ECON 3131 T3

A nation's real GDP was $250 billion in 2013 and $265 billion in 2014. Its population was 120 million in 2013 and 125 million in 2014. What is its real GDP per capita in 2014? A $21,200 per person B $205 per person C $212 per person D $2120 per person

$2,120

Assume that a manufacturer of stereo speakers purchases $40 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is $110 $40 $30 $70

$30

With a marginal propensity to save of .4, the marginal propensity to consume will be A .4 minus 1.0 B .4 C the reciprocal of the MPS D 1.0 minus 4

1.0 minus .4

The unemployment rate in an economy is 7.5 percent. The total population of the economy is 250 million and the size of the civilian labor force is 180 million. The number of employed workers in this economy is A 15.7 million B 13.5 million C 174.6 million D 166.5 million

166.5 million

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is 100 200 240 300

300

If the total population is 200 million, the labor force is 100 million, and 92 million workers are employed, then the unemployment rate would be A 4 percent B 10 percent C 8 percent 6 percent

8 percent

The unemployment rate in an economy is 6%. The total population of the economy is 290 million, and the size of the civilian labor force is 150 million. The number of unemployed workers in this economy is A 12 million B 24 million 6 million 9 million

9 million

Which of the following is a final good or service? a. Chevrolet windows purchased by a General Motors assembly plant. b Diesel fuel bought for a delivery truck c A haircut purchased by a father for his 12 year old son. d Fertilizer purchased by a farm supplier.

A haircut purchased by a father for his 12 year old son.

Which of the following is correct? A APC + APS = 1 B APS + MPS = 1 C APS + MPC = 1 D APC + MPS = 1

APC + APS = 1

Arthur sells $100 worth of cotton to Bob. Bob turns the cotton into cloth, which he sells to Camille for $300. Camille uses the cloth to make prom dresses that she sells to Donita for $700. Donita sells the dresses for $1,200 to kids attending the prom. The total contribution to GDP of this series of transactions is a. $1100 B $1200 C $2300 D $500

B $1200

The agency responsible for compiling the National Income Product Accounts for the U.S. economy is the Bureau of Economic Analysis Council of economic Advisers National Bureau of Economic Research Bureau of Labor Statistics

Bureau of Economic Analysis

FC

Consumption of fixed capital (depreciation)

GDP

GDP = C + IG + G + Xn

Suppose the total monetary value of all final goods and services produced in a particular country in 2010 is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that NDP in 2010 is $450 billion GDP in 2010 is $450 billion GDP in 2010 is $500 billion Inventories in 2010 fell by $50 billion

GDP in 2010 is $500 billion

G

Government purchases

Ig

Ig = Ln + FC

The following items describe the responses of four individuals to a Bureau of Labor Statistics (BLS) survey of employment. 1. Mollie just graduated from college and is now looking for work. She has had three job interviews in the past month, but still has not gotten a job offer. 2. George used to work in an automotive assembly plant. He was laid off six months ago as the economy weakened. He expects to return to work in a few months when national economic conditions improve. 3. Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the Federal government cut defense spending. She has been looking for similar work for a year but no company seems interested in her aircraft design skills. 4. Ricardo lost his job last year when his company downsized and laid off middle-level managers. He tried to find another job for a year, but was unsuccessful and quit looking for work. Refer to the above information. Which individual is structurally unemployed?

Jeanette

The following items describe the responses of four individuals to a Bureau of Labor Statistics (BLS) survey of employment. 1. Mollie just graduated from college and is now looking for work. She has had three job interviews in the past month, but still has not gotten a job offer. 2. George used to work in an automotive assembly plant. He was laid off six months ago as the economy weakened. He expects to return to work in a few months when national economic conditions improve. 3. Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the Federal government cut defense spending. She has been looking for similar work for a year but no company seems interested in her aircraft design skills. 4. Ricardo lost his job last year when his company downsized and laid off middle-level managers. He tried to find another job for a year, but was unsuccessful and quit looking for work. Refer to the above information. Which individual is frictionally unemployed?

Mollie

NDP

NDP= GDP-FC

NI

NI=NDP-SD+NFFI

NFFI

Net Foreign Factor Income

Xn

Net exports

In

Net private domestic investment

C

Personal Consumption expenditures

Which of the following transactions would be included in GDP? Nick buys $5000 worth of stock in Microsoft Peter buys a newly constructed house Mary buys a used book for $5 at a garage sale Olivia receives a tax refund of $500

Peter buys a newly constructed house

Tom Atoe grows fruits and vegetables for home consumption. This activity is Productive but is excluded from GDP because no market transaction occurs. Included in GDP because it reflects production. Excluded from GDP because an intermediate good is involved. Excluded from GDP in order to avoid double counting.

Productive but is excluded from GDP because no market transaction occurs.

SD

Statistical Discrepancy

If intermediate goods and services were included in GDP The GDP would be overstated The GDP would then have to be deflated for changes in the price level The GDP would be understated Nominal GDP would exceed real GDP

The GDP would be overstated

Which of the following is an intermediate good? The purchase of baseball uniforms by a professional baseball team. The purchase of jogging shoes by a professor. The purchase of a pizza by a college student. The purchase of gasoline for a ski trip to Colorado.

The purchase of baseball uniforms by a professional baseball team.

If the MPC is .6, the multiplier will be A 2.5 B 1.67 C 6.0 D 4.0

a 2.5

Which one of the following will cause a movement down along an economy's consumption schedule? A An increase in consumer indebtedness B An increase in stock prices C A decrease in stock prices D A decrease in disposable income

a decrease in disposable income

Assume a machine that has a useful life of only one year costs $2,000. Assume, also, that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,300. If the firm finds it can borrow funds at an interest rate of 10 percent, the firm should A purchase the machine because the expected rate of return exceeds the interest rate B purchase the machine because the interest rate exceeds the expected rate of return C not purchase the machine because the interest rate exceeds the expected rate of return D not purchase the machine because the expected rate of return exceeds the interest rate

a purchase the machine because the expected rate of return exceeds the interest rate

As disposable income goes up, the B average propensity to save fails C volume of consumption declines absolutely D average propensity to consume fails

average propensity to consume fails

Suppose that a new machine tool having a useful life of only one year costs $80,000. Suppose, also, that the net additional revenue resulting from buying this tool is expected to be $96,000. The expected rate of return on this tool is a 8 percent B 20 percent C 2 percent D 80 percent

b 20 percent

The most important determinant of consumer spending is A the stock of wealth B the level of income C consumer expectations D the level of household borrowing

b the level of income

As disposable income increases, consumption A Decreases and saving increases B and saving both decrease C And saving both increase D increases and saving decreases

c and saving both increase

If Carol's disposable income increases from $1,200 to $1,700 and her level of saving increases from minus $100 to a plus $100, her marginal propensity to A consume is three - fifths B consume is one- half C consume is two-fifths D save is three - fifths

consume is three - fifths

GDP can be calculated by summing Consumption, investment, government, purchases, and imports Consumption, investment, wages, and rents Consumption, investment, government purchases and net exports Consumption, investment, government purchases, exports, and imports

consumption, investment, government purchases and net exports.

In calculating the unemployment rate, "discouraged" workers who are not actively seeking employment are A treated the same as part-time workers B Excluded from the labor force C Used to determine the size of the labor force D included as part of the unemployed

excluded from the labor force

The consumption schedule is drawn on the assumption that as income increases, consumption will A increase both absolutely and as a percentage of income B be unaffected C increase absolutely but remain constant as a percentage of income D increase absolutely but decline as a percentage of income

increase absolutely but decline as a percentage of income

Which of the following is a measure of economic growth that is most useful for comparing living standards? Increase in real GDP per capita Increase in real GDP Growth in nominal GDP Decreases in the rate of unemployment

increase in real GDP per capita

Which of the following is a measure of economic growth that is most useful for measuring geopolitical preeminence or military potential? Growth in nominal GDP Increases in real GDP Increases in real GDP per capita Decreases in the rate of unemployment

increases in real GDP

Suppose a nation's 2010 nominal GDP was $972 billion and the general price index was 90. To make the 2010 GDP comparable with the base year GDP, the 2010 GDP must be A deflated to $896 billion B deflated to $1,080 billion C deflated to $678 billion D inflated to $1,080 billion

inflated to $1,080 billion

If exports in a given economy are $40 billion and imports are $45 billion, then A net exports are $-5 billion and a leakage has occurred B net exports are -5 billion and an injection has occurred C net exports are $5 billion and a leakage has occurred D net exports are $5 billion and an injection has occurred

net exports are $-5 billion and a leakage has occurred

Full-time homemakers and retirees are classified in the BLS data as A Not in the labor force B Unemployed C Employed D Part of the labor force

not in the labor force

Dissaving means A the same thing as disinvesting B that households are spending more than their current incomes C that saving and investment are equal D that disposable income is less than zero

that households are spending more than their current incomes

The consumption schedule is such that a the APC is constant and the MPC declines as income rises. B the MPC and the APC must be equal at all levels of income of income C both the APC and the MPC increases as income rises D the MPC is constant and the APC declines as income rises

the MPC is constant and the APC Declines as income rises

Real GDP is A Always greater than nominal GDP B the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation. C that aggregate output that is produced when the economy is operating at full employment. D the nominal value of all goods and services produced in the economy.

the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation.