macroeconomics

Assume that a rancher sells McDonald's a quarter-pound of meat for $1 and that McDonald's sells you a hamburger made from that meat for $2. In this case, the value included in GDP should be:

$2

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and net exports are -$1,910, then government purchases are:

$2,997

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $0.50 in 2009. If 10 apples and 5 oranges were purchased in 2002, and 5 apples and 10 oranges were purchased in 2009, the CPI for 2009, using 2002 as the base year, is:

1.25

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 5 in 2009, then the GDP deflator in 2009, using a base year of 2002, was approximately:

1.7

Assume that equilibrium GDP (Y) is 5,000. Consumption (C) is given by the equation C = 500 + 0.6(Y - T). Taxes (T) are equal to 600. Government spending is equal to 1,000. Investment is given by the equation I = 2,160 - 100r, where r is the real interest rate in percent. In this case, the equilibrium real interest rate is:

13%

If nominal GDP grew by 5 percent and real GDP grew by 3 percent, then the GDP deflator grew by approximately ______ percent.

2

If the unemployment rate is 6 percent and the number of employed is 188 million, then the labor force equals ______ million.

200

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and net exports are $1,910, then government purchases are:

2977

If real GDP grew by 6 percent and population grew by 2 percent, then real GDP per person grew by approximately ______ percent.

4

If the adult population equals 250 million, of which 145 million are employed and 5 million are unemployed, the labor force participation rate equals ______ percent.

60

Assume that the adult population of the United States is 191.6 million, total employment is 117.6 million, and 9.4 million are unemployed. Then the unemployment rate, as normally computed, is approximately ______ percent.

7.4

If GDP (measured in billions of current dollars) is $5,465 and the sum of consumption, investment, and government purchases is $5,496, while exports equal $673, imports are:

704

An estimate of total employment in the economy can be obtained from:

both the household and establishment surveys.

In the classical model with fixed income, if the demand for goods and services is less than the supply, the interest rate will:

decrease

A woman marries her butler. Before they were married, she paid him $60,000 per year. He continues to wait on her as before (but as a husband rather than as a wage earner). She earns $1,000,000 per year both before and after her marriage. The marriage:

decreases GDP by $60,000

If the consumption function is given by C = 150 + 0.85(Y - T) and T increases by 1 unit, then savings:

decreases by 0.15 units.

Recessions are periods when real GDP

decreases mildly

Recessions are periods when real GDP:

decreases mildly

In the neoclassical model with fixed income, if there is a decrease in taxes with no change in government spending, then public saving ______ and private saving ______.

decreases; increases

Macroeconomic models are used to explain how ______ variables influence ______ variables.

exogenous; endogenous

The total income of everyone in the economy is exactly equal to the total:

expenditure on the economy's output of goods and services

All of the following are measures of GDP except the total:

expenditures of all businesses in the economy.

In the long run, the level of national income in an economy is determined by its:

factors of production and production function.

A production function is a technological relationship between:

factors of production and the quantity of output produced

All of the following actions increase government purchases of goods and services except the:

federal government's sending a Social Security check to Betty Jones.

Exogenous variables are

fixed at the moment they enter the model

Skill-biased technological change ______ the demand for high-skilled workers, while the slowdown in the pace of educational advancement reduces the supply of skilled workers, resulting in relatively _____ wages for skilled workers.

increases; higher

Funds flow directly between savers and investors in financial___ and flow indirectly between savers and investors through financial___

intermediaries; markets

Disposable personal income:

is computed by subtracting personal tax and nontax payments from personal income.

At any particular point in time, the output of the economy:

is fixed because the supplies of capital and labor and the technology are fixed.

According to the definition used by the U.S. Bureau of Labor Statistics, a person is not in the labor force if that person:

is going to school full time.

When a firm sells a product out of inventory, GDP:

is not changed

A woman marries her butler. Before they were married, she paid him $60,000 per year. He continues to wait on her as before (but as a husband rather than as a wage earner). She earns $1,000,000 per year both before and after her marriage. If GDP were changed so that it truly measured the sum of all final economic activity, the marriage would:

leave GDP unchanged

In the classical model with fixed income, if the interest rate is too high, then investment is too ______ and the demand for output ______ the supply.

low; falls short of

GNP equals GDP ______ income earned domestically by foreigners ______ income that nationals earn abroad.

minus; plus

The labor force equals the:

number of employed and unemployed individuals

The labor force equals the:

number of people employed plus the number of people unemployed

A worker with two jobs is counted:

once in the household survey, but twice in the establishment survey.

A competitive, profit-maximizing firm hires labor until the:

price of output multiplied by the marginal product of labor equals the wage.

A competitive firm chooses the:

quantity of labor and capital to employ.

The government raises lump-sum taxes on income by $100 billion, and the neoclassical economy adjusts so that output does not change. If the marginal propensity to consume is 0.6, national saving:

rises by $60 billion.

A competitive firm:

small relative to the markets in which it trades, so it has little influence on market prices

An increase in the price of imported goods will show up in:

the CPI but not in the GDP deflator

An increase in the price of goods bought by firms and the government will show up in:

the GDP deflator but not in the CPI.

all of the following are a stock except:

the government budget deficit

All of the following are important macroeconomic variables except:

the marginal rate of substitution.

In a simple model of the supply and demand for pizza, the endogenous variables are:

the price of the pizza and the quantity of the pizza sold

In the long run, what determines the level of total production of goods and services in an economy?

the quantity of capital, quantity of labor, and production technology

If an earthquake destroys some of the capital stock, the neoclassical theory of distribution predicts:

the real wage will fall and the real rental price of capital will rise.

Two equivalent ways to view GDP are as the

total income of everyone in the economy or the total expenditure on the economy's output of goods and services

The household survey conducted by the Bureau of Labor Statistics provides estimates of the number of workers ______, while the establishment survey provides estimates of the number of workers ______.

with jobs; on firms' payrolls

National income differs from net national product by an amount called:

a statistical discrepancy.

Economic profit is zero if:

all factors are paid their marginal products and there are constant returns to scale

In the circular flow model, the flow of dollars from firms to households is paid _____ and the flow of dollars from households to firms is paid _____.

as wages and profits; for goods and services

Real GDP is measured in _____ prices ____ time.

constant; per unit of

The demand for output in a closed economy is the sum of:

consumption, investment, and government spending.

In a neoclassical economy, if consumption increases as the interest rate decreases, then a $10 billion rise in government spending would:

crowd out between zero and $10 billion of investment.

Nominal GDP measures the value of goods and services in ______ prices, while real GDP measures the value of goods and services in ______ prices.

current; constant