test 1 econ

An economy has $10 trillion in consumption, $2.5 trillion in investment, $3 trillion in government purchases, $1 trillion in exports, and $1.5 trillion in imports. What is GDP in this economy?

$15 trillion (GDP=C+I+G+(X-M))

(Table: Economic Data) Based on the data in the table, what is the GDP for this economy based on the factor income approach?

$1831

(Table: Economic Data) Based on the data in the table, what is the GDP for this economy, based on the national spending approach?

$1831 (add together stuff for GDP)

If U.S. per capita GDP is $50,000 and grows at 2% per year, what will U.S. per capita GDP be in 70 years?

$200,000

(Table: Three-Good Economy I) Suppose an economy produces only the three finished goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. If prices in 2008 are used to calculate real GDP, what is the real GDP in 2009?

$25,260 (i did price 2008 times quantity of 2009)

Suppose an economy produces only the three finished goods shown in the table. The table gives information on the quantities produced and price of goods sold in 2008 and 2009. What is the nominal GDP in 2009?

$31,400 (nominal is using the price and quantity for the year given)

If a country produced nothing but 20 smartphones and 10 Blu-ray players in 2017, priced at $100 per smartphone and $200 per Blu-ray player, its GDP in 2017 would be:

$4,000

(Table: Prices and Quantities in a 4-Good Economy) Refer to the table. Suppose an economy produces only the four goods listed. What is the GDP in this country?

$7,700

If real GDP per capita in a country was $14,000 in year 1 and $14,140 in year 2, then the economic growth rate for this country from year 1 to year 2 was:

1%

In 2010, real GDP was $13.2 trillion and nominal GDP was $14.6 trillion. What was the GDP deflator for that year?

110.6 ((nominal - real/real) *100)

Imagine an economy with production function Y = F(K) = and 400 units of capital. If the fraction of output invested in new capital is γ = 0.2 and the depreciation rate is δ = 0.05, what is the steady-state amount of capital?

16 units

An economy with production function Y = F(K) =square root of k that has 400 units of capital will produce _____ units of output.

20

Imagine an economy with production function Y = F(K) = and 400 units of capital. If the depreciation rate is δ = 0.05, how much capital will deteriorate in the next period?

20 units

The value of a car produced and sold in 2000 and sold again to a second owner in 2008 would be included in GDP for:

2000 only

GDP in the United States was $14,119 billion in 2014, and grew to $14,660.4 billion in 2015. This represents an annual growth rate of:

3.8%

Imagine an economy with production function Y = F(K) = and 400 units of capital. If the fraction of output invested in new capital is γ = 0.2 and the depreciation rate is δ = 0.05, how much total capital will be available in the next period?

384 units

Imagine an economy with production function Y = F(K) = and 400 units of capital. If the fraction of output invested in new capital is γ = 0.2, how much new capital will be created in the next period?

4

(Figure: Loanable Funds Market) Refer to the figure of the loanable funds market. This market will be in equilibrium when the interest rate is _____ and the quantity of loanable funds is _____.

4.5%; $250

Which of the following is counted as part of GDP?

A state government hires workers to repave the streets.

Which of the following statements correctly differentiates catching-up growth from cutting-edge growth?

Catching-up growth comes primarily from capital accumulation, while cutting-edge growth comes from technological development.

Which statement best explains why growth in China has been so rapid recently?

China began with very little capital, so its marginal product of capital was very high.

Which statement best describes the cross-country evidence on the relationship between a nation's GDP per capita and standard measures of societal well-being?

GDP per capita is positively related to measures of societal well-being.

Which statement about the effects of patents is TRUE?

Patents increase the incentive to research and develop new products but also increase monopoly power once the products are created.

Which of the following is TRUE about the life-cycle theory of savings?

People tend to borrow during the early years of their lifetimes, save during their prime working years, and dissave during their retirement years.

Which of the following chains of logic explain the functions of banks in the process of economic growth?

Savers deposit their savings in banks. Banks direct these funds to firms that invest and engage in capital accumulation that furthers economic growth.

If individuals become more impatient, what will happen in the market for loanable funds?

The supply of loanable funds will decrease, interest rates will rise, and the quantity of saving and borrowing will decrease.

What is a result of a high level of government corruption?

There are few entrepreneurs.

Which of the following would be included in GDP for the United States?

Toyota, a Japanese car company, producing cars in the United States

Insecure property rights in bank account deposits typically lead to:

a decrease in the supply of savings.

Which is NOT an institution that leads to sustained long-term economic growth?

a more equal income distribution

The main reason people save during their working years is:

a preference toward a smooth consumption path over time.

According to the national spending approach, which of the following is counted in investment?

a restaurant buys a new wood-fired oven for baking pizzas

The source of "cutting-edge" growth is:

advances in technological knowledge.

For most of recorded human history, long-run economic growth was:

almost nonexistent

In the Solow model, if a country's saving rate (γ) increased from 10% to 12% and it was operating at its steady state before the change, we would expect to see:

an increase in both the capital stock and output.

The difference between a finished good and an intermediate good is that:

an intermediate good is sold for use as a component in a finished good.

Wealthier nations tend to have:

better educational opportunities

If the interest rate increases, then:

both the quantity saved and the quantity supplied of loanable funds will increase.

Conditional convergence refers to the tendency for:

countries with similar steady-state levels of output to grow faster when they're poor than when they're rich until their per capita GDP levels converge.

At lower interest rates, the cost of investing _____ and the quantity of funds demanded for investment _____.

decreases: increases

If the government raises taxes on investment returns, then the:

demand for loanable funds will decrease and the equilibrium interest rate will decrease.

When industries are limited by the size of the domestic market, opening trade to the world markets will likely lead to _____ and _____ real GDP per capita in the domestic country.

economies of scale; increase

Which of the following is NOT a reason for the financial crisis of 2007-2008?

excessive confidence about the stock market

Gross domestic product is the market value of all:

finished goods and services produced within a country in a year.

The level of capital stock increases when investment in physical capital is:

greater than depreciation.

Time preference is the desire to:

have goods and services sooner rather than later.

A business that pays for its workers to attend a technical college is increasing its:

human captial

Savings is:

income that is not spent on consumption goods.

Which would be most effective in ensuring sustained long-term economic growth?

increasing technological knowledge

Which of the following defines the "rules of the game" that structure economic incentives?

institutions

According to the Solow model, output is a function of the quantity of:

labor, capital, and ideas

Ideas are not rivalrous, meaning that:

many people can benefit from an idea at the same time.

The difference between nominal GDP and real GDP is that nominal GDP:

measures a country's production of finished goods and services at current market prices, whereas real GDP measures a country's production of finished goods and services at the same prices in all years.

GDP:

measures production in a year, while national wealth measures a stock of assets.

The single best indicator of a recession is:

negative real GDP growth

The United States and Western European countries began to experience accelerated economic growth during which century?

nineteenth

The value of volunteer services is:

not included in GDP, but should be because a service is produced.

Bond prices and bond interest rates move:

opposite directions

When economists speak of "long-run economic growth," they mean increasing the:

per capita real GDP of a country.

One measure of student output is number of completed math problems produced. Using pen and paper only, a student can complete 50 math problems in 2 hours. Using pen, paper, and a calculator, the same student can complete 100 math problems in 2 hours. (The student is already familiar with, and knows how to use, the calculator.) This scenario illustrates the use of which factor of production?

physical capital

Factors of production that contribute to growth in per capita GDP include:

physical capital, human capital, and technological knowledge.

Increases in productivity cause the:

production function to shift upward.

Which of the following has the greatest potential for solving free-rider problems?

property rights

Governments can play a role in supporting the production of new ideas by:

protecting intellectual property.

The main reason for the influence of institutions on the wealth of nations is that good institutions:

raise people's incentives to build wealth.

To compare levels of production from different years, the appropriate measure to use is:

real GDP

Financial intermediaries:

reduce the costs of moving savings from savers to borrowers and investors.

A country increases its technological knowledge by engaging in:

research and development

One of the best explanations for why some countries are rich and others are poor is that:

rich countries organize their factors of production more efficiently than poor countries do.

The process in which bank loans are bundled together and sold on the market as financial assets is called:

securitization.

(Figure: Loanable Funds Market) Refer to the figure of the loanable funds market. At an interest rate of 3% in this market, there is a _____ of loanable funds of _____.

shortage; $320 (cause its below)

Over the past 200 years, economic growth in the United States has been:

slow and consistent.

Which of the following represents ownership in a corporation?

stocks

(Figure: Loanable Funds Market) Refer to the figure of the loanable funds market. At an interest rate of 6% in this market, there is a _____ of loanable funds of _____.

surplus; $320

Diminishing returns to capital implies that _____ diminishes as more capital is added.

the marginal product of capital

The production function is a mathematical function that shows:

the relationship between output and the factors of production.