Macroeconomics Chapter 7

is net exports.

A nation's exports minus its imports: equals its private investment. is net exports. is always a positive number. is equal to net transfer payments.

All of the above are true.

A price index: always includes a base year. is used to measure the cost of a market basket across different years. is normalized so that it equals 100 in the base year. All of the above are true.

104

Calculate the GDP deflator for 2019. ​ 2018. 2019 Nominal GDP. 400. 500 Real GDP. 360. 480 111 104 90 96 ​

$22,000.

Consider an economy that produces only smartphones and laptops. Last year, 10 smartphones were sold at $800 each, and 5 laptops were sold at $1,000 each, while this year, 15 smartphones were sold at $900 each, and 10 laptops were sold at $1,100 each. Real GDP this year, using last year as a base year, is: $22,000. $24,500. $11,000. $13,500.

$630.

Enchanté Inc., a designer clothing company, buys $400 worth of silk and $30 worth of accessories to produce each dress. If the value added by Enchanté is equal to $200, then according to the value-added approach, the price of the designer dress should be: -$630. -$230. -$200. -$830.

5.56%.

If the consumer price index is 180 in year 1 and 190 in year 2, the inflation rate between year 1 and year 2 is about: 5.26%. 5.56%. 6.5%. 10%.

aggregate output decreases by more than prices

If the dollar amount of nominal GDP decreases, then it is possible that ____. -aggregate output decreases by less than prices increase -aggregate output decreases by more than prices -aggregate output increases by more than prices -aggregate output increases and prices decrease

remain unchanged.

If the price level and nominal GDP both doubled, then real GDP would: also double. increase by half. remain unchanged. decrease by half.

sell goods and services.

In the circular-flow diagram, firms: -sell goods and services. -buy goods outside of investment spending. -sell labor. -buy services outside of investment spending.

receive transfer payments from the government.

In the circular-flow model, households: -receive transfer payments from the government. -buy resources in the factor markets. -sell products in the market for goods and services. -issue stocks and bonds to raise capital.

real GDP divided by the population.

Real per capita GDP is: real GDP divided by the population. real GDP divided by the amount of capital available in the economy. not a useful measure of human welfare. rarely used as a tool to compare countries' possible resources.

$40

Suppose a market basket consists of 20 jars of peanut butter and 10 jars of jelly. What is the value of the market basket in 2017? ​ Price in 2017. Price in 2018. Price in 2019 Peanut butter. $1.00. $1.10 $1.20 Jelly. $2.00. $2.25. $2.50 ​ $3 $40 $42 $44.50 ​

100

Suppose a market basket consists of the following goods: 50 pens, 25 notepads, and 25 paperclips. Also assume that the unit prices of these goods are as follows for the years noted and that 2018 is the base year. What is the value of the price index in 2018? ​ Price in 2018 Price in 2019 Pens. $0.25 $0.30 Notepads. $0.30 $0.25 Paperclips. $0.10. $0.15 100 111 90 0

5%

The approximate rate of inflation in year 3 is: ​ Year. Consumer Price Index 1. 80 2 (base year). 100 3. 105 4. 125 5. 150 ​ 5%. 10%. 19%. 20%.

the change in a price index divided by the initial value of the index.

The inflation or deflation rate is: the change in a price index divided by the initial value of the index. the change in a price index divided by the new index number. the difference between the initial price index number and the new price index number. computed by dividing the old price index number by the new price index number.

the current; the base

The price index in the current year is the cost of the market basket in ____ year divided by the cost of the market basket in ____ year times 100. the base; the current the current; the base a past; a future a future; a past

consumer price index

The price measure MOST widely used to determine the inflation rate in the United States is the _____. producer price index consumer price index GDP deflator national income account

prices of inputs will ultimately be reflected in prices of final products.

The producer price index is often regarded as a warning sign of inflation because: prices of inputs will ultimately be reflected in prices of final products. producers are likely to have monopoly control over prices. consumers have to pay the prices charged. commodity producers can sell whatever they want at higher prices.

real GDP

The scale MOST often used to compare economic performance in other years is: the circular-flow diagram. real GDP. the business cycle. fiscal policy.

equal to nominal; 2017

The town of York produces two goods, good A and good B. The following is information regarding York's production of these two goods and their prices over three years. With 2017 as the base year, real GDP in 2017 was _____ GDP in _____. ​ Year 2017. Year 2018. Year 2019 Quantity of good A. 3. 4. 5 Price of good A $500. $550. $550 Quantity of good B 10. 10. 10 Price of good B. $2. $4. $5 -equal to real; 2018 -equal to nominal; 2017 -greater than real; 2018 -greater than nominal; 2019

$1200

What is the total value added of all stages of production of furniture in this production schedule? ​ Table: Furniture Production Schedule Stage of Production. Sales Value of Material Timber. $100 Milled wood $300 Furnished wood $600 Assembled furniture $800 Retail price to consumer. $1,200 ​ $800 $1,200 $1,800 $2,000

GDP = C + I + G + X - IM.

Which equation breaks GDP down into the four sources of aggregate spending? -GDP = C + I + G + X + IM. -GDP = C + I + G - X - IM. -GDP = C - I - G - X + IM. -GDP = C + I + G + X - IM.

the purchase of your neighbor's house, which was built in 2010

Which item would NOT be included in this year's GDP? the production of a television show the purchase of a new hybrid truck the hiring of a new school teacher the purchase of your neighbor's house, which was built in 2010

A college student buys a pizza and has it delivered to her dorm room.

Which transaction is included in the nation's gross domestic product? -A college student buys a used textbook from his roommate. -A construction company purchases lumber to build a new house. -A college student buys a pizza and has it delivered to her dorm room. -A group of college students volunteer to rake leaves at an assisted living facility for senior citizens.