econ exam 2
Answer the next question on the basis of the following information: Three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5. The current year per unit prices of these three goods are A = $2, B = $3, and C = $1. Nominal GDP in the current year is
$115
Arthur sells $100 worth of cotton to Bob. Bob turns the cotton into cloth, which he sells to Camille for $300. Camille uses the cloth to make prom dresses that she sells to Donita for $700. Donita sells the dresses for $1,200 to kids attending the prom. The total contribution to GDP of this series of transactions is
$1200
Government Purchases$15Consumption90Gross Investment20Consumption of Fixed Capital (depreciation)5Exports8Imports12 Refer to the accompanying data (all figures in billions of dollars). GDP is
$121
Use the following table to answer the next question. Labor Compensation (Wages and Benefits)$9,560 billionProprietors' Income$615 billionNet Interest$1,024 billionCorporate Profits$2,049 billionRent$409 billion What is the value of national income?
$13,657 billion
Use the following table to answer the next question. YearReal GDPPopulation2008$20,000200200940,000400201060,000400201170,000500 In 2011 real GDP per capita equals
$140
Use the following information to answer the next question. Maya purchases only three products; orange juice, prepared meals, and on-demand episodes of her favorite shows. Each week she purchases 2 bottles of orange juice, 14 prepared meals, and 8 on-demand episodes. The prices of bottles of orange juice, prepared meals, and on-demand episodes for four different years are shown in the table below. YearPrice of Orange JuicePrice of Prepared MealsPrice of On-Demand Episodes1$2$6$102$6$5$123$4$7$134$4$8$11 How much will Maya spend per week in Year 1?
$168
A nation's real GDP was $250 billion in 2014 and $265 billion in 2015. Its population was 120 million in 2014 and 125 million in 2015. What is its real GDP per capita in 2015?
$2,120 per person
Use the following information to answer the next question. Maya purchases only three products; orange juice, prepared meals, and on-demand episodes of her favorite shows. Each week she purchases 2 bottles of orange juice, 14 prepared meals, and 8 on-demand episodes. The prices of bottles of orange juice, prepared meals, and on-demand episodes for four different years are shown in the table below. YearPrice of Orange JuicePrice of Prepared MealsPrice of On-Demand Episodes1$2$6$102$6$5$123$4$7$134$4$8$11 How much will Maya spend per week in Year 4?
$208
If the average level of nominal income in a nation is $44,000 and the Consumer Price Index is 175, the average real income would be about
$25,143
One year nominal GDP was $286 billion and the price index was 88. Real GDP that year was
$325 billion
Use the following table to answer the next question. YearNominal Income (dollars)CPIReal Income (dollars)1$44,600130 2$48,200 $35,1833$51,000139 What is the value of real income in Year 1?
$34,308
If real GDP in a year was $3,668 billion and the price index was 112, then nominal GDP in that year was approximately
$4,108 billion.
Use the following table to answer the next question. YearNominal GDPReal GDPPrice Index15,2004,800--25,500--11235,7505,000-- What was real GDP in year 2?
$4,911 billion
Use the following table to answer the next question. Gross Investment$172 billionNet Foreign Income$18 billionIndirect Business Taxes$15 billionRent Net Exports-$96 billionDepreciation (Capital Consumption)$145 billionGovernment Purchases$188 billionWages$763 billionProfits and Losses$90 billionConsumption$895 billionInterest$74 billion What is the value of rent?
$54 billion
Answer the next question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. YearUnits of OutputPrice per Unit18$22103315441855206 If year 2 is the base year, then real GDP in year 5 is
$60
nswer the next question on the basis of the following national income data for the economy. All figures are in billions of dollars. Personal consumption expenditures$400Government purchases128Gross private domestic investment88Net exports7Net foreign factor income0Consumption of fixed capital43Taxes on production and imports50Compensation of employees369Rents12Interest15Proprietors' income52Corporate income taxes36Dividends24Undistributed corporate profits22Statistical discrepancy0 The gross domestic product for the above economy is
$623
If the Consumer Price Index was 125 in one year and 120 in the following year, then the rate of inflation is approximately
-4 percent
GDP in an economy is $11,050 billion. Consumer expenditures are $7,735 billion, government purchases are $1,989 billion, and gross investment is $1,410 billion. Net exports must be
-84$ billion
Use the following table to answer the next question. The base year is 2007. YearHot DogsBaseballsBottles of BeerPriceQuantityPriceQuantityPriceQuantity2005$2.50100$2.5050$1.0010020064.001005.001002.0015020075.001005.001002.0020020088.001508.002004.00200200910.0020010.002004.00250 Compared to the base year, the rate of inflation for the year 2007 is
0 percent
Use the table below to answer the next question. YearEmployedStructuralFrictionalCyclicalUnemployed20031,800501005020020042,400100100 30020052,000 15018050020062,66040 0140 Determine the number of people cyclically unemployed for the year 2004.
100
Use the table below to answer the next question. YearEmployedStructuralFrictionalCyclicalUnemployed20031,800501005020020042,400100100 30020052,000 15018050020062,66040 0140 Determine the number of people frictionally unemployed for the year 2006.
100
Use the following table to answer the next question. The base year is 2007. YearHot DogsBaseballsBottles of BeerPriceQuantityPriceQuantityPriceQuantity2005$2.50100$2.5050$1.0010020064.001005.001002.0015020075.001005.001002.0020020088.001508.002004.00200200910.0020010.002004.00250 Calculate the percentage change in prices from 2007 to 2009.
100 percent
Answer the next question on the basis of the following information about the hypothetical economy of Asland. All figures are in millions. Unemployed7Total population145Employed95Discouraged workers3 The labor force in Asland is
102 million
If the Consumer Price Index was 90 in one year and 100 in the following year, then the rate of inflation is about
11 percent
Government Purchases$15Personal Consumption80Gross Investment29Consumption of Fixed Capital (depreciation)5Exports8Imports12 Refer to the accompanying data (all figures in billions of dollars). GDP is
120
Use the following table, which lists output quantities and prices for the only three goods in the economy, to answer the next question. Use 2007 as the base year and to as quantities in the market basket. YearHot DogsBaseballsBottles of BeerPriceQuantityPriceQuantityPriceQuantity2005$2.50100$2.5050$1.0010020064.001005.001002.0015020075.001005.001002.0020020088.001508.002004.00200200910.0020010.002004.00250 The Consumer Price Index for the year 2008 is
171.4
The following table shows values of annual real GDP per capita over time. Use it to answer the next question. 1810$1,5001860$2,1001910$3,9001960$18,0002010$43,600 Between which years was the rate of growth in real GDP per capita the lowest?
1810 to 1860
The following table shows values of annual real GDP per capita over time. Use it to answer the next question. 1810$1,5001860$2,1001910$3,9001960$18,0002010$43,600 Between which years was the rate of growth in real GDP per capita the highest?
1910 to 1960
A Consumer Price Index of 120 for a certain year means that the average price of consumer items in that year was
20 percent higher than the average price in the base period 1982-1984
The total adult population of an economy is 175 million, the number of employed is 122 million, and the number of unemployed is 17 million. The percentage of adults who are not in the labor force is
20.6 percent
The economy has an annual inflation rate of 3.5 percent. It will take approximately how many years for the price level to double?
21 years
Use the data in the table below to answer the next question. The data describes a hypothetical economy and are denominated in billions of dollars. Disposable income$200Net private domestic investment40Value of imports15National income300Personal taxes31Net exports9Gross private domestic investment55Net foreign factor income10Statistical discrepancy0 This nation's exports are
24 billion
A nation's average annual real GDP growth rate is 3%. Based on the "rule of 72," the approximate number of years that it would take for this nation's real GDP to double is
24 years
Answer the next question based on the following data. All figures are in billions of dollars. Gross investment$18Net exports2Residential fixed investment5Inventory investment3Net investment13 Consumption (depreciation) of fixed capital is
5$
Answer the question below based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. YearUnits of OutputPrice per Unit18$22103315441855206 If year 2 is the base year, the Consumer Price Index for year 1 is
67
The table below shows information on the adult population of a small country. Employment Information Adult population20.9 millionFull-time workers13.1 millionPart-time workers2.2 millionUnemployed workers actively seeking employment1.3 millionUnemployed workers not actively seeking employment1.4 million What is the unemployment rate?
7.8 percent
Use the following table to answer the next question. The base year is 2007. YearHot DogsBaseballsBottles of BeerPriceQuantityPriceQuantityPriceQuantity2005$2.50100$2.5050$1.0010020064.001005.001002.0015020075.001005.001002.0020020088.001508.002004.00200200910.0020010.002004.00250 Inflation for the year 2008 is
71 percent
1Consumption of fixed capital$4382Taxes on production and imports3263Compensation of employees2,3474Rents145Interest2876Proprietors' income2427Corporate profits2978Personal consumption expenditures2,5829Gross private domestic investment66910Government purchases81511Net exports-7812Net foreign factor income4613Statistical discrepancy50 The expenditures approach to GDP calculation can beterm-10 done by adding
8 through 11
Which of the following is an example of gross investment?
Electric Car Incorporated increases the number of cars on its lots.
Real GDP refers to
GDP data that has been adjusted for changes in the price level.
Each week Jim buys the same market basket composed of a case of ramen noodles, two bottles of coke, and three bags of tortilla chips. Jim has found that it takes more of his wages to buy this market basket than before. We can say
Jim's real wage has gone down.
Alpha is a developed economy with a growth rate of 2%. Omega is a developing economy with a growth rate of 8%. Assuming these growth rates remain constant, we would predict ___.
Omega's per capita real GDP will eventually catch up to Alpha's
The table below shows the prices a household must pay for goods they purchase regularly. YearPrice of BreadPrice of Peanut ButterPrice of Milk1$2.00$3.50$4.1022.253.654.1532.403.704.18 Suppose the yearly consumption of the household 61 loaves of bread, 52 jars of peanut butter, and 57 gallons of milk. What is CPI in year 2, using year 1 as a base year?
The CPI is 104.82.
Suppose Canada has a population of 30 million people and a labor force participation rate of 2/3. Furthermore, suppose the natural rate of unemployment in Canada is 7 percent. If the current number of unemployed people is 1.4 million people, what can we conclude about Canada's economy?
There is no cyclical unemployment present in the economy
Nominal GDP is the market value of
all final goods and services produced in an economy in a given year.
Adding up the market value of all final and intermediate goods and services in an economy in a given year would result in
an amount greater than GDP for that year.
Which of the following will not increase a nation's real GDP?
average price level
Use the following graph to answer the next question. The horizontal axis is labeled time and the vertical axis is labeled nominal and real GDP in dollars. An S-shaped curve is labeled nominal GDP and intersects the real GDP curve at time equals 2000. The year 2000 must be the
base year of the GDP price index.
The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are
capital goods and durable consumer goods.
If the economy's real GDP doubles in 8 years, we can
conclude that its average annual rate of growth is 9%
Unemployment that occurs when there is deficient demand for the goods and services of an economy is called
cyclical unemployment
In an economy, the value of inventories was $75 billion in 2009 and $63 billion in 2010. In calculating total investment for 2010, national income accountants would
decrease it by $12 billion.
Which of the following is a factor determining the natural rate of unemployment?
demographics
The number of years required for real GDP to double can be found by
dividing 72 by the annual growth rate.
Use the following diagram to answer the next question. The straight line E drawn through the wavy lines would provide an estimate of the
economic growth trend.
In the expansion phase of a business cycle
employment and output increase.
In calculating the unemployment rate, "discouraged" workers who are not actively seeking employment are
excluded from the labor force.
What are net exports?
exports minus imports
Which of the following activities is excluded from GDP, causing GDP to understate a nation's production?
goods and services produced in the underground economy
Money spent on the purchase of a newly constructed house is included in GDP as a part of
gross domestic private investment
According to the circular flow model
income must equal expenditures.
Usually an abundance of natural resources ______ labor productivity.
increases
Which of the following is a measure of economic growth that is most useful for comparing changes in standards of living?
increases in real GDP per capita
In November 2009, Marketopia Motors produced an automobile that was delivered to a local dealership in December 2009. The auto was then sold to Sharon Smith for personal use in February of 2010. Following national income accounting practices, this auto would be counted as part of
investment in 2009 and negative investment in 2010.
If labor market institutions change so that it becomes easier to find a job, and unemployed people are unemployed for smaller durations of time, what would happen to the natural rate of unemployment?
it would decrease
Growth is advantageous to a nation because it
lessens the burden of scarcity.
Use the following information to answer the next question. Maya purchases only three products; orange juice, prepared meals, and on-demand episodes of her favorite shows. Each week she purchases 2 bottles of orange juice, 14 prepared meals, and 8 on-demand episodes. The prices of bottles of orange juice, prepared meals, and on-demand episodes for four different years are shown in the table below. YearPrice of Orange JuicePrice of Prepared MealsPrice of On-Demand Episodes1$2$6$102$6$5$123$4$7$134$4$8$11 Based on this information, which of the following statements is true?
maya spent $10 less in Year 1 than in Year 2.
The gross domestic product (GDP) concept accounts for society's valuation of the relative worth of goods and services by using a
monetary measure
Use the figure below to answer the next question. The horizontal axis is labeled consumer goods and lists markings from left to right as B and D. The vertical axis is labeled capital goods and lists markings from bottom to top as A and C. Two concentric curves are drawn from the vertical axis to the horizontal axis and the curves' overall shape is a quarter circle, approximately. First curve initiates from A and ends at B and the second curve initiates from C and ends at D. First curve has two points marked as Z and X. A point marked as Y is plotted on the second curve to the right. X and Y lies in a straight line at an approximately 45 degree angle with the origin. Economic growth is best represented by a
move from X on AB to Y on CD
GDP measured using current prices is called
nominal gdp
Environmental pollution is accounted for in
noneof these answers are correct
Alex works in his own home as a homemaker and full-time caretaker of his children. Officially, he is
not in the labor force
Full-time homemakers and retirees are classified in the BLS data as
not in the labor force
Use the following diagram to answer the next question. The phases of the business cycle from points A to D are, respectively
peak, recession, trough, expansion
When a firm builds a new factory, this is an example of an investment in
physical capital
A GDP price index of 130 in year 2 means that
prices in year 2 are on average 30 percent higher than in the base year
The GDP price index measures changes in the
prices of the output produced in the nation.
Suppose that an economy's labor became more productive between year 1 and year 2. We could conclude that this economy's
production possibilities frontier shifted outward.
For a nation's real GDP per capita to rise during a year,
real GDP must increase more rapidly than population.
To increase future living standards by pursuing higher current rates of investment spending, an economy must
reduce current rates of consumption spending.
If a nation's real GDP increases from 100 billion to 106 billion and its population jumps from 200 million to 212 million, its real GDP per capita will
remain constant.
Use the following information to answer the next question. The following items describe the responses of four individuals to a Bureau of Labor Statistics (BLS) survey of employment. Mollie just graduated from college and is now looking for work. She has had three job interviews in the past month but still has not gotten a job offer. George used to work in an automotive assembly plant. He was laid off six months ago as the economy weakened. He expects to return to work in a few months when national economic conditions improve. Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the federal government cut defense spending. She has been looking for similar work for a year but no company seems interested in her aircraft design skills. Ricardo lost his job last year when his company downsized and laid off middle-level managers. He tried to find another job for a year but was unsuccessful and quit looking for work. Which individual would be classified as a discouraged worker?
ricardo
Government purchases in national income accounts would include payments for
salaries for current U.S. military officers.
Use the figure below to answer the next question. Two concentric curves are drawn from the vertical axis through the horizontal axis and the curves' overall shape is a quarter circle, approximately. First curve initiates from A and ends at B and the second curve initiates from C and ends at D. Growth of production capacity is shown by the
shift from AB to CD.
Which of the following is included in the expenditures approach to GDP?
spending on meals by consumers at restaurants
A mismatch between the geographic location of workers and the location of job openings would result in which type of unemployment?
structural
Consumption of fixed capital (depreciation) can be determined by
subtracting net investment from gross investment.
most economists agree that ______ are the single most important source of economic growth.
technological advances
Which of the following groups declares the start and end of recessions in the United States?
the Business Cycle Dating Committee of the National Bureau of Economic Research
Which of the following is an example of an intermediate good?
the lumber produced by Boise Cascade and sold to a builder of old houses
Ahmed bought the same goods and services this year as last year. But, he has experienced inflation. This means
the prices of goods and services has increased in general
The expenditures or output approach to GDP measures it by summing up
the total spending for consumption, investment, net exports, and government purchases
GDP tends to underestimate the productive activity in the economy because it excludes the value of output from
the underground economy.
Barbara buys the same market basket each week and spends $60 on it. This week Barbara brought $60 to the store but could not buy her usual market basket. One explanation for this is
there was inflation
Government expenditures for Social Security and unemployment insurance are, for GDP accounting purposes, considered
transfer payments, and are not included in government spending as part of GDP.
GDP excludes most nonmarket transactions. Therefore, GDP tends to
underestimate the amount of production in the economy.
Official unemployment rate statistics may
understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment.
Use the following diagram to answer the next question. If CD is the economy's current production possibilities frontier, what is the most likely reason for operating at point X?
unemployment and inefficient allocation of resources
A worker would be hurt least by inflation when the
worker is protected by a cost-of-living adjustment clause in an employment contract
The following diagram shows the rate of inflation each year during a five-year span. Use this diagram to answer the next question. In which year are people on fixed incomes hurt the most?
year 5