Exam 2
Albert Einstein once referred to compounding as
"The greatest mathematical discovery of all time"
In 1931,president Herbert Hoover was paid a salary of 75,000.Goverent statistics show a consumer price index of 15.2 for 1931 and 229.6 for 2012.President Hoover's 1931 salary was equivalent to a 2012 salary of about
$1,132,895
James owns two houses.He rents one house to the Johnson family for $10,000 per year.He lives on the other house.If he were to rent the house in which he lives,he could earn 12,000 per year in rent.How much do the housing services provided by the two houses contribute to the GDP?
$22,000
What is the present value of a payment of $250 one year from today if the interest rate is 4 percent
$240.38
Jorge deposited $1,000 into a account three years ago.The first two years he earned 5 percent interest;the third year he earned 6 percent interest.How much money does Jorge have in his account today
$1,168.65
Dewey earned a salary of 75,000 in 2001 and 95,000 in 2006.The consumer price Index was 177 in 2001 and 266 in 2006.Dewey's 2001 salary in 2006 dollars is
$112,711.86
In the economy of talikastan on 2015,consumption was $600,exports were $300,GDP was $1300,government purchases were $250,and investments was $300.What were talikastan's imports in 2015
$150
A tire manufacturer produces 400 tires valued at $20 each.300 totes are sold to a tire shop,which then sells them to households for $50 each.The remaining tires are unsold and are added to the tire manufacturers inventory.How much is added to GDP
$17,000
For an imaginary economy,the value of the consumer price index was 138.75 in 2016,and the inflation rate was 10 percent between 2015 and 2016.The consumer price index in 2015 was
126.1
Sue Holloway's 1944 income in 2013 dollars is
148,909
In 2012,the imaginary nation of Kanmiw had a population of 8,044 and real GDP of 36,198,000.In 2013 it has a population of 7,800 and real GDP of 35,880,000.What was the growth rate of real GDP per person in Kanmiw between 2012 and 2013?
2.2 percent
The CPI was 172 in 2007,and the CPI was 46.5 in 1982.If your parents put aside $1,000 for you in 1982,then how much would you have needed in 2007 in order to buy what you could have bought with the 1,000 in 1982
$3,698.92
If 6,000 workers are unemployed,then the minimum wage must be
$7
If nominal gdp is $10 trillion and real gdp is $12 trillion,then the gdp deflator is
$83.33,and this indicates that the price level had decreased by 16.67 percent since the base year
If the government imposes a minimum wage of $3,how many workers will be unemployed
0
Economist have found that union works earn what percent more than similar nonunion workers
10 to 20
If in some year real GDP was $5 trillion and the GDP deflator was 200,what was nominal GDP
10 trillion
A country's real GDP rose from 500 to 530 while its nominal GPD rose from 600 to 700.What was this country's inflation rate
10.0%
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 $51;and in 2016 the basket's cost was 52.The value of the CPI in 2014 was
102.0
F
4 years
If the nominal interest rate is 9 percent and the real interest rate is 3 percent,then the inflation rate is
6 percent
In 1972,one could buy a bag of chips,a pound of hamburger,a package of buns,and a small bag of charcoal for about $2.50.If the same goods today cost $6.00,then which pair of CPIs would make the cost in today's dollars the same for both years?
65 in 1972 and 156 today
In the United States in 2012,consumption represented approximately
70 percent of GDP
When you were 10 years old,your grandparents pullout $500 into an account for you paying 7 percent interest.Now that you are 18 years old,your grandparents tell you that you can take the money out of the account.What is the balance
859.09
Zoey wants to have about $750,000 when she retires in 10 years.She has $300,000 to deposit now.At which of the following interest rates would Zoey's deposit come closest to $750,000 after 10 years
9.6 percent
What is the adult male labor force in mediator
90 million
If real GDP is 5,100 and nominal GDP is 4,900,then the GDP deflator is
96.1 so prices are lower than in the base year
Which of the following is an example of a durable good?
A hair dryer
When a minimum-wage law forces the wage to remain above the equilibrium level,the result is
A surplus of labor and a shortage of jobs
Minimum-wages laws can keep wages
Above equlibrium and cause a shortage of labor
Adam and Doug both build birdhouses.Adam works 30 hours a week and produces 15 bird houses.Doug works 20 hours a week and produces 12 bird houses.Which of the following is correct
Adam's production is higher than Doug's,but Doug's productivity is higher than Adam's
Which of the following make(s) insurance premium higher than otherwise?
Adverse selection and moral hazard
Which of the following is an example of an nonreneable natural resource?
All of the above are correct
Which of the following is correct?
All of the above are correct
Which of the folllwing domestically produced items is not included in GDP?
All of the above are included in GDP
Other things the same,which of the following would increase productivity?
An increase in either human or physical capital
In the basket of goods that is used to compute the consumer price index,which of the following categories of consumer spending is the smallest
Apparel
Dividends
Are cash payments that companies make to shareholders
An increase in the price of dairy products produced domestically will be reflected in
Both the gdp deflator and the consumer price index
Which of the following is an example of physical capital?
Bulldozers,backhoes and other construction equipment
The inflation rate is calculated
By determining the percentage increase in the price index from the preceding period
Which of the following pairs of values of the consumer price index(CPI) is consistent with an inflation rate of 10 percent for 2014
CPI in 2013=210;CPI in 2014=231
If 2010 is the base year,then the Inflation rate in 2015 equals
CPI in 2015-CPI in 2014/CPI in 2014x100
Which of the following is the correct formula for calculating the Inflation rate?
CPI in year 2-CPI in year 1/CPI in year 1 x 100
According to the circular-flow diagram GDP
Can be computed as either the revenue firms receive from the sales of goods and services or the payments they make to factors of production
Which of the following statements is correct?
Compared to the GDP deflator,the consumer price index is the more common gauge of inflation
You bake cookies.One day you double the time you spend,double the number of chocolate chips,flour,eggs,and all your other inputs,and bake twice as many cookies.Your cookie production function has
Constant returns to scale
In the calculation of the CPI,books are given greater weight than magazines if
Consumers buy more books than magazines
Household spending on education is included in
Consumption,although it might be argued that it would fit better in investment
In the actual economy,households
Divide their income among spending,taxes,and saving
Which of the following examples of household spending is categorized as investment rather than consumption?
Expenditures on a new housing
GDP includes the value of
Final goods and services produced within a country using primary market prices to measure the value of goods and services
Suppose that an American company opens and operates a restaurant in Ireland.This is an example of
Foreign direct investment.American saving is used to finance Irish investment
Which of the following statements regarding GDP is correct?
GDP includes factory production,but not any harm that may be inflicted on the environment
Gasoline is considered s final good if it is soldiers by a
Gasoline station to a motorist in LA
Megan is a landscaped.Which of the following are included in her physical capital?
Her landscaping equipment,but not her knowledge of landscaping learned in college
Abby buys healthy insurance because she knows that she had health risks that wouldn't be obvious to an insurance company.Brsd buys home owners insurance and then Is less careful to make sure he's put out his cigarettes.The example with abby
Illustrates adverse selection;the example with Brady illustrates moral hazard
Government corruption
Impedes the coordinating power of markets and discourages investments
Which of the following statements is correct
In the late 1800s,real GDP per person was higher in the United Kingdom than in the United States
Susan switched 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 change the oil is
Included in GDP if Susan pays speedy lube to change it but not if she changes it herself
Efficiency wages
Increase productivity but increase unemployment
According to studies using international data,an increase in the saving rate
Increased the growth rate of output for several decades
"When workers have a relatively small quantity of capital to use in producing goods and services,giving them an additional unit of capital increased their productivity by a relatively large amount" this statement
Is consistent with the view that capital is subject to diminishing returns
The average income in a rich country
Is more than ten times that in a poor country.Further,people in rich countries have longer life expectancy
Jenna is searching for a job that suits her tastes about where to live.mary is looking for a job that makes best use of her skills
Jenna and Mary are both structurally unemployed
Which of the following is included in the investment component of GDP?
John's law firm buys him a new computer
Who of the following would be included in the bureau of labor statistics "unemployed" category
Kevin,who is temporary layoff
Martin,a u.s citizen,travels to Mexico and buys a newly manufactured motorcycle made there.His purchase is include in
Mexican GDP,but it is not included in u.s GDP
The CPI is calculated
Monthly by the bureau of labor statistics
When we express babe ruth's 1931 salary in today's dollars and compare his salary to those of current New York yankee players,we find that the current median salary of today's Yankees is
More than 4 times ruth's Salary
A manufacturing company is thinking about building a new factory.The factory,if built,will yield the company $300 million in 7 years,and it would cost $220 million today to build.The company will decide to build the factory if the interest rate is
No greater than 4.53 percent
Suppose an economy produces only cheese and fish.In 2010,20 units of cheese are sold at $5 each and 8 units of fish are sold at $50 each.In 2009,the base year,the price of cheese was $10 per unit and the price of fish was $75 per unit.For 2010,
Nominal GDP is $500,real GDP is $800,and the gdp deflator is 160
In 2015,this country's
Nominal GDP was equal to real GDP,and the GDP deflator was equal to 100
Real GDP will increase
Only when output increases
When economist talk about growth in the economy,they measure the growth as the
Percentage change in real GDP from one period to another
In the 19th century John Deere took out a patent on a newly designed plow that incorporated steel to make plowing faster.Many farmers bought plows from his company and he made millions.This example shows that patents turn an idea into a
Private good
In the equation for the production function Y/L represents
Productivity
Which of the following statements about nominal GDP and real GDP is correct?
Real GDP is a better gauge of economics well-being than nominal GDP
In 2018,this country's
Real GDP was 1080,and the GDP deflator was 177.8
Diversification
Reduced the likely fluctuation in a portfolio's return.Thus,the likely standard deviation of the portfolio's return is lower
Which of the following is included in the investment component of GDP?
Spending on new business equipment such as power tools but not spending on stocks and bonds
If the wage is kept above the equilibrium wage for any reason,the result is
Structural unemployment
Which of the following is correct?
Studies show that when the unemployed become ineligible for benefits,the probability of their finding a job rises markedly
Minimum wages create unemployment in markets where they create a
Surplus of labor.minimum wage laws are not the predominant reason for unemployment in the u.s
The performance of index funds
That all stocks are fairly valued all the time and that no stock is a better buy than any other
Social security payments are indexed for inflation using
The CPI
A decrease in the price of domestically produced nuclear reactors will be reflected in
The GDP deflator but not the consumer price index
Which of the following agencies calculated the CPI
The bureau of labor statistics
Suppose that u.s mining companies purchase German-made ore trucks at a reduced price.By itself,what effect will this purchase have on the GDP deflator and on the consumer price index?
The consumer price index and the GDP deflator will both be unaffected
Which is the most accurate statement about GDP deflator and the consumer price index?
The consumer price index compares the price of a fixed basket of goods and services to the price of the basket in the base year,whereas the GDP deflator compares the price of currently produced goods and services to the price of the same goods and services in the base year
Suppose that over the past year,the real interest rate was 6 percent and the inflation rate was 4 percent.It follows that
The dollar value of savings increased at 10 percent,and the purchasing power of savings increased at 6 percent
Which of the following statements is correct
The figure shows that the greater the risk,the greater the return
A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth.The first is to decrease barriers to trade.The second is to restrict foreign portfolio investment.Which of these policies do most economist say promote growth
The first but not the second
A nation's standard of living is determined by
The productivity of its workers
Which of the following is included in the calculation of GDP?
The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the county
Which of the following items is included in GDP?
The sale of services such as those performed by a doctor
In 1979 and 1980
The u.s inflation rate as measured by the CPI was higher than that measured by the GDP deflator,and the difference was explained by rapidly rising oil prices
To maintain their standard of living,most people rely on
Their labor earnings
During the third quarter of this year a firm produces goods and adds some of those goods to its inventory..
They increased consumption and decrease investment
Fundamental analysis shows that stock in cedar valley furniture corporation has a price that exceeds its present value
This stock is overvalued;you shouldn't consider adding it to your portfolio
Most financial decisions involve two related elements:
Time and risk
Popeye produces 20 cans of spinach in 8 hours.Wimpy produces 15 hamburgers in 10 hours.If each hamburger traded for 1.5 cans of spinach,then
Wimpy's production is greater than Popeye's,but his productivity is less
Cyclical unemployment refers to
Year-to-year fluctuations of unemployment around its natural rate
In 1870,the richest country in the world was
the United Kingdom
