macro test 2
Kyle purchased on share of stock for $200 in year one and sold the share in year two for $400. The inflation rate between year one and two was 50%. If the capital gains tax is 50%, whats kyles after tax real capital gain if the tax is on nominal gains? what is it if the tax is on real gains?
$0, $50
suppose pierce purchases one share of ford stock for $200 in year 1 and sells that share in year 2 for $400. The inflation rate between year 1 and year 2 is 50%. if the capital gains tax is 50%whats pierces after tax real capital gain if the tax is on nominal gains? what is it if the tax is on real gains?
$0, $50
suppose that chris's pizza place incurs $800,000 per year in explicit costs and $100,000 in implicit costs. the restaurant earns 1.3 million in revenues and has 5 million in net worth. based on this info, economic profit is and accounting profit is ____
$400,000, $500,000
assume GDP is $9000; Consumption expenditure is $6000; total tax collection is $3500; government transfer and interest payment is $2800. Suppose the government of this closed economy is running a budget deficit of $400. Then we know that net taxes is ____ and government purchase is _____
$700, $1,100
suppose your grandfather earned a salary of 12000 in 1964. if the CPI is 31 in 1964 and 219 in 2013, then the value of your grandfathers salary in 2013 dollars is approximately
$84,775
imagine your father lends you 1000 for one year and at the end of the year you repay the 1000 plus 50 of interest. If the inflation rate was 7%, what was the real interest rate you paid to your father?
-2 percent
suppose that in the country of troy, the CPI in year 1 was 100 and CPI in year 2 was 105. a resident of Troy borrowed money in year 1 and repaid the loan in year 2. If the nominal interest rate on the loan was 8% then the real interest rate paid was
3%
suppose that pizza place incurs 800,000 in explicit cost and 100,000 in implicit costs. The restaurant earns 1.3 million in revenues and $5 million in net worth. The economic profit is ____. The accounting profit is _____.
400,000; $500,000
the Earnest scholarship awards Jacob $4000 today and promises to pay him two additional payments of $4000 one year and two years from today. What is the present value of these payments
4000+4000/(1+r)+4000/(1+r)^2
when 1983 is the CPI base year, the CPI value is 82.4 for 1980 and 172.2 for 2000. Suppose we want to convert this CPI series to have a base year of 2000. What is the value of the revised CPI for 1980?
47.9
suppose that macroland, a closed economy, has net taxes of 3 trillion, government purchase of 5 trillion and private savings of 7 trillion. we can include that investment in this nation must be equal to
5 trillion
suppose Dr. Lee's house stock is selling at $50 per share and it has retained earnings of $3 per share, and dividends of $7 per share. What is the price earnings ration and dividend yield
5, 7/50
in year one the CPI is 141 and in year two the CPI is 150. If Dennis's salary was 75000 in year one whats the minimum salary he must earn in year two to "more than keep up with inflation"
75000 x 150/141
what is the present value of $888 in one year if the current rate of interest is five percent
845.71
if the inflation rate is higher than expected in the U.S. which of the people in the U.S. would be most likely to gain
Sarah, who borrowed 10,000 at a 6% interest rate form commerce bank to purchase a Hyundai Sonata
in a closed economy, which equation reflects investment?
Y-C-G
according to lecture, in addition to brazil, another country recently suffering from hyperinflation is
Zimbabwe
who has a higher standard of living and why?
___ has a higher standard of living because their GDP per capita is higher
if the demand curve for loanable funds shifts rightward from the curve, this is a result of
a increase in investment tax credit
countries with high rates of economic growth tend to have
a labor force that is more productive
a system in which the government provides national health insurance to all Canadian residents
a single payer health care system
tax law give preferential treatment to specific types of behavior
a tax loophole
suppose the government wants to finance housing for low income families by placing a tax on the purchase of luxury homes. Assume the government defines a luxury home as a home that is purchased for at least 1 million. This tax is consistent with the _____
ability to pay principle
a key difficulty facing insurance companies is that people know more about their health than do insurance companies, and those people who are seriously ill are most likely to want to obtain health insurance. what is this phenomenon called
adverse selection
suppose you lend $1000 at an interest rate of 10% over the next year. if the expected real interest rate at the beginning of the loan contract is a 4%, then what rate of inflation over the upcoming year would be most beneficial to you as the lender
an inflation rate equal to 0 percent
if revenue from gas tax is used to build and maintain public roads, the gas tax may be justified on the basis of ___.
benefits principle
if a corporation goes bankrupt, which of the following has first claim on the firm's assets
bondholders
the consumer price index would be likely to reflect the prices of goods and services except
bonds of US corporations
brock and chris are discussing starting up an firm as a corporation. What's an advantage of setting up their business as a corporation
brock and chris would have the ability to share risk with shareholders
suppose that sam is an economic consultant for the US department of defense. the US is considering whether to build a fence that will cost taxpayers 10 billion. if the total benefit of having the border fence is spread out over the next twenty years and interest rate is 5% per year, what should Samuel advise the US government to to
build the fence if the total benefit is greater than 10 billion x (1+.05)^20
a false statement from lecture and the text
centrally-planned economies tend to grow more quickly than market economies
the substitution bias in the consumer price index refers to the idea that consumers ___ the quantity of products they buy in response to price and the CPI does not reflect this and ______ the cost of the market basket
change; over-estimates
a false statement, according to lectures is ...
changes in the health of the average person are relatively unimportant as an indicator of changes in the standard of living
sale of bonds to raise funds is
debit finance
the sale of stocks to raise money is called
equity finance
in the united states, total health care spending per person has been rising and out of pocket spending on health care per person has been _______
falling
during the great depression, cyclical unemployment increased as the recession continued. This increase in cyclical unemployment:
had no effect on the natural rate of unemployment
ryan buys health insurance and then he requests an unreasonable high number of certifications to see specialists. tim buys car insurance because he knows he has narrowly avoided many accident. the example with ryan
illustrates moral hazard, the example with tim illustrates adverse selection
a false statement from lecture and the text
in the US, the marginal tax rate on the personal federal income tax decrease as income increases
which of the taxes is based on the ability to pay principle
income taxes
the economy includes two distinct groups of people: wage earners and good sellers. If the price level falls by 10% and nominal wages remain unchanged
income will be redistributed from goods sellers to wage earners
in 2000, the citizens of Columbia passed a 1/4 dedicated park sales tax to fund purchase of property from stephens college and turn it into stephens lake park, and as a result there are hundreds of people enjoying the trails, swimming lake, open space, shelters and playgrounds that currently make up the park. this method of using park sales tax is
inconsistent with the ability to pay principle
according to text or lecture technological advances lead to
increased life expectancy
according to lectre, which of the following methods is well-established firm like Microsoft least likely to use to fund an investment
issue stocks
What is true about consumer price index
it assumes that consumers purchase the same amount of each product in the market basket each month
the quantity of goods and service that can be produced by one worker or by one hour of work is referred to as
labor productivity
in the long run, small differences in economic growth results in ____ differences in GDP per capita
large
in response to the question, "what are your feelings on recessions?" Jen responds, "I like a good recession. It cuts out the weak. Its just survival of the fittest for businesses" Jen statement about recessions:
may be true. Recessions may lead to a more efficient society by driving inefficient firms out of business
the governments health plan for the poor
medicaid
the governments health plan for the elderly
medicare
Suppose the price of chicken wings per pound rises from $4 to $5 and the price of a gallon of ice cream rises from $3 to $3.60. If the CPI rises from 100 to 130, then people likely will buy
more chicken and ice cream
suppose the price of ice cream rises from 2 to 2.20 and pric of coffee rises from 2 to 3. if the CPI rises from 150-200 then people will likely buy
more ice cream and less coffee
according to lecture or text, the FICA is payroll tax imposed on employers and workers that is used to fund social security and medicare. which of the following statements regarding the tax is true?
most economist believe the burden of the tax falls almost entirely on workers
at the time of courtneys 10 year reunion she was making $25000 and the CPI was 70. Now that its time for 20 year reunion, her incme has risen to $65000 and CPI is 210. At her 20 year renunion, can Courtney rightfully brag that her nominal and real income have risen since the last time she saw her former classmates ten years ago?
no Courtney's real income fell although her nominal income rose during that 10 year period
the amount of income tax owed by a family is
not simply proportional to its total income
according to lecture, the two largest sources of revenue for the U.S. federal government are
personal income tax and payroll tax
if a doctor knows hat an insurance company will pay for most of a patients bill, the doctor has more of an incentive to require additional medical procedures and tests, even if the patient may not require them. this is an example of
principle agent problem
financial intermediaries do all of the following except
print money
if you pay $2000 in taxes on an income $20,000 and a tax of $2700 on an income of $30,000 then over this range of income the tax is
regressive
if your nominal wages rises faster than the price level, we can say your real wage has ______ and the purchasing power of your income has _____
risen, risen
according to lecture, what best describes stagflation
rising unemployment and inflation rates
a consumer price index of 160 in 1996 with a base year of 1872-1984 would mean the cost of the market basket
rose 60% from the cost of the market basket in the base year
sam is thinking of starting up a small business as a sole proprietorship. Whats an advantage of being a sole proprietor
sam would have both ownership and control over the business
suppose that janique, an accountant, opens the accounting service at her house in Chicago. Suppose that during her first year of business her monthly income exceeds her monthly expenditures. Janique would be best describes as a
saver or supplier of funds
better health allows people to work harder, which raises a country's total income. This indicates that in effect, better health
shifts out a country production possibilities frontier
suppose OPEC succeeds in raising world oil prices by 300%. this price increase causes inventors to develop alternative fuels for internal combustion engines. a hydrogen powered engine is developed which is cheaper to operate than gasoline engines. which problem in the construction of the CPI does this situation represent
substitution bias and intro of new goods
suppose that the government runs a budget deficit. The ____ funds curve will shiftleft, effectively ____ the nterest rate and _____ amount of loanable funds. This isutatio is known as ____ effect
supply of, increase, decreasing, crowding out
if the price of used cars in the U.S. decreased by 10% then
the GDP deflator will be unchanged and the CPI will decrease
The stealth bomber is designed by LA based corp and is one of the most expensive and controversial military aircrafts ever designed for the U.S. military. If the price of the bomber increased by 5.5 percent then
the GDP deflator will increase and the CPI will be unchanged
suppose the tires of a tire manufacturer are discovered to be defective. Other things the same, this news would likely cause
the demand for stock of this company to decrease so the price would fall
which of the following statements best describes the phenomenon known as "crowding out"
the government runs a budget deficit, increasing the interest rate and making it more expensive for the private sector to get funds for private investment
suppose the U.S. Congress passes new legislation that increase incentives for U.S. resident to save. everything else the same, according to the analysis of the market for loanable funds, we would expected:
the interest rate to decrease
how would the equilibrium interest rate and quantity of loanable funds respond to a change from an income tax to a consumption tax
the interest rate would fall and the quantity of loanable funds would rise
Juan owns a shoe repair shop in Bolivia. The value of the Bolivian peso dropped last year at a rate of 5% per day. One day you walk into the store to find Juan grumbling about the inflation rate as he erases a chalk board that reads "todays prices". Juan is most likely grumbling about
the menu cost of inflation
if a poor family has three children in public school and rich family has two children in private school, the benefits principle would suggest that
the poor family should pay more in taxes to pay for public education than the rich family
according to the text or lecture....?
the producer price index tracks the prices firms receive for goods and services at all stages of production
the unemployment rate is an important economic statistic that can tell us about the health of the economy. if the unemployment rate turns out to be high or higher than anticipated, we would expect:
the stock prices are more likely to fall
what would happen in the market for loanable funds if the government were to decrease the tax rate on interest income
the supply of loanable funds would shift right and investment would increase
you open a savings account at a local bank. The bank puts together your savings with the savings of other depositors and creates a loan to a local carpenter that uses the loan to buy new tools.
you participated in the indirect finance channel; the carpenter got his funds through the indirect finance channel
