Maco Exam 2 Quizzes

Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals

$1,200

Based on the table above, what is disposable personal income for this economy?

$1,530 billion

The following table pertains to Quicheland, an economy in which the typical consumer's basket consists of 10 bushels of prunes and 8 bushels of macadamia . Refer to Table 24.1. The cost of the basket in Year 2 was

$166

Based on the table above, what is personal income for this economy?

$2030 Billion

Mia Denton was an accountant in 1943 and earned $21,000 that year. Her son is an accountant too and he earned $270,000 this year. Suppose the price index was 18.3 in 1943 and 20.2 in the current year. Mia's 1943 income in current year dollars is

$23,180.

Based on the table above, what is national income for this economy?

$2950 Billion

Consider the following data for Tyrovia, a country that produces only two products: guns and butter. Real GDP for Tyrovia for 2018 using 2009 as the base year equals

$690

Suppose that a very simple economy only produces four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume that all the coffee beans in this economy are used in the production of coffee drinks. What is GDP using the information in the attached table?

$8,750

The following table pertains to Quicheland, an economy in which the typical consumer's basket consists of 10 bushels of prunes and 8 bushels of macadamia . Refer to Table 24-1. If Year 1 is the base year, then the CPI for Year 2 was

$97.65

If the nominal interest rate is 5 percent and the real interest rate is 7 percent, then the inflation rate is

-2%

The following table pertains to Quicheland, an economy in which the typical consumer's basket consists of 10 bushels of prunes and 8 bushels of macadamia . Refer to Table 24-1. If Year 1 is the base year, then the inflation rate in Year 2 was

-2.35 percent

Suppose a basket of goods and services has been selected to calculate the CPI and Year 1 has been selected as the base year. In Year 1, the basket's cost was $50; in Year 2, the basket's cost was $52; and in Year 3, the basket's cost was $55. The value of the CPI in Year 3 was

110

If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator is

125

If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years?

2.7%

Last year real GDP per person in the imaginary nation of Olympus was $4,260. The year before it was $4,100. By about what percentage did real GDP per person grow during the period?

4%

The price index was 105 in Year 1 and 111 in Year 2. What was the inflation rate?

5.7%

Country Y has a population of 1,500, of whom 375 work 7 hours a day to make 128,000 final goods. Country Z has a population of 2,200, of whom 880 work 5 hours a day to make 384,000 final goods. Which of the following is true?

Country Y has lower productivity and lower real GDP per person than country Z.

Joe and Bob purchase oranges at a grocery store, but Bob also grows oranges in his backyard. Regarding these two practices, which of the following statements is correct?

Only Joe's and Bob's grocery store purchases are included in GDP

Each day Sasha works 6 hours and produces 7 units of goods and services. Clara works 10 hours each day and produces 9 units of goods and services. It follows that

Sasha's productivity is higher than Clara's

Which of the following countries benefited significantly from the catch-up effect in the last half of the twentieth century?

South Korea

Which of the following statements is correct?

The CPI can be used to compare dollar figures from different points in time

A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to decrease barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies do most economists say promote growth?

The first but not the second

What basket of goods and services is used to construct the CPI?

The goods and services that are typically bought by consumers as determined by government surveys

Social Security payments are indexed for inflation using the CPI. A recent newspaper editorial claimed that Social Security recipients are harmed by years of low inflation because they do not receive as large an increase in their payments as they do in years of high inflation. Which of the following statements is correct?

The newspaper editorial could be correct if the prices of the goods consumed by Social Security recipients change at a different rate than the prices of the goods in the market basket used to compute the CPI

Some poor countries appear to be falling behind rather than catching up with rich countries. Which of the following could explain the failure of a poor country to catch up?

The poor country has a health epidemic such as the Zika virus.

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

The purchase of a new house

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 statements is correct about the relationship between the nominal interest rate and the real interest rate?

The real interest rate is the nominal interest rate minus the rate of inflation

The Karmic Deed Restaurant uses all of the following to produce vegetarian meals. Which of them is an example of physical capital?

The tables and chairs in the restaurant

If the consumer price index was 93 in Year 1, 97 in Year 2, and 100 in Year 3, then the base year must be

Year 3

Which of the following transactions represents the purchase of a final good?

Your father buys a new John Deere riding lawn mower

Most goods and services produced at home

and most goods and services produced illegally are excluded from GDP

An increase in the price of bread produced domestically will be reflected in

both the GDP deflator and the consumer price index.

Investment, as defined by economists, would not include which of the following? Ford

buys U.S. government bonds.

Because every transaction has a buyer and a seller,

every transaction contributes equally to an economy's income and to its expenditure

One of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI

fails to account for the introduction of new goods.

If an American-based firm opens and operates a new clothing factory in Honduras, then it is engaging in

foreign direct investment.

The output of Mexican citizens who work in Texas would be included in the

gross national product of Mexico

Michael learns how to sew from his grandmother. This is an example of

human capital, but not technological knowledge.

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.

Legalizing all forms of illegal activities

increases GDP and reduces the size of the underground economy

The value of goods added to a firm's inventory in a certain year is treated as

investment, since GDP aims to measure the value of the economy's production that year.

Apple founder Steve Jobs received patents on many of his ideas. While the patents existed, his ideas were

private goods and proprietary knowledge.

Will's expenditures on food for three consecutive years, along with other values, are presented in the following table. Refer to Table 24-4. If the nominal interest rate was 8 percent in Year 2, then

the real interest rate in Year 2 was 4 percent.

Depreciation is

the value of worn-out equipment, machinery, and buildings.

The consumer price index is used to

turn dollar figures into meaningful measures of purchasing power.