Macro 7 Final

Which of the following statistics is used to measure changes in the prices that firms pay for goods and services?

Producer Price Index

Which one of the following transactions will be included in the official measurement of GDP?

Sean bought a new iPhone.

(Figure: Circular Flow Model) If the circular flow model is in equilibrium (the sum of money flows into each box is equal to the sum of the money flows out of that box), which of the following is likely to happen if there is an increase in investment spending?

an increase in the nominal GDP

Total income households have after paying taxes and receiving government transfers is called:

disposable income.

The national accounts keep track of all except:

exchange rates.

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:

export is $600 and import is $800.

(Scenario: Good A and Good B) Using 2006 as the base year, then one would find that the real GDP in 2006:

is equal to the nominal GDP in 2006.

A country's exports minus its imports during a period are:

net exports.

Many economists believe that the CPI overstates inflation because:

the CPI market basket doesn't reflect the fact that consumers shift consumption away from more expensive goods.

Private savings is:

disposable income less consumption.

The Boeing Corporation buys $3 million worth of steel from the Steel manufacturers, $2.5 million worth of computerized hardware and software, and $1 million worth of mechanical tools to manufacture a certain model of aircraft. Boeing Corporation sells this particular model of aircraft at $10 million. The value-added by Boeing is equal to:

$3.5 million.

(Figure: Circular Flow Model) What is disposable income in this economy?

$400

Figure: Circular Flow Model (Figure: Circular Flow Model) What is GDP in this economy?

$500

Use the following to answer questions 20-22: Scenario: Market Basket Suppose a market basket consists of the following goods: 50 pens, 25 notepads, and 25 paperclips. Also assume the price per unit of these goods is as follows for the years noted and 2007 is the base year. (Scenario: Market Basket) What is the value of the price index in 2007?

100

(Scenario: Market Basket) What is the rate of inflation between 2007 and 2008?

11%

(Scenario: Market Basket) What is the value of the price index in 2008?

111

(Scenario: Good A and Good B) Using 2006 as the base year, real GDP is greatest in:

2008.

If the consumer price index is 180 in Year 1 and 190 in Year 2, the inflation rate between Year 1 and Year 2 is about ________.

5.56%

Which one of the following equations correctly measures GDP?

C + I + G + X - IM

(Figure: Circular Flow Model) If the circular flow model is in equilibrium (the sum of money flows into each box is equal to the sum of the money flows out of that box), which of the following is likely to happen if there is an increase in exports?

a decrease in the unemployment rate

(Figure: Circular Flow Model) If the circular flow model is in equilibrium (the sum of money flows into each box is equal to the sum of the money flows out of that box), which of the following is likely to happen if there is a decrease in consumer spending?

an increase in the unemployment rate

Goods that are produced in a particular period but not sold in that period:

are included in investment.

2.Which of the following is considered to be an IOU?

bond

Use the following to answer questions 17-19: Scenario: Good A and Good B The town of York produces two goods, Good A and Good B. The following is information regarding York's production of these two goods and their prices the following three years. (Scenario: Good A and Good B) In 2007, nominal GDP is:

greater than the nominal GDP in 2006.

1.According to the circular flow diagram, which of the following economic agents engages in consumer spending?

households