Economics Final

Which of the following would be included in the GDP of the United States?

Boeing builds a plane in Seattle that is sold to Air Canada

The standard of living in an economy is best measured by:

output per person

When comparing the standard of living in two countries it is important to adjust total output for differences in:

population

If Country A and Country B have the same total output, then the standard of living in these two countries can be different depending on:

population size

Deflation is a situation in which the:

prices of most goods and services are falling over time.

The money supply in Macroland is currently 2,500, bank reserves are 200, currency held by public is 500, and banks' desired reserve/deposit ratio is 0.10. Assuming the values of the currency held by the public and the desired reserve/deposit ratio do not change, if the Central Bank of Macroland wishes to increase the money supply to 3,000, then it should conduct an open-market ______ government bonds.

purchase of 50

If banks' desired reserve ratio increases from 0.10 to 0.15, the public still desires to hold the same amount of currency, and the Fed takes no actions, the money supply will:

decrease.

The typical family on the Planet Econ consumes 10 pizzas, 7 pairs of jeans, and 20 gallons of milk. In 2008, pizzas cost $10 each, jeans cost $40 per pair, and milk cost $3 per gallon. In 2009, the price of pizzas went down to $8 each, while the prices of jeans and milk remained the same. Between 2008 and 2009, a typical family's cost of living:

decreased by 4.5 percent

People who say that they would like to have a job, but have not made an effort to find a job in the past four weeks, are called ______ workers.

discouraged

Each person who is 16 years or older is considered to be in one of the following categories:

employed, unemployed, or out of the labor force.

Output per worker must be _____ output per person.

greater than or equal to

The market value of final goods and services produced within a country during a period of time is called:

gross domestic product

The most commonly used measure of an economy's output is:

gross domestic product

If total output increases from $1 trillion to $2 trillion as population increases from 100 million to 200 million, then output per person:

remains constant

The degree to which people have access to goods and services that make their lives easier, healthier, safer, and more enjoyable is called the:

standard of living

When the actual reserve/deposit ratio is less than the desired reserve/deposit ratio banks:

stop making loans

A broad government initiative to reduce a country's reliance on agriculture and promote high technology industries is an example of ______ policy.

structural

A decision by a government to sell businesses that currently are operated by the government to private investors is an example of ________ policy.

structural

A government decision to privatize a sector of the economy formerly operated by the government is an example of _____ policy.

structural

Deregulation of the airline, trucking, telephone, and electric utility industries are examples of _______ policy.

structural

Bank depositors will not lose their deposits in a banking panic if:

there is 100% reserve banking.

Which of the following correctly ranks the amounts from largest to smallest?

total output, average labor productivity, output per person

The money supply is 1,500 of which 500 is currency held by the public. Bank reserves are 200. The existing reserve/deposit ratio equals:

0.20

Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: Name of Company Revenues Cost of Purchased inputs Citrus Growers Inc. | $0.75 | 0 Florida Jam Company | $2.00 | $.75 The Corner Store | $2.50 | $2.00 If the oranges were grown and the jam produced in the year 2015, but the marmalade was sold at The Corner Store in the year 2016, what is the contribution of these transactions to GDP in the year 2016?

$0.50

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: Name of Company Revenues Cost of Purchased inputs Fulton Family Farm | $0.50 | 0 DeLux Popcorn Co. | $2.50 | $.50 Friendly Groceries | $4.00 | $2.50 What is the value added of Friendly Groceries?

$1.50

Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: Name of Company Revenues Cost of Purchased inputs Citrus Growers Inc. | $0.75 | 0 Florida Jam Company | $2.00 | $.75 The Corner Store | $2.50 | $2.00 If the corn was grown and the jar of popcorn produced in the year 2015, but the jar was sold at Friendly Groceries in the year 2016, what is the contribution of these transactions to GDP in the year 2016?

$1.50

Assume an economy produces only footballs and baseballs and the base year is 2005. Quantity produced Prices 2005 | 2006 | 2005 | 2006 Footballs | 200 | 300 | $20 | $25 Baseballs | 500 | 600 | $10 | $15 Given the data in the table above, what is the value of real GDP in 2006?

$12,000

Assume an economy produces only hamburgers and hotdogs and the base year is 2005. Quantity produced Prices 2005 | 2006 | 2005 | 2006 Hamburgers | 2,000 | 3,000 | 2 | $3 Hotdogs | 3,000 | 4,000 | 1 | $1.50 Given the data in the table above, what is the value of nominal GDP in 2006?

$15,000

If Bountiful Orchard grows $100,000 worth of peaches, sells $50,000 worth of peaches to consumers and uses to rest to make jam that is sold to consumers for $100,000, Bountiful Orchard's contribution to GDP is:

$150,000

Assume an economy produces only footballs and baseballs and the base year is 2005. Quantity produced Prices 2005 | 2006 | 2005 | 2006 Footballs | 200 | 300 | $20 | $25 Baseballs | 500 | 600 | $10 | $15 Given the data in the table above, what is the value of nominal GDP in 2006?

$16,500

In both Gamma and Delta average labor productivity is $20,000 per worker per year. The population of Gamma is 200,000 and the population of Delta is 400,000. Sixty percent of the population in each country is employed. Total output in Gamma is _____ and total output in Delta is _____.

$2.4 billion; $4.8 billion

In 2015, Pete Rich purchases a 1642 painting by Rembrandt for $20 million. He also pays a one percent commission to the auction house that sold the painting. What is the contribution of these transactions to GDP in the year 2015?

$200,000

In Econland total output is $6 billion, population equals 250,000 people, and, of these, 200,000 are employed workers. Output per person in Econland equals _______ and average labor productivity equals ______.

$24,000; $30,000 Output per person equals $24,000 ($6 billion / 250,000), and average labor productivity, which is output per employed worker, equals $30,000 ($6 billion / 200,000).

If the Citrus Growers Association grows $1 million worth of oranges, sells $500,000 worth of oranges to consumers, uses the rest to make orange juice that is sold to consumers for $3 million, Citrus Grower's contribution to GDP is:

$3,500,000

An economy produces 500,000 tables valued at $100 each. Households purchase 100,000 tables, of which 50,000 are imported. Businesses purchase 200,000 domestically produced tables, the government purchases 100,000 domestically produced tables, and 50,000 domestically produced tables are sold abroad. At the end of the year, the table manufacturers hold the unsold tables in inventory. What is value of the investment component of GDP?

$30 million

The country of Northland produced $1,000 billion of output in one year. The population of Northland was 50 million, of whom 30 million were employed. What was average labor productivity in Northland?

$33,333 Average labor productivity is output per employed worker, which is $33,333 ($1,000 billion / 30 million).

The country of Southland produced $2,000 billion of output in one year. The population of Southland was 100 million, of whom 60 million were employed. What was average labor productivity in Southland?

$33,333 Average labor productivity is output per employed worker, which is $33,333 ($2,000 billion / 60 million).

If the Central Bank of Macroland puts an additional 1,000 dollars of currency into the economy, the public deposits all currency into the banking system, and banks have a desired reserve/deposit ratio of 0.20, then the banks will eventually make new loans totaling ______ and the money supply will increase by _______.

$4,000; $5,000

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: Name of Company Revenues Cost of Purchased inputs Fulton Family Farm | $0.50 | 0 DeLux Popcorn Co. | $2.50 | $.50 Friendly Groceries | $4.00 | $2.50 What is the sum of the value added of all of the firms?

$4.00

In Macroland there is $12,000,000 in currency. The public holds half of the currency and banks hold the rest as reserves. If banks' desired reserve/deposit ratio is 12.5%, deposits in Macroland equal ______ and the money supply equals _______.

$48,000,000; $54,000,000

An economy produces 500,000 tables valued at $100 each. Households purchase 100,000 tables, of which 50,000 are imported. Businesses purchase 200,000 domestically produced tables, the government purchases 100,000 domestically produced tables, and 50,000 domestically produced tables are sold abroad. At the end of the year, the table manufacturers hold the unsold tables in inventory. What is value of GDP?

$50 million

In Macroland there is $10,000,000 in currency. The public holds half of the currency and banks hold the rest as reserves. If banks' desired reserve/deposit ratio is 10%, deposits in Macroland equal ______ and the money supply equals _______.

$50,000,000; $55,000,000

If a pizza maker pays $1 for tomatoes, $1 for cheese, $2 for sausage, and sells the pizza made with these ingredients for $7, then each pizza sold contributes how much to GDP?

$7

Suppose that the total production of an economy consists of 10 oranges and 5 candy bars, each orange sells for $0.20, and each candy bar sells for $1.00. What is the market value of production in this economy?

$7.00

Data for an economy shows that the unemployment rate is 10%, the participation rate 80 percent, and 200 million people 16 years or old

1.0 billion

The consumer price index for Planet Econ consists of only two items: books and hamburgers. In 2010, the base year, the typical consumer purchased 10 books for $25 each and 25 hamburgers for $2 each. In 2015, the typical consumer purchased 15 books for $30 each and 30 hamburgers for $3 each. The consumer price index for 2015 on Planet Econ equals:

1.25

The CPI in 1974 equaled 0.49. The CPI in 1975 equaled 0.54. The rate of inflation between 1974 and 1975 was ______ percent.

10.2

A consumer expenditure survey reports the following information on consumer protein spending: 2005 2006 Price Quantity Price Quantity Fish | $5 | 5 | $7 | 7 Chicken | $3 | 10 | $4 | 12 Beef | $6 | 7 | $5 | 10 Using 2005 as the base year, by how much does a "cost of protein" index increase between 2005 and 2006?

13.4 percent

The following table provides data for an economy in a certain year Consumption expenditures 1,000 Imports 600 Government purchases of goods and services 700 Construction of new homes and apartments 500 Sales of existing homes and apartments 600 Exports 500 Government payments to retirees 200 Household purchases of durable goods 300 Begining-of-year inventory 500 End-of-year inventory 600 Business fixed investment 300 Given the data in the table, compute the value of GDP.

2,500

Based on the information in the table, how many people are out of the labor force? Population 16 and older | 1,000,000 Participation Rate | 80% Employed Workers | 720,000

200,000

A consumer expenditure survey reports the following information on entertainment spending: 2008 2009 Price Quantity Price Quantity Movies | $7 | 5 | $8 | 7 Concerts | $30 | 2 | $35 | 2 CDs | $16 | 7 | $15 | 10 Using 2008 as the base year, by how much does a "cost of entertainment" index increase between 2008 and 2009?

3.9 percent

The following table provides data for an economy in a certain year Consumption expenditures 50 Imports 40 Government purchases of goods and services 20 Construction of new homes and apartments 30 Sales of existing homes and apartments 40 Exports 50 Government payments to retirees 10 Household purchases of durable goods 20 Begining-of-year inventory 10 End-of-year inventory 20 Business fixed investment 30 Given the data in the table, how much did households spend on nondurables and services?

30

The following table provides data for an economy in a certain year Consumption expenditures 1,000 Imports 600 Government purchases of goods and services 700 Construction of new homes and apartments 500 Sales of existing homes and apartments 600 Exports 500 Government payments to retirees 200 Household purchases of durable goods 300 Begining-of-year inventory 500 End-of-year inventory 600 Business fixed investment 300 Given the data in the table, compute the government purchases component of GDP.

700

The following table provides data for an economy in a certain year Consumption expenditures 1,000 Imports 600 Government purchases of goods and services 700 Construction of new homes and apartments 500 Sales of existing homes and apartments 600 Exports 500 Government payments to retirees 200 Household purchases of durable goods 300 Begining-of-year inventory 500 End-of-year inventory 600 Business fixed investment 300 Given the data in the table, how much did households spend on nondurables and services?

700

Data for an economy shows that the unemployment rate is 10%, the participation rate 80 percent, and 200 million people 16 years or older are not in the labor force. How many people are in the labor force in this economy?

800 million

If bank reserves are 200, the public holds 400 in currency, and the desired reserve/deposit ratio is 0.25, the deposits are ______ and the money supply is _____.

800; 1,200

The following table provides data for an economy in a certain year Consumption expenditures 1,000 Imports 600 Government purchases of goods and services 700 Construction of new homes and apartments 500 Sales of existing homes and apartments 600 Exports 500 Government payments to retirees 200 Household purchases of durable goods 300 Begining-of-year inventory 500 End-of-year inventory 600 Business fixed investment 300 Given the data in the table, compute the investment component of GDP.

900

Which of the following would increase the net export component of U.S. GDP?

A bottle of California wine is purchased in London.

Which of the following is an example of a capital good?

A metal-stamping machine used to produce cars sold to an automaker

Which of the following is NOT a capital good?

Batteries purchased by a car manufacturer to install in new cars

Which of the following would increase the investment component of U.S. GDP?

Disney World purchases tires for the monorail from a firm in Ohio

Which of the following is not classified as a final good?

Fresh Vegetable purchased by a restraunt

______ is/are the market value of final goods and services produced within a country during a given period of time.

GDP

The M2 measure of money consists of the sum of:

M1, savings deposits, small time deposits, and money market mutual funds.

M1 differs from M2 in that:

M2 includes savings deposits, small-denomination time deposits, and money market mutual funds that are not included in M1.

Which of the following would increase the consumption component of U.S. GDP?

You purchase a bottle of California wine.

If you use $1,000 to purchase silver bullion, which you plan to keep in a safe, you are using money as:

a medium of exchange

In Econland exports equal 25% of total output, while imports equal 20% of total output. Econland has:

a trade surplus

When the price of a pizza is quoted in dollars, this is an example of dollars serving as:

a unit of account

Output per employed worker is called:

average labor productivity

In an open-market purchase the Federal Reserve ______ government bonds from the public and the supply of bank reserves ______.

buys; increases

During the Great Depression in the United States between 1929 and 1933, banks' reserve/deposit ratio ______ and the amount of currency held by the public ____, while the money supply ______.

increased; increased; decreased

In a fractional-reserve banking system the reserve/deposit ratio equals:

less than 100 percent

A college graduate in 1972 found a job paying $7,200. The CPI was 0.418 in 1972. A college graduate in 2005 found a job paying $30,000. The CPI was 1.68 in 2005. The 1972 graduate's job paid ______ in nominal terms and ______ in real terms than the 2005 graduate's job.

less, less

When the actual reserve/deposit ratio exceeds the desired reserve/deposit ratio banks:

make more loans

When a bank makes a loan by crediting the borrower's checking account balance with an amount equal to the loan:

money is created