FIN 201 - 4

24) You want to make a 10% real return on a loan that you are planning to make, and the expected inflation rate during the period of the loan is 4%. You should charge a nominal interest rate of A) 6%. B) -6%. C) 10%. D) 14%.

D) 14%.

16) The productivity of workers is defined as the A) total output produced by the labor force. B) output produced by a worker per hour. C) number of hours a worker spends at work. D) number of workers needed to produce one dayʹs volume of output.

A) total output produced by the labor force.

18) Productivity is the ratio of A) total output to the total number of worker hours. B) total output to the total population. C) total output to the total number of unemployed. D) total capital to the total number of workers.

A) total output to the total number of worker hours.

25) Lola wants to make an 6% real return on a loan that she is planning to make, and the expected inflation rate during the period of the loan is 5%. She should charge an interest rate of A) 6%. B) 16%. C) 11%. D) 1%.

C) 11%.

15) If nominal GDP is $8 trillion and real GDP is $6 trillion, the GDP deflator is A) 48. B) 75. C) 133.33. D) 480.

C) 133.33.

3) Refer to Table 6.1. The value for gross private domestic investment in billions of dollars is A) 300. B) 375. C) 325. D) 450.

C) 325.

22) Which of the following increases the real interest rate? A) a decrease in the nominal interest rate, holding the inflation rate constant B) an increase in both the nominal interest rate and the inflation rate by the same percentage points C) a decrease in the inflation rate, holding the nominal interest rate constant D) a decrease in both the nominal interest rate and the inflation rate by the same percentage points

C) a decrease in the inflation rate, holding the nominal interest rate constant

10) What type of tax affects the amount of money you pay for a product? A) direct tax B) income tax C) indirect tax D) all of the above

C) indirect tax

14) The GDP deflator is the A) difference between real GDP and nominal GDP multiplied by 100. B) difference between nominal GDP and real GDP multiplied by 100. C) ratio of nominal GDP to real GDP multiplied by 100. D) ratio of real GDP to nominal GDP multiplied by 100.

C) ratio of nominal GDP to real GDP multiplied by 100.

21) The number of people unemployed equals A) the number of people employed minus the labor force. B) the labor force plus the number of people employed. C) the labor force minus the number of people employed. D) the number of people employed divided by the labor force.

C) the labor force minus the number of people employed.

2) Refer to Table 6.1. Personal consumption expenditures in billions of dollars are A) 1,000. B) 1,300. C) 1,500. D) 1,650.

D) 1,650.

6) Refer to Table 6.1. The value of government spending in billions of dollars is A) 100. B) 200. C) 300. D) 550.

D) 550.

4) Refer to Table 6.1. The value for net exports in billions of dollars is A) 350. B) 250. C) 650. D) 800.

A) 350.

1) The equation for GDP using the expenditure approach is A) GDP = C + I + G + EX - IM. B) GDP = C + I + G + (IM - EX). C) GDP = C + I + G + EX + IM. D) GDP = C + I + G - EX - IM.

A) GDP = C + I + G + EX - IM.

9) What should be subtracted from GDP to calculate national income? A) depreciation B) indirect taxes C) personal income taxes. D) net factor payments to the rest of the world

A) depreciation

17) The capital per worker ratio is a measure of A) how many tools or machines each worker has to work with. B) how productive workers are. C) how much GDP is growing. D) how much borrowed money is needed per worker.

A) how many tools or machines each worker has to work with.

20) Cheryl graduated from college a month ago and is now without work. She accepted a job that will start next month. Today, Cheryl is A) not in the labor force. B) in the labor force. C) employed. D) a discouraged worker.

A) not in the labor force.

23) If Mr. Garrison is paid an interest rate of 4% on his savings, but the inflation rate is 7%, the real interest rate Mr. Garrison earns is A) 4%. B) -3%. C) -7%. D) 28%.

B) -3%.

12) If disposable personal income is $400 billion and personal saving is $8 billion, the personal saving rate is A) 1.5%. B) 2%. C) 5%. D) 12%.

B) 2%.

5) Refer to Table 6.1. The value of gross domestic product in billions of dollars is A) 3,000. B) 2,875. C) 3,125. D) 3,750.

B) 2,875.

7) When calculating GDP, exports are ________ and imports are ________. A) added; added B) added; subtracted C) subtracted; added D) subtracted; subtracted

B) added; subtracted

8) If the value of net exports is negative, then A) exports exceed imports. B) imports exceed exports. C) exports equal imports. D) imports are zero.

B) imports exceed exports.

13) If the personal saving rate is 5% and personal saving is $10 billion, the value of personal disposable income A) is $100 billion. B) is $200 billion. C) is $500 billion. D) cannot be determined from this information.

B) is $200 billion.

19) For you to be considered out of the labor force, you can be A) a full-time student. B) a full-time retiree. C) a full-time volunteer. D) any of the above

D) any of the above

11) The personal saving rate is A) the difference between total personal spending and personal saving. B) the difference between personal income and disposable personal income. C) the ratio of personal income to personal saving. D) the percentage of disposable personal income that is saved.

D) the percentage of disposable personal income that is saved.