EC test 1

Assume that a tire company sells four tires to an automobile company for $400, another company sells a navigation system for $500, and the automobile company puts all of these items in or on a car that it sells for $20,000. In this case, the amount from these transactions that should be counted in gross domestic product (GDP) is:

$20,000.

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 4 in 2009, then real gross domestic product (GDP) (in 2002 prices) in 2009 was:

$6.50.

Assume that total output consists of four apples and six oranges and that apples cost $1 each and oranges cost $0.50 each. In this case, the value of gross domestic product (GDP) is:

$7.

If 7 million workers are unemployed, 143 million workers are employed, and the adult population equals 200 million, then the unemployment rate equals approximately _____ percent.

4.7

. If the adult population equals 250 million, of which 145 million are employed and 5 million are unemployed, the labor-force participation rate equals _____ percent.

60

If bread is produced using a constant returns to scale production function, then if the:

amounts of equipment and workers are both doubled, twice as much bread will be produced

In the circular flow model, the flow of dollars from firms to households is paid _____, and the flow of dollars from households to firms is paid _____

as wages, capital income, and profits; for goods and services

. The assumption of continuous market clearing means that:

at any given instant, buyers can buy all that they want and sellers can sell all that they want at the going price.

In the classical model with fixed income, if the demand for goods and services is less than the supply, the interest rate will

decrease.

Exogenous variables are:

determined outside the model

5. Endogenous variables are:

determined within the model

In an economic model:

exogenous variables affect endogenous variables.

In the long run, the level of national income in an economy is determined by its

factors of production and production function.

A typical trend during a recession is that:

incomes fall

Assume that the production function is Cobb-Douglas with parameter a = 0.3. In the neoclassical model, if the labor force increases by 10 percent, then output:

increases by about 7 percent.

In the classical model with fixed income, if there is a decrease in government spending with no change in taxes, then public saving _____ and private saving _____.

increases; does not change

When the demand for loanable funds exceeds the supply of loanable funds, households and the government want to save _____ than firms want to invest, and the interest rate _____.

less; rises

how to find equilibrium price and quantity

plug in remaining information and equal them to each other then relog in the answer

An increase in the price of goods bought by firms and the government will show up in:

the GDP deflator but not in the CPI.

Macroeconomics is the study of

the economy as a whole

Which is the BEST example of a flexible price?

the price of gasoline at a service station

In a simple model of the supply and demand for pizza, the endogenous variables are:

the price of pizza and the quantity of pizza sold

In a classical economy, assume that the government lowers both government spending and taxes by the same amount. This causes investment:

to rise and the real interest rate to fall

Prices of items included in the consumer price index (CPI) are

weighted according to the quantity of the item purchased by the typical household.

If income is 4,800, consumption is 3,500, government purchases is 1,000, and taxes minus transfers are 800, public saving is:

-200

All of these transactions that took place in 2009 would be included in gross domestic product (GDP) for 2009 EXCEPT the purchase of a:

. 2001 Jeep Cherokee

When a firm sells a product out of inventory, gross domestic product (GDP):

. is not changed

A fixed-weight price index like the consumer price index (CPI) _____ the change in the cost of living because it _____ take into account that people can substitute less expensive goods for ones that have become more expensive

. overestimates; does not

Which is the BEST example of a sticky price?

. the price of a soda in a vending machine

If nominal gross domestic product (GDP) in 2009 equals $14 trillion and real GDP in 2009 equals $11 trillion, what is the value of the GDP deflator?

1.27

If nominal gross domestic product (GDP) grew by 5 percent and real GDP grew by 3 percent, then the GDP deflator grew by approximately _____ percent

2