EC 211 Final Exam
Which of the following will increase a country's real GDP per person? Group of answer choices
reducing restrictions on foreign trade and foreign investment
If the budget deficit increases then
saving falls and the interest rate rises
Otherwise legal transactions that go unreported or unrecorded are called
- All of the above are correct. (the shadow economy. the underground economy. the informal economy.)
Table 28-1 - Adult population 2010 2000 2011 3000 2012 3200 - Number of employed 2010 1400 2011 1300 2012 1600 - Number of unemployed 2010 200 2011 600 2012 200 The unemployment rate of Aridia in 2011 was
31.6%.
Suppose the government deficit increases, but the interest rate remains the same. Which of the following things might have happened simultaneously to keep interest rates the same?
Consumers decide to decrease consumption and work more.
Demand deposits are included in
M1 and M2.
Which of the following is correct?
The amount of money in the economy depends in part on the behavior of banks.
Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. Refer to Figure 26-3. A shift of the supply curve from S1 to S2 is called
a decrease in the supply of loanable funds.
The first element of a financial crisis is
a large decline in some asset prices.
When the relative price of a good decreases, consumers respond by buying
a larger quantity of that good and a smaller quantity of substitutes for that good.
Prisoners sometimes determine a single good to be used as money. This good becomes
a medium of exchange and a unit of account.
A creditor of a corporation holds
bonds sold by the corporation. If the corporation experiences financial difficulties bond holders are paid before stock holders.
ABC Co. sells newly issued bonds. JLG Co. sells newly issued stocks. Which company is raising funds in financial markets?
both ABC and JLG
Which of the following is not included in GDP?
carrots grown in your garden and eaten by your family
Which of the following is a source of frictional unemployment? Group of answer choices
changes in the composition of demand among industries or regions
A management professor discovers a way for corporate management to operate more efficiently. He publishes his findings in a journal. His findings are
common, but not proprietary, knowledge.
If in some year real GDP was $25 billion and the GDP deflator was 68, what was nominal GDP?
$17 billion
The table below contains data for Bahkan for the year 2010. GDP$110 Income earned by citizens abroad$5 Income foreigners earn here$15 Losses from depreciation$4 Indirect business taxes$6 Statistical discrepancy$0 Retained earnings$5 Corporate income taxes$6 Social insurance contributions$10 Interest paid to households by government$5 Transfer payments to households from government$15 Personal taxes$30 Nontax payments to government$5 Refer to Table 23-1. What were country A's government purchases in 2010?
$1975
Tim mows the yard for his neighbors. He spends $1 on gas and charges them $20 for each lawn he mows. What's the total contribution to GDP each time Tim mows a yard?
$20
Sue Holloway was an accountant in 1944 and earned $12,000 that year. Her son, Josh Holloway, is an accountant today and he earned $210,000 in 2008. The price index was 17.6 in 1944 and 184 in 2008. Josh Holloway's 2008 income in 1944 dollars is
$20,086.96.
Suppose there are only two firms in an economy: Rolling Rawhide produces rawhide and sells it to Chewy Chomp, Inc., which uses the rawhide to produce and sell dog chews. With each $2 of rawhide that it buys from Rolling Rawhide, Chewy Chomp, Inc. produces a dog chew and sells it for $5. Neither firm had any inventory at the beginning of 2008. During that year, Rolling Rawhide produced enough rawhide for 1000 dog chews. Chewy Chomp, Inc. bought 75% of that rawhide for $1500 and promised to buy the remaining 25% for $500 in 2009. Chewy Chomp, Inc. produced 750 dog chews during 2008 and sold each one during that year for $5. What was the economy's GDP for 2008? Group of answer choices
$4250
Which of the following is not included in M1?
$500 in your savings account
Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006. The consumer price index was 160 in 1996 and 266 in 2006. Janelle's 1996 salary in 2006 dollars is
$66,500.00.
Refer to Table 29-5. The Bank of Pleasantville's reserve ratio is
10 percent.
About what percentage of jobs are destroyed every year and about what percentage of workers leave their jobs in a typical month?
10% and 3%
Table 28-1 - Adult population 2010 2000 2011 3000 2012 3200 - Number of employed 2010 1400 2011 1300 2012 1600 - Number of unemployed 2010 200 2011 600 2012 200 Refer to Table 28-1. The unemployment rate of Aridia in 2012 was
11.1%.
Table 23-5A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2009. - Year 2008 Price of Movies $10.00 Quantity of Movies 400 Price of Popcorn $5 Quantity of Popcorn 800 - Year 2009 Price of Movies $11.00 Quantity of Movies 500 Price of Popcorn $4 Quantity of Popcorn 900 - Year 2010 Price of Movies $12.00 Quantity of Movies 600 Price of Popcorn $5 Quantity of Popcorn 1000 - Year 2011 Price of Movies $12.00 Quantity of Movies 600 Price of Popcorn $6 Quantity of Popcorn 900 Refer to table 23-5 What was this country's GDP deflator in 2010?
115.1
Table 28-1 - Adult population 2010 2000 2011 3000 2012 3200 - Number of employed 2010 1400 2011 1300 2012 1600 - Number of unemployed 2010 200 2011 600 2012 200 The labor force of Aridia in 2011 was
1900
In the small closed economy of San Lucretia, the currency is the denar. Statistics for last year show that private saving was 60 billion denars, taxes were 70 billion denars, government purchases of goods and services were 80 billion denars, there were no transfer payments by the government, and GDP was 400 billion denars. What were consumption and investment in San Lucretia?
270 billion denars, 50 billion denars
The manager of the bank where you work tells you that your bank has $10 million in excess reserves. She also tells you that the bank has $400 million in deposits and $355 million dollars in loans. Given this information you find that the reserve requirement must be
35/400.
A typical American worker covered by unemployment insurance receives Group of answer choices
50 percent of his former wages for 26 weeks.
Table 28-1 - Adult population 2010 2000 2011 3000 2012 3200 - Number of employed 2010 1400 2011 1300 2012 1600 - Number of unemployed 2010 200 2011 600 2012 200 Refer to Table 28-1. The labor-force participation rate of Aridia in 2011 was
63.3%.
Table 23-4The table below reports nominal and real GDP for the U.S. from 1929 to 1932. - Year 1992 Nominal GDP 103.6 Real GDP 977 - Year 1930 Nominal GDP 91.2 Real GDP 892.8 - Year 1931 Nominal GDP 76.5 Real GDP 834.9 - Year 1932 Nominal GDP 58.7 Real GDP 725.8 Refer to table 23-3. What is the GDP deflator and the inflation rate for 1932?
8.09, -11.7
Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP. It follows that
GDP is still a useful measure of society's welfare because it measures a nation's ability to purchase the inputs that can be used to help produce the things that contribute to welfare.
Use the following table to answer the following questions.Table 26-2 - Stock Boeing Co. Sym BA Yld % 1.55 P/E 30.48 Vol 100s 4,531,600 Hi 64.78 Lo 63.70 Close 64.62 NetChg. +.93 - Stock Eli Lily and Co. Sym LLY Yld % 2.60 P/E 29.71 Vol 100s 3,765,700 Hi 58.98 Lo 58.21 Close 58.52 NetChg. +.16 - Stock H.J. Heinz and Co. Sym HNZ Yld % 3.30 P/E 15.33 Vol 100s 1,350,200 Hi 36.55 Lo 36.26 Close 36.33 NetChg. +.21 - Stock Kellog Co Sym K Yld % 2.22 P/E 20.50 Vol 100s 1,990,600 Hi 45.72 Lo 45.20 Close 45.50 NetChg. +.24 Refer to Table 26-2.Which company had the highest earnings per share?
H. J. Heinz and Co.
Janet bought flour and used it to bake bread she ate. ABC Bakery bought flour which it used to bake bread that customers purchased. In which case will the flour be counted as a final good?
Janet's purchase but not ABC Bakery's purchase.
Which of the following is correct?
The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers.
The traditional view of the production process is that capital is subject to
diminishing returns.
If one wants to know how the material well-being of the average person has changed over time in a given country, one should look at the
growth rate of real GDP per person.
Fiat money
has no intrinsic value.
Suppose over the last year that the price of iron ore increased from $1,200 a ton to $1,300 a ton. Over the same time a measure of the overall price level increased from 168 to 187. The price of iron ore increased by Group of answer choices
less than inflation, and this means it became relatively less scarce.
If a country's saving rate declined, then other things the same, in the long run the country would have
lower productivity and lower real GDP per person.
Suppose an economy produces only burgers and bags of fries. In 2010, 4000 burgers are sold at $3 each and 6000 bags of fires are sold at $1.50 each. In 2008, the base year, burgers sold for $2.50 each and bags of fries sold for $2 each.
nominal GDP is $21,000, real GDP is $22,000, and the GDP deflator is 95.45.
Monetary policy affects employment Group of answer choices
only in the short run.
Estimates of the values of which of the following non-market goods or services are included in GDP?
the estimated rental value of owner-occupied homes
Michigan Tea Company sold $15 million worth of tea it produced. In producing this tea it purchased $5 million dollars worth of ingredients from foreign countries and paid workers who reside in Canada but commute to the U.S. $1 million. How much did these transactions add to U.S. GDP?
$10 million
Ethel purchased a bag of groceries in 1970 for $8. She purchased the same bag of groceries in 2006 for $25. If the price index was 38.8 in 1970 and the price index was 180 in 2006, then what is the price of the 1970 bag of groceries in 2006 dollars?
$37.11
Table 23-6The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2009. - Year 2008 Price of Waffles $2.00 Quantity of Waffles 100 Price of Pancakes $1.00 Quantity of Pancakes 100 - Year 2009 Price of Waffles $2.00 Quantity of Waffles 120 Price of Pancakes $2.00 Quantity of Pancakes 150 - Year 2010 Price of Waffles $2.00 Quantity of Waffles 150 Price of Pancakes $3.00 Quantity of Pancakes 200 - Year 2011 Price of Waffles $4.00 Quantity of Waffles 180 Price of Pancakes $3.00 Quantity of Pancakes 220 Refer to Table 23-6. In 2008, this country's real GDP was
$400.
Table 28-4 Civilian labor force 100 million Persons unemployed 15 weeks or longer 1.6 million Job losers and persons who have completed temporary jobs (excludes job leavers) 3.1 million Total unemployed 6.2 million Total unemployed plus discouraged workers 7.0 million Total unemployed plus all marginally attached workers 8.1 million Total unemployed plus all marginally attached workers plus total employed part-time for economic reasons 9.2 million Refer to Table 28-4. What is the U-1 measure of labor underutilization?
1.6 percent
If the cost of medical care increases by 40 percent, then, other things the same, the CPI is likely to increase by about
2.4 percent.
Table 24-5The table below pertains to Napandsnack, an economy in which the typical consumer's basket consists of 2 pillows and 15 hotdogs. - Year 2009 Price of a Pillow $40 Price of a Hotdog $3 - Year 2010 Price of a Pillow $45 Price of a Hotdog $4 - Year 2011 Price of a Pillow $50 Price of a Hotdog $3 Refer to Table 24-5. If the base year is 2010, then the economy's inflation rate in 2010 was
20.0 percent.
In 2009, the imaginary nation of Florastan had a population of 8,300 and real GDP of 190,900. Florastan had 5% growth in real GDP per person. In 2010 it had a population of 8,400. What was real GDP in Florastan in 2010?
202,860
Table 28-32010 Labor Data for Adults (age 16 and older) in Meditor Males not in labor force 45 million Females not in labor force 35 million Males unemployed 5 million Females unemployed 5 million Males employed 85 million Females employed 65 million Refer to Table 28-3. What is the adult male unemployment rate in Meditor?
5.6 percent
The Bureau of Labor Statistics reported in 2005 that there were 50.40 million people over age 25 whose highest level of education was some college or an associate degree, 33.86 million of whom were employed and 1.27 million of whom were unemployed. What were the labor-force participation rate and the unemployment rate for this group?
69.7% and 3.6%
In 1974, one could buy a theater for $1.25. Today the same theater ticket costs $6.50. Which pair of CPIs would imply that the cost in today's dollars was the same for both tickets?
75 in 1964 and 390 today
From 2008 to 2009, the CPI for medical care increased from 150.8 to 164.4. What was the inflation rate for medical care?
9.0 percent
On the basis of theory and empirical evidence, economists have reached several conclusions about economic growth. Which of the following is not one of these conclusions? Group of answer choices
A relatively simple way to increase growth rates permanently is to increase a country's saving rate.
Which of the following is a financial-market transaction?
A saver buys a bond a corporation has just issued so it can purchase capital.
Which of the following nations experienced average rates of economic growth of less than 2 percent over the last 100 years?
All of the above are correct
Which of the following statements regarding the Federal Open Market Committee is correct? Group of answer choices
All regional Fed presidents attend the meetings, but only five get to vote.
Of Social Security benefits and federal income tax brackets, which is indexed?
Both are indexed.
Who of the following would be included in the Bureau of Labor Statistics' "unemployed" category?
Eric, who is on temporary layoff
Which of the following is not correct? Group of answer choices
Financial intermediaries are the only type of financial institution.
If national saving in a closed economy is greater than zero, which of the following must be true? Group of answer choices
Investment is positive. Either public saving or private saving must be greater than zero. Y-C-G>0 All of the above are correct.
Suppose that computer factory workers and cell phone factory workers have no unions. Now suppose that cell phone factory workers form unions. What does this do the labor supply of and wages of workers in computer factories?
It increases the labor supply and decreases the wages of computer factory workers.
Suppose the Congress and president decreased the maximum annual contributions limits to retirement accounts and at the same time reduced the budget deficit. What would happen to the interest rate?
It would decrease. It would stay the same. It would increase. It might do any of the above.
The information for 2008 in millions in the table below was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of real GDP per person from highest to lowest? - Country Germany GDP (Constant US$) 2,091,573 GDP(Current US$) 3,649,493 Population 82.11 - Country Japan GDP (Constant US$) 5,166,281 GDP(Current US$) 4,910,839 Population 127.70 - Country U.S. GDP (Constant US$) 11,513,872 GDP(Current US$) 14,093,309 Population 304.06
Japan, United States, Germany
John is a stockbroker. He has had several job offers, but he has turned them down because he thinks he can find a firm that better matches his tastes and skills. Curtis has looked for work as an accountant for some time. While the demand for accountants doesn't appear to be falling, there seems to be more people applying than jobs available.
John is frictionally unemployed, and Curtis is structurally unemployed.
The information below for 2008 in millions was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest? - Country Ghana GDP (Constant US$) 7,690 GDP(Current US$) 16,653 Population 23.35 - Country Kenya GDP (Constant US$) 17,569 GDP(Current US$) 30,354 Population 38.76 - Country Tanzania GDP (Constant US$) 15,394 GDP(Current US$) 20,490 Population 41.276
Kenya, Tanzania, Ghana
John and Jane decide to go on a vacation. As a result, they withdraw $2,500 from their savings account. As a result of this transfer by itself
M1 increases by $2,500 and M2 stays the same.
Which of the following statements is not correct?
Malthus argued that charity and government aid was an effective way to reduce poverty.
Over the last 100 years which of the following had growth rates higher than that of the United States? Group of answer choices
Mexico
In June 2009 the BLS reported a U.S. foreign-born population of 35.3 million. Of these, 22.7 million were employed and 1.4 million were unemployed. Based on these numbers what were the unemployment rate and the labor-force participation rate of the foreign-born U.S. population?
None of the above are correct.
Which of the following is not correct? Group of answer choices
The U.S. economy has never experienced deflation.
Which of the following could explain a decrease in the equilibrium interest rate and in the equilibrium quantity of loanable funds?
The demand for loanable funds shifted leftward.
M1 includes
Travelers checks currency demand deposits
Which of the following is not correct?
Unions play a much larger role in the U.S. labor market now than they did in the past.
Which of the following correctly ranks the three countries, from highest to lowest, for percentage of high-school age children in school?
United Kingdom, Mexico, mali
Upland has a population of 15,000, of whom 9,000 work 8 hours a day to produce real output of $342,000. Lowland has a population of 8,000, of whom 7,000 work 7 hours a day to produce real output of $171,500. Group of answer choices
Upland has higher productivity and higher real GDP per person than Lowland.
In the equation Y = C + I + G + NX,
Y represents the economy's total expenditure.
Which of the following includes everyone in the adult population that the Bureau of Labor Statistics counts as unemployed?
anyone who is not employed, is available for work, has looked for work in the past 4 weeks, and anyone who is waiting to be recalled from a job from which they have been laid off
Figure 26-4. On the horizontal axis of the graph, L represents the quantity of loanable funds in billions of dollars. Refer to Figure 26-4. If the equilibrium quantity of loanable funds is $56 billion and if the rate of inflation is 5 percent, then the equilibrium nominal interest rate is
approximately 12 percent.
The members of the Federal Reserve's Board of Governors
are appointed by the president of the U.S. and confirmed by the U.S. Senate.
Some persons are counted as out of the labor force because they have made no serious or recent effort to look for work. However, some of these individuals may want to work even though they are too discouraged to make a serious effort to look for work. If these individuals were counted as unemployed instead of out of the labor force, then
both the unemployment rate and labor-force participation rate would be higher.
The producer price index measures the cost of a basket of goods and services
bought by firms.
If the federal funds rate were above the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by
buying bonds. This buying would increase reserves.
The inflation rate is calculated Group of answer choices
by determining the percentage change in the price index from the preceding period.
Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating. Which list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate?
corporate bond, U.S. government bond, municipal bond
Which of the following increase when the Fed makes open market purchases?
currency and reserves
To increase the money supply, the Fed could
decrease the discount rate.
The table below relates to the economy of Mainland, where the typical consumer's market basket consists of 2 iPhones and 3 hamburgers. - Year 2007 Price of an iPhone $400 Price of a hamburger $3 - Year 2008 Price of an iPhone $300 Price of a hamburger $5 - Year 2009 Price of an iPhone $325 Price of a hamburger $7 Refer to Table 24-6. The cost of the basket
decreased from 2007 to 2008 and increased from 2008 to 2009.
Ava owns her own business. The Bureau of Labor Statistics counts Ava as Group of answer choices
employed and in the labor force.
Northwest Wholesale Foods sells common stock. The company is using Group of answer choices
equity financing and the return shareholders earn depends on how profitable the company is.
Social Security payments are
excluded from GDP because they do not reflect the economy's production.
If the supply of loanable funds shifts to the right, then the equilibrium interest rate
falls and the quantity of loanable funds rises.
Other things equal, relatively poor countries tend to grow
faster than relatively rich countries; this is called the catch-up effect.
If an American-based firm opens and operates a service call center in Bulgaria, then it is engaging in Group of answer choices
foreign direct investment.
Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called
frictional unemployment.
The Federal Reserve
has other duties in addition to controlling the money supply. was created in 1913. is the U.S.'s central bank. All of the above are correct.
Consider three imaginary countries. In Mainland, saving amounts to $4,000 and consumption amounts to $8,000; in Upland, saving amounts to $2,000 and consumption amounts to $15,000; and in Lowland, saving amounts to $6,000 and consumption amounts to $11,000. The saving rate is
higher in Lowland than in Mainland, and it is higher in Mainland than in Upland.
The purchase of a new house is the one form of
household spending that is investment rather than consumption.
The money supply decreases if
households decide to hold relatively more currency and relatively fewer deposits and banks decide to hold relatively more excess reserves and make fewer loans.
In the basket of goods that is used to compute the consumer price index, the three largest categories of consumer spending are
housing, transportation, and food & beverages.
By far the largest category of goods and services in the CPI basket is
housing.
Every unit of good x that is produced in the United States is exported to other countries. An increase in the price of good x shows up
in the GDP deflator, but not in the consumer price index.
Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself. Which of the following is correct? The value of changing the oil is
included in GDP if Susan pays Speedy Lube to change it but not if she changes it herself.
When a bank loans out $1,000, the money supply
increases.
If the price of a good has risen over time,
it has become more scarce only if the price adjusted for inflation has risen.
Which of the following is not included in M1?
savings deposits
When conducting an open-market sale, the Fed Group of answer choices
sells government bonds, and in so doing decreases the money supply.
In a closed economy, if Y is 10,000, T is 1,000, G is 3,000, and C is 5,000, then
the government has a budget deficit and investment is 2,000
Country A has real GDP per person of 10,000 while country B has real GDP per person of 20,000. All else constant, country A will eventually have a higher standard of living than country B if
the level of saving per person is 1,000 in country A and 1,800 in country B. the level of saving per person is 500 in country A and 750 in country B. Both of the above are correct.
To calculate the CPI, the Bureau of Labor Statistics uses
the prices of some consumer goods.
Renee is the CEO of a corporation that hires nonunion labor. According to the theory of efficiency wages, if she decides to pay her workers more than the competitive equilibrium wage, then
the profits of her firm might increase.
In a particular production process, if the quantities of all inputs used double, then the quantity of output doubles as well. This means that
the relevant production function has the constant-returns-to-scale property.
One surprising thing about the U.S. money stock is that
there is so much currency per person.
M1 equals currency plus demand deposits plus
traveler's checks plus other checkable deposits.
For some racquet sports, there have been increases in the size of the racquets; also, the methods and materials used for making racquets have improved. To which problem in the construction of the CPI is this situation most relevant?
unmeasured quality change
In order, which group has the highest participation rate and which has the higher unemployment rate? Group of answer choices
white males, black males
The Bureau of Labor Statistics places people in the "employed" category if they
work without pay in a family member's business.
Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2010 Quality Motors produced $30 million worth of automobiles, with $17 million in sales to Americans, $9 million in sales to Canadians, and $4 million worth of automobiles added to Quality Motors' inventory. The transactions just described contribute how much to U.S. GDP for 2010?
$30 million
In the economy of Ukzten in 2010, consumption was $4000, exports were $800, GDP was $9500, imports were $200, and investment was $1000. What were Ukzten's government purchases in 2010?
$3900
Quinn has job offers in Wrexington and across the country in Charlieville. The Wrexington job would pay a salary of $50,000 per year, and the Charlieville job would pay a salary of $40,000 per year. The CPI in Wrexington is 150, and the CPI in Charlieville is 90. The Charlieville salary in Wrexington dollars is
$66,666.67.
If the nominal interest rate is 6 percent and the rate of inflation is 10 percent, then the real interest rate is
-4 percent.
Refer to Table 29-5. Assume there is a reserve requirement and the Bank of Pleasantville is exactly in compliance with that requirement. Assume the same is true for all other banks. Lastly, assume people hold only deposits and no currency. What is the money multiplier?
10
Table 29-4. The First Bank of Roswell - Assets Reserves 25,000 Loan 125,00 - Liabilities Deposits 150,000 Refer to Table 29-4. If the bank is holding $4,000 in excess reserves, then the reserve requirement with which it must comply is
14 percent.
Table 23-4The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2008. Prices and Quantities - Year 2008 Price of Cereal $4.00 Quantity of Cereal 90 Price of Milk $1.50 Quantity of Milk 150 - Year 2009 Price of Cereal $4.00 Quantity of Cereal 100 Price of Milk $2.00 Quantity of Milk 180 - Year 2010 Price of Cereal $5.00 Quantity of Cereal 120 Price of Milk $2.50 Quantity of Milk 200 - Year 2011 Price of Cereal $6.00 Quantity of Cereal 150 Price of Milk $3.50 Quantity of Milk 200 Refer to Table 23-4. This country's output grew
15.4% from 2010 to 2011.
Sue Holloway was an accountant in 1944 and earned $12,000 that year. Her son, Josh Holloway, is an accountant today and he earned $210,000 in 2008. The price index was 17.6 in 1944 and 184 in 2008. In real terms, Josh Holloway's income amounts to about what percentage of Sue Holloway's income?
167 percent
In 2009, the imaginary nation of Viloxia had a population of 5,000 and real GDP of 500,000. In 2010 it had a population of 5,100 and real GDP of 520,200. During 2009 real GDP in Viloxia grew by Group of answer choices
2 percent, which is about the same as average U.S. growth over the last one-hundred years.
If the nominal interest rate is 1.5 percent and the rate of inflation is -0.5 percent, then the real interest rate is
2 percent.
In 2009, based on concepts similar to those used to estimate U.S. employment figures, the Swedish adult non-institutionalized population was 7.568 million, the labor force was 4.888 million, and the number of people employed was 4.486 million. According to these numbers, the Swedish labor-force participation rate and unemployment rate were about
64.6% and 8.2%.
Rank the countries from highest to lowest based on underground economic activity as a percentage of GDP.
Bolivia, Thailand, Sweden, United States.
Given that a country's real output has increased, in which of the following cases can we be sure that its productivity also has increased?
Both b and c are correct.
Which of the following countries achieved higher economic growth, in part by mandating a reduction in population growth?
China
Which of the following is not always correct for a closed economy?
Private saving equals investment.
The U.S. government pays an economist at the U.S. Department of Commerce $50,000 in salary in 2006. The economist then retires. In 2007, the government pays him $30,000 in retirement benefits. Which of the following is correct?
The 2006 payment is included in 2006 GDP as government purchases, but the 2007 payment is not included in 2007 GDP.
Which of the following restrictions implies that private saving and investment are equal for a closed economy?
The economy's government is running neither a surplus nor a deficit.
Consider the expressions T - G and Y - T - C. Which of the following statements is correct?
The first of these is public saving; the second one is private saving.
Suppose a country has a consumption tax that is similar to a state sales tax. If its government were to eliminate the consumption tax and replace it with an income tax that includes an income tax on interest from savings, what would happen?
The interest rate would increase and saving would decrease.
At the Federal Reserve,
The nation's monetary policy is made by the Federal Open Market Committee, which meets about every six weeks.
Suppose the quality of televisions changes over time, but the quality change goes unmeasured for the purpose of computing the consumer price index. In which of the following instances would the bias resulting from the unmeasured quality change be most severe? Group of answer choices
The quality of televisions improves and televisions become more expensive relative to other goods.
Popeye produces 20 cans of spinach in 8 hours. Wimpy produces 15 hamburgers in 10 hours. If each hamburger trades for 1.5 cans of spinach, then
Wimpy's production is greater than Popeye's, but his productivity is less.
A perpetuity is
a bond that pays interest forever
In a simple circular-flow diagram, total income and total expenditure are
always equal because every transaction has a buyer and a seller.
The residents of country A earn $500 million of income from abroad. Residents of other countries earn $200 million in country A. These earnings are accounted for in country A's
country A's net factor payments from abroad are positive, and its GNP is larger than its GDP.
The natural unemployment rate includes
both frictional and structural unemployment.
Country A has a population of 1,000, of whom 700 worked an average of 8 hours a day and had a productivity of 2.5. Country B has a population of 800, of whom 560 worked 8 hours a day and had productivity of 3.0. The country with the higher real GDP was
country A, and the country with higher real GDP per person was country B.
In the United States, if the price of imported oil rises so that the prices of gasoline and heating oil rise, then the
consumer price index rises much more than does the GDP deflator.
Which of the following lists correctly identifies the four expenditure categories of GDP?
consumption, government purchases, investment, net-exports
If the public decides to hold more currency and fewer deposits in banks, bank reserves
decrease and the money supply eventually decreases.
When the Fed makes open-market purchases bank
deposits and lending increase.
On a bank's T-account, which are part of the banks liabilities? Group of answer choices
deposits made by its customers but not reserves
In the past there have been violent protests against the World Bank and the World Trade Organization. The protesters argued that these institutions promote free trade and also encourage corporations in rich countries to invest in poor countries. The protesters contended that these practices make rich countries richer and poor countries poorer. An economist would
disagree with the protesters because these practices will help make both rich and poor countries richer.
The amount of revenue a firm receives for the sale of its products minus its costs of production as measured by its accountants is the firm's
earnings.
The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators. - Year 2006 Price of a Book $24 Price of a Calculator $8 - Year 2007 Price of a Book $30 Price of a Calculator $12 - Year 2008 Price of a Book $32 Price of a Calculator $15 Refer to Table 24-3. The cost of the basket
increased from 2006 to 2007 and increased from 2007 to 2008.
Other things the same, if reserve requirements are increased, the reserve ratio
increases, the money multiplier decreases, and the money supply decreases.
The notion that our ability to conserve natural resources is growing more rapidly than their supplies are dwindling is supported by the fact that
inflation-adjusted prices of most natural resources have been stable or fallen over time.
Which of the following does not create unemployment by keeping wages above the equilibrium level?
job search
Proprietary technology is knowledge that is
known only by the company that discovered it.
Gross domestic product includes all
legal final goods and services, but it excludes illegal final goods and services.
Short-term bonds are generally
less risky than long-term bonds and so they feature lower interest rates.
Rapid population growth
may depress economic prosperity by reducing the amount of capital which each worker has to work with.
Suppose the price of a six-pack of cola rises from $3 to $3.75 and the price of a pack of mints rises from $1.25 to $1.75. If the CPI rises from 140 to 182, then people likely will buy Group of answer choices
more cola and fewer mints.
U.S. Department of Labor data show that minimum-wage workers tend to be
more likely to be working part time and in the leisure and hospitality industry.
If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold
more reserves, so the reserve ratio will rise.
Angelica is an unpaid homemaker who works as a volunteer at the local Red Cross and is currently not looking for a paid job. The Bureau of Labor Statistics counts Angelica as
neither in the labor force nor unemployed.
Patents turn new ideas into
private goods, and increase the incentive to engage in research.
In a closed economy, if Y and T remained the same, but G rose, and C fell but by less than the rise in G, what would happen to private and national saving?
private saving would rise and national saving would fall
In the 1990's Ireland made unemployment benefits less generous. This change would likely have
reduced frictional unemployment and the natural rate of unemployment
Evidence from research studies by economists
shows that increased unemployment benefits decrease the job search efforts of the unemployed.
Which of the following is included in the investment component of GDP?
spending on new business equipment such as power tools but not spending on stocks and bonds
Sam has no job but keeps applying to get a job with a business that is unionized. He is qualified and he finds the pay attractive, but the firm is not hiring. Sam is
structurally unemployed. Structural unemployment exists even in the long run.
Suppose a government that taxed all interest income changed its tax law so that the first $5,000 of a taxpayer's interest income was tax free. This would shift the
supply of loanable funds to the right, causing interest rates to fall.
Haley discovers a new way to design automobile engines so that they use less gasoline. Haley's finding is an example of Group of answer choices
technological knowledge. If Haley's discovery leads to lower gasoline prices, it has made gasoline less scarce.
Which of the following numbers is not associated with shares of a company's stock?
term
A decrease in the price of domestically produced industrial robots will be reflected in
the GDP deflator but not in the consumer price index.
If the price of Italian shoes imported into the United States increases, then
the consumer price index will increase, but the GDP deflator will not increase.
If total spending rises from one year to the next, then which of the following could not be true?
the economy is producing a smaller output of goods and services, and goods and services are selling at lower prices
Total income from the domestic production of final goods and services equals
the expenditures for these goods whoever buys them.
During a certain year, the consumer price index increased from 150 to 159 and the purchasing power of a person's bank account increased by 3.5 percent. For that year, Group of answer choices
the nominal interest rate was 9.5 percent.
