Macro Test 2

*Using the data in the above table, what is the value of national saving

$1,053 billion

*Using the data in the above table, what is the value of net exports?

-$181 billion

If 2009 is the reference base period, what is the price index for the CPI basket of goods for 2015 in the above table?

102.8

The CPI basket contains 400 oranges and 800 pens. In the base year, the price of an orange is $1.00 and the price of a pen is $.75. This year urban consumers each buy 300 oranges at $2.00 each and 850 pens at $1.00 each. The CPI this year is?

160

*In the above figure, a trough is at point _and a peak is at point _.

b; a

Suppose an economy has some inflation. Then, after a base year, the value of real GDP will

be greater than nominal GDP.

All of the following are included in gross private domestic investment expenditure EXCEPT a

businessʹs purchase of another companyʹs stock.

Real GDP is not a perfect indicator of economic welfare because ________.

economic welfare depends on many factors not measured or not measured accurately by real GDP

Which, if any, of the following causes reported GDP to be less than total economic production?

the exclusion of household production

Two methods of measuring GDP are

the income approach and the expenditure approach

In a period of rapid, unexpected inflation, resources can be lost

when firms use resources to forecast inflation

The above table shows data from the GDP accounts of Hypothetica. Hypotheticaʹs GDP is ________ billion. D) $160

$160

Using the data in the table above, gross domestic product equals

$2,400

Using the data in the above table, net private domestic investment equals

$210

Using the data in the above table, gross private domestic investment equals

$460

Using the data in the table above, what is the value of GDP?

$8,403 billion

Real GDP can be criticized as a measure of economic welfare because it

-does not include the value of products produced in the household -does not take account of the degradation of environmental quality -does not include leisure time available to a society -all of the above answers are correct***

Inflation is a problem when

-it is unpredictable -It causes the value of money to vary unpredictably -it causes resources to be diverted from productive uses -all of the above ***

The information above gives the 2016 references base period CPI basket and prices used to construct the CPI for a small nation. It also has the 2017 prices. What is the value of the CPI for the reference base period, 2016?

100

In an economy, 42 million people are in the labor force, 38 million are employed, and 47 million are of working age. How many people are not in the labor force?

5 million

If the CPI was 132.5 at the end of last year and 140.2 at the end of this year, the inflation rate over these two years was

5.8%

Bob inherits a large sum of money from his dead uncleʹs estate. Bob decides to retire young, so he quits his job and heads to the Bahamas. Bob is an example of

A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) None of the above is correct. Answer: D

If we compare the U.S. GDP and the Chinese GDP,

Chinaʹs real GDP per person is less than real GDP per person in the United States

This type of unemployment reflects the normal amount of unemployed workers who possess skills that will enable them to find another job.

Frictional unemployment

A recent accounting graduate from a major business school is searching for a place to begin his career as an accountant. This individual is best considered as

Frictionally unemployed

Which of the following is included in ʺcompensation of employeesʺ part of the income approach to measuring GDP?

I. Wages and salaries. II. Pension fund contributions. III. Social security contributions. D) I, II and III

Real GDP does not show the state of economic welfare in a country in part because GDP omits

I. household production. II. leisure time available. III. the quality of the environment. D) I, II and III

The cost of inflation to society includes

I. the opportunity costs of resources used by people to protect themselves against inflation. II. the diversion of productive resources to forecasting inflation. C) both I and II

Suppose the working population in Tiny Town is 100 people. If 25 of these people are NOT in the labor force, the ___ equals ___

Labor force; 75

Suppose the Consumer Price Index is 143.6. What does that number mean?

Prices rose 43.6 percent over the reference base period, on average.

________ gross domestic product is the value of ________ linked back to the prices of a single year.

Real; total production

When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing

Structural unemployment

Using the notation Pt to designate this period's price level, the formula for measuring the inflation rate from last period to this period is

[(Pt-Pt-1)/Pt-1] x 100

In the above figure, a recession begins at point ____and an expansion begins at point ____.

a; b

The consumer price index (CPI)

compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed int he base period

Which of the following expressions equals GDP?

compensation of employees + net interest + rental income + depreciation + corporate profits + proprietorsʹ income + indirect taxes - subsidies

The income approach to measuring GDP sums together

compensation of employees, rental income, corporate profits, net interest, proprietorsʹ income, indirect taxes paid, and depreciation and subtracts subsidies paid by the government.

Cyclical unemployment ___ during expansions and ___ during recessions.

decreases; increases

As currently calculated, the CPI tends to overstate the true inflation rate because

it fails to correctly measure quality changes for some products

In the equation, GDP=C+I+G+X-M, G refers to

local, state, and federal government expenditure on goods and services, but does not include transfer payments.

Which of the following is NOT part of the expenditure approach to measuring GDP?

net interest

In the above figure, which point represents the under use of resources?

point G

Which of the following items is not a component of the expenditure approach to measuring U.S. GDP?

social security payments made by the government

In the 2000s video recordings were made primarily on DVDs. However, in the 2010s streaming movies became increasingly popular, leading to a sharp decline in DVDs. As a result, many people who manufactured DVDs lost their jobs and didn't have the skills necessary to work in jobs required to stream movies. This occurrence is best considered an example of

structural unemployment

Substitution bias in the CPI refers to the fact that the CPI

takes no account of the substitution of goods by consumers when relative prices change

The technique currently used to calculate the CPI implicitly assumes that over time consumers buy

the same relative quantities of goods as in a base year.

Real GDP is

the value of total production of all the nationʹs farms, factories, shops and offices measured in the prices of a single year.

Frictional unemployment includes

unemployment caused by normal labor turnover associated with people leaving and entering the labor force.

Which of the following purchases is included in personal consumption expenditures when determining gross domestic product?

vacation expenses for a spring trip to Fort Lauderdale

Hyperinflation is defined as

very high inflation rates