ECON 102 FINAL SHITTTTT

Which of the following is a stock variable? A) wealth B) consumption C) investment D) income

A

The amount of capital in an economy is a ______ and the amount of investment is a ______. A) flow; stock B) stock; flow C) final good; intermediate good D) intermediate good; final good

B

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. A) 4.9 B) 7.4 C) 7.9 D) 9.4

b

Assume that total output consists of 4 apples and 6 oranges and that apples cost $1 each and oranges cost $0.50 each. In this case, the value of GDP is: A) 10 pieces of fruit. B) $7. C) $8. D) $10.

b

If 7 million workers are unemployed, 143 million workers are employed, and the adult population equals 200 million, then the unemployment rate equals approximately ______ percent. A) 3.5 B) 4.7 C) 4.9 D) 7

b

Imputed values included in GDP are the: A) market prices of goods and services. B) estimated value of goods and services that are not sold in the marketplace. C) price of goods and services measured in constant prices. D) price of goods and services measured in current prices.

b

The employment statistics computed from the establishment survey do not include: A) workers with two jobs. B) the self-employed. C) workers on firms' payrolls. D) part-time workers on firms' payrolls.

b

. GNP equals GDP ______ income earned domestically by foreigners ______ income that nationals earn abroad. A) plus; plus B) minus; minus C) minus; plus D) plus; minus

c

18. GNP equals GDP ______ income earned domestically by foreigners ______ income that nationals earn abroad. A) plus; plus B) minus; minus C) minus; plus D) plus; minus

c

19. National income differs from net national product by an amount called: A) depreciation. B) indirect business taxes. C) a statistical discrepancy. D) net foreign factor income payments.

c

26. 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 ______. A) self-employed; unemployed B) unemployed; self-employed C) with jobs; on firms' payrolls D) on firms' payrolls; with jobs

c

In the national income accounts, government purchases are goods and services purchased by: A) the federal government. B) the federal and state governments. C) state and local governments. D) federal, state, and local governments.

d

John Maynard Keynes wrote that responsibility for low income and high unemployment in economic downturns should be placed on: A) low levels of capital. B) an untrained labor force. C) inadequate technology. D) low aggregate demand.

d

In the Keynesian-cross model, if the MPC equals 0.75, then a $1 billion increase in government spending increases planned expenditures by ______ and increases the equilibrium level of income by ______.

$1 billion; more than $1 billion

Other things equal, a given change in money supply has a larger effect on demand the: A) flatter the IS curve. B) steeper the IS curve. C) smaller the interest sensitivity of expenditure demand. D) smaller the income sensitivity of expenditure demand.

A

Those economists who believe that fiscal policy is more potent than monetary policy argue that the: A) responsiveness of investment to the interest rate is small. B) responsiveness of investment to the interest rate is large. C) IS curve is nearly horizontal. D) LM curve is nearly vertical.

A

All of the following are a stock except: A) a consumer's wealth. B) the government budget deficit. C) the number of unemployed people. D) the amount of capital in the economy

B

If the Fed reduces the money supply by 5 percent, then the real interest rate will: A) rise both in the short run and the long run. B) rise in the short run but return to its original equilibrium level in the long run. C) rise in the short run but will fall below its original equilibrium level in the long run. D) be unaffected both in the short run and the long run.

B) rise in the short run but return to its original equilibrium level in the long run.

All of the following are a flow except: A) the number of new automobile purchases. B) the number of people losing their jobs. C) business expenditures on plant and equipment. D) the government debt.

D

If the demand for money increases, but the Fed keeps the money supply the same, then in the short run output will: A) fall and in the long run prices will remain unchanged. B) remain unchanged and in the long run prices will fall. C) remain unchanged and in the long run prices will remain unchanged. D) fall and in the long run prices will fall.

D

28. 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: A) does not change GDP. B) decreases GDP by $60,000. C) increases GDP by $60,000. D) increases GDP by more than $60,000.

b

In principle, the GDP accounts should—but do not—have an imputation for: A) housing services enjoyed by homeowners. B) rental services of automobiles driven by owners. C) meals cooked in restaurants. D) housing services enjoyed by renters.

b

In the national income accounts, net exports equal: A) exported goods minus imported goods. B) exported goods and services minus imported goods and services. C) exported goods minus imported services. D) exported goods and services plus imported goods and services.

b

Nominal GDP is measured in _____ dollars _____ time. A) current; at a point in B) current; per unit of C) constant; at a point in D) constant; per unit of

b

The best measure of the economic satisfaction of the members of a society is: A) nominal GDP. B) real GDP. C) the rate of inflation. D) the value of corporate profits.

b

. If the unemployment rate is 6 percent and the number of employed is 188 million, then the labor force equals ______ million. A) 11.28 B) 176.72 C) 188 D) 200

d

. In computing GDP, A) expenditures on used goods are included. B) production added to inventories is excluded. C) the amount of production in the underground economy is imputed. D) the value of intermediate goods is included in the market price of the final goods.

d

15. If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and government purchases are $1,098, then net exports are: A) $131. B) -$131. C) $31. D) -$31.

d

The value added of an item produced refers to: A) a firm's profits on the item sold. B) the value of the labor inputs in the production of an item. C) the value of a firm's output less the value of its costs. D) the value of a firm's output less the value of the intermediate goods that the firm purchases

d

When bread is baked but put away for later sale, this is called: A) waste. B) saving. C) fixed investment. D) investment in inventory.

d

In a small, open economy with a floating exchange rate, the exchange rate will depreciate if: A) the money supply is decreased. B) import quotas are imposed. C) government spending is increased. D) taxes are decreased

d??

The Keynesian-cross analysis assumes planned investment:

is fixed, whereas the IS analysis assumes it depends on the interest rate.

32. One senator criticizes the government for making an inadequate effort to stimulate the economy based on data from the BLS establishment survey that shows the number of jobs in the economy has fallen. Another senator counters that the number of employed workers in the economy has increased over the same period, based on the BLS household survey. Explain how both senators can be correct.

If the number of self-employed workers and workers employed in new start-up firms (who are included in the household survey, but not in the establishment survey) has increased more rapidly than the decline in payroll jobs counted in the establishment survey, then the number of employed workers as measured in the household survey could increase while the number of payroll jobs decreases.

Assume two countries have the same nominal GDP (measured in the same currency using the same accounting rules). Explain at least three reasons why you cannot assume that citizens in each country enjoy approximately the same level of economic wellbeing.

Some possible, but not all, explanations include: a. different price levels in the two countries would result in different amounts of real GDP, i.e., different quantities of goods and services available in each country; b. different-sized populations could result in different quantities of goods and services available per person in each country; c. different levels of nonmarket production in the two countries would alter the quantity of goods and services available in each country; d. different amounts of leisure time available (not captured in nominal GDP figures) would cause economic well-being to differ in the two countries; e. different distributions of income in the two countries could alter the quantity of goods and services available to the typical citizen in each country; f. different quantities of both positive and negative externalities associated with producing GDP, such as pollution and congestion, which are not measured in GDP, would cause the different levels of eocnomic well-being between the two countries.

33. Explain why the value of GDP in 2009 would or would not change as a result of each transaction described below: a. In 2009, the Smith family purchases a new house that was built in 2009. b. In 2009, the Jones family purchases a house that was built in 2001. c. In 2009, a construction company purchases windows to put in the Smith family home that was built in 2009. d. In 2009, Mr. Jones paints all of the rooms of the Jones family house purchased in 2009. e. In 2009, Mr. Smith uses an online brokerage service to purchase shares of stock in a construction company.

a. GDP in 2009 increases by the purchase price of the house, which is a newly produced good. b. GDP in 2009 does not change because the house is not a newly produced good, since it was built in 2001. Transactions involving used goods are not included in GDP. c. GDP in 2009 does not change directly because the windows are intermediate goods, not final goods. The value of intermediate goods is not included in GDP to avoid double counting. The value of the windows is implicitly included in the price of the house. d. GDP in 2009 does not change because home production is not included in GDP. e. GDP in 2009 does not change because financial transactions do not represent the production of final goods and services and are not included in GDP.

17. If total investment (measured in billions of current dollars) equals $741, business fixed investment is $524, and residential fixed investment is $222, then inventory investment is: A) $5. B) -$5. C) $15. D) -$15.

b

Suppose you are an economist working for the Federal Reserve when droughts in the Southeast and floods in the Midwest substantially reduce food production in the United States. Use the aggregate demand-aggregate supply model to illustrate graphically your policy recommendation to accommodate this adverse supply shock, assuming that your top priority is maintaining full employment in the economy. Be sure to label: i. the axes; ii. the curves; iii. the initial equilibrium values; iv. the direction the curves shift; and v. the terminal equilibrium values. State in words what happens to prices and output as a combined result of the supply shock and the recommended Fed accommodation.

draw the AD with horizontal SRAS and vertical LRAS. the SRAS shifts upwards. the AD should shift right and up and increase the price level if we want to stay at LRAS *The accommodating policy means that the price level is permanently higher, but output is at the full-employment level.

In a small open economy with a floating exchange rate, a rise in government spending in the new short-run equilibrium: A) chokes off investment, but not by as much as the new government spending. B) chokes off an amount of investment just equal to the new government spending. C) attracts foreign capital, thus raising the exchange rate and reducing net exports, but not by as much as the new government spending. D) attracts foreign capital, thus raising the exchange rate and reducing net exports by an amount just equal to the new government spending.

D

Two equivalent ways to view GDP are as the: A) total payments made to all workers in the economy or the total profits of all firms and businesses in the economy. B) total expenditures on all goods produced in the economy or the total income earned from producing all services in the economy. C) total profits of all firms and businesses in the economy or the total consumption of goods and services by all households in the economy. D) total income of everyone in the economy or the total expenditure on the economy's output of goods and services.

D

Which of the following is a flow variable? A) wealth B) the number unemployed C) government debt D) income

D

In a small open economy with perfect capital mobility, if the domestic interest rate were to rise above the world interest rate, then ______ would drive the domestic interest rate back to the level of the world interest rate. A) capital inflow B) capital outflow C) the central bank D) a decline in domestic saving

a.

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: A) 1.5. B) 1.7. C) 1.9. D) 2.0

b

. All of the following are measures of GDP except the total: A) expenditures of all businesses in the economy. B) income from all production in the economy. C) expenditures on all final goods and services produced. D) value of all final production.

a

. The GDP deflator is equal to: A) the ratio of nominal GDP to real GDP. B) the ratio of real GDP to nominal GDP. C) real GDP minus national GDP. D) nominal GDP minus real GDP.

a

13. If nominal GDP grew by 5 percent and real GDP grew by 3 percent, then the GDP deflator grew by approximately ______ percent. A) 2 B) 3 C) 5 D) 8

a

14. If nominal GDP increased by 5 percent and the GDP deflator increased by 3 percent, then real GDP ______ by ______ percent. A) increased ; 2 B) decreased; 2 C) increased; 8 D) decreased; 8

a

16. 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: A) $2,977. B) $1,910. C) -$843. D) $1,067

a

Assume that a tire company sells 4 tires to an automobile company for $400, another company sells a compact disc player for $500, and the automobile company puts all of these items in or on a car that it sells for $20,000. In this case, the amount from these transactions that should be counted in GDP is: A) $20,000. B) $20,000 less the automobile company's profit on the car. C) $20,900. D) $20,900 less the profits of all three companies on the items that they sold.

a

GDP is all of the following except the total: A) expenditure of everyone in the economy. B) income of everyone in the economy. C) expenditure on the economy's output of goods and services. D) output of the economy.

a

If the GDP deflator in 2009 equals 1.25 and nominal GDP in 2009 equals $15 trillion, what is the value of real GDP in 2009? A) $12 trillion B) $12.5 trillion C) $15 trillion D) $18.75 trillion

a

Nominal GDP means the value of goods and services is measured in ______ prices. A) current B) real C) constant D) average

a

The total income of everyone in the economy is exactly equal to the total: A) expenditure on the economy's output of goods and services. B) consumption expenditures of everyone in the economy. C) expenditures of all businesses in the economy. D) government expenditures.

a

To avoid double counting in the computation of GDP, only the value of ______ goods are included. A) final B) used C) intermediate D) investment

a

In 2016, the GDP of the United States totaled about: a. $110 billion. b. $11 trillion. c. $574 billion. d. $19 trillion. e. $19 billion.

d

31. Economic statistics are not perfect. Explain at least one way in which each of the following statistics as currently calculated in the United States fails to completely or accurately measure the corresponding economic concept (in parentheses): a. real gdp per person (Economic well being) b. cpi (cost of living c. unemployment rate (involuntary unemployment)

a. The official measure of GDP does not include measurements of leisure time available, nonmarket production, production in the underground economy, the distribution of income, or production externalities (e.g., pollution). b. The CPI does not allow substitution away from products with rising prices and has difficulty distinguishing between price changes and quality changes in products included in the index. c. The official unemployment rate does not take into account discouraged workers, parttime workers who desire full-time employment, and workers employed in jobs not matching their skill level, such as taxi drivers with PhDs in physics.

22. Assume that the market basket of goods and services purchased in 2004 by the average family in the United States costs $14,000 in 2004 prices, whereas the same basket costs $21,000 in 2009 prices. However, the basket of goods and services actually purchased by the average family in 2009 costs $20,000 in 2009 prices, whereas this same basket would have cost $15,000 in 2004 prices. Given these data, a Paasche index for 2009 using 2004 prices would be: A) 1.05. B) approximately 1.07. C) approximately 1.33. D) 1.50.

b

23. 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. A) 4.9 B) 7.4 C) 7.9 D) 9.4

b

24. If 7 million workers are unemployed, 143 million workers are employed, and the adult population equals 200 million, then the unemployment rate equals approximately ______ percent. A) 3.5 B) 4.7 C) 4.9 D) 7

b

27. A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bread for $6. The value added by the miller is: A) $1. B) $2. C) $3. D) $6

b

4. The market value of all final goods and services produced within an economy in a given period of time is called: A) industrial production. B) gross domestic product. C) the GDP deflator. D) general durable purchases.

b

6. All of the following transactions that took place in 2009 would be included in GDP for 2009 except the purchase of a: A) book printed in 2009, entitled The Year 3000. B) 2001 Jeep Cherokee. C) year 2010 calendar printed in 2009. D) ticket to see the movie 2001.

b

A worker with two jobs is counted: A) once in both the household and the establishment surveys. B) once in the household survey, but twice in the establishment survey. C) once in the establishment survey, but twice in the household survey. D) twice in both the household and the establishment surveys.

b

An example of an imputed value in the GDP is the: A) value-added of meals cooked at home. B) housing services enjoyed by homeowners. C) services of automobiles to their owners. D) value of illegal drugs sold.

b

Assume that a firm buys all the parts that it puts into an automobile for $10,000, pays its workers $10,000 to fabricate the automobile, and sells the automobile for $22,000. In this case, the value added by the automobile company is: A) $10,000. B) $12,000. C) $20,000. D) $22,000.

b

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 4 in 2009, then real GDP (in 2002 prices) in 2009 was: A) $5. B) $6.50. C) $9.50. D) $11.

b

29. 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: A) decrease GDP. B) increase GDP. C) leave GDP unchanged. D) first decrease and then increase GDP.

c

If nominal GDP in 2009 equals $14 trillion and real GDP in 2009 equals $11 trillion, what is the value of the GDP deflator? A) 0.79 B) 1.03 C) 1.27 D) 1.30

c

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. A) 50 B) 58 C) 60 D) 67

c

It is a national income accounting rule that all expenditure on purchases of products is necessarily equal to: A) profits of firms. B) wages of employees. C) income of the producers of the products. D) income of employees.

c

Prices of items included in the CPI are: A) averaged with the price of every item weighted equally. B) weighted according to amount of the item produced in GDP. C) weighted according to quantity of the item purchased by the typical household. D) chained to the base year by the year-to-year growth rate of the item.

c

Real GDP is a better measure of economic well-being than nominal GDP, because real GDP: A) excludes the value of goods and services exported aboard. B) includes the value of government transfer payments. C) measures changes in the quantity of goods and services produced by holding prices constant. D) adjusts the value of goods and services produced for changes in the foreign exchange rate.

c

Real GDP means the value of goods and services is measured in ______ prices. A) current B) actual C) constant D) average

c

The underground economy: A) is included in the latest GDP accounts. B) includes only illegal activities. C) includes domestic workers for whom Social Security tax is not collected. D) excludes the illegal drug trade

c

When a firm sells a product out of inventory, GDP: A) increases. B) decreases. C) is not changed. D) increases or decreases, depending on the year the product was produced.

c

Which of the following is the best example of structural unemployment? a. Fatima lost her job at a packing plant, but has not looked very intensively for a new job because she still has two months of unemployment insurance benefits left. b. Vickie lost her job as a graphic artist at a movie studio because she did not have training in computer-generated animation. c. Kirby is seeking a job as an airline pilot, but the high union wages in the industry have limited the number of jobs available. d. Tim is looking for a job with flexible hours, but has not been offered one yet. e. Mark lost a job in coal mining as demand for coal decreased due to a changing structure of the economy and a switch from fossil fuels to renewable sources of energy.

c

21. Assume that the market basket of goods and services purchased in 2004 by the average family in the United States costs $14,000 in 2004 prices, whereas the same basket costs $21,000 in 2009 prices. However, the basket of goods and services actually purchased by the average family in 2009 costs $20,000 in 2009 prices, whereas this same basket would have cost $15,000 in 2004 prices. Given this data, a Laspeyres price index of 2009 prices using 2004 as the base year would be: A) 1.05. B) approximately 1.07. C) approximately 1.33. D) 1.50.

d

25. If the unemployment rate is 6 percent and the number of employed is 188 million, then the labor force equals ______ million. A) 11.28 B) 176.72 C) 188 D) 200

d

An economy's ______ equals its ______. A) consumption; income B) consumption; expenditure on goods and services C) expenditure on goods; expenditures on services D) income; expenditure on goods and services

d

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: A) 0.75. B) 0.80. C) 1. D) 1.25.

d