ch 3 questions

which is likely to happen if there is a decrease in exports? a. a decrease in the nominal gdp b. an increase in the real gdp c. a decrease in the unemployment rate d. an increase in the inflation rate

a. a decrease in the nominal gdp

Consider an economy that produces only two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each, while this year 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Nominal GDP this year is: a. $650 b. $500 c. $100 d. $700

a. $650

which is likely to happen if there is a decrease in imports? a. an increase in the nominal gdp b. a decrease in the nominal gdp c. an increase in the unemployment rate d. an increase in the nominal gdp, a decrease in the nominal gdp and an increase in the unemployment rate

a. an increase in the nominal gdp

which is likely to happen if there is an increase in consumer spending? a. an increase in the nominal gdp b. a decease in the nominal gdp c. an increase in the unemployment rate d. a decrease in the inflation rate

a. an increase in the nominal gdp

which is likely to happen if there is an increase in government spending? a. an increase in the nominal gdp b. a decrease in the real gdp c. an increase in the unemployment rate d. a decrease in the inflation rate

a. an increase in the nominal gdp

When economists impute a value for household services that individuals perform for themselves, they: a. assign an estimate of what the market value of that work would be if it were paid for b. assume that the services are unimportant in calculating GDP c. include 10 percent of the value of the services in calculating GDP d. agree that the value of the services should be subtracted from GDP

a. assign an estimate of what the market value of that work would be if it were paid for

don has built an expansion to his house. this transaction will be: a. not included in gdp because it is not produced for the marketplace b. included in gdp because don is a professional builder c. not included in gdp because it is an intermediate good d. included in gdp because building is don's hobby

a. not included in gdp because it is not produced for the marketplace

Wages, interest, profits, and _____ are the forms of household income. a. rent b. taxes c. debt d. credit

a. rent

for the past several months, per capita output has increased, but at a slower and slower rate. over the same period, the unemployment rate has been falling, but it appears to have leveled off and may soon rise. where in the business cycle is the economy? a. the business cycle peak b. a recession c. the business-cycle trough d. an expansion

a. the business-cycle peak

nominal gdp may be used to compare: a. the dollar amount of final goods produced in different years b. the price of final goods times the number of goods produced in one year c. output if prices are held constant d. living standards among different countries

a. the dollar amount of final goods produced in different years

which is likely to happen if there is an increase in imports? a. an increase in the nominal gdp b. a decrease in the nominal gdp c. a decrease in the unemployment rate d. an increase in the nominal gdp and in the unemployment rate

b. a decrease in the nominal gdp

In 2011, consumption spending is $7000, government purchasing is $2000, and investment spending is $1500. If GDP for 2011 is $10,300, then: a. exports are $100 and imports are $200 b. exports are $600 and imports are $800 c. exports are $500 and imports are $300 d. exports are $400 and imports are $200

b. exports are $600 and imports are $800

a laptop computer that is purchased by an accounting firm is considered to be: a. consumption spending b. investment spending c. private saving d. a pretax dividend

b. investment spending

suppose that a doctor who lives alone hires the services of a maid and pays her $15000 a year to clean his house. suppose that he marries her the following year. other things equal, which would be TRUE about the reported official GDP the following year? a. it would rise b. it would fall c. it would stay the same d. the effect on the gdp would depend on whether the maid was an undocumented immigrant or a u.s. citizen

b. it would fall

during a recession, one will often observe: a. rising aggregate output b. rising unemployment rates and falling aggregate output c. rising employment rates d. zero unemployment rates

b. rising unemployment rates and falling aggregate output

The distinguishing feature of macroeconomics is that it: a. evaluates the behavior of large firms b. studies the behavior of the economy as a whole c. examines the markets for expensive items d. uses economic theory to explain popular consumer trends

b. studies the behavior of the economy as a whole

In the circular-flow diagram, government purchases of goods and services are financed by: a. tax revenues b. tax revenues net of transfer payments plus government borrowing from financial markets c. tax revenues net of transfer payments d. tax revenues plus government borrowing from financial markets

b. tax revenues net of transfer payments plus government borrowing from financial markets

which is an example of a macroeconomic question? a. what will happen to the price of apples? b. what will happen to the overall level of prices in the economy as a whole? c. what will happen to the price of yarn? d. what will happen to wages earned by workers in the hotel industry?

b. what will happen to the overall level of prices in the economy as a whole?

Which transaction would not be counted in the GDP for the United States? a. The Indiana state government spends taxpayer money to repair a damaged bridge over the Wabash River b. Your mother buys a pound of Washington-grown apples at the grocery store c. Your mother buys 100 shares of Nike stock d. Nike builds a Niketown retail store in Chicago

c. Your mother buys 100 shares of Nike stock

which is likely to happen if there is an increase in exports? a. a decrease in the nominal gdp b. a decrease in the real gpd c. a decrease in the unemployment rate d. a decrease in the inflation rate

c. a decrease in the unemployment rate

When the value of a nation's imports exceeds the value of that nation's exports, the nation is said to have: a. a trade surplus b. hyperinflation c. a trade deficit d. price stability

c. a trade deficit

which is likely to happen if there is a decrease in investment spending? a. an increase in the nominal gdp b. an increase in the real gdp c. an increase in the unemployment rate d. an increase in the inflation rate

c. an increase in the unemployment rate

The alternation between recessions and expansions is known as the: a. unemployment rate b. long-run economic growth c. business cycle d. macroeconomy

c. business cycle

fiscal policy involves: a. changes in the money supply intended to affect the rate of inflation b. putting more money directly in the hands of consumers c. changes in taxation and government spending d. changes in business regulation

c. changes in taxation and government spending

monetary policy involves: a. putting more money directly in the hands of consumers b. putting more money directly in the hands of college students c. changes in the money supply intended to affect interest rates d. changing bank regulations

c. changes in the money supply intended to affect interest rates

in 2011, consumption spending is $7,000, government purchasing is $2,000, and investment spending is $1,500. if gdp for 2011 is $10,300, then: a. exports are $400 and imports are $200 b. exports are $100 and imports are $200 c. exports are $600 and imports are $800 d. exports are $500 and imports are $300

c. exports are $600 and imports are $800

If workers' nominal wages have risen by 50% over a ten-year period and prices have increased by 40% in that same period, then we can safely conclude that the amount of goods and services that workers can buy has: a. decreased in quality b. fallen c. increased d. not changed

c. increased

if the economy grew at a 3% rate this year and average prices increased _________, people would be better off this year than last a. 3% b. faster than 3% c. less than 3% d. faster than 10%

c. less than 3%

an example of investment spending is the: a. amount of funds raised by the government in the financial markets b. purchase of government bonds by a private household c. purchase of a freezer by an ice-cream parlor d. purchase of stock shares by a mutual fund

c. purchase of a freezer by an ice-cream parlor

if the price level in the economy and the nominal wages both doubled, then real wages would: a. also double b. increase by half c. remain unchanged d. decrease by half

c. remain unchanged (same amount you spend)

The point on a business cycle when real GDP stops falling and begins rising is a(n): a. expansion b. business-cycle peak c. recession d. business-cycle trough

d. business-cycle trough

inflation affects people adversely because: a. nominal income falls during inflation b. purchasing power tends to increase during inflation c. budget deficit increases during inflation d. inflation causes money to lose its value over time if the overall price level is rising

d. inflation causes money to lose its value over time if the overall price level is rising

economic growth per capita: a. arises from fiscal and monetary policies used to address the business cycle b. does not reflect improvements in productivity c. is independent of the size of the workforce d. is the key to higher wages and sustained increases in the standard of living

d. is the key to higher wages and sustained increases in the standard of living