Econ 202 Ch 11 & 12 review

Compute how much each of the following items is worth in terms of today's dollars using 177 as the price index for today. a.In 1926, the CPI was 17.7 and the price of a movie ticket was $0.25. b.In 1932, the CPI was 13.1 and a cook earned $15.00 a week. c.In 1943, the CPI was 17.4 and a gallon of gas cost $0.19.

A.) $2.5 B.) $202.65 C.) $1.93

Explain how the introduction of new goods might bias the calculation of the consumer price index.

Because the CPI is based on a fixed basket of goods and services, any new goods would not be included in this basket. As a result, the CPI would fail to reflect the increase in the value of a dollar that arises from new goods being introduced.

Other things the same, which of the following would increase productivity? a. An increase in either human or physical capital b. An increase in human capital but not an increase in physical capital c. An increase in physical capital but not an increase in human capital d. Neither an increase in human capital nor an increase in physical capital

a. An increase in either human or physical capital

Private property rights mean that... a. individuals can own businesses and assets and their ownership is secure b. communities jointly own businesses and assets c. the government owns businesses and assets d. everyone owns an equal share of the businesses and assets in a society

a. individuals can own businesses and assets and their ownership is secure

Sue Holloway was an accountant in 1944 and earned $12,000 that year. Her son, Josh Holloway, is an accountant today and he earned $210,000 in 2017. Suppose the price index was 17.6 in 1944 and 218.4 in the current year. Sue Holloway's 1944 income in current year dollars is a. $136,909. b. $148,909. c. $240,960. d. $23,033.

b. $148,909.

____________institutions are aspects of society's rules that concern the allocation of political power and the constraints of the exercise of political power. a. Economic b. Political c. Government d. Public

b. Political

An understanding of the best ways to produce goods and services is called... a. physical capital. b. Technology. c. Productivity. d. human capital.

b. Technology.

The equipment and structures available to produce goods and services are called a. human capital. b. physical capital. c. the production function. d. Technology

b. physical capital.

Apple founder Steve Jobs received patents on many of his ideas. While the patents existed, his ideas were... a. private goods but not proprietary knowledge. b. private goods and proprietary knowledge. c. public goods but not proprietary knowledge. d. public goods and proprietary knowledge.

b. private goods and proprietary knowledge.

Sue Holloway was an accountant in 1944 and earned $12,000 that year. Her son, Josh Holloway, is an accountant today and he earned $210,000 in 2017. Suppose the price index was 17.6 in 1944 and 218.4 in the current year. Josh Holloway's current year income in 1944 dollars is a. $11,528. b. $149,009. c. $16,923. d. $26,059.

c. $16,923.

According to the Solow Growth Model, the source of long-term economic growth is... a. Natural resources b. Institutions c. Technological progress d. Geographical differences

c. Technological progress

Which of the following is an example of human capital? a. The comfortable chair in your dorm room where you read economics texts b. The amount you get paid each week to work at the library c. The things you have learned this semester d. Any capital goods that require a human to be present to operate

c. The things you have learned this semester

The dictator of Turan has recently begun to arbitrarily seize farms belonging to his political opponents, and he has given the farms to his friends. His friends don't know much about farming. The courts in Turan have ruled that the seizures are illegal, but the dictator has ignored the rulings. Other things equal, we would expect that the growth rate in Turan will... a. increase because the total amount of human capital in the country will increase as the new owners learn how to farm. b. fall temporarily, but will return to where it was when the new owners learn how to farm. c. fall and remain lower for a long time. d. not be affected unless widespread civil disorder or civil war results.

c. fall and remain lower for a long time.

An increase in the price of bread produced domestically will be reflected in a. the consumer price index but not in the GDP deflator. b. neither the GDP deflator nor the consumer price index. c. the GDP deflator but not in the consumer price index. d. both the GDP deflator and the consumer price index.

d. both the GDP deflator and the consumer price index.

Consider a small economy in which consumers buy only two goods: pretzels and cookies. In order to compute the consumer price index for this economy for two or more consecutive years, we assume that a. neither the price of pretzels nor the price of cookies changes from year to year. b. the percentage change in the price of pretzels is equal to the percentage change in the price of cookies from year to year. c. the number of pretzels bought by the typical consumer is equal to the number of cookies bought by the typical consumer in each year. d. neither the number of pretzels nor the number of cookies bought by the typical consumer changes from year to year.

d. neither the number of pretzels nor the number of cookies bought by the typical consumer changes from year to year.

Suppose that a new government is elected in Eurnesia. The new government takes steps toward improving the court system and reducing government corruption. The citizens of Eurnesia find these efforts credible and outsiders believe these changes will be effective and long lasting. These changes will probably raise a. productivity but not real GDP per person in Eurnesia. b. real GDP per person but not productivity in Eurnesia. c. neither productivity nor real GDP per person in Eurnesia. d. real GDP per person and productivity in Eurnesia

d. real GDP per person and productivity in Eurnesia