ECON Potential Exam Questions
In the economy of Talikastan in 2015, consumption was $700, exports were $200, government purchases were $300, imports were $150, and investment was $400. What was Talikastan's GDP in 2015?
$1450
Tim mows the yard for his neighbors. He spends $1 on gas and charges them $20 for each lawn he mows. What's the total contribution to GDP each time Tim mows a yard?
$20
In the economy of Talikastan in 2015, consumption was $800, GDP was $2000, government purchases were $400, and investment was $600. What were Talikastan's net exports in 2015?
$200
Most goods and services produced at home
and most goods and services produced illegally are excluded from GDP
Household spending on education is included in
consumption, although it might be argued that it would fit better in investment
The deviation of unemployment from its natural rate is called
cyclical unemployment
For any given year, the CPI is the price of the basket of goods and services in the
given year divided by the price of the basket in the base year, then multiplied by 100
In the CPI, goods and services are weighted according to
how much consumers buy of each good or service
Which of the following is not included in either M1 or M2?
US Treasury Bills
Which of the following best illustrates the medium of exchange function of money?
You pay for your oil change using currency
Which of the following is an example of a durable good?
a hair dryer
The CPI is a measure of the overall cost of the goods and services bought by
a typical consumer
The "yardstick" people use to post prices and record debts is called
a unit of account
In the calculation of the CPI, books are given greater weight than magazines if
consumers buy more books than magazines
If MPC is .75, what will be MPS and the government spending multiplier?
1/1-.75 = .25 1/4; multiplier is 4 (100/.25)
Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $50; in 2014, the basket's cost was $52; and in 2016, the basket's cost was $55. The value of the CPI in 2016 was
110.0
Refer to scenario 28-1. how many people are unemployed?
3 million (not 100% sure its correct)
The price index was 120 in 2012 and 126 in 2013. What was the inflation rate?
5.0 percent
If the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was
6 percent
Refer to Table 29-1. What is the value of M2 in billions of dollars?
8,315 billion
MPC is .75 and MPS is .25, what is the tax multiplier?
=-(MPC/MPS)=-(.75/.25)=-3
In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct?
The value of the consumer price index is always 100 in the base year
A double coincidence of wants
All of the above are correct
Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been chosen as the base year. In 2012, the basket's cost was $80.00; in 2013, the basket's cost was $84; and in 2014, the basket's cost was $87.60. The value of the CPI was
All of the above are correct
Which of the following is a store of value?: Currency, U.S. government bonds, Fine art, all of the above
All of the above are correct.
Olga owns her own business. Sven is an unpaid worker in his family's business. Who is included in the bureau of labor statistics' "employed" category?
Both Olga and Sven
Refer to Table 29.01. Which, if any, pairs of traders has a double coincidence of wants?
Tim with Amy
Sam, an American citizen, prepares meals for his family at home. Ellen, a Canadian citizen, commutes to the U.S. to help prepare meals at a restaurant in Idaho. Whose value of services preparing meals is included in U.S. GDP?
Ellen's but not Sam's
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.
Included or not included in US GDP? A book publisher produces too many copies of a new book; the books don't sell this year, so the publisher adds the surplus books to inventories
Included
Included or not included in the GDP of the United States? The purchase of a new aircraft carrier by he Navy
Included
State whether the following transaction will be included or not included in the GDP of the United States: A California winery produces a bottle of Chardonnay and sells it to a customer in Montreal, Canada.
Included
State whether the following transactions will be included or not included in GDP for the United States Coca-Cola builds a new bottling plant in the United States
Included
John and Jane decide to go on a vacation. As a result, they withdraw $2,500 from their savings account to purchase $2,500 worth of traveler's checks. As a result of these changes,
M1 increases by $2,500 and M2 stays the same.
Moving money from Savings (M2) to Checking (M1), what happens to the size of M1 and M2?
M2 will stay the same but M1 will increase
In a barter system which of the following pairs has a double coincidence of wants? (Allen,Betty,etc.)
None of the above are correct.
Included or not included in US GDP? The purchase of a copy paper by Pepsico, which is used by the company staff
Not Included
State whether the following transaction will be included or not included in the GDP of the United States: An American buys a bottle of French perfume in Paris
Not Included
State whether the following transaction will be included or not included in the GDP of the United States: Delta sells one of its existing airplanes to Korean Air
Not Included
State whether the following transaction will be included or not included in the GDP of the United States: Ms. Moneybag buys an existing share of Disney stock
Not Included
Included or not included in the GDP of the United States: A deposit in your savings account as a result of a judgment in a law suit
Not included
Joe and Jim purchase vegetables at a grocery store, but Jim also grows vegetables in his back yard. Regarding these two practices, which of the following statements is correct?
Only Joe's and Jim's grocery store purchases are included in GDP.
Treasury Bonds are
both liquid and a store of value
The inflation rate is calculated
by determining the percentage increase in the price index from the preceding period
Which of the following is not included in GDP?
carrots grown in your garden and eaten by your family
Which of the following is a store of value?
cash and stocks
Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself. Which of the following is correct? The value of changing the oil is
included in GDP if Susan pays Speedy Lube to change it but not if she changes it herself
As opposed to a payments system based on barter, a payments system based on money
makes trade less costly
In calculating the CPI, a fixed basket of goods and services is used. The quantities of the goods and services in the fixed basket are determined by
surveying consumers
Which of the following agencies calculates the CPI?
the Bureau of Labor Statistics
Liquidity refers to
the ease with which an asset is converted to the medium of exchange
The natural rate of unemployment is the
unemployment rate that would exist in a growing and healthy economy
GDP is defined as the
value of all final goods and services produced within a country in a given period of time