econ final

Which of the following is an accurate explanation of why the average American today is "richer" than the richest American 100 years ago?

Tremendous technological advances.

Portland Sardines produced $14 million worth of cans of sardines. In producing these cans of sardines, it purchased $2 million dollars' worth of tin from foreign countries and paid workers who reside in Canada but commuted to the U.S. $1 million, all other labor was provided by U.S. residents. How much of the company's production was included in U.S. GDP?

$12 million

Tom lives in an apartment where he pays $8,000 a year in rent. Sarah lives in a house that could be rented for $10,000 a year. How much do these housing services contribute to GDP?

18,000

Which of the following pairs of values of the consumer price index (CPI) is consistent with an inflation rate of 2% from 2013 to 2014?

CPI in 2013 = 110; CPI in 2014 = 112.2

The best measure for changes in the price level of a consumer basket of goods and services over time is the

CPI since it measures changes in the prices of a basket of goods and services consumed by a typical consumer over time

Which of the following is the way that Net National Product is calculated?

Depreciation losses are subtracted from the total income of a nation's citizens.

In 1870, the United States was the richest country in the world.

False 1870, the United Kingdom was the richest country in the world

According to 2012 data for U.S. teenagers (ages 16-19) ______ had the highest unemployment rate and _______ had the lowest unemployment rate.

For teenagers black males had the highest unemployment rate and white females had the lowest unemployment rate.

The U.S. computes that $3 trillion of GDP was produced in the second quarter of 2014. What, if any, adjustments will it make to this number when it reports GDP for the second quarter?

It will adjust for seasonality and multiple by four.

Over the last century, which of the following countries had the highest growth rate of real GDP per person?

Japan

Industrial machinery is an example of

Physical capital

What is measured by the level of real GDP divided by hours worked over that year?

Productivity for a given year.

Suppose that productivity grew faster in Country A than in Country B, while the population and total hours worked remained the same in both countries.

Real GDP per person grew faster in Country A than in Country B.

George lives in a home that was newly constructed in 2011 for which he paid $200,000.In 2014 he sold the house by himself for $250,000. Which of the following statements is correct regarding the sale of the house?

The 2014 sale affected neither 2014 GDP nor 2011 GDP.

Which of the following statements is correct regarding the CPI and the GDP deflator?

The CPI is better than the GDP deflator at reflecting the prices of goods and services bought by consumers.

In Canada, real GDP per person was $2,397 in 1870 and $38,370 in 2010. The growth rate was 2.00% per year. Which of the following is true?

The growth rate of 2.00% per year ignores short-run fluctuations around the long-run trend and represents an average rate of growth for real GDP per person over the period.

In Japan, real GDP per person was $1,517 in 1890 and $34,810 in 2010. The growth rate was 2.65% per year. Which of the following is true?

The growth rate of 2.65% per year ignores short-run fluctuations around the long-run trend.

An American company operates a coffeehouse in Lisbon, Portugal. Which of the following statements is accurate?

The value of the goods and services produced by the coffeehouse is included in Portuguese GDP, but not in U.S. GDP.

John restores cars. He buys a 1964 Mustang, new parts and paint, and spends time restoring it. He then sells the car. Which of the following is included in GDP?

The value of the new parts and paint, the value of John's time, but not his purchase of the old car.

Japan is an advanced economy, and over the past century its rate of economic growth has been higher than that of the United States.

True

Real GDP uses constant base year prices to place a value on the economy's production of goods and services, while nominal GDP uses current prices to place a value on the economy's production of goods and services.

True

Which of the following describes natural resources?

Wind energy.

The citizens of Denmark earn $300 million of income from abroad whereas citizens of other countries earn $500 million in Denmark. Therefore, Denmark's

net factor payments from abroad are negative, and its GDP is larger than its GNP.

The introduction of new goods creates a problem when measuring the CPI because

the CPI is based on a fixed basket of goods and services and does not reflect increased value as a result of a larger variety of goods.

The government of a country, which has adopted American GDP accounting conventions, reported that seasonally adjusted GDP in third quarter was $36 billion at an annual rate. This means that the seasonally-adjusted market value of all final goods and services produced within this country in the third quarter was

$9 billion GDP is measured at annual rates by multiplying the seasonally adjusted quarterly output by 4.

If in some year real GDP was $45 billion and the GDP deflator was 130, what was nominal GDP?

$58.5 billion

Last year, real GDP in an imaginary economy was $125 billion and the population was 5 million. This year, real GDP is $132 billion and the population was 5.2 million. What was the growth rate of real GDP per person during the year?

1.54%

Last year was the base year, this year inflation was 5%. What is this year's GDP deflator?

105 (In the base year the GDP deflator = 100. 5% inflation means that the deflator rose by 5%.)

Susan sells a house built several years ago. The house sells for $300,000, but $20,000 of this is her real estate agents' commission fee. How much does this transaction add to GDP?

20,000

In 2014, a farmer grew and sold $2 million worth of green beans to a company that froze and bagged them. The company produces $4 million worth of bags of frozen beans in 2014, with sales to households during the year of $3 million. The unsold $1 million worth of frozen beans remains in the company's inventory. The transactions just described contribute how much to GDP for 2014?

4 million $3 million of beans are consumption and $1 million add to inventory which is part of investment spending. The $2 million of beans is not counted separately as they are intermediate goods.

Consider the case of Crusoe's economy. Suppose Robinson Crusoe spends two hours to find ten turtle eggs. What is his productivity?

5 turtle eggs per hour. - A correct way to measure productivity is to divide the quantity of output by the number of hours worked: 10 turtle eggs / 2 hours = 5 turtle eggs per hour.

Last year real GDP per person in an imaginary economy was $4,500. This year, it is $4,900. What was the rate of economic growth over the year?

8.9% The rate of growth is calculated as 100 * ((GDP per person in the current year - GDP per person last year)/ GDP per person last year) = 100*(($4,900 - $4,500)/ $4,500) = 8.9%.

Bertha uses all of the following resources to prepare delicious breakfast meals at her café. Which of them is an example of human capital?

Bertha's unique recipes.

Blake is not looking for work because there have been many job cuts where he lives, and he doesn't think it is likely that he will find work. Sierra hasn't looked for work for six weeks, but she would like a job, and she has looked for work in the past. Who does the Bureau of Labor Statistics count as marginally attached workers?

Blake and Sierra Marginally attached workers are workers who are not currently working nor looking for work but have looked for work sometime in the recent past.

The ______ is responsible for calculating and reporting the CPI.

Bureau of Labor Statistics

Which of the following is measured by the growth rate of real GDP per person?

Changes in the level of well-being in a country.

The United Kingdom is an advanced economy, and over the past century its rate of economic growth has been higher than that of the United States.

False -has fallen -In 1870, it was the richest country in the world

Which of the following countries is a middle-income country, which over the past century had a higher rate of economic growth than the United States?

Mexico

Derrick worked part time for his mother's business without pay. Tyler was absent from work because he had the flu. The Bureau of Labor Statistics counts

both . People who work part time for a family business and people temporarily absent from work due to weather, illness, or vacation are both counted as employed.

Coffee is weighted more than tea in the calculation of the CPI if

consumers buy more coffee than tea. Weights in the CPI are determined by the importance of the good to the consumer.

The official government unemployment rate (U-3) fails to fully capture labor utilization because it does not capture

discouraged workers. The official unemployment rate does not count discouraged workers as being in the labor force. Since these workers are able to work, they should be considered in labor utilization.

The gross domestic production of a country

equals the income of its residents.

The consumer price index is the only measure of inflation used in the United Sates.

false

From 1890 to 2010, countries with lower levels of real GDP per person than the United States all had growth rates that are lower than that of the United States.

false In some cases, countries that had lower levels of real GDP per person than the United States had growth rates that were higher than that of the United States. In other cases, countries with lower levels of real GDP per person had lower growth rates than that of the United States.

Rudy has graduated from college and is devoting his time to searching for a job. He has seen plenty of openings but has not yet been offered one that best suits his tastes and skills. Rudy is

frictionally unemployed. Frictional unemployment exists even in the long run. Frictional unemployment is created by the time it takes for job seekers and employers to find a good match. Structural unemployment is created by above equilibrium wages. Both types of unemployment exist even in the long run, they are not created by the business cycle.

Given that it takes only 35 years for an initial value to double if there is a 2 percent growth rate, we can conclude that ___

growth rates are compounding. If growth rates were not compounding and we were only applying the percentage change to the initial value each time, it would take 50 years to double. Real GDP per person changes over time, and countries with lower initial values can overtake countries with higher initial values by achieving higher growth rates over time.

If workers increase the amount of training that they obtain, they are increasing their _

human capital.

The CPI is able to measure changes in the quality of goods over time

imprecisely because it is relatively complicated to measure quality changes.

Gross national product (GNP)

is the total income earned by a nation's permanent residents (called nationals) t differs from GDP in that it includes income that our citizens earn abroad and excludes income that foreigners earn here.

International studies of the relationship between real GDP per person and quality of life measures find that as real GDP per person rises

life expectancy and the percentage of the population that is literate tends to rise.

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP primarily makes use of

market prices.

The Bureau of Labor Statistics reports the CPI

monthly

The underground economy

ncludes otherwise legal transactions that go unreported or unrecorded.

The citizens of Denmark earn $300 million of income from abroad whereas citizens of other countries earn $500 million in Denmark. Therefore, Denmark's

net factor payments from abroad are positive, and its GNP is larger than its GDP.Net factor payments from abroad equal income earned by Danish citizens abroad - income earned by foreign citizens in Denmark = -$200 million. GNP = GDP + net factor payments from abroad. So GDP exceeds GNP by $200 million.

Transfer payments from the government to households are

not for the current production of goods and services. They are not included in GDP.

Substitution bias is a problem when measuring the consumer price index because

prices of goods and services do not change in the same proportion from year to year.

Of the following which is the best single measure of a country's economic well-being?

real GDP per person.

The investment component of GDP includes changes in inventories.

true

Bertha uses all of the following resources to prepare delicious breakfast meals at her café. Which of them is an example of technological knowledge?`

Efficient commercial foodservice equipment that allows an increased number of servings per hour. -Still, technological knowledge refers to society's understanding about how the world works. Thus technology makes commercial foodservice more efficient and allows to increase productivity. Human capital, however, refers to the resources expended transmitting this understanding to the labor force. Bertha uses the commercial foodservice technology to prepare her unique recipes, which are her human capital.

U.S. GDP and U.S. GNP are related as follows.

GNP = GDP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad.

The residents of Ecuador earn $700 million of income from abroad. Residents of other countries earn $200 million in Ecuador. The earnings of Ecuadorian residents abroad are accounted for in Ecuador's

GNP which is larger than its GDP

The most commonly reported measure of inflation by the media is

the CPI

Which of the following statements is correct for explaining why the CPI is commonly used as a measure of inflation?

the CPI better reflects the prices of goods and services bought by consumers.

GDP is not adjusted to account for differences in the quality of the environment such as air quality and access to safe water.

true