Econ 410 Homework for Exam 1

The total income of everyone in the economy adjusted for the level of prices is called:

real GDP

In principle, the GDP accounts should—but do not—have an imputation for

rental services of automobiles driven by owners

When studying the short-run behavior of the economy, an assumption of ________ is more plausible, in contrast to studying the long- run equilibrium behavior of an economy, when an assumption of _________ is more plausible

sticky prices; flexible prices

An increase in the price of imported goods will show up to:

the CPI but not in the GDP deflator

In the classical model with fixed, output the supply and demand for goods and services are balanced by:

the interest rate

The real interest rate is the:

the nominal interest rate minus the rate of inflation

In a Cobb-Douglas production function the marginal product of capital will increase if:

the quantity of labor increases

The two most important factors of production are:

capital and labor

The panel of economists appointed by the Senate Finance Committee estimated that the CPI ______ inflation by approximately ______ percentage point(s) per year.

overestimates; 1

Deflation occurs when

prices fall

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and net exports are -$1,910, then government purchases are:

$2977

If GDP (measured is billions of current dollars) is $5465 and the sum of consumption, investment, and government purchases is $5496, while exports equal $673, imports are:

$704

If nominal GDP in 2009 equals $14 trillion and real GDP in 2009 equals $11 trillion, what is the value of the GDP deflator

1.27

Assume that the consumption function is given by C= 200+0.7(Y-T), the tax function is given by T= 100 + t1Y, and Y=50K0.5L0.5, where K=100 and L=100. If t1 increases from 0.2 to 0.25, then consumption decreases by:

175

If real GDP grew by 6% and population grew by 2%, then real GDP per person grew by approximately ________ %.

4

If the adult population equals 250 million, of which 145 million are employed and 5 million are unemployed, the labor force participation rate equals ______ percent.

60

In the US economy today, real GDP per person, compared with its level in 1900, is about:

8 times as high

GNP minus GDP _______ income earned domestically by foreigners_______ income that nationals earn abroad.

minus; plus

A worker with two jobs is counted:

once in the household survey, but twice in the establishment survey

The CPI is a:

Laspeyres price index

All of the following actions are investments in the sense of the term used by macroeconomists except:

Sandra Santiago's buying 100 shares of IBM stock

In a closed economy, private saving equals:

Y-T-C

The national income accounts identity, for an open economy, is:

Y= C + I + G + NX

National income differs from net national product by an amount called:

a statistical discrepancy

A consumption function shows the relationship between consumption and:

disposable income

Imputed values included in GDP are the:

estimated value of goods and services that are not sold in the marketplace

The core inflation rate:

excludes food and energy prices

In the circular flow model, households receive income from the ________ market and save through the ______ market.

factor; financial

In the national income accounts, government purchases are goods and services purchased by:

federal, state and local governments

The unemployment rate:

has never been zero in the United States

Estimates by Goldin and Katz indicate that the financial returns of a year of college _____ between 1980 and 2005.

increased

In a simple model of the supply and demand for pizza, when aggregate income increases, the price of pizza________ and the quantity purchased__________.

increases; increases

The demand for loanable funds is equivalent to

investment

At any particular point in time, the output of the economy:

is fixed because the supplies of capital and labor and the technology are fixed

With a Cobb-Douglas production function, the share of output going to labor:

is independent of the amount of labor

When a firm sells a product out of inventory, GDP:

is not changed

Macroeconomists cannot conduct controlled experiments, such as testing various tax and expenditure policies, because:

they must make use of the data history gives them

The real wage is the return to labor measured in:

units of output

Which of the following is a stock variable? a. wealth b. consumption c. investment d. income

wealth

The household survey conducted by the Bureau of Labor Statistics provides estimates of the number of workers ___________, while the establishment survey provides estimates of the number of workers ________.

with jobs; on firm's payrolls