macro quizzes 5-7 solutions

in a imaginary economy, consumers buy only sandwiches and magazines. the fixed basket consist 20 sandwiches and 30 magazines. in 2006 sandwich cost 4 and mag cost 2. in 2007 sandwich cost 5. the base year is 2006. if the consumer price index in 2007 was 125, the how much did a mag cost in 2007.

2.50

the consumer price index and the GDP deflator are two alternative measures of the overall price level. which of the following statements about the two measures is correct

CPI reflects a fixed basket of goods and services; the GDP deflator reflects current production of goods and services

other things the same, an increase in population growth

dec capital per worker. however, there is some evidence that a higher population growth rate may increase the oace of technological progress

if national saving in a closed economy is greater than zero, which of the following must be true

either public saving or private saving must be greater than zero, investment is positive, Y-C-G>0

financial intermediaries are

financial institutions through which savers can inderctly provide funds to borrowers

the steps involved in calculating the consumer price index and the inflation rate, in order, are as follows

fix the basket, find the prices, compute the baskets cost, choose a base year and compute the index, and compute the inflation rate

the shape of the curve is consistent with which of the following statements about the economy to which the curve applies

in the long run a higher savings rate leads to a higher level of productivity and income, or leads to neither a higher growth rate of productivity nor a higher growth rate of income

according to the definitions of national saving and provate saving, if Y,C, and G remained the same, an increase in taxes would

leave national saving unchanged and reduce private saving

the consumer price index is used to

monitor changes in the cost of living over time

the inflation rate is defined as the

percentage change in the price level from the previous period

which of the following items plays a role in determining productivity

physical capital, natural resources, technological knowledge

in a closed economy, what does (Y-T-C) represent

private saving

productivity is the amount of goods and services

produced for each hour of a workers time. it is linked to a nations economic policies

in a closed economy, what does (T-G) represent

public saving

a nations standard of living is best measured by its

real GDP per person

the shape of the curve is consistent with which of the following statements about the economy to which the curve applies.

return to capital bacome increasingly smaller as the amout of captial per worker increases

price change from year to year are not proportional, and consumers respond to these changes by altering their spending patterns. the problem this creates for inflation calculation is called

substitution bias

the supply of loanable funds would shift to the right if either

tax reforms encouraged greater saving or the budget deficit became smaller

thomas malthus's predictions turned out to be wrong due to

technological advances such as those during the industrial revolution

which of the following statements about real and normal interest rate is correct

when the inflation rate is positive, the nominal interest rate is necessarily greater than the real interest rate

suppose the govm were to replace the income tax with a consumption tax so that interest on savings was not taxed. the result would be that the interest rate

would decrease and investment would increase

if there are constant returns to scale, the production function can be written as

Y/L = A F(1, K/L, H/L, N/L)

which of the following movements shows the effects of the government going from a budget deficit to a budget surplus

a movement from point B to A

for the given year, the CPI is the price of the bastet of goods and services in the

base year divided by the price of the basket inthe given year, then multiply by 100

all else equal, which of the following would tend to cause real GDP per person to rise

change from inward oriented policies to outward oriented policies, an increase in investment in human capital, strengthening of property rights

according to the loanable funds model, which of the following events would result in higher interest rate and greater saving

congress passes a reform of the tax laws that encourages greater investment

which of the following is not correct

countries that have has higher output growth per person have typically done so without higher productivity growth

suppose that in a closed economy GDP is equal to 11000, taxes are equal 2500, consumption equals 7000, and govmt purchases equal 3000. what are private saving and public saving.

1500 and -500, respectively

the price index was 220 in one year and 260 in the next year. what was the inflation rate

18.2 percent

suppose a basket of goods and services has been selected to find CPI and 2002 has been selected as the base year. in 2002, the baskets cost was 50; in 2004, the baskets cost was 52; and in 2006, basket cost 54.60. the value in 2004 was

104