Midterm for Macroeconomics
A business buys $5000 worth of inputs from other firms in order to produce a product. The business makes 100 units of the product and each of them sells for $65. The value added by the business to these products is
$1500
13. Assume that a consumer has a given budget or income of $12 and that she can buy only 2 goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.70. What is the slope of the budget line if the quantity of apples were measured on the horizontal axis and bananas on the vertical axis?
-2.0
In year 1, nominal GDP for the United States was 2,250 billion and in year 2 it was 2,580 billion. The GDP deflator was 72 in your wine and 79 in your two. Between year 1 and year 2, real GDP rose by
1.6%
In an economy, the total expenditures for a market basket of goods in year 1 (the base year) were 5,000 billion. In year 2, the total expenditures for the same market basket of goods was 5,500 billion. What was the GDP price index for the economy in year 2?
110
If consumption is 8 billion, investments is 4 billion, government purchases are 2 billion, imports or 1 billion, and exports are 2 billion, GDP must equal
15 billion
The nations average annual real GDP growth rate is 2.5%. Based on the rule of 70, the approximate number of years that it would take for this nations real GDP to double is
28 years
Increasing returns would be a situation where a firm increases its workforce and other inputs by
5 percent and its output increase by 8 percent.
If real GDP per capita in 2014 is 36,000 and in 2015 it is 37,800, what is the economic growth rate?
5%
If US real GDP grew from 12 trillion one year to 12 .7 trillion the next the annual growth rate would be
5.8%
If the GDP of macroland is 250 million and they have a population of 5000 people, then the GDP per capita is
50,000
Which of the following could cause an increase in the supply of wheat?
A decrease in the price of oats.
Which of the following is a final good or service?
A haircut.
6. What is the distinction between a positive and a normative statement?
A. Positive statements are assertions that can be tested with data, whereas normative statements are based on value system of beliefs.
4. Meridith had only $16 to spend this last weekend. She was, at first, uncertain about about whether to go to two movies she had been wishing to see or to buy a new CD she had recently heard. In the end she went to the movies. Which of the following statements is correct?
A. The opportunity cost of the two movies is one CD.
Refer to the graph above the answer this question. All the following except one could have caused the shift from D1 to D2. Which is the exception?
An increase in the price of a complement good.
Ceteris paribus, which of the following is most likely to cause an increase in the quantity supplied of perfume?
An increase in the price of perfume.
3. Gwen had only $10 yesterday. She was uncertain whether to go out for lunch or to buy beer. In the end she bought beer. Which of the following statements is correct?
B. The opportunity cost of beer is lunch.
1. What do economists mean when they say that economy faces scarcity?
B. The resources available are not sufficient to produce all that everyone wants.
And example of something that might be sold in the underground economy is
Babysitting services, lawnmowing services, endangered animals.
7. Which of the following statements describes the key assumption behind the law of increasing costs?
C. Not all resources are equally suitable for the production of goods and services.
2. Given that resources are scarce,
C. Opportunity costs are experienced whenever choices are made.
8. What is an example of an economic model?
C. Production possibilities curve.
What is the term for a change in the amounts that a producer is willing and able to make available as a result of a price change?
Change in the quantity supplied.
5. All of the following statements, except one, are positive statements. Which is the exception?
E. Economics should be a mandatory course in all Canadian colleges and universities.
9. All of the following except one are microeconomic statements. Which is the exception?
GDP increased by 1.8% in the U.S last year.
The best measure of living standards is
GDP per capita
Jake, Sr. sells the family business, a factory that produces snake oil, to Jake, Jr., For $100 even though the factory has been assessed at $400,000. How will this transaction affect GDP?
GDP will not be affected by the transaction
What is the result if the size of the underground economy grows?
GDP will understate the level of economic activity
Assume the real US GDP in 1997 was 7,269 billion and the US population was 268 million and the real US GDP in 1998 was 7,552 billion and the US population was 270 million. From 1997 to 1998 the per capita real GDP
Increased
Supply factors in economic growth include the following except
Increases in purchases of output.
12. If an economy is producing inside the production possibilities curve, then
It can produce more of one good without giving up some of another good.
What is the effect of an increase in the price of a resource?
It will cause a decrease in the supply of the product.
What is the effect of consumers expecting that the future price of a product will increase?
It will cause an increase in demand.
What is the effect of producers' expecting that the future price of a product will decrease?
It will cause an increase in supply.
What is the effect of a decrease in the supply of a product?
It will cause an increase in the price but a decrease in the quantity traded.
In order to shift the current production possibilities curve out word, an economy
Must find additional resources or better technology
GDP counts:
Only final goods and services, because otherwise certain things would be double counted and the GDP would be over estimated.
What is meant by the erm ceteris paribus?
Other things being equal.
Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?
People moving into the community will have difficulty locating residential space to rent.
The base year refers to the year whose
Prices are used to calculate real GDP for all years.
The population of a country has increased while the value of its real GDP has decreased, over the previous year. Which of the following will be true:
Real GDP per capita has decreased
Economic growth can be best portrayed as a
Rightward shift of the production possibilities curve.
What can be concluded is, in a certain year, net investment is -5.8 billion
That depreciation exceeds growth investment by 5.8 billion
What would be the result is intermediate goods and services were included in the calculation of GDP?
The GDP would be overstated.
Which of the following would be included in the measurement of GDP?
The amount of government spending on goods and services.
At the end of the year, ford realizes it has overproduced fiestas, because 2500 of them are left on sold. How is this accounted for in that year's GDP?
The cars are considered inventory and their value will increase investment.
What is meant by the term change in the quantity demanded?
The change in the quantity which results from a price change and implies a movement along the demand curve.
10. All of the following except one are macroeconomic topics. Which is the exception?
The effect of an interest rate change on the cost of your monthly loan payment.
What will cause the demand for a normal product to increase?
The expectation by consumers that future prices will be higher.
11. A point on a nations production possibilities curve represents
The full employment of resources to achieve a particular combination of goods and services.
GDP deflator of 112 means
The overall price level is 12% higher than in the base year
If the price of a product is above equilibrium, which of the following statements is true?
The quantity supplied will exceed the quantity demanded.
A girl that would be counted as consumption in GDP would be
The subway sandwich Tony ate for lunch
What is the result if professor mumble decorates his own home?
This is a productive activity but is excluded from GDP because no market transaction occurs.
Which of the following is not an intermediate good?
Tires sold by Goodyear to put on your Explorer
An example of a final good or service is:
a tire to replace your flat, a new car, getting the oil changed in your car
Labor productivity can only increase if
capital increases faster than labor
An American citizen works for a US owned architectural firm located in Mexico. This architect will:
contribute toward Mexico's GDP since he's working in Mexico
One of the basic economic defenses of economic growth rests on the conclusion that
growth makes the gap between unlimited wants and scarce resources less acute.
All else held constant, a decrease in supply will lead to a
increase in price and decrease in quantity demanded.
Rising real wages for women in the U.S. workforce since the 1960s have
increased the opportunity cost of staying at home.
14. Assume that a consumer purchases only 2 products. Suppose that the consumers money income double and the prices of the 2 products also double. These changes in income and prices will result in...
no change in the budget line
An example of a good or service that would not count in the US GDP would be:
sneakers made by Nike in Indonesia
Which of the following does not appear in GDP as a part of government spending?
social security payments
The inverse dependency ratio is defined as the ratio of
the working age population to the number of dependents.
