Exam 2 Macro
See figure
$86
Which of the following statements regarding U.S. economic growth is NOT correct?
The growth of real GDP per person accelerated between 1973 to 1984
The natural unemployment rate
is the unemployment rate that occurs when the economy is at a full employment
If the CPI is 120, this means that
prices are 20% higher than in the reference base period
An indirect tax is exemplified by
a sales tax
The best definition for economic growth is
a sustained expansion of production possibilities measured as the increase in real GDP over a given period
The Consumer Price Index is a measure of the average of the prices paid by ________ for a 58) fixed basket of consumer goods and services.
urban consumers
see figure
320$
Suppose that last year the Consumer Price Index was 124; this year it is 130.7. What was the inflation rate between these years?
5.4%
GDP can be computed as the sum of
Total expenditures of consumption, investment, and government expenditure on goods and services over a period of time
see figure
a;b
The growth rate of real GDP per person in the United States has
averaged approximately 2 percent per year over the past century
see figure
b; a
Suppose the country of Tiny Town experienced frictional unemployment. This frictional 49) unemployment would
be considered a natural occurrence in a growing economy
Suppose an economy has some inflation. Then, after a base year, the value of real GDP will
be greater than nominal GDP
Which type of unemployment increases during a recession?
cyclical unemployment
Depreciation is defined as the
decrease in stock of capital due to wear and tear
We are interested in long-term growth primarily because it brings
higher standards of living
Frictional unemployment is the result of
normal labor market turnover
In calculating GDP, household production is
not included because there is no market transaction
Which of the following best fits the definition of unemployed?
not working but looking for a job
The unemployment rate is defined as the
percentage of labor force not working
Of the following, the largest component of GDP is
personal consumption expenditure
A recession is commonly defined as occurring when
real GDP decreases for a period of 6 or more months
Of the following sequences of price levels, which CORRECTLY represents a 5 percent inflation 60) rate?
100,105,110.25,115.76
see figure
130
Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?
14
In 2011, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. Armeniaʹs real GDP per person in 2012 was
1545$
If real GDP per person is growing at 4 percent per year, approximately how many years will it take to double?
17.5
Over the last 100 years, the average U.S. growth rate in real GDP per person was about
2% per year
If the CPI basket of goods cost $200 in the reference base period and $450 in a later year, the 57) CPI in the later year equals
225
During 2013, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2012, real GDP was 105 billion and the population was 0.85 billion. Economiaʹs growth rate of real GDP per person is
3.23%
At the end of last year the Consumer Price Index was equal to 157.5 and at the end of this year it was equal to 163.8. What is the inflation rate over this time period?
4.0 %
see table
65 %
If consumption expenditures are $500 million, net investment is $100 million, depreciation equals $5 million, imports are $50 million, exports are $55 million, government expenditure on goods and services is $220 million, and government transfer payments are $20 million, then GDP is
830 Million
In 2011, Armenia had a real GDP of $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. What was Armeniaʹs economic growth rate from 2011 to 2012?
9.0%
GDP is the
A) total amount that buyers spent on the final goods and services produced in a country during a specific time. B) total amount of income earned in producing the final goods and services in a country during a specific time. C) value of the final goods and services produced in a country during a specific time. D) All of the above answers are correct. (THIS IS ANSWER)
see table
A,B and C
GDP equals
Aggregate Expenditure Value of the aggregate production in a country during a given time period Aggregate Income ALL OF THESE
In the circular flow of economic activity
Aggregate expenditure measures the dollar value of purchases of final goods and services
Of the following Asian countries, which has the lowest level of real GDP per person?
China
When economists speak of full employment, they refer to the case in which the sum of 42) frictional and structural unemployment is
Equal to the actual amount of unemployment
A loaf of bread purchased by one of your instructors would be best described as
Final Good
When real GDP is ________ potential GDP, the unemployment rate is ________ the natural 41) unemployment rate.
Greater than; less than
Which of the following relationships is CORRECT?
Gross Investment = Net Investment + Depreciation
The historical record for the United States for the past 100 years shows
Growth in real GDP per person during most years
Convergence of the income gap has been most dramatic between
Hong Kong and the United States
Which of the following people would be considered unemployed by the Bureau of Labor 35) Statistics? I. Mrs. X retires from her job at the age of 55 and does not look for another job. II. Mr. Y was laid off from his job as a welder, but expects to be rehired in 8 months.
II only
Proprietorsʹ income is a component of which approach to measuring GDP?
Incomes approach
According to the Economic Times (09/2012), Standard & Poorʹs forecast for Indiaʹs GDP growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Which of the following is TRUE?
India's PPF has been shifting rightward since 1997
During the 1990s, which of the following experienced the slowest rate of growth in real GDP per person?
Japan
The historical record for the United States over the last 100 years shows
Mostly positive economic growth, though the Great Depression caused actual GDP to dip well below potential GDP
Which of the following people would be counted as is employed in the Current Population Survey?
Rich, who is working 20 hours a week but wants a full-time job
Over the past fifty years, there has been substantial closure of the gap in real GDP per person 74) between which of the following groups of countries?
The United States and Japan
Over the past four decades
U.S. real GDP per person has increased
The use of purchasing power parity prices
accounts for differences in the prices of the same goods in different countries when measuring real GDP
The nationʹs structural unemployment will increase when
an increase in textile imports displaces older textiles workers who do not have the skills necessary to find new jobs
Gross domestic product can be calculated
either by valuing the nations output of goods and services or by valuing the income generated in the production process
A person quits her job in order to spend time looking for a better-paying job. This type of 47) unemployment is an example of
frictional unemployment
Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek work 44) with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best considered as
frictionally unemployed
Net investment equals
gross investment - depreciation
An increase in exports of goods or services with no change in imports of goods or services
increase GDP
Which of the following is NOT one of the components for computing GDP based upon the 14) income approach?
investment
an expansion
is defined as a period of real GDP growth
Potential GDP is
maximum amount of GDP that can be produces while avoiding shortages of labor, capital, land, entrepreneurship that would bring rising inflation
In the United States, GDP is typically measured
quarterly
By common definition, a recession occurs when
real GDP decreases for at least 2 successive quarters
According to the Economic Times (09/2012), Standard & Poorʹs forecast for Indiaʹs GDP 62) growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Based on this story, it is most likely that the slowdown reflects a
temporary business cycle showdown
Looking at inflation rates in the United States since the 1970s we see that
the 1970s experiences the highest inflation rates
Real GDP decreases during
the movement from peak to trough
Frictional unemployment increases when
the number of workers who quit one job to find another increases
The labor force is defined as the number of
the people who are employed and unemployed
The unemployment rate is measured as
the percentage of people in the labor force who are unemployed
Hyperinflation is defined as
very high inflation rates
The labor force participation rate is percentage of the ________ who are in the labor force.
working-age population
Which of the following is included in ʺcompensation of employeesʺ part of the income 20) approach to measuring GDP? I. Wages and salaries. II. Pension fund contributions. III. Social Security contributions.
I,II and III
Which of the following is TRUE regarding business cycles? I. Cycles are predictable. II. In each cycle, a peak follows an expansion. III. Potential GDP fluctuates around real GDP
II only
Which of the following is CORRECT?
Aggregate income, aggregate expenditure and GDP and are all equal
Which of the following is used to calculate the standard of living?
Real GDP/population
The unemployment rate is found by dividing the number of unemployed people by the
sum of working individuals plus unemployed workers, and multiplying by 100