Macroeconomics Final Chapter 7

6. Suppose that fixed investment is $480 billion and (total) investment is $630 billion. What does inventory investment equal? a. $150 billion b. $550 billion c. $630 billion d. $1,110 billion

a. $150 billion

23. The sale of __________ goods is omitted from current GDP because __________. a. intermediate goods; these goods do not constitute production b. used goods; these goods were counted in an earlier year c. illegal; these goods do not constitute economic value d. b and c e. a, b, and c

b. used goods; these goods were counted in an earlier year

10. An economy produces 10X, 20Y, and 30Z in a year. Base-year prices for these goods are $1, $2, and $3, respectively. Current-year prices for these goods are $2, $3, and $4, respectively. What is Real GDP? a. $180 b. $200 c. $140 d. $240

c. $140

Exhibit 7-2 Goods - 1990 Quantities - 1990 Prices - 2012 Quantities- 2012 Prices papayas 10. $1.00 20 $0.50 fish 15 $0.60 20 $0.80 skirts 8 $4.00 15 $4.00 19. Refer to Exhibit 7-2. GDP in 2012 is a. $49. b. $51. c. $86. d. $92. e. not possible to calculate without the CPI.

c. $86.

Exhibit 7-3 Durable goods - $3,000 Services - 6,000 Business purchases of capital goods - 400 Fixed investment - 850 Exports - 600 Imports - 800 Nondurable goods - 700 Inventory investment - 200 Government transfer payments - 100 Purchases of new residential housing - 450 Government purchases - 900 2. Refer to Exhibit 7-3. Investment is equal to a. $850. b. $1,250. c. $200. d. $2,200. e. $1,050.

e. $1,050.

Exhibit 7-3 Durable goods - $3,000 Services - 6,000 Business purchases of capital goods - 400 Fixed investment - 850 Exports - 600 Imports - 800 Nondurable goods - 700 Inventory investment - 200 Government transfer payments - 100 Purchases of new residential housing - 450 Government purchases - 900 1. Refer to Exhibit 7-3. Consumption is equal to a. $3,700. b. $9,000. c. $10,150. d. $8,200. e. $9,700.

e. $9,700.

24. Which of the following goods is an intermediate good? a. lettuce that a restaurant buys to put on sandwiches b. tires that a car company buys to put on the cars it produces c. a television set that Chi-Mai buys to put in her college dorm room d. a and b e. b and c

d. a and b

17. Look at the following data: GDP = 1,150 billion; investment = $200 billion; exports = $55 billion; government purchases = $145 billion; consumption = $850 billion. What does import spending equal? a. $100 billion b. $370 billion c. $200 billion d. $430 billion

a. $100 billion

12. Suppose the total market value of all final goods and services produced in economy X this year is $4 million. Of the $4 million worth of goods and services, $3 million is sold and $1 million is held in inventory. For this year, the GDP for economy X is a. $4 million. b. $3 million. c. $1 million. d. $7 million.

a. $4 million.

18. Look at the following data: GDP = $3,590 billion; consumption = $1,820 billion; exports = $450 billion; investment = $1,250 billion; government purchases = $900 billion. Imports is equal to __________ billion. a. $830 b. $1,460 c. -$830 d. $1,240 e. none of the above

a. $830

11. The expenditure approach to measuring GDP sums a. consumption, investment, government purchases, and net exports. b. sales, revenues, income, and wages. c. profits, compensation of employees, consumption, and investment. d. net exports, consumption, wages, and salaries.

a. consumption, investment, government purchases, and net exports.

13. The two ways of measuring Gross Domestic Product are the __________ approach and the __________ approach. a. expenditure; income b. expenditure; national product c. national product; income d. net national product; personal income

a. expenditure; income

16. Look at the following data: personal income = $4,900 billion; personal taxes = $900 billion; transfer payments = $980 billion. What is disposable income? a. $3,200 billion b. $4,000 billion c. $4,980 billion d. $1,880 billion e. There is not enough information to answer the question.

b. $4,000 billion

21. Refer to Exhibit 7-2. GDP in 1990 is a. $49. b. $51. c. $86. d. $92. e. impossible to calculate without the CPI.

b. $51.

Exhibit 7-3 Durable goods - $3,000 Services - 6,000 Business purchases of capital goods - 400 Fixed investment - 850 Exports - 600 Imports - 800 Nondurable goods - 700 Inventory investment - 200 Government transfer payments - 100 Purchases of new residential housing - 450 Government purchases - 900 3. Refer to Exhibit 7-3. Net exports is equal to a. $200. b. -$200. c. $600. d. -$1,400.

b. -$200.

14. National income equals a. wages + salaries + corporate profits + net income. b. compensation of employees + proprietors' income + corporate profits + rental income + net interest. c. compensation of employees + proprietors' income + indirect business taxes + rental income + net interest. d. the monetary value of fringe benefits + tips + wages + profits + salaries.

b. compensation of employees + proprietors' income + corporate profits + rental income + net interest.

7. What is the proper sequence of the phases of a business cycle? a. peak, contraction, trough, expansion, recovery b. peak, contraction, recovery, trough, expansion c. peak, contraction, trough, recovery, expansion d. contraction, peak, trough, recovery, expansion e. recovery, trough, peak, expansion, contraction

c. peak, contraction, trough, recovery, expansion

5. Suppose that nondurable goods spending is $200 billion, durable goods spending is $400 billion, new residential housing spending is $500 billion, and spending on services is $700 billion. What does consumption equal? a. $600 billion b. $1,100 billion c. $1,800 billion d. $1,300 billion

d. $1,300 billion

25. Look at the following data: consumption = $925 billion; exports = $50 billion; imports = $62 billion; investment = $325 billion; government purchases = $300 billion. GDP is equal to __________ billion. a. $1,662 b. $1,468 c. $1,911 d. $1,538

d. $1,538

15. Look at the following data: consumption = $915 billion; exports = $40 billion; imports = $33 billion; inventory investment = $123 billion; fixed investment = $500 billion; government purchases = $300 billion. GDP is equal to a. $1,632 billion. b. $1,466 billion. c. $1,911 billion. d. $1,845 billion. e. none of the above

d. $1,845 billion.

Exhibit 7-3 Durable goods - $3,000 Services - 6,000 Business purchases of capital goods - 400 Fixed investment - 850 Exports - 600 Imports - 800 Nondurable goods - 700 Inventory investment - 200 Government transfer payments - 100 Purchases of new residential housing - 450 Government purchases - 900 4. Refer to Exhibit 7-3. GDP is equal to a. $13,050. b. $11,550. c. $8,600. d. $11,450.

d. $11,450.

20. Refer to Exhibit 7-2. Assuming that 1990 is the base year, Real GDP in 2012 is a. $49. b. $51. c. $86. d. $92. e. not possible to calculate without the CPI.

d. $92.

8. If Real GDP was $9,542 billion in year 2 and it had been $9,300 billion in year 1, what was the approximate economic growth rate during this time period? a. 9.7 percent b. 2.4 percent c. 3.5 percent d. 2.6 percent

d. 2.6 percent

9. Which of the following is the correct equation for computing personal income? a. Personal income = National income + undistributed profits - social insurance taxes - corporate profits taxes + transfer payments. b. Personal income = National income - undistributed profits - social insurance taxes + corporate profits taxes + transfer payments c. Personal income = National income - taxes d. Personal income = National income - undistributed corporate profits - social insurance taxes - corporate profits taxes + transfer payments

d. Personal income = National income - undistributed corporate profits - social insurance taxes - corporate profits taxes + transfer payments

22. "Economic growth" has occurred if a. inflation rate between this year and last year is zero or less. b. GDP this year exceeds the Real GDP this year. c. unemployment rate this year is above the natural rate of unemployment. d. Real GDP this year is greater than Real GDP last year.

d. Real GDP this year is greater than Real GDP last year.