Econ Chapter 21

Consider the following graphs, which are discussed in the textbook. Focus on the graph that looks at the relationship between GDP per person and infant deaths per 1,000 live births. What can explain this relationship?

As real GDP per person rises, maternal and fetal health increase due to better health care, education, sanitation, and nutrition.

Would an employee directly spending her paycheck on an oil change for her car be in the market for inputs or outputs, and why?

Market for outputs, because once the paycheck is received it belongs to the household sector and is then used in the output market

Consider the data shown in the table. Assume that the economy produces only frozen fish. What is the real GDP for last year using this year as the base year?

185,000

As GDP increases, the amount of money the average person has also increases. On average, this results in _____ levels of infant mortality and _____ levels of life expectancy.

lower; higher

Which scenario would be described as the strategy that compares a large number to the total state of the economy?

A military general argues for more funding because the government is spending only 10% of its budget, or 3% of GDP, on the military.

Which of these scenarios would explain a strategy used to evaluate large numbers in terms of what they mean per person?

A professor explains that a new piece of legislation would cost $50 billion and would tax each citizen $0.20.

GDP is consistently used throughout the study of macroeconomics because it is an efficient measure of:

material living standards

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the growth rate of real GDP between the two years using last year as the base year?

5%

Which scenario would be described as comparing a large number to its past values?

A lawmaker wants to fund a new park because GDP, and thus taxes, increased by 3% since last year.

Which of the following scenarios is relying on evaluating what large numbers mean on a per person basis?

The president of the United States presents his new tax policies by illustrating the burden on the average person in the country.

You purchase a new car (produced this year) for $38,000. After six months, you sell the car for $31,500. How much does GDP rise because of these two transactions?

GDP rises by $38,000.

James is growing older and no longer cares to pull weeds on his property. Instead, James pays the kid next door $10 a week in cash to make sure his yard is weed free. GDP would fail to measure this activity because of what limitation?

It does not take into account the shadow economy.

When calculating GDP, the clothing items made in Vietnam by a Chinese-owned firm would count toward the GDP of which country and why?

Vietnam because they were produced there

If a country is expecting to double its real GDP every 150 years, then its annual growth rate according to the rule of 70 is:

approximately 0.47%.

Sharon is getting the tires replaced on her car, and she is paying for the replacement. In this case, the tire is _____ because _____.

counted in GDP; it is a final good

Which of the following is a scaled number?

government budget deficit as a percentage of GDP

If Brazil produced the same amount of coffee beans in 2020 and 2021 and sold them for $2 a bag in 2020 and $3 a bag in 2021, nominal GDP would measure a/an _____ from 2020 to 2021 of what percent?

increase; 50%

The consistent rise in prices over time is defined as:

inflation.

Macroeconomics is the study of:

the economy as a whole

Jabahri is willing to spend up to $20 of the $100 he currently has to ride a cable car. If San Francisco sells cable car rides for $10, then GDP would ___________ the economic value of Jabahri riding a cable car by _____ since GDP is based on prices and not values.

underestimate;$10

Which of the following is an example of transfer payments?

unemployment benefits

Which of the following is an example of a durable good?

your new car

The Grand Canyon contributes to Arizona's GDP via two industries, hiking tours and river rafting tours. The hiking industry employs 11 guides, and they each make $40,000 a year while earning a profit of $5,000 for the company. The rafting industry employs 30 guides, who make $20,000 a year and no profits for the industry. What is the contribution to Arizona's GDP from these two industries?

$1,045,000

A farmer can sell a bag of corn at $2 a bag. A grocer can take that bag and stock it at a grocery store and sell the corn at $5 a bag. An ethanol maker can buy a bag from a grocer and make ethanol and sell that for $9 per bag of corn. In this case, the value added by the farmer is:

$2

If a farmer sells wheat for $1 a bushel to the baker and the baker can make a loaf of bread with one bushel and sell it for $3, and then the pastry chef can take a loaf of bread from the baker and make one dessert out of one loaf and sell it for $5, what is the value added of the pastry chef's actions to GDP?

$2

If the farmer sells wheat for $1 a bushel to the baker and the baker can make $3 worth of bread with one bushel, the value added by the baker is:

$2.

Below is U.S. economic data for 2018. What was total spending?

$20.58 trillion

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the nominal GDP for last year?

$250,000

In 2010, Canada's GDP was approximately $1,357 billion, and its population was about 34.12 million. What was Canada's approximate GDP per person in 2010?

$39,770

Consider the data shown in the table. Assume that the economy produces only barrels of oil. What is the real GDP for this year using last year as the base year?

$4,980,000

Based on the following statistics, how much is consumption?

$6.49 trillion

Which of the following is (are) included in investment?(i) military spending (ii) the purchase of an aircraft by a domestic airline (iii) the purchase of $45,000 worth of bonds (iv) the purchase of $32,000 worth of stock (v) social security payments (vi) the construction of a highway by the federal government

(ii) only

In 2017, the total population of Africa was estimated to be about 1,250,000,000 people. This number, in billions, is:

1.25

Ice cream made in December 2018 and sold in January 2019 would count toward GDP in the year _____ because the ice cream _____.

2018; was produced that year

Because GDP treats natural resources as free, activities such as logging and mining for gold are only measured as _____ despite the external negative effects.

production

Based on the following statistics, how much are net exports?

-$0.575 trillion

When a television show attempts to give you an idea of the government's budget by telling you it could fill 8,000 buses, it is using _____ techniques to _____ large numbers.

visual; give meaning to

Refer to the diagram of the circular flow of income. Based on the diagram, the arrow going FROM box 2 to box 1 must be:

output bought by households.

Refer to the diagram of the circular flow of income. The key lessons from this diagram are that: (i) all flows of resources are matched by flows of money. (ii) the market value of total output must be equal to total spending. (iii) total spending must equal total income.(iv) all inputs are provided by businesses.

(i), (ii), and (iii)

What is the difference between spending from a microeconomic standpoint versus spending from a macroeconomic standpoint?

In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy.

What is the difference between microeconomics and macroeconomics?

Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole.

Shaniqua is making a presentation on the state of the U.S. economy for an audience that has never taken economics coursework. Which of the four scaling strategies for big numbers could Shaniqua use to help her audience understand the size of U.S. military expenditures?

Present them as a percentage of the total economy

Dale is a stay-at-home-parent whose typical day consists of getting the kids ready for school, doing the laundry, cooking three meals, and cleaning the house. How are Dale's home activities counted in GDP?

They are not counted.