Econ 522 KU exam 1 part 3

Assume that a firm buys all the parts that it puts into an automobile for $10,000, pays its workers $10,000 to fabricate the automobile, and sells the automobile for $22,000. In this case, the value added by the automobile company is: A) $10,000. B) $12,000. C) $20,000. D) $22,000.

$12,000

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 GDP (in 2002 prices) in 2009 was: A) $5. B) $6.50. C) $9.50. D) $11.

$6.50.

In a small open economy, if exports equal $20 billion, imports equal $30 billion, and domestic national saving equals $25 billion, then net capital outflow equals: A) -$25 billion. B) -$10 billion. C) $10 billion. D) $25 billion.

-$10 billion.

If a U.S. corporation sells a product in Canada and uses the proceeds to purchase a product manufactured in Canada, then U.S. net exports ______ and net capital outflows ______. A) increase; increase B) decrease; decrease C) do not change; do not change D) do not change; increase

do not change; do not change

A "small" economy is one in which the: A) level of output is fixed. B) price level is fixed. C) domestic interest rate equals the world interest rate. D) domestic saving is less than domestic investment.

domestic interest rate equals the world interest rate.

When exports exceed imports, all of the following are true except: A) net capital outflows are positive. B) net exports are positive. C) domestic investment exceeds domestic saving. D) domestic output exceeds domestic spending.

domestic investment exceeds domestic saving.

Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure, called core inflation, A) provides a real, rather than a nominal, rate of inflation. B) gives a better measure of ongoing, sustained price changes. C) is more consistent with measures of inflation used in other countries. D) fluctuates more than measures of inflation that include food and energy prices.

gives a better measure of ongoing, sustained price changes.

If domestic spending exceeds output, we ______ the difference—net exports are ______. A) import; negative B) export; positive C) import; positive D) export; negative

import; negative

If a U.S. corporation sells a product in Europe and uses the proceeds to purchase shares in a European corporation, then U.S. net exports ______ and net capital outflows ______. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease

increase; increase

GNP equals GDP ______ income earned domestically by foreigners ______ income that nationals earn abroad. A) plus; plus B) minus; minus C) minus; plus D) plus; minus

minus; plus

Net capital outflow is equal to: A) national saving minus the trade balance. B) domestic investment plus the trade balance. C) domestic investment minus national saving. D) national saving minus domestic investment.

national saving minus domestic investment.

If domestic saving is less than domestic investment, then net exports are ______ and net capital outflows are ______. A) positive; positive B) positive; negative C) negative; negative D) negative; positive

negative; negative

83. If domestic saving exceeds domestic investment, then net exports are ______ and net capital outflows are ______. A) positive; positive B) positive; negative C) negative; negative D) negative; positive

positive; positive

The investment component of GDP includes all of the following except: A) purchases of corporate stock. B) spending on new plants and equipment. C) purchases of new housing by households. D) changes in business inventories.

purchases of corporate stock.

An increase in the price of imported goods will show up in: A) the CPI but not in the GDP deflator. B) the GDP deflator but not in the CPI. C) both the CPI and the GDP deflator. D) neither the CPI nor the GDP deflator.

the GDP deflator but not in the CPI.

The value of net exports is also the value of: A) net investment. B) net saving. C) national saving. D) the excess of national saving over domestic investment.

the excess of national saving over domestic investment.

81. If net capital outflow is positive, then: A) exports must be positive. B) exports must be negative. C) the trade balance must be positive. D) the trade balance must be negative.

the trade balance must be positive.

The household survey conducted by the Bureau of Labor Statistics provides estimates of the number of workers ______, while the establishment survey provides estimates of the number of workers ______. A) self-employed; unemployed B) unemployed; self-employed C) with jobs; on firms' payrolls D) on firms' payrolls; with jobs

with jobs; on firms' payrolls

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $0.50 in 2009. If 10 apples and 5 oranges were purchased in 2002, and 5 apples and 10 oranges were purchased in 2009, the CPI for 2009, using 2002 as the base year, is: A) 0.75. B) 0.80. C) 1. D) 1.25.

1.25.

If the unemployment rate is 6 percent and the number of employed is 188 million, then the labor force equals ______ million. A) 11.28 B) 176.72 C) 188 D) 200

200

The GDP deflator is a: A) Laspeyres price index. B) Paasche price index. C) Laspeyres quantity index. D) Paasche quantity index.

Paasche price index.

Chain-weighted measures of real GDP make use of prices from: A) an unchanging base year. B) a continuously changing base year. C) a base year that is changed approximately every 5 years. D) a base year that is changed approximately every 10 years.

a continuously changing base year.

National income differs from net national product by an amount called: A) depreciation. B) indirect business taxes. C) a statistical discrepancy. D) net foreign factor income payments.

a statistical discrepancy.

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. A) 50 B) 58 C) 60 D) 67

60

Assume that the adult population of the United States is 191.6 million, total employment is 117.6 million, and 9.4 million are unemployed. Then the unemployment rate, as normally computed, is approximately ______ percent. A) 4.9 B) 7.4 C) 7.9 D) 9.4

7.4

In a small open economy, if domestic saving equals $50 billion and domestic investment equals $50 billion, then there is ______ and net capital outflow equals ______. A) a trade deficit; $100 billion B) balanced trade; $0 C) a trade surplus; $100 billion D) balanced trade; $100 billion

balanced trade; $0

In a small open economy, if domestic investment exceeds domestic saving, then the extra investment will be financed by: A) borrowing from abroad. B) borrowing from domestic banks. C) the domestic government. D) the World Bank.

borrowing from abroad.

A trade deficit can be financed in all of the following ways except by: A) borrowing from foreigners. B) selling domestic assets to foreigners. C) selling foreign assets owned by domestic residents to foreigners. D) borrowing from domestic lenders.

borrowing from domestic lenders.

If a U.S. corporation purchases a product made in Europe and the European producer uses the proceeds to purchase a U.S. government bond, then U.S. net exports ______ and net capital outflows ______. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease

decrease; decrease

In a small open economy, if exports equal $5 billion and imports equal $7 billion, then there is a trade ______ and ______ net capital outflow. A) deficit; negative B) surplus; negative C) deficit; positive D) surplus; positive

deficit; negative