Exam 3

The following table shows the production within a very small country's economy in two consecutive years. What was the real GDP of 2017? (2017 is the base year)

$11,000

The country of Russia had a Gross Domestic Product of about $4 trillion in 2016 and a population of 142 million people, the GDP per capita would be ________.

$28,000

If Nominal GDP = $4.5 trillion and the GDP deflator is 150, then real GDP is equal to

$3 trillion

Assume the economy of country C produces hotdogs and buns in the following quantities and prices in 2016 and 2017. Assume also that 2016 is the base year and the real GDP will be calculated using 2016 prices. What is the real GDP 2017?

$60 million

Your boss has asked you to calculate the needed figures for a government report. The figure you need to calculate is the GDP using the numbers in the table. What is the GDP?

$612 million

Use the data from the following table to calculate the GDP per capita of each country. The GDP per capita for Estonido and for Galicia in 2017 is

$7,199 for Estonido and $14,021 for Galicia in 2017.

Calculate the unemployment rate based on the following data for a country: Population: 200, Employed workers: 140, Labor Force: 160, Discouraged workers: 10.

12.5%

Real GDP measurements are

Adjusted for inflation

With a Consumer Price Index of 179.8 at the end of last year and 186.5 at the end of this year, the country experienced which of the following?

An inflation rate of 3.72 percent.

What term refers to a nation's transactions in the form of imports and exports with any other single nation or rest of the world.

Balance of trade

Why do governments impose trade barriers?

Both to protect domestic industries and to combat job losses

Since the U.S. has so many resources why do we trade with other countries?

Comparative advantage

What is the term to describe when a nation or individual can produce a good or service at a lower opportunity cost than another nation or individual?

Comparative advantage

What happens when the value of the currency changes and you can purchase more of the other currency?

Currency appreciates

The Balance of Payments includes three accounts. Which account includes income from foreign investments?

Current account

David's pay last year was $100,000. His pay this year increased to $115,000. The consumer price index increased from 100 to 115 over the same time period. What has happened to David's real income from last year to this year?

David's real income is unchanged

Which of the following is NOT a consequence of tariffs?

Domestic products are less expensive

Several nations might agree to jointly issue and use a single currency. Which of these is an example of a common currency?

Euro

What is the term used to describe the price of one nation's currency in terms of another nation's currency?

Exchange rate

Which product should Nation XYZ produce given the following information? They have traditionally been an agricultural nation and have a huge population. The government wants to diversify the economy with a new industry.

Experimental cancer drug???

A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be ________.

Frictionally unemployed

Henry has accepted a new position in the Federal government after working at ball bearing manufacturing plant. He has been put to the task to measure the economic growth as accurately as possible for the nation's last year. What would Henry use in this instance to produce the most accurate growth analysis?

GDP Deflator

Which types of unemployment exist at all times and determine the natural rate of unemployment?

frictional unemployment and structural unemployment

The redistribution of purchasing power due to unexpected inflation benefits which group of people?

students with fixed-rate educational loans

Labor productivity is

the production or output per worker per hour.

The Department of Economic Health in the country of Cavia has calculated the price index for a basket of goods from 2014 to 2018. January 2014 is the standardized price index (at 100) for a basket of consumer goods. The price index increased in 2015 to 105.7, in 2016 to 108.6, in 2017 to 115.9, and in 2018 it increased to 120.4. What are the inflation rates in Cavia for 2015, 2016, 2017, and 2018?

2015: 5.7%; 2016: 2.7%; 2017: 6.7%; 2018: 3.9%

The following table indicates the CPI for the country of Praton over the last four years. Using the information in the table, calculate the annual inflation rates. Which time frame had the lowest annual inflation rate?

2016-2017

If the number of employed persons in a country equals 24 million, the number of unemployed persons equals 8 million, and the number of persons over age 16 in the population equals 40 million, the unemployment rate equals ________.

25%

In 2005 the price index was calculated at 115.3 with 2000 as the base year. In 2006 the price index increased to 119.5. What was the inflation from 2005-2006?

3.6%

The fictional small country of Qbert has had a robust GDP the last few years. Dansbert produces just two products; Water Bottles and Bikes. The following chart shows product quantities and prices from 2016 to 2018. With 2016 as the base year calculate the real GDP. What is the real yearly growth of 2017 & 2018?

41.3% for 2017; 58.7% for 2018

In the far off kingdom of Viracien there is a healthy sized population of citizens over 16 years old. The last census indicated a total adult population of 5 million people. This year a recession hit and 237 thousand people were let go from their jobs and are on the hunt to find new work. Because of the recession many took early retirement and there is now a population of 1.3 million who are not working or looking for various reasons. Because of the unrest, the military of Viracein has increased its ranks and is now grown to a total of 50 thousand citizens serving the country. If Viracein uses the same calculation to find the unemployment rate, what is the country's unemployment rate?

6.5%

Which of the following would be included in Gross National Product?

A dresser made in Mexico by USA furniture direct inc.

Jenny can paint one birdhouse in 2 hours and can build one birdhouse in 1 hour. Gary can paint one birdhouse in 3 hours and can build one birdhouse in 2 hours. Who has the comparative advantage in painting a birdhouse? (HINT: To determine the opportunity cost, divide the hours of painting by the hours of building. The one with the lowest opportunity cost has the comparative advantage.)

Gary

What does comparative advantage measure?

How much each nation gives up in one good to produce another good.

How do trade barriers negatively impact an economy?

Hurt efficient and competitive industries

If the Euro appreciates, how will it impact U.S. purchases in Europe and European purchases in the U.S.?

Increase purchases in U.S. by Europe and decrease purchases in Europe by U.S.

The Krisp Kracker company which makes unique kettle chips for restaurants, clubs, and events, has just lost a large client that made up 55% of its total revenue. Management finds it necessary to reduce staff or wages. This comes only three months after hiring 35 new people to support this big client. While there are rumors of wage reductions in the short run, the 100 employees who have been with the company for the past two years are grumbling that they are more valuable that the new hires which should be let go and the wages not reduced. The situation at Krisp Kracker illustrates which wage stickiness theory best?

Insider-outsider model

Which of the following goods is likely not to be included in CPI calculations that take 1982-1984 as the base year?

Laptop computers

Which group of people is harmed by the redistribution of purchasing power due to unexpected inflation?

Lenders

Which account is held by a nation's central bank and used to balance deficits and surpluses in the combined other two accounts?

Official reserves account

A year ago Parker reached his retirement and left the business to pursue other interests. He is now spending lots of time playing golf and visiting his grandchildren. For purposes of employment he is considered:

Out of the labor force

Concerning the four phases in the economic cycle, what is show by point B (upmost point of the cycle)?

Peak

Which of the following best describes a business cycle?

Periods of increasing and decreasing real GDP

Concerning the four phases in the economic cycle, what is shown by point C?

Recession

If the print media is taken over by the electronic media, thereby causing employees in the print media industry to be permanently laid off, ________ unemployment would increase.

Structural

What is excluded from the official calculation of the unemployment rate?

Students who are attending to school full time and not working.

The exchange rate is determined by what?

Supply and demand

Which of the following trade barriers is a special tax on imports?

Tariff

Cyclical unemployment is caused by the ________ for labor ________ during a recession.

demand; moving to the left

What is the definition of opportunity cost?

The next best alternative that you give up

What does the unemployment rate measure?

The percentage of the labor force who do not have a job, but are looking for one.

In his Macroeconomics class, Louis is working on a project for which he needs to understand the state of the U.S. economy. Which of the following is an economic indicator that Louis could use to help him with this task?

The unemployment rate

What is it called when imports exceed exports?

Trade deficit

What is it called when exports exceed imports?

Trade surplus

Concerning the four phases in the economic cycle above, what does point D depict (lowest point of the cycle)?

Trough

Gross Domestic Product (GDP) is designed to measure:

a nation's total production of final goods and services.

Investment in human capital

is an important source of labor productivity.

When calculating GDP, investment refers to the

purchase of new capital goods like equipment and inventories