Econ 100 CH 6 Homework

Suppose a 1-pound steak sells at a grocery store for $7. Suppose that the grocery store purchased it from a butcher for $4. Suppose the butcher bought cattle from farmers for $2 per sellable pound, paid their labor approximately $1 for pound of sellable beef labor, and made $1 in profit. What is the GDP contribution of the steak?

It is $7.

Suppose a Boeing 777 is sold to a Chinese company for $250 million and resells it to a Hong Kong airline for $251 million. GDP will count this as

$250 million.

Suppose there are only two goods (Good A and Good B) and the average person buys 8 of Good A in a year and 6 of Good B. If, in the base year, the Price of Good A is $8 and the Price of Good B is $6, and in the next year the Price of Good A is $10 and the Price of Good B is $5, the inflation that occurred in the second year is Multiple Choice

2%

Using Table 6.1, the inflation rate for 2000 would be (CPI 1982-1984=100)

3.3% (((174.0-168.3)/168.3)*100 %).

In Figure 6.1, which area represents a trough?

C the lowest point

The expenditures approach to GDP equals

Consumption + Gross Investment + Government Purchases + Net Exports.

In measuring Gross Domestic Product, goods produced by foreign firms in the United States are

counted, but goods produced by American firms in foreign countries are not counted.

If the unemployment rate falls because the number of people not working but searching for work falls, economists would attribute this to the

discouraged worker effect.

Item15 One of the reasons that Real Gross Domestic Product is not synonymous with social welfare is

domestic production (cooking, laundry and such) are not counted.

In the recession of 2007-2009, the National Bureau of Economic Research's Business Cycle Dating Committee

ignored the traditional definition of a recession, marking the beginning in late 2007.

One major source of difficulty in measuring inflation arises because

improvements in product quality are usually associated with increased prices.

A price indexi

is a mechanism to compare all prices in two different years and the ratio of the price of a market basket in one year to the price of the market basket in the previous year times 100.

A reason why the CPI overstates the cost of living is it

makes no attempt to control for substitution to cheaper goods.

One of the consequences of the overstatement of the CPI is that

personal income taxes are lower than they would otherwise be.

The reason that only final sales are counted in GDP is

to avoid double counting goods that are sold so as to be resold.

One subject of study for macroeconomics is

unemployment.

If a market basket was defined in 2018 and it cost $10,000 to purchase the items in that basket in 2018, while it cost $11,000 to purchase those identical goods in 2019, then the inflation rate from 2017 to 2018 is

unknown given this data.

Suppose the CPI was 140 last year. This year it is 147. Now suppose the CPI was 140 last year, and this year it is 132.

a. This year's inflation rate is 5% ((147-140)/140)*100%) b. This year's inflation rate is -5.71% ((1132-140)/140)*100%)

In early 2005, inflation increased unexpectedly due to an increase oil prices. This helped

borrowers

With 125 million people working, 8 million out of work and looking for work, and 147 million neither working nor looking for work, "underemployment" would be illustrated by

part of the 125 million holding part-time jobs when they were qualified for full-time jobs.