EXAM 1 (ECO 2302)

Between a trough and a peak, the economy goes through a(n) A) recession. B) bust. C) hyperinflation. D) expansion.

D) expansion.

Table 6.9 ____________Production__________Prices ____________Y 1/Y 2/Y 3_____Y 1 / Y2 / Y3 Good X__60/80/100 | $1.00/$1.00/$1.40 Good Y_100/110/130__$0.80/$0.90/$1.00 Refer to Table 6.9. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's inflation rate between year 1 and year 2 is: A) -6.1%. B) -5.5%. C) 6.5%. D) 79%.

C) 6.5%.

The value of what KFC produces in Japan is included in the U.S. ________ and in the Japanese ________. A) GNP; GDP B) GNP; GNP C) GDP; GNP D) GDP; GDP

A) GNP; GDP

The value of all motorcycles produced by Harley Davidson in the United States is A) included in the U.S. GNP but not the U.S. GDP. B) included in both the U.S. GDP and GNP. C) included in the U.S. GDP but not the U.S. GNP. D) not included in either the U.S. GDP or GNP.

B) included in both the U.S. GDP and GNP.

Inflation is a(n): A) increase in the overall level of economic activity. B) increase in the overall price level. C) decrease in the overall level of economic activity. D) decrease in the overall price level.

B) increase in the overall price level.

The demand for massage therapists declined in the spring of 2016, but the starting wages paid to massage therapists was still the same at the end of 2016. This is an example of a A) highly regulated market. B) price control. C) sticky price. D) flexible price.

C) sticky price.

Aggregate behavior is: A) the behavior of each individual. B) the behavior of each household and firm. C) the behavior of all households and firms together. D) none of the above.

C) the behavior of all households and firms together.

If an economy produced 10 pizzas at $20 each and fifteen gallons of root beer at $5 each, the total value of these goods and services would be A) $75. B) $200. C) $275. D) $2,750.

C)$75

If real GDP in 2016 using 2015 prices is higher than nominal GDP of 2016, then: A) prices in 2016 are higher than prices in the base year. B) prices in 2016 are lower than prices in the base year. C) nominal GDP in 2016 equals nominal GDP in 2015. D) real GDP in 2016 is larger than real GDP in 2015.

B) prices in 2016 are lower than prices in the base year.

The demand for corn has increased in May without any change in supply. Eight months later there still has been no change in corn prices. This is an example of a A) price floor. B) sticky price. C) macroeconomic price. D) price control.

B) sticky price.

The GDP deflator in year 2 is 110 and the GDP deflator in year 3 is 118. The rate of inflation between years 2 and 3 is: A) 4.55% . B) 7.27%. C) 8%. D) 18%.

B) 7.27%.

A period of very rapid increase in the overall price level is known as: A) stagflation. B) hyperinflation. C) depression. D) stagnation.

B) hyperinflation.

The trend of the economy is A) the long run unemployment rate. B) the long run growth path of the economy. C) the long run inflation rate. D) the short run production capacity of an economy

B) the long run growth path of the economy.

Suppose that net investment in 2016 was $20 billion and depreciation was $4 billion. Gross investment in 2016 was A) $16 billion. B) $20 billion. C) $24 billion. D) $28 billion.

C) $24 billion.

If net investment in 2017 is $500 billion and gross investment in 2017 is $900 billion, depreciation in 2017 is A) -$500 billion. B) $0. C) $400 billion. D) $1,400 billion.

C) $400 billion.

Gross national income is: A) GDP converted into dollars using an average exchange rate over several years adjusted for rates of inflation. B) GNP measured using an incomes approach. C) GNP divided by population. D) GNP converted into dollars using an average exchange rate over several years adjusted for rates of inflation.

D) GNP converted into dollars using an average exchange rate over several years adjusted for rates of inflation.

Gross domestic product measures: A) the value of all output in the economy. B) the total spending of everyone in the economy. C) the total income of everyone in the economy. D) all of the above

D) all of the above

A period during which aggregate output rises is known as a(n) A) hyperinflation. B) recession. C) inflation. D) expansion.

D) expansion.

Legalizing all forms of illegal activities would: A) reduce both the underground economy and measured GDP. B) increase the size of the underground economy and reduce measured GDP. C) reduce measured GDP. D) reduce the size of the underground economy and increase measured GDP.

D) reduce the size of the underground economy and increase measured GDP.

The base year of an index is: A) the last year of the index. B) the year currently being calculated. C) the first year of the index. D) the year chosen for the weights in a fixed weight procedure.

D) the year chosen for the weights in a fixed weight procedure.

If real GDP in 2016 using 2015 prices is higher than nominal GDP of 2016, then A) real GDP in 2016 is smaller than real GDP in 2015. B) prices in 2016 are lower than prices in 2015. C) nominal GDP in 2016 equals nominal GDP in 2015. D) prices in 2016 are higher than prices in 2015.

B) prices in 2016 are lower than prices in 2015.

Table 6.9 ____________Production__________Prices ____________Y 1/Y 2/Y 3_____Y 1 / Y2 / Y3 Good X__60/80/100 | $1.00/$1.00/$1.40 Good Y_100/110/130__$0.80/$0.90/$1.00 Refer to Table 6.9. Assume that this economy produces only two goods Good X and Good Y. The value for this economy's nominal GDP in year 1 is A) $140. B) $160. C) $180. D) $200.

A) $140.

Per capita gross national income (GNI) decreases when: A) GNI does not change and the population increases. B) GNI and the population decrease at the same rate. C) GNI increases and the population does not change. D) GNI and the population increase at the same rate.

A) GNI does not change and the population increases.

If receipts of factor income from the rest of the world exceed payments of factor income to the rest of the world, then A) GNP is greater than GDP. B) GDP is greater than GNP. C) GDP equals GNP. D) GNP equals NNP.

A) GNP is greater than GDP.

Which of the following is an example of a final good or service? A) a computer purchased by Federal Express to track shipments B) wheat a bakery purchases to make bread C) lumber purchased by a construction company to used in building houses D) coffee beans Starbucks purchases to make coffee

A) a computer purchased by Federal Express to track shipments

The total value of all capital goods newly produced in a given period is A) gross investment. B) depreciation. C) the change in business inventories. D) net investment.

A) gross investment.

Nominal GDP is gross domestic product measured A) in current dollars. B) at a constant output level but at the base-year prices. C) as the difference between the current year's GDP and last year's GDP. D) in the prices of a base year.

A) in current dollars.

Table 6.9 ____________Production__________Prices ____________Y 1/Y 2/Y 3_____Y 1 / Y2 / Y3 Good X__60/80/100 | $1.00/$1.00/$1.40 Good Y_100/110/130__$0.80/$0.90/$1.00 Refer to Table 6.9. Assume that this economy produces only two goods Good X and Good Y. The value for this economy's nominal GDP in year 2 is: A) $168. B) $179. C) $202. D) $214.

B) $179.

A company produced 8 dishwasher machines in 2015. The company sold 6 in 2015 and added 2 to its inventories. The market value of the dishwasher machines in 2015 was $200 per unit. What is the value of this company's output that will be included in the 2015 GDP? A) $400 B) $1,400 C) $1,600 D) $2,000

C) $1,600

Table 6.9 ____________Production__________Prices ____________Y 1/Y 2/Y 3_____Y 1 / Y2 / Y3 Good X__60/80/100 | $1.00/$1.00/$1.40 Good Y_100/110/130__$0.80/$0.90/$1.00 Refer to Table 6.9. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's GDP deflator in year 2 is A) 93.9. B) 100. C) 106.5. D) 179.

C) 106.5.

If nominal GDP is $8 trillion and real GDP is $6 trillion, the GDP deflator is: A) 48. B) 75. C) 133.33. D) 480.

C) 133.33.

Refer to Table 6.1. The value for gross private domestic investment in billions of dollars is: A) 300. B) 375. C) 425. D) 450. {Table 6.1}______________________________________$Billions Durable goods________________________800 Nonresidential investment________400 Federal purchases of goods_____300 Exports__________________________________400 State & local purchases of goods 200 Residential investment _______________50 Services __________________________________500 Imports ____________________________________250 Change in business inventories ___-25 Nondurable goods ___________________700

C) 425.

Between a peak and a trough, the economy goes through a(n) A) inflation. B) expansion. C) recession. D) boom.

C) recession.

Which of the following is not counted in the GNP of the United States? A) The wage of a U.S. citizen who works in a foreign country for a foreign firm. B) The value of services that are produced by state and local governments in the United States. C) The profit earned by a restaurant located in the United States but owned by a Mexican company. D) The interest earned by a U.S. bank on loans to a business firm located in Brazil.

C) The profit earned by a restaurant located in the United States but owned by a Mexican company.

Fixed weight indexes: A) generally become less accurate the closer in time they are to the base year. B) account for response to demand shifts. C) generally become less accurate the farther in time they are from the base year. D) account for responses to supply shifts.

C) generally become less accurate the farther in time they are from the base year.

Which of the following is a topic studied in Macroeconomics? A) the amount of pizza produced B) the price of Dell computers C) gross domestic product D) the wage of auto workers

C) gross domestic product

If net investment is zero, then A) depreciation is zero. B) gross investment is less than depreciation. C) gross investment equals depreciation. D) gross investment is greater than depreciation.

C) gross investment equals depreciation.

A country's GNP will definitely exceed its GDP if ________ foreign companies produce in the country and ________ of the country's companies produce abroad. A) many; many B) no; none C) no; many D) many; none

C) no; many

Refer to Table 6.1. Personal consumption expenditures in billions of dollars are: A) 1,000. B) 1,300. C) 1,500. D) 2,000. {Table 6.1}___________________________________________$Billions Durable goods____________________________800 Nonresidential investment____________400 Federal purchases of goods_________300 Exports______________________________________400 State & local purchases of goods 200 Residential investment ___________________50 Services _____________________________________500 Imports ______________________________________250 Change in business inventories _____-25 Nondurable goods _____________________700

D) 2,000.

The GDP deflator in year 2 is 95 using year 1 as a base year. This means that, on average, the price of goods and services is A) 5% higher in year 2 than in year 1. B) 105% higher in year 1 than in year 2. C) 105% higher in year 2 than in year 1. D) 5% higher in year 1 than in year 2.

D) 5% higher in year 1 than in year 2.