Econ Midterm 1

अब Quizwiz के साथ अपने होमवर्क और परीक्षाओं को एस करें!

A factory sells​ $500,000 of products per year. The​ factory's run-off pollutes a beautiful river. The estimated damage of this pollution is​ $204,000. What is the contribution of the factory to gross domestic product​ (GDP)?

$500,000

If Samsung sells a TV for​ $849, but spends​ $110 in purchasing goods and services from other​ manufacturers, what is the value added of each​ television?

$739

​Real-Time Data Analysis Exercise The following table contains data from FRED​* for real exports and real imports for two recent years. ​*Real-time data provided by Federal Reserve Economic Data​ (FRED), Federal Reserve Bank of Saint Louis. Year Real Exports ​Real Imports 2016 $2,382.258 billion $3,145.881 billion 2015 $2,375.244 billion $3,094.791 billion Using the data​ above, calculate net exports for the following two​ years: ​(Enter your responses rounded to one decimal​ place.) Year Net Exports 2016 $ --billion 2015 $--billion When net exports possess the sign they had in 2016​, the country is said to have--

-763.6 billion - 719.5 billion trade deficit

Since World War​ II, the United States has experienced -- recessions.

11

The table below shows purchases for the small island of Renuzit. Purchases Value​ (in millions) Consumption Expenditures ​$80 Private Investment Expenditures ​$30 Government Purchases ​$36 Imports ​$37 Exports ​$23 Renuzit's GDP was ​$-- million. ​(Enter your response as a whole​ number.)

132

Real-Time Data Analysis Exercise The following table contains the most recent household expenditure data from FRED​*. ​*Real-time data provided by Federal Reserve Economic Data​ (FRED), Federal Reserve Bank of Saint Louis. Using the data from​ FRED, compute the value for personal consumption expenditures for the first quarter of 2021. ​(Enter your response rounded to one decimal​ place.) Title Value Personal Consumption Expenditures ​$--------- billion Personal Consumption​ Expenditures: Durable Goods ​$1,940.662 billion Personal Consumption​ Expenditures: Nondurable Goods ​$3,278.25 billion Private Residential Fixed Investment ​$1,051.278 billion Personal Consumption​ Expenditures: Services ​$9,851.208 billion According to these​ data, the share of total household expenditures devoted to goods is ----- percent. ​(Enter your response rounded to one decimal​ place.) From this result it may be concluded​ that, all else​ constant, any given reduction in household spending will be felt more significantly in the --- sector of the economy.

15,070.120 34.6 service

A recession occurs if real GDP falls for​ ____ consecutive quarters.

2

Which of the following will most likely cause the US stock market to​ rise?

A business cycle expansion in China

Which of the following are not included in​ GDP?

A mother taking care of children at home.

Which of the following will most likely cause the US stock market to​ rise?

A. current business cycle expansion in the US B.Lower US interest rates C.Expected productivity gains in the US D.All of these things

Air Quality and Measured GDP. Air quality in Los Angeles deteriorated in the 1950s through the 1970s and then improved in the 1980s and 1990s. Can a change in air quality such as this be incorporated into our measures of national​ income?

All of the above are reasonable arguments.

Which of the following is generally​ pro-cyclical (moving in the same direction as​ GDP)?

All of these are generally​ pro-cyclical

Suppose a community spends​ $1 million on salaries and equipment for its police department. Because it believes that citizens are now more law​ abiding, the community decides to cut back on the number of police it employs. As a​ result, the community now spends​ $800,000 less on the police officers. The crime rate remains the same. What happens to measured​ GDP? Does this change in GDP accurately reflect welfare in this​ case?

B. GDP falls by​ $800,000. ​No, because the crime rate has not changed.

Which of the following are not included in​ GDP?

C. A mother taking care of children at home.

Which of the following are included in​ GDP?

C.paid child care

What is the largest component of national​ income?

Compensation of employees​ (wages and​ benefits).

Related to​ Application: Using Value Added to Measure the True Size of WalmartLOADING... Sales versus Value Added. In comparing a small​ country's GDP to a major​ corporation, why is it best to use the value added of the corporation rather than its total​ sales? When we calculate GDP for a​ country, do we use the total sales of all goods and​ services?

Corporations typically buy goods such as inputs from many other companies to produce sales. No. GDP only includes the sale of final goods and services produced within a given year.

Which government department produces the National Income and Product​ Accounts?

D. The Department of Commerce.

Does Money Buy​ Happiness? Although people with high incomes appear to be happier than those with low​ incomes, people in the United States in general have become less happy over the last 30 years even though real GDP has risen. Why might increases in real GDP not necessarily have increased​ happiness?

Everyday life has become more stressful.

Investment is a smaller component of GDP than​ consumption, but it is much more stable.

False

Investment spending rises in recessions.

False

Which of the following explains the circular flow between production and​ income?

Households supply labor and capital to firms in return for money. Households use this money to buy products from firms.

Disappearing Fish and National Income. Suppose you were worried that national income does not adequately take into account thedepletion of the stock of fish in the economy. How would you advise the Commerce Department to take this into account in its​ calculations?

Identify the value of the proven fish stock​, and subtract the net change in the proven fish stock from national income.

Suppose you were worried that national income did not adequately take into account the depletion of the stock of fish in the economy. Describe how you would advise the Commerce Department to take this into account in their calculation.

Identify the value of the trees that provide shade​, and subtract the net change in the extracted trees that provide shade from national income.

All other things being​ equal, which of the following would MOST likely lead to an increase in stock​ prices?

Lower interest rates

All other things being​ equal, an increase in interest rates would MOST likely lead to

Lower stock prices

In Economy​ A, the government puts workers on the payroll who cannot find jobs for long​ periods, but these​ "employees" do no work. In Economy​ B, the government does not hire any​ long-term unemployed workers but gives them cash grants. Comparing the GDP statistics between the two otherwise identical​ economies, what can you determine about measured GDP and the actual level of output in each​ economy?

Measured GDP is higher in Economy​ A, though the actual level of output in each economy is the same.

The organization that officially dates recessions is the

National Bureau of Economic Research.

What do we add to GDP to reach​ GNP?

Net income earned abroad by U.S. households.

Does this mean that movements in stock prices cause movements in investment​ spending?

Not necessarily—another possible explanation could be that investor optimism causes both to move together.

Which of the following statements is​ true? Economists divide GDP into four broad categories​ including:

Real GDP is a measure of GDP that controls for changes in​ prices, whereas nominal GDP is the value of GDP in current dollars. consumption​ expenditures, private investment​ expenditures, government​ purchases, and net exports.

Which of the following would be considered an intermediate​ good?

The cord for a vacuum cleaner.

In​ Europe, the average resident takes several weeks more of vacation time than in the United States.​ Per-capita income,​ however, is higher in the United States than the European average. What can you say about relative economic welfare in Europe versus the United​ States?

To compare the two regions in terms of true economic​ welfare, you would have to put some value on the additional leisure time.

What part of government spending is excluded from​ GDP?

Transfer payments.

If the GDP deflator equals 100​, then real and nominal GDP in 2010 will be equal.

True

If the GDP deflator equals 100​, then real and nominal GDP in 2010 will be equal.

True

Related to​ Application: The Links Between Self-Reported Happiness and GDP ​Men's reported happiness has increased relative to​ women's reported happiness in the last several decades.

True

Suppose the base year is 2009 and prices were increasing every year from 2009 to 2018. Then nominal GDP will exceed real GDP in 2018.

True

When calculating GDP using the production​ method, which of the following would you not​ include?

Value added.

We can summarize who purchases GDP with a simple equation that combines the four components of​ GDP:

Y​ = C​ + I​ + G​ + NX.

If current interest rates​ increase, then old bonds sold on the secondary bond market are most likely to

be less attractive to current investors because they offer a lower rate of return than new bonds will

If secondary bond market prices fall​ then, all other things being​ equal

bond yields are rising

As real interest rates rise​, investment spending in the economy will

decrease

A trade surplus occurs when our exports --our imports.

exceed

A trade surplus occurs when our exports --our imports.

exceed

The state of New York banned a technique known as​ "fracking" where fluids are injected into wells in order to produce more natural gas. The reason given for banning fracking was that it caused environmental damage. To measure whether this ban increased or decreased economic​ welfare, you would need to compare the value of the--

extra output produced and then subtract the estimates of environmental damage.

The resources that firms use in​ production, including​ land, buildings, and​ equipment, are called --.

factors

When a​ firm's stock price is​ high, it can issue shares at a premium and use the proceeds from their sale to finance new investments. The higher a​ firm's share​ price, the --shares the firm needs to sell to raise capital. This​ means, essentially, that the cost of the project the firm wants to undertake --as the​ company's stock price climbs. In other​ words, --stock prices lead to --investment.

fewer falls high

Ch5 17

full credits

Ch5 Extension Finance 6

full credits

Related to​ Application: Comparing Recoveries From Recessions. Measuring the Speed of a Recovery. Some economists have suggested that the time it takes the economy to recover to the level where it originally was when the recession started is a good measure of the speed of a recovery. This measure tells you how long it takes to

get back to the peak before the recession started.

the​ non-income happiness components in Louisiana must be higher than in California.

gross investment.

Personal income and personal disposable income refer to payments ultimately flowing to -- .

households

If the federal government provides subsidies for individuals to buy health ​care, this is

included in the federal budget but not in GDP.

The circular flow describes the process by which GDP generates --,which is spent on goods and services.

income

The circular flow describes the process by which GDP generates --which is spent on goods and services.

income

Buying a Foreign Car. Buying a foreign car made abroad for​ $50,000

increases consumption by​ $50,000, increases imports by​ $50,000, leaves exports​ unchanged, decreases net exports by​ $50,000, but does not change GDP.

Stock​ Prices, Interest​ Rates, and Corporate Earnings. Stock​ Prices, Interest​ Rates, and Corporate Earnings. a. Holding other factors​ constant, stock prices tend to rise when expected corporate earnings rise because higher expected corporate earnings increase ​investors' expectations about future​ dividends, -- the demand for stock and stock prices. b. When interest rates fall​, lower interest rates make borrowing --expensive, -- the total level of investment. All other things being​ equal, when investment spending rises​, stock prices --

increasing less increasing rise

The provision of health care services --counted as output in modern economies.

is

Which of the following are included in​ GDP?

paid child care

The date that a recession starts is called the -- .

peak

The date that a recession starts is called the--

peak

Because investment spending moves in conjunction with​ GDP, investment spending​ is:

procyclical.

goods and services are exchanged in --market

product

We can measure the output of an economy by looking at either production or income because

production generates income.

The GDP deflator is calculated for any given year by dividing nominal GDP by -- GDP and multiplying by 100.

real

The GDP deflator is calculated for any given year by dividing nominal GDP by ----GDP and multiplying by 100.

real

As stock prices​ rise, investment spending

rises along with stock prices.

If current interest rates​ increase, then old bonds sold on the secondary bond market are most likely to

sell at a lower​ price, which will increase the rate of return on those bonds for buyers

Investment is a -- portion of GDP than​ consumption, but is substantially--volatile. Investment rises

smaller more

Related to​ Application: Using Value Added to Measure the True Size of WalmartLOADING... Measuring Value for Facebook. Facebook does not sell products but does generate value added. You could measure its value added as the sum of

the payments it makes to its​ factors, including its profit.

Depreciation is

the reduction in the value of capital goods over a​ one-year period due to wear and tear.

If current interest rates​ decrease, then, all other things being equal

the stock market will go up even if firms are no more productive than before

Measured price changes do not depend on the particular base year chosen when calculating

the​ chain-weighted GDP deflator.

Measuring Happiness Across States. Suppose statisticians find from survey data that the residents of California and Louisiana report that they are equally happy. ​ However, incomes in California are​ higher, on​ average, than those in Louisiana. One could make a case that living in Louisiana actually makes you happier than living in California since--

the​ non-income happiness components in Louisiana must be higher than in California.

The --marks the date that ends a recession and output starts to increase again.

trough

Which of the following is NOT considered a transfer​ payment, and therefore is included in the calculation of the​ GDP?

wage payments to government employees

Click the following link to view personal income and outlays data from FRED​.* Then use that data to answer the following questions. ​*Real-time data provided by Federal Reserve Economic Data​ (FRED), Federal Reserve Bank of Saint Louis. For this exercise you will need to enter data from FRED for personal​ income, disposable​ income, and personal consumption expenditures. Using the data from​ FRED, enter the values for the first quarter of 2021 ​(shown as 2021−Jan−01 in​ FRED) for the following series​ IDs: ​(Enter your responses exactly as they appear in​ FRED.) Title Series ID Value Personal Income PINCOME --billion Disposable Personal Income DPI --billion Personal Consumption Expenditures PCEC --billion The difference between personal income and disposable personal income represents personal ------​which, in the first quarter of 2021​, amounted to -------- billion. Given the ratio of personal consumption to disposable income shown in the table above along with the fact that disposable income rises​ dollar-for-dollar with a tax​ reduction, it may be concluded that a tax cut will be largely ---by households.

​$22,101.641 billion ​$19,787.535 billion ​$15,070.120 billion tax payments 2,314.106 billion spent

In Central and South​ America, the size of the underground economy is

​41% of GDP.

A method for calculating price changes that takes an average of price changes using base years from consecutive years produces a--

​chain-weighted index.

The four phases of the business cycle in the order in which they occur​ are:

​recession, trough,​ expansion, and peak.


संबंधित स्टडी सेट्स

CISSP Topic 3 - Security Engineering

View Set

Overview of Financial Markets and Securities

View Set