Macro Quiz 5
In the economy of Ukzten in 2010, consumption was $1000, exports were $100, government purchases were $450, imports were $150, and investment was $350. What was Ukzten's GDP in 2010?
$1750
An American soldier stationed in North Carolina receives a paycheck from the federal government for $300, which she uses to purchase a $100 MP3 player made in China by a Chinese firm and $200 for fruit and vegetables from a local farmers market. As a result, U.S. GDP increases by
$200.
A farmer sells $50,000 of apples to individuals who take them home to eat and $75,000 of apples to a company that uses them all to produce cider. How much of the farmer's sales will be included as apples in GDP?
$50,000
Suppose that an economy produces 30,000 units of good A which sells at $3 a unit and 60,000 units of good B which sells at $2 per unit. Production of good A contributes
3/4 times as much to GDP as the production of good B.
The steps involved in calculating the consumer price index and the inflation rate, in order, are as follows:
Fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index, and compute the inflation rate.
One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells it to a consumer for $2.00. Taking these four transactions into account, what is the effect on GDP?
GDP increases by $5.00.
Which of the following is correct?
Nominal GDP equals real GDP in the base year.
In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct?
The value of the consumer price index is always 100 in the base year.
A form of government spending that is not made in exchange for a currently produced good or service is called
a transfer payment.
Spots, Inc. produces ink and sells it to Write on Target, which makes pens. The ink produced by Spots, Inc. is called
an intermediate good.
Most goods and services produced at home
and most goods and services produced illegally are excluded from GDP.
According to the circular-flow diagram GDP
can be computed as the total income paid by firms or as expenditures on final goods and services.
For the purpose of calculating GDP, investment is spending on
capital equipment, inventories, and structures, including household purchases of new housing.
Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has
caused measured GDP to rise.
Real GDP is the yearly production of final goods and services valued at
constant prices.
Government purchases include spending on goods and services by
federal, state, and local governments.
For any given year, the CPI is the price of the basket of goods and services in the
given year divided by the price of the basket in the base year, then multiplied by 100.
When the consumer price index rises, the typical family
has to spend more dollars to maintain the same standard of living
In a simple circular-flow diagram,
households spend all of their income. all goods and services are bought by households. expenditures flow through the markets for goods and services, while income flows through the markets for the factors of production.by households.
Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included
in German GDP, but is not included in U.S. GDP.
What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services?
investment
Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of
market prices.
Consider a small economy in which consumers buy only two goods: apples and pears. In order to compute the consumer price index for this economy for two or more consecutive years, we assume that
neither the number of apples nor the number of pears bought by the typical consumer changes from year to year.
If the prices of all goods and services produced in the economy rose while the quantity of all goods and services stayed the same, which would rise?
nominal GDP but not real GDP
In a simple circular-flow diagram, firms use the money they get from a sale to
pay wages to workers. pay rent to land lords pay profit to firms owners
The inflation rate is defined as the
percentage change in the price level from the previous period.
Consumption consists of spending by households on goods and services, with the exception of
purchases of new houses.
A professional gambler moves from a state where gambling is illegal to a state where gambling is legal. Most of his income was, and continues to be, from gambling. His move
raises GDP.
When studying changes in the economy over time, economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services. In other words, economists want to study
real GDP.
Which of the following is always measured in prices from a base-year?
real but not nominal GDP
In calculating the CPI, a fixed basket of goods and services is used. The quantities of the goods and services in the fixed basket are determined by
surveying consumers.
Economists use the term inflation to describe a situation in which
the economy's overall price level is rising
The CPI is a measure of the overall cost of
the goods and services purchased by a typical consumer.
GDP is equal to
the market value of all final goods and services produced within a country in a given period of time. Y. C + I + G + NX.
GDP is defined as the
value of all final goods and services produced within a country in a given period of time.
In a simple circular-flow diagram, households buy goods and services with the income they get from
wages rent profit
