ECO exam 2
The consumer price index was 225 in 2008 and 232.2 in 2009. The nominal interest rate during this period was 6.5 percent. What was the real interest rate during this period?
3.3%
You need to go to BEA's website (https://www.bea.gov) to find relevant information to answer the following question. What is the GDP growth rate of the United States for Q2 (second quarter) 2020?
31.4%
Suppose that some country had an adult population of about 46 million, a labor-force participation rate of 75 percent, and an unemployment rate of 8 percent. How many people were employed?
31.74 million
If the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was
6 percent.
A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer's inventory. How much is added to GDP?
$17,000
In 1969, Malcolm bought a Pontiac Firebird for $2,500. If the price index was 36.7 in 1969 and the price index was 235 in 2013, then what is the price of the Firebird in 2013 dollars?
$16,008.17
Harry spent $39,000 in 2009 and $42,000 in 2014 on goods and services. The consumer price index was 220 for 2009 and 231 for 2014. Harry's 2009 spending in 2014 dollars is about
$40,950.
Iggie took a university teaching job as an assistant professor in 1980 at a salary of $15,000. By 2011, she had been promoted to full professor, with a salary of $70,000. If the price index was 82 in 1980 and 225 in 2011, then what is Iggie's 1980 salary in 2011 dollars?
$41,159
David earned a salary of $43,500 in 1994 and $89,000 in 2010. The consumer price index was 148.2 in 1994 and 215.3 in 2010. David's 1994 salary in 2010 dollars is
$63,195.34
A dairy buys $50,000 worth of milk and spend $5,000 on cartons and utilities. It sells the cartons of milk to a grocery store for $60,000 that then sells all of the cartons to consumers for $65,000. How much do these actions add to GDP?
$65,000
Arlo is offered a job in Des Moines, where the CPI is 80, and a job in New York, where the CPI is 125. Arlo's job offer in Des Moines is for $42,000. How much does the New York job have to pay in order for the two salaries to represent the same purchasing power?
$65,625
Michigan Cranberry Company sold $10 million worth of cranberries it produced. In producing cranberries, it purchased $1 million dollars' worth of supplies from foreign countries and paid workers who reside in Canada but commute to the U.S. $1 million. How much did these transactions add to U.S. GDP?
$9 million
The yearly CPI values for Chicago, IL are 233 and 237 for the year 2017 and 2018, respectively. If the annual interest rate offered by a Wells Fargo bank in Chicago is 1.15% in the year of 2018, then what is the real interest rate in Chicago in 2018?
-0.57%
Suppose the consumer price index was 184 in 2009 and 198.17 in 2010. The nominal interest rate during this, period was 5.8 percent. What was the real interest rate during this period?
-1.9%
For a 100-dollar bill, if you know that the CPI value of Houston, TX is 229, then what is the purchasing power of 100-dollor bill in Houston, TX?
0.44
Suppose that some country had an adult population of about 25 million, a labor force participation rate of 60%, and an unemployment rate of 6%. How many people were unemployed?
0.9 million
You need to go to BEA's website (https://www.bea.gov) to find relevant information to answer the following question. What is the nominal GDP for Texas in the year 2019?
1,886,956.1 millions of USD
The yearly CPI values for Chicago, IL are 233 and 237 for the year 2017 and 2018, respectively. Then what is the inflation rate from 2017 to 2018 for Chicago?
1.72%
In the base year, the GDP deflator is always equal to
100
Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $50; in 2014, the basket's cost was $51; and in 2016, the basket's cost was $52. The value of the CPI in 2014 was
102.0.
Wilson is offered a job in Kansas City that pays $50,000 and a job in Dallas that pays $60,000. Which pair of CPIs would ensure that the two salaries have the same purchasing power?
125 in Kansas City and 150 in Dallas
Suppose that some country had an adult population of about 25 million, a labor-force participation rate of 60 percent, and an unemployment rate of 6 percent. How many people were employed?
14.1 million
The Bureau of Labor Statistics counts a member of a surveyed household as an adult if thatPerson is at least
16 years old.
During a certain year, the nominal interest rate was 7 percent, the real interest rate was 4 percent, and the CPI was 198.3 at the end of the year. The CPI at the beginning of the year was:
192.5
If the consumer price index was 96 in 2012, 100 in 2013, and 102 in 2014, then the base year must be
2013
Suppose that the adult population in the town of Springfield is 225 million. If 40 million are unemployed and 100 million are employed, then the unemployment rate is approximately
29%.
From 2013 to 2014, the CPI for medical care increased from 150 to 159. What was the inflation rate for medical care?
6.0 percent
Frictional unemployment results from
Job searching. It is often thought to explain relatively short spells of unemployment.
Micah buys a used car for $10,000 and spends $200 on a new radio that is made in the U.S. The end result of these two transactions is
U.S. consumption purchases increase by $200 and U.S. GDP increases by $200.
A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result,
U.S. investment and GDP increase, but German GDP is unaffected.
Eric was laid off two months ago. He has not searched for other work because he is expecting to be recalled to work. The Bureau of Labor Statistics counts Eric as
Unemployed and in the labor force.
Which of the following transactions adds to U.S. GDP for 2015?
When Ken and Kim were both single, they lived in separate apartments and each paid $800 it rent. Ken and Kim got married in 2015 and they bought a previously unoccupied house that, according to reliable estimates, could be rented for $1,700 per month.
In the equation Y = C + I + G + NX,
Y represents the economy's total expenditure.
Which of the following is included in the investment component of GDP?
a. Households' purchases of newly constructed homes b. Net additions to firms' inventories c.Firms' purchases of capital equipment d. All of the above are correct. d.all correct
Who of the following would necessarily be included in the Bureau of Labor Statistics' "unemployed" category?
a. Huey, who did not work during the previous three weeks b. Dewey, who tried to find new employment during the previous two weeks c. Louie, who was an unpaid worker during the previous two weeks d. None of the above is correct. d.none
GDP does not reflect
a. The value of leisure. b. The value of goods and services produced at home. c. The quality of the environment. d. All of the above are correct.
Which of the following items is included in the U.S. GDP?
a. the estimated value of production accomplished at home, such as backyard production of fruits and vegetables b. the value of illegaly produced goods and services c. the value of cars and trucks produced in foreign countries and sold in the U.S. d. None of the above is included in the U.S. GDP.
Otherwise legal transactions that go unreported or unrecorded are called
a.. the underground economy. b. the shadow economy. c. the informal economy. d. All of the above are correct. a. all correct
Which of the following is a way to compute GDP?
add up the market value of all final goods and services
GDP per capita tells us the income and expenditure of the
average person in the economy.
Which statement is true about GDP growth?
if we want to compare GDP over time, we should always compare real GDP.
The term economists use to describe a situation in which the economy's overall price level is rising is:
inflation
A farmer produces oranges and sells them to Fresh Juice, which makes orange juice. The oranges produced by the farmer are called:
intermediate goods
To which of the problems in the construction of CPI is the creation of the new smart phones most relevant, such as new generations of iPhone?
introduction of new goods
For the purpose of calculating the consumer price index, the basket of goods
is kept the same from year to year so that the effects of price changes are isolated from the effect of any quantity changes that might be occurring at the same time.
Suppose an economy produces only burgers and bags of fries.in 2010, 4000 burgers are sold at $3 each and 6000 bags of fries at $1.5 each. In 2008, which is the base year, burgers were sold for $2.5 each and bags of fries were sold for $2 each. Then for 2010,
nominal GDP is $21,000, real GDP is $22,000, and the GDP deflator is 95.45.
The GDP deflator is the ratio of:
nominal GDP to real GDP.
The 1.49% interest rate for a 9-month CD account at Wells Fargo is called:
nominal interest rate
Transfer payments are:
not included in GDP because they are not payments for currently produced goods or services.
Changes in real GDP reflect:
only changes in the amounts being produced.
When economists talk about growth in the economy, they measure that growth as the:
percentage change in real GDP from one period to another.
Nominal GDP will definitely increase when
prices increase and output increases.
Which of the following is included in government purchase?
the services of a US government attorney valued at the cost of her salary
In 2012 the nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP?
$15 billion
In the economy of TAMIU in 2018, exports were $200, GDP was $2000, government purchases were $200, imports were $270, and investment was $500. What was TAMIU's consumption in 2018?
$1370
In 1986, Ken bought a Ford Mustang for $8,000. If the price index was 122 in 1986, and the price index was 280 in 2011, then what is the price of the Mustang in 2011 dollars?
$18,360.66.
In an imaginary economy, consumers buy only sandwiches and magazines. The fixed basket consists of 20 sandwiches and 30 magazines. In 2006, a sandwich cost $4 and a magazine cost $2. In 2007, a sandwich cost $5. The base year is 2006. If the consumer price index in 2007 was 125, then how much did a magazine cost in 2007?
$2.50
If the CPI was 95 in 1955 and id 475 today, then $100 today purchases the same amount of goods and services as
$20.00 purchased in 1955.
Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2008, Quality Motors produced $25 million worth of automobiles and sold $12 million in the U.S. and $13 million in Mexico. In addition, it sold $2 million from the previous year's inventory in the U.S. The transactions just described contribute how much to U.S. GDP for 2008?
$25 million
If the CPI was 108.00 in 1942 and is 336.96 today, then $10 in 1942 purchased the same amount of goods and services as
$31.20 purchases today.
Jane earned a salary of $40,000 in 1996 and $65,000 in 2006. The consumer price index was 160 in 1996 and 266 in 2006. Jane's 2006 salary in 1996 dollars is
$39,097.74.
If in some year nominal GDP was $20 billion and the GDP deflator was 50, what was real GDP?
$40 billion.
The latest CPI value for Chicago, IL is 242. For a registered nurse making an annual salary of $85,000 in Chicago, then what is his or her salary's purchasing power?
351
If the nominal interest rate is 4.2 percent and the rate of inflation is -0.5 percent, then the real interest rate is
4.7 percent.
In 2009, based on concepts similar to those used to estimate U.S. employment figures, the Italia adult non- institutionalized population was 51.070 million, the labor force was 24.710 million, and the number of people employed was 22.765 million. According to these numbers, the Italia labor-force participation rate and unemployment rate were about
48.4% and 7.9%
If the nominal interest rate is 8percent and the rate of inflation is 3 percent, then the real interest rate is
5%
The latest CPI value for Chicago, IL is 242, for Boston, MA is 281, for San Diego, CA is 301, and for Dallas, TX is 239. The making $65,000 per year in Boston is equivalent to making how much money in Chicago?
55978.65
In 2009, based on concepts similar to those used to estimate U.S. employment figures, the Japanese adult non- institutionalized population was 110.272 million, the labor force was 65.36 million, and the number of people employed was 62.242 million. According to these numbers, the Japanese labor-force participation rate and unemployment rate were about
59.3% and 4.8%
The Bureau of Labor Statistics reported in 2005 that there were 50.40 million people over age 25whose highest level of education was some college or an associate degree, 33.86 million of whom were employed and 1.27 million of whom were unemployed. What were the labor-force participation rate and the unemployment rate for this group?
69.7% and 3.6%
John just graduated law school and has two competing job offers. The first is in Phoenix and pays a salary of $150,000. He has a similar job offer in Cleveland that pays $90,000. Which pair of CPIs would make the two salaries have the same purchasing power?
70 in Phoenix and 42 in Cleveland
In 1974, one could buy a theater for $1.25. Today the same theater ticket costs $6.50. Which pair of CPIs would imply that the cost in today's dollars was the same for both tickets?
75 in 1964 and 390 today
The adult population in the town of Belleville is 150 thousand. If 100 thousand people are employed and 20 thousand are unemployed, then the labor force participation rate is approximately
80%.
If nominal GDP is $8 trillion and real GDP is $10 trillion, then the GDP deflator is
80, and this indicates that the price level has decreased by 20 percent since the base year.
If in some year nominal GDP was $28 trillion and real GDP was $32 trillion, what was the GDP deflator?
87.5.
Which of the following transactions would add to the value of the U.S. GDP?
A grocery store purchases new freezers made in the United States.
The CPI is a measure of the overall cost of the goods and services bought by
A typical consumer, and the CPI is computed and reported by the Bureau of Labor Statistics.
You need to go to BEA's website (https://www.bea.gov) to find relevant information to answer the following question. Which state has the largest value of real GDP per capita in the year 2019?
Alaska
Which of the following items is included in U.S. GDP?
All of the above are included in U.S. GDP.
An economy's natural rate of unemployment is the
Amount of unemployment that the economy normally experiences.
Which of the following includes everyone in the adult population that the Bureau of Labor Statistics counts as "unemployed"?
Anyone who is not employed, is available for work, has actively looked for work in the past four Weeks, and anyone who is waiting to be recalled from a job from which they have been laid off
You need to go to BEA's website (https://www.bea.gov) to find relevant information to answer the following question. Which metropolitan area in the United States has the largest value of real GDP in the year 2018?
Bismark, ND
You need to go to the Wikipedia page: List of countries by GDP (nominal) per capita to answer this question (https://en.wikipedia.org/wiki/Listof_countries_by_GDP(nominal)_per_capita). For the year 2019, which country has the highest value of per capita GDP ranked by the World Bank?
Brunei
The latest CPI value for Chicago, IL is 242, for Boston, MA is 281, for San Diego, CA is 301, and for Dallas, TX is 239. If you receive a job offer with the same annual salary of $65,000 from each of the four cities, then which city gives you the largest purchasing power of your salary?
Dallas
You need to go to BEA's website (https://www.bea.gov) to find relevant information to answer the following question. Which metropolitan area in Texas has the largest value of nominal GDP in the year 2018?
Dallas-Fort Worth, TX
To be counted as "employed" in the U.S. labor force statistics, a person
Does not have to be working for pay if they are working for a family business and does not have to be working full time.
You need to go to the Wikipedia page: List of countries by GDP (nominal) to answer this question (https://en.wikipedia.org/wiki/Listof_countries_by_GDP(nominal)). For the year 2019, which country has the largest value of GDP ranked by the International Monetary Fund?
Dominican Republic
Jamarcus works part-time as a pizza delivery person in a college town. The Bureau of Labor Statistics counts Jamarcus as
Employed and in the labor force.
People who are unemployed because they are in search of a job that suits their skills are included within
Frictional unemployment.
GDP is not a perfect measure of economic well-being. For example:
GDP fails to account for the quality of the environmen
Which of the following statements regarding GDP is correct?
GDP includes factory production, but not any harm that may be inflicted on the environment.
Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP. It follows that
GDP is still a useful measure of society's welfare because it measures a nation's ability to purchase the inputs that can be used to help produce the things that contribute to welfare.
Which of the following is not an explanation for the existence of structural unemployment?
Job search
GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is:
GDP per capita
Suppose that the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?
GDP would definitely increase because GDP excludes environmental quality.
The city of Ann Arbor Michigan buys a police car manufactured in Germany. In the GDP accounts this transaction is included in
Government expenditures and imports.
When the consumer price index rises, the typical family
Has to spend more dollars to maintain the same standard of living.
The real interest rate tells you
How fast the purchasing power of your bank account rises over time.
Suppose a basket of goods and services has been selected to calculate the consumer price index. In 2005, the basket of goods cost $108.00; in 2006, it cost $135.00; and in 2007, it cost $168.75. Which of the following statements is correct?
If the CPI is 156.25 in 2007, then 2005 is the base year.
Which statement is true about GDP?
In the US, GDP is calculated both annually and quarterly.
The underground economy
Includes otherwise legal transactions that go unreported or unrecorded.
Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has
Increased measured GDP by the value added by the restaurant's preparation and serving of the meals.
Sam loses his job and decides to sit on the beach rather than look for work during the next few months. Other things the same, the unemployment rate
Increases, and the labor-force participation rate decreases.
John is a stockbroker. He has had several job offers, but he has turned them down because he thinks he can find a fine that better matches his tastes and skills. Curtis has looked for work as an accountant for some time. While the demand for accountants does not appear to be falling, there seems to be more people applying than jobs available.
John is frictionally unemployed, and Curtis is structurally unemployed.
You need to go to the Wikipedia page: List of countries by GDP (nominal) to answer this question (https://en.wikipedia.org/wiki/Listof_countries_by_GDP(nominal)). For the year 2019, which country has the smallest value of GDP ranked by the International Monetary Fund?
Kiribati
You need to go to the Wikipedia page: List of countries by GDP (nominal) per capita to answer this question (https://en.wikipedia.org/wiki/Listof_countries_by_GDP(nominal)_per_capita). For the year 2020, which country has the smallest value of per capita GDP ranked by the International Monetary Fund?
Madagascar
Martin, a US citizen, travels to Mexico and buys a newly manufactured motorcycle there. His purchase is included in:
Mexican GDP, but not in US GDP.
You need to go to BEA's website (https://www.bea.gov) to find relevant information to answer the following question. Which metropolitan area in Texas has the largest value of real GDP in the year 2018?
Midland, TX
Who of the following would be included in the Bureau of Labor Statistics' "unemployed" category?
Miguel, who just got a layoff a week ago by Ford but has been actively looking for a new job since.
The consumer price index is used to
Monitor changes in the cost of living over time.
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.
Which of the following is correct?
Nominal GDP equals real GDP in the base year
Which of the following is correct?
Nominal GDP equals real GDP in the base year.
Suppose an economy produces only eggs and ham. In 2009, 100 dozen eggs are sold at $3 per dozen and 50 pounds of ham sold at $4 per pound. In 2010, the base year, eggs sold at $1.50 per dozen and ham sold at $5 per pound. For 2009,
Nominal GDP is $500, real GDP is $400, and the GDP deflator is 125.
The GDP deflator is the ratio of
Nominal GDP to real GDP multiplied by 100.
The labor force equals the
Number of people employed plus the number of people unemployed
A U.S. grocery chain purchases olive oil from Tunisia and sells it to U.S. consumers. In which of the following is this transaction included?
U.S. consumption and U.S. imports
Babe Ruth, the famous baseball player, earned $80,000 in 1931. Today, the best baseball players can earn more than 400 times as much as Babe Ruth earned in 1931. However, prices have also risen since 1931. We can conclude that
One cannot determine whether baseball stars today enjoy a higher standard of living than Babe Ruth did in 1931 without additional information regarding increases in prices since 1931.
By not taking into account the possibility of consumer substitution, the CPI
Overstates the cost of living.
The economy's inflation rate is the
Percentage change in the price level from the previous period.
With respect to the consumer price index, the substitution bias arises because
Prices of goods and services do not change in the same proportion from year to year.
If real GDP doubles and the GDP deflator doubles, then nominal GDP
Quadruples.
Which of the following statements about nominal GDP and real GDP is correct?
Real GDP is a better gauge of economic well-being than nominal GDP.
If the quality of a good improves while its price remains the same, then the real value of a dollar
Rises and the cost of living decreases.
Which metropolitan area has the largest value of nominal GDP in the year 2018?
Seattle-Tacoma-Bellevue, WA
Frictional unemployment is thought to explain relatively
Short spells of unemployment, while structural unemployment is thought to explain relatively long spells of unemployment.
Cyclical unemployment refers to
Short-run fluctuations around the natural rate of unemployment.
You need to go to BEA's website (https://www.bea.gov) to find relevant information to answer the following question. Which state has the largest value of nominal GDP in the year 2019?
South Carolina
One problem with the consumer price index stems from the fact that, over time, consumers ten to buy larger quantities of goods that have become relatively less expensive and smaller quantities of goods that have become relatively more expensive. This problem is called
Substitution bias.
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.
You need to go to the Wikipedia page: List of countries by GDP (nominal) to answer this question (https://en.wikipedia.org/wiki/Listof_countries_by_GDP(nominal)). For the year 2019, which country has the largest value of GDP ranked by the International Monetary Fund?
Thailand
Two alternative measures of the overall level of prices are
The GDP deflator and the consumer price index.
Which of the following is not correct?
The consumer price index is used to measure the quantity of goods and services that the economy is producing.
Suppose that over the past year, the real interest rate was 3 percent and the inflation rate was 1 percent. It follows that:
The dollar value of savings increased at 4 percent, and the purchasing power of savings increased at 3 percent.
Suppose that over the past year, the real interest rate was 3 percent, the CPI was 126.2 at the beginning of the year, and the CPI was 129.5 at the end of the year. It follows that:
The dollar value of savings increased at 5.6 percent, and the purchasing power of savings Increased at 3 percent.
Suppose that over the past year, the real interest rate was 5 percent and the inflation rate was 3 percent. It follows that
The dollar value of savings increased at 8 percent, and the purchasing power of savings increased at 5 percent.
The term inflation is used to describe a situation in which
The overall level of prices in the economy is increasing.
Which of the following is included in the calculation of GDP?
The purchase of tutoring services from a tutor who holds citizenship outside the country but, resides within the country.
Which of the following is included in Singapore's GDP?
The value of production by an American working in Singapore.
Unemployment data are collected
Through a regular survey of about 60,000 households.
Net exports equal
exports minus imports
If the CPI is 156.25 in 2007, then 2005 is the base year.
face value
