23

At an annual growth rate of 2%, approximately how long does it take for real GDP per capita to increase from $30000 to $60000 in a country?

35 years

Table: (Types of Goods) Which of the following statements is TRUE?

Section 3 includes cable TV

Which of the following government outlays is a transfer payment that would NOT be included in GDP?

The Social Security program sends a monthly payment to a senior citizen

Diminishing returns to tractors indicates that:

having more tractors leads to more output, but at a decreasing rate

Saving is:

income that is not spent on consumption goods

Special interest groups have an incentive to be:

rationally informed

A recession is defined as a widespread decline in:

real income (GDP)

Two thousand years ago, per capita GDP (in 2010 dollars) was:

less than $1000

(Table: Prices and Quantities in a 4-Good Economy) Suppose an economy produces only the four goods listed in this table. What is the GDP in this country?

$7700

(Table: Consumer Price Index) Refer to the CPI values in the table for the years 2005 to 2010. What was the approximate inflation rate over the period 2009 to 2010?

1.68%

Suppose the money supply equals $100 million, the average price level equals 40, and real GDP equals $50 million. Given this information, the velocity of money equals:

20

If real GDP per capita in a country was $14000 in year 1 and $14420 in year 2, then the economic growth rate for this country from year 1 to year 2 was:

3%

If the growth rate of the money supply in an economy is 5%, the growth rate of output is 2%, and the velocity of money is constant, what will the inflation rate in this economy be?

3%

Over a 10-year span, the S&P 500 Index fund outperforms about ______ of all active funds.

97%

The AD-AS model consists of the:

AD, SRAS, and LRAS curves

This summer, a U.S. citizen has a paid internship at the South Korean carmaker Kia Motors at its offices located in Canada. The intern's work contributes to the GDP of which nation(s)?

Canada

Human capital is:

acquired only through investment of time and other resources

People smooth their consumption over their lifetime by:

both borrowing and saving

Population Growth Rates (Which country, on average, is experiencing the most rapid increase in prosperity across its population?

country C

At lower interest rates, the cost of investing ______ and the quantity of funds demanded for investment _______.

decreases; increases

If an increase in the expected future returns on investment leads to an increase in the current level of investment projects undertaken, the loanable funds market will experience an increase in the ______ loanable funds and ______ in equilibrium interest rates.

demand for; an increase

Which of the following is (are) NOT an institution of economic growth?

free-riding behavior

Figure: (Loanable Funds Expansion) In the accompanying figure, if the demand for loanable funds increases from DFL, to D1LF and the supply of loanable funds remain at SLF, the equilibrium interest rate will:

increase to i1

Which would be most effective in ensuring sustained long-term economic growth?

increasing technological knowledge

A real variable is one that corrects for:

inflation

Which is an example of passive investing?

investing in a mutual fund that tries to mimic the S&P 500

In a steady state, the level of investment:

is equal to depreciation

People will usually save more if the interest rate:

is higher

Uncertainty tends to amplify business cycles because:

many investments are irreversible with large sunk costs; thus, investors decrease investment during bad times and wait until they are more certain about the future direction of the economy

GDP:

measures the value of production in a year, while national wealth measures a stock of assets

Which is NOT a standard price index used in the United States?

national inflation index

A good is excludable if:

people who do not pay can be easily prevented from using the good

If we hold ideas, education, and labor constant in the Solow model, then output (GDP) is a function of:

physical capital only

John Stossel's dart-throwing experiment showed that:

picking stocks at random can outperform the stock picks pf major Wall Street experts

Which of the following is (are) NOT a transmission mechanism of real shocks and aggregate demand shocks?

reversible investment

Sugar quotas are an example:

showing that special interests have an incentive to be informed

When voters are myopic, politicians will prefer policies that generate:

small benefits now and large costs later

Time preference is:

the desire to have goods and services sooner rather than later (all other things being equal).

In the equation Mv = PYR, M stands for:

the money supply

The quantity theory of money predicts that the main cause of inflation is increases in:

the money supply

Which of the following would be included in 2017's GDP?

the real estate agent's commission on the 2017 resale of a house built in 2015

Intertemporal substitution refers to:

the tendency to work more when the returns to work are higher

Table: (Small-Town GDP) Which of the four towns has the highest standard of living?

town B

Which of the following is the explanation for why wild animals are often hunted to the point of extinction?

tragedy of the commons

The presence of illegal and off-the-books activities causes measured GDP to ______ the value of production within the country.

understate