Macroeconomics Exam 1
Which of the following is false? Gross domestic product:
is the market value of all intermediate and final goods and services produced in a nation within a specific period of time
A shortcoming of real GDP is:
it does not include the underground economy
A country's exports minus its imports during a period are:
net exports
You are a college student who is not working or looking for work. You are:
not part of the labor force.
Recessions are periods when:
output and employment are falling
Macroeconomics involves the study of the:
overall behavior of the economy
Which of the following is included in the government purchases category of GDP?
payments to people in the military
Investment spending includes spending on:
tools and equipment that can be used in future production
Per capita economic growth is:
economic growth per person
To evaluate the change in average living standards over time, it is best to use:
real GDP per capita.
The measure of aggregate output typically used by economists is:
real gross domestic product
Real GDP is nominal GDP adjusted to account for:
differences in the price level that affects the purchasing power of the money used in economic activity
Company X sells leather to company Y for $60,000. Company Y uses the leather to make shoes, selling them to consumers for $180,000. The total amount included in GDP is:
$180,000
You bought stock in 2010 for $100 and you sold it in 2012 for $200. You used a broker to sell the stock for you, and he charged you $20. This transaction contributed ________ to GDP.
$20
If income in a country is $750,000 million and its population is 250 million, it's per-capita income is:
$3,000
Assume that the real GDP of the U.S. is approximately $12,000,000 million and the population of the United States is approximately 300 million. What is per capita real GDP?
$40,000
Farmer John produces oranges. He sells half of his inventory to people at his roadside stand for $20,000 and sells the other half to Tropicali for $15,000. Tropicali uses the oranges to make orange juice, which it sells to consumers for $25,000. The total amount included in GDP is:
$45,000
Suppose that Mr. Green Jeans sells $5,000 of wheat to Big Ben Bakery. Big Ben uses the wheat to make flour and then hamburger buns, which they sell to Hamburger Heaven for $11,000. Hamburger Heaven also buys $20,000 of beef from a rancher. Hamburger Heaven uses the beef and buns to make 10,000 hamburgers which are sold for $5 each. The total amount included in GDP is:
$50,000
If the growth rate of the number of televisions in a country is 1% and the growth rate of the country's population is 3%, the growth rate of the number of televisions per-capita is:
-2%
Suppose that a country's per-capita wages grew 4.6 percent. The country's total wages grew 6.3 percent. What is the growth rate of the country's population?
1.7%
Suppose there are 70 million people in the labor force, out of which 60 million are employed, then the unemployment rate is:
14.28%
If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its labor force is
150 million
Suppose nominal GDP increased by 5 percent and real GDP increased by 3 percent. What is the growth rate of the price level?
2 percent
Real GDP in a small country was $148.3 million in 2014 and $152.5 million in 2015. What is the growth rate of real GDP from 2014 to 2015?
2.83%
If a country has a working-age population of 200 million, 120 million people with jobs, and 30 million people unemployed and seeking employment, then its unemployment rate is:
20%
The Arcadia Entertainment Co. produced 20,000 DVD's of the movie Hulk in 2007. During 2007 16,000 were sold (leaving 4000 copies unsold at the end of 2007). Based on this information:
20,000 DVD's will be included in 2007 GDP. 16,000 will be counted as part of consumption. 4,000 will be counted as part of investment
A survey reveals that on a small island 40 people have jobs, 10 people are looking for jobs, and 30 people are neither working nor looking for work. The unemployment rate on the island is:
20.0%
Suppose the average price of a book was $10.39 in 2009 and it was $10.76 in 2010. What was the growth rate of the average book price between 2009 and 2010?
3.56%
If nominal GDP changed by 6% and the price level changed by 2%, then real GDP changed by:
4%
If real GDP grew by 2% and the price level grew by 2%, then nominal GDP grew by:
4%
Consumption expenditures make up about how much of GDP?
70 percent
The country of Livonia has an adult population of 100 million. Sixty percent of Livonia's population are employed, but 10% of the people are unemployed. The Labor Force Participation Rate in Livonia is:
70%
US GDP includes which of the following transactions?
A new (US-made) sofa that Ben bought online
Which of the following answers best describes the difference between nominal and real variables?
A nominal variable reflects the amount of money involved in a transaction. A real variable reflects the purchasing power of a nominal variable.
Goods that are produced in a particular year but not sold in that year:
Are added to the firm's inventory and are included in GDP as part of investment in the year they're produced
Which of the following is (are) true? A) The number of people not working but who have looked for work in the past year are unemployed. B) The labor force is the total number of people working plus those who are unemployed. C) The unemployment rate is the number of people unemployed expressed as a percentage of the population. D) The labor force is the same as the population.
B) The labor force is the total number of people working plus those who are unemployed.
Which of the following equations correctly measures GDP?
C + I + G + X -M
The growth rate of a variable:
Can be positive, negative, or zero
Business cycles refer to the expansion, then contraction, then expansion again of nominal GDP
False
GDP is the market value of all goods and services produced in a nation during a specified period of time:
False
Which economic statistic measures aggregate production in an economy?
GDP
Miguel found a new job in another city. By taking the new job his nominal income increases from $40,000 to $50,000. Based on this information we know:
He's getting more money than he was in his old job
Which of the following would NOT be considered a transfer payment?
Payments by the defense department for a new weapons system
Suppose that nominal GDP increased by 5 percent and the price level increased by 3 percent. We know that real GDP:
Increased by 2 percent
Suppose that in a particular month roughly 8 million people in the United States were seeking jobs but had not found them, as in the previous month. Suppose that 2 million of these people gave up their searches in the current month and stopped looking for work. What will happen to the unemployment rate, all other things unchanged?
It will fall
Which of the following people would be officially considered unemployed?
Jenna, who just graduated from college and is searching for a job that fits her graphic-design skills. She's available to start work right away.
Which of the following is an example of an unemployed worker?
Jennifer, an accountant who spends her days at home reading the New York Times and mailing her resume.
Which of the following is included in GDP as investment spending?
Maggie bought a play-gym set for her day-care business
Joe has a full-time construction job and also does odd jobs for people on the weekends. You have bought the materials needed to build a fence at your house and you pay Joe $500 in cash to build it. Will the $500 you pay Joe be included in GDP?
No, if this income is not likely to be reported to the government
Per-Capita
Per-Person
The standard of living in a country is best measured using:
Real per-capita GDP
Why do economists pay attention to data on real income?(In other words, why do they find real income data useful?)
So they can compare the purchasing power of nominal income over time
Which one of the following is an example of a consumption expenditure?
Stephanie bought a new laptop computer for her brother
A company sells 100 boxes of chocolate, yet it only produced 90 boxes of chocolate during the year. Which of the following is true?
The change in inventories must be negative
The business cycle illustrates
The tendency for GDP to rise and fall in the short-run
Which of the following topics are studied in macroeconomics?
The unemployment rate
Country A has a GDP of $200,000 and a population of 1,000. Country B has a GDP of $400,000 and a population of 4,000. Which of the following is true?
The value of GDP per capita is higher in country A.
Per-capita production is a better measure for making comparisons between two countries than usual (total) production when:
There are large differences in population in the two countries
Which of the following is an example of an intermediate good?
Tires purchased from Goodyear by General Motors fora newly produced electric car
Investment spending includes spending on
Tools and equipment used by businesses
Is the value of cleaning your house included in GDP?
Yes, if you pay a person or company to clean your house
Which of the following is included in 2018 US GDP?
a new oven produced in S. Carolina in 2018 and bought by a local bakery
Which of the following is a service?
a physical exam performed by your doctor
Official unemployment is identified when:
a worker who is not currently employed, is available for work and is unsuccessfully searching for a job.
Long-run growth is the growth rate of:
aggregate output per person, averaged over several decades
The consumption category includes:
all purchases of final goods and services made by consumers except new houses
Ford produces 100,000 cars this year and only sells 95,000. The 5,000 cars that are not sold _______ included in ________ category of GDP.
are; the investment
To be counted as unemployed, one must:
be out of work and be actively looking for a job
The short-run fluctuations in economic activity that can cause output to be above or below the long-run trend are called:
business cycles
GDP is used as a measure of:
changes in average living standards.
Macroeconomics is the study of:
changes in national income
Real GDP is nominal GDP adjusted to account for:
changes in purchasing power
The largest component of U.S. GDP is:
consumption spending
The four major expenditure categories of GDP are:
consumption, investment, government purchases, and net exports
When John buys new tires for his car it _______, and when Ford buys tires to put on new cars it ____________.
counts toward consumption; does not count toward GDP
GDP is used as a measure of all of the following except:
environmental quality
The sale of American-grown corn to China is included in the ________ category of GDP.
export
Goods that are produced in a country but sold abroad are
exports
In 2008, consumption spending is $7,000, government purchases is $2,000 and investment spending is $1,500. If GDP for 2008 is $10,300, then:
exports = $600 and imports = $800
If real GDP rises while nominal GDP falls, then we know the price level must have:
fallen
GDP is best defined as the total market value of all:
final goods and services produced within a country within a given time.
A new (US-made) laptop computer purchased by an accounting firm is:
included in US GDP as part of investment spending
Suppose that nominal GDP is $1000 in 2006 and nominal GDP is $1500 in 2007. If the price level ____ between 2006 and 2007, we could say that real GDP _____.
increased by 50%; stayed constant
When GDP increases, national income ________ and national output __________.
increases; increases
Goods that firms repackage with other goods for sale at a later stage are:
intermediate goods
When George buys a new computer for his business, it is included in GDP as _______, and when he buys a new computer for use at home, it counts as ________.
investment; consumption
The topics studied in macroeconomics include:
the average price level in the economy
GDP is
the market value of all final goods and services produced in a nation within a specific period of time
The unemployment rate is:
the percent of the labor force that is unemployed
Which of the following represents the largest share of U.S. GDP?
the production of services
Which of the following is a topic of microeconomics?
the profit of firms in the banking industry
The business cycle is:
the short-run alternation between economic expansions and contractions
The expansion phase of a business cycle is best described as:
the time elapsed from a trough to a peak
The labor force is:
the total of people employed and unemployed
GDP includes:
the value of new homes and apartment buildings
