MACRO 7-9

Whenever a buyer and a seller agree to trade, both must believe they will be made better off

whether the buyer and seller live in the same (or different) city or country.

The real average hourly earnings for 1965 in 1982-1984 dollars equal

$8.28

the labor force participation rate for this simple economy equals

(1,100/15000) x 100

If the nominal interest rate is 6% and the inflation rate is 9%, then the real interest rate is

-3%

If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many belts will Estonia gain compared to the "without trade" numbers?

10

If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many belts will Morocco gain compared to the "without trade" numbers?

10

If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years?

2.7%

with trade what is the total gain in belt production

20

Suppose the government allows imports of leather footwear into the United States. What will the market price be?

24

If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many swords will Estonia gain compared to the "without trade" numbers?

25

in the nominal rate of interest is 6.5% and the inflation rate is 3.0%, what is the real rate of interest?

3.5%

Assume the average annual CPI values for 2019 and 2020 were 207.3 and 215.3, respectively. What was the percent increase in the CPI between these two years?

3.86

what is the opportunity cost to produce 1 sword in estionia

3/5 a belt

the loss in domestic consumer surplus as a result of the tariff is equal to

30.375 million

if the nominal interest rate is 6% and inflation rate is 2% then the real interest rate is

4%

The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is

5% higher in year 2 than in year 1

If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many belts will Estonia consume?

50

Refer to Table 8-2. Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simple economy equals

6,400

If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many belts will Morocco consume?

70

If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many swords will Morocco consume?

75

Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia. We can conclude that

Australia has a lower opportunity cost of producing surfboards relative to New Zealand

absolute advantage

the ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources

real GDP in a given year

GDP valued in the prices of the base year.

suppose the government allows imports of leather footwear into the United States. what will be the domestic quantity supplied?

Q0

You earned $30,000 in 2013, and your salary rose to $80,000 in 2020. If the CPI rose from 82 to 202 between 2013 and 2020, which of the following is true?

The purchasing power of your salary increased between 2013 and 2020.

When prices are rising, which of the following will be true?

The real interest rate will be lower than the nominal interest rate

If Brazil has a comparative advantage relative to Cuba in the production of sugar cane, then

the opportunity cost of production is lower in Brazil than Cuba

refer to table 8-16. given the information above, what can we say has happened in the economy from 2019 to 2020?

the price level has risen

Labor unions cause unemployment because the union contract wage is set

above the market wage, causing a surplus of labor

Suppose that in 2020, all prices in the economy double and that all wages and salaries also double. In 2020 you

are no better off or worse off than you were in 2019 as the purchasing power of your salary has remained the same.

the consumer price index

average of the prices of the goods and services purchased by a typical urban family of four.

trade that is within a country or between countries is based on the principle of

comparative advantage

The purchase of a new automobile is included in

consumption expenditures on durable goods.

What is the largest component of spending in the United States?

consumption spending

to calculate gdp by the expenditure method, one must add

consumption spreading, investment spending, government purchases, and net exports

Frictional unemployment is the result of

the search process of matching workers with jobs

which of the following cause the unemployment rate as measured by the bureau of labor statistics to understate the true extent of joblessness?

discouraged workers

Autarky is a situation in which a country

does not trade with other countries

The labor force equals the number of people

employed plus unemployed

Jack just told his boss that he thinks his boss is an idiot. It is likely that Jack will be experiencing ________ unemployment in the near future.

frictional

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower

frictional unemployment

A student who just graduated from college but has not found a job would most likely be

frictionally unemployed

the output of U.S. citizens who work in Canada would be included in the

gross domestic product of Canada

The output of Mexican citizens who work in Texas would be included in the

gross national product of Mexico

With the tariff in place, the United States

imports 12 million pounds of coffee

During a business cycle expansion, total production ________ and total employment ________.

increases, increases

the percent increase in the cpi from one year to the next is a measure of the

inflation rate

The purchase of a new house is included in

investment expenditures

A final good is one that

is purchased by its final user

National income equals domestic product

minus the consumption of fixed capital

If firms pay what are called "efficiency wages," they pay wages that

motivate workers to increase their productivity.

personal income is defined as

national income less retained earnings plus transfer payments and plus interest on government bonds.

The purchase by a household in China of an automobile produced in the United States is included in U.S.

net exports

The stated interest rate on a loan is the

nominal interest rate

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

not in the labor force

the nominal interest rate equals the real interest rate____the inflation rate

plus

If the CPI changes from 125 to 120 between 2019 and 2020, how did prices change between 2019 and 2020?

price decreased by 4%

if the gdp is 142, by how much have prices changed since the base year?

prices have increased by 42%

Gross national product (GNP) of the United States is the market value of all final goods and services

produced by citizens of the United States anywhere in the world

Economists believe the most persuasive argument for protectionism is to

protect infant industries

Suppose the government allows imports of leather footwear into the United States. The market price falls to $24. What area represents consumer surplus?

r + s + t + u

Which of the following statements is true?

rob has a greater opportunity cost than bill for picking berries and bill has comparative advantage in picking berries.

Under autarky, the producer surplus is area

s + v

dumping refers to

selling a product for a price below its cost of production

which of the following describes the national security argument for protectionism?

some goods should be insulated from foreign competition to ensure an adequate supply of the goods in the event of an international conflict.

the United States has developed a comparative advantage in digital computers, airliners, and so many prescription drugs. the source of its comparative advantage in these products is

technology

Which of the following is included in both the U.S. GDP and U.S. GNP?

the value of all cars produced by General Motors in the United States

U.S. gross national product is defined as

the value of final goods and services produced by residents of the United States, even if the production takes place outside the United States

the nominal GDP in 2019 was approximately $21.7 trillion. this means that

total spending, the value of output, total income in 2019 was around $21.7 trillion

Nominal GDP is GDP in a given year

valued in the prices of that year