Macro HW 1 Questions

A

During a business cycle expansion, total production ________ and total employment ________. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases

A

If real GDP increases we know for sure that A) output has risen. B) prices have risen. C) prices have risen but output has remained constant. D) prices have remained constant.

D

In a small economy, gross investment in 2012 is $1,500, consumption spending is $6,000, net investment is $200, government spending is $1,500, exports are $2,000 and imports are $1,000. What is GDP for this economy in 2012? A) $10,700 B) $10,300 C) $10,200 D) $10,000

C

The purchase of a new automobile is included in A) consumption expenditures on services. B) consumption expenditures on nondurable goods C) consumption expenditures on durable goods. D) investment expenditures.

B

Which of the following accurately describes an effect of hurricane Katrina on GDP? A) GDP would decrease reflecting the costs of cleanup. B) GDP would increase reflecting the costs of cleanup. C) GDP would increase reflecting the decrease in production that occurred during the storm and the productive capacity lost in the storm. D) GDP would increase well-being.

C

Which of the following are included in gross domestic product for an economy in a given year? A) the value of intermediate goods produced in that year B) the value of used goods sold in that year C) the value of final goods produced in that year D) All of the above would be included in gross domestic product for an economy in a given year.

A

Which of the following are not considered part of government purchases? A) welfare benefits B) teacher's salaries paid by a local government C) a tank purchased by the federal government D) a bridge purchased by the state Government

A

A car that is produced in 2012 is not sold until 2013. According to the definition of GDP, in which year's GDP should it be counted? A) 2012 B) 2013 C) Half of the sales price will count as part of 2012 GDP and half will count as part of 2013 GDP. D) The production cost will count as part of 2012 GDP while the sales price will count as part of 2013 GDP.

C

An example of a final good would be A) the soy milk sold to Starbucks. B) the whipped cream sold to Starbucks. C) a soy latte sold by Starbucks to a student. D) the coffee beans sold to Starbucks.

A

An example of an intermediate good would be A) the bread that goes into a sub sandwich that is sold by Quiznos. B) the soda pop sold by Quiznos. C) a sub sandwich sold by Quiznos. D) the potato chips sold by Quiznos.

C

Between 2011 and 2012, if an economy's exports rise by $8 billion and its imports fall by $8 billion, by how much will GDP change between the two years, all else equal? A) Net exports will increase GDP by $8 billion. B) The increase in exports is offset by the decrease in imports, so there is no change in net exports and no effect on GDP. C) Net exports will increase GDP by $16 billion. D) Net exports will decrease GDP by $8 billion.

C

Marla is an architect who is designing a home for Chuck. Chuck is paying Marla $150 per hour to design his new home. When Chuck and Marla get married, Marla continues to work on designing the home, but she no longer charges Chuck for her work. As a result, GDP_____ because_______ . A) falls; Marla's work takes place in the underground economy once she's married B) falls; Marla's work becomes less valuable once she's married C) falls; Marla's architectural design services are no longer bought by Chuck once they're married D) rises; Marla becomes more productive once she's married

C

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study? A) Avocado prices rise due to a late frost in California. B) The United Auto Workers sign a contract raising wages and benefits 7% over the next 3 years. C) Real GDP grows by 2.3% in the second quarter. D) Airlines raise ticket prices in response to rising fuel costs.

B

Which of the following is counted in GDP? A) the value of goods and services produced in the underground economy B) the cost of a speed boat purchased bydrug smugglers C) the value of do-it-yourself work D) the value of leisure

D

Assuming that the United States is the domestic economy, are goods and services produced by and purchased by . A) exports; foreign countries; the United States B) exports; the United States; the United States C) imports; foreign countries; foreign countries D) imports; foreign countries; the United States

B

In periods when prices are falling, on average, A) real GDP will grow slower than nominal GDP. B) real GDP will grow faster than nominal GDP. C) real GDP will grow as fast as nominalGDP. D) one cannot calculate real GDP.

D

Which of the following transactions would be included in the official calculation of GDP? A) A student buys a used textbook at the bookstore. B) Firestone sells $2 million worth of tires to General Motors. C) You wash and wax your father's car as a favor to him. D) You buy a new iPod. E) You illegally download music off the Internet to put on your new iPod.

D

A final good is one that A) is used in the production of another good. B) is a natural resource used to produce a good. C) is purchased as an input in the production process. D) is purchased by its final user.