macro LN4

Which one of the following price indexes measures the cost of living? A) producer price index B) wholesale price index C) CPI D) GDP deflator

c

GDP is the: A) total market value of all final goods and services produced in one year. B) total accumulated wealth of an economy. C) volume of all dollar transactions made in an economy in one year. D) dollar amount of all sales made in the economy in one year.

a

(Figure: Circular-Flow Model) If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of that box), which of the following is likely to happen if there is a decrease in exports? A) a decrease in the nominal GDP B) an increase in the real GDP C) a decrease in the unemployment rate D) an increase in the inflation rate

a

A stock in a company is: A) a share of ownership of a company held by a shareholder. B) an IOU that pays interest. C) a portion of a firm's profits paid to stock owners. D) part of private savings.

a

Enchante Inc., a designer clothing company, buys $400 worth of silk from a silk trader and $30 worth of accessories from AccessoriesRuS to produce each dress. If the value added by Enchante is equal to $200, then according to the value-added approach, the price of the designer dress should be: A) $630. B) $230. C) $200. D) $830.

a

Nominal GDP: A) has not been adjusted for changes in prices over time. B) has been adjusted for changes in prices over time. C) is a small or nominal amount of output. D) excludes the international sector.

a

Suppose that nominal GDP is $1,000 in 2009 and nominal GDP is $1,500 in 2010. If the overall price level ____ between 2009 and 2010, we could say that real GDP _____. A) increased by 50%; stayed constant. B) increased by less than 50%; decreased. C) increased by more than 50%; increased. D) increased by 50%; increased.

a

The largest spending category in GDP is consumption. A) True B) False

a

Which of the following would NOT be a part of GDP? A) used car sales B) new residential construction C) a new truck purchased by a building contractor D) telephone service purchased for a home

a

An example of an intermediate good is: A) wages paid to an employee. B) steel purchased by aircraft manufacturers. C) vegetables purchased for your dinner. D) electric bills for the office.

b

Goods that are produced in a particular period but NOT sold in that period: A) go into inventory and are called consumption. B) end up in inventory and are included in investment. C) are finally included in depreciation when they are sold. D) are classified as intermediate goods.

b

If the CPI is 180 in year 1 and 190 in year 2, the inflation rate between year 1 and year 2 is about: A) 5.26%. B) 5.56%. C) 6.5%. D) 10%.

b

If the United States exports $500 of goods and services and imports $700 of goods and services, net exports are $1,200. A) True B) False

b

If we add up the consumer spending on goods and services, investment spending, government purchases of goods and services, and the value of exports, then subtract the value of imports, we have measured the nation's: A) disposable income. B) gross domestic product. C) trade deficit. D) value added.

b

In 2010, _____ was the largest component of U.S. GDP, at approximately 70% of the total aggregate spending. A) government spending B) consumer spending C) investment spending D) net export spending

b

Suppose that in the base period a college student buys 20 gallons of gasoline at $2 per gallon, 2 CDs for $13 each, and 4 movie tickets for $7 each. In the next month, the price of gasoline is $2.25 per gallon, CDs cost $12.50 each, and the price of a movie ticket is $7.50. 35. (Scenario: Price Index) The price index for the second month is: A) 94. B) 106.4. C) 100. D) impossible to determine without more information.

b

The GDP deflator is: A) a price index. B) equal to 100 in the base year. C) the ratio of real GDP for year X divided by nominal GDP for year X × 100. D) a measure that tracks price changes for consumer goods.

b

The total volume of business sales in the economy is much larger than GDP because: A) GDP understates the value of total output. B) the output approach to measuring GDP excludes intermediate transactions. C) GDP includes transfer payments. D) GDP excludes exports.

b

Which of the following would accurately characterize the portion of a firm's profit paid to the owner of one share of its stock? A) interest B) dividend C) stock D) bond

b

Which one of the following is an example of consumption expenditure? A) Samantha bought an oven for her cooking show on Food Network. B) Stephanie bought a laptop for her brother. C) Jim purchased 200 shares of Google stock. D) Mr. Smith spent $1,500 to buy a used car for his son.

b

(Figure: Circular-Flow Model) If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of that box), which of the following is likely to happen if there is a decrease in consumer spending? A) an increase in the nominal GDP B) an increase in the real GDP C) an increase in the unemployment rate D) an increase in the inflation rate

c

Assume that the real GDP of the United States is approximately $12 trillion and the population of the United States is approximately 300 million. What is per capita real GDP? A) $4,000 B) $36,000 C) $40,000 D) Real per capita GDP can't be determined without more information.

c

Goods and services sold to people in other countries are known as: A) imports. B) investments. C) exports. D) transfer payments.

c

If the price level in the economy and the nominal wages both doubled, then real wages would: A) also double. B) increase by half. C) remain unchanged. D) decrease by half.

c

Suppose only two countries existed in the world. Country A imported $200 million worth of goods and services from country B. Country B imported $100 million worth of goods and services from country A. Net exports for: A) country A equal $200 million. B) country B equal $200 million. C) country A equal -$100 million. D) country B equal -$100 million.

c

Which of the following statements is true concerning the producer price index? A) The producer price index is just another term for the GDP deflator. B) Changes in the producer price index generally follow changes in the CPI. C) The producer price index measures the cost of a basket of goods typically purchased by producers. D) The producer price index shows how the cost of all purchases by urban families changes.

c

Which of the following would NOT be considered a government transfer? A) unemployment compensation B) food stamps C) payments by the Defense Department for a new weapons system D) Medicare benefits paid to someone who is indigent

c

What is net exports?

exports-imports