Macro Econ Test #1
(Table: iPhones) This table shows data for a country producing only iPhones. If 2000 prices are used in the calculation of real GDP, the GDP deflator for 2010 is:
10.
Technological advances are generally expected to have _____ spillovers.
positive
When investment is equal to depreciation, the capital stock:
remains constant.
Good institutions:
reward those who create value and increase efficiency with higher profits.
One of the best explanations for why some countries are rich and others are poor is that:
rich countries organize their factors of production more efficiently than poor countries.
Property rights encourage:
saving and investment in both physical and human capital.
Physical capital is the:
stock of tools, including machines, structures, and equipment, used to produce output.
Development of new computer software that increases productivity is an example of:
technical knowledge.
A surplus occurs when:
the quantity supplied is greater than the quantity demanded.
A shortage of a good occurs when:
the quantity supplied is less than the quantity demanded.
Research and development of new ideas that lead to spillover effects tend to be:
underprovided in markets.
For most of recorded history, economic growth has been:
virtually nonexistent.
The sale of sugar will contribute to GDP when the buyer is:
a mother who is baking cookies at home.
The key to keeping the economy growing in the long run is:
advances in technological knowledge.
Gross domestic product (GDP) is the market value of:
all final goods and services produced within a country in a year.
Which of the following would NOT lead to a decrease in the price of domestic automobiles?
an increase in the price of foreign-made automobiles
Which is an example of an increase in human capital?
an increase in the training of bone cancer researchers
Figure: The Solow Model Reference: Ref 8-4 (28-4) (Figure: The Solow Model) If the production function shifts from Y1 to Y2 in the accompanying graph of the Solow model, then:
both catching-up and cutting-edge growth will occur.
The BEST way for an economy to grow is to:
change the country's institutions.
If the price of swimming pools decreases, we would expect the demand for:
chlorine, a complement good, to increase.
Which of the following is NOT a kind of institution that encourages investment and the efficient organization of resources?
closed markets
In 2010, real GDP was $13.2 trillion and the GDP deflator was 110.6. What was nominal GDP for that year?
$14.6 trillion
Alex and Tyler enjoy the food at a restaurant named China Star. Alex values a meal there at $15 and Tyler values it at $26. If the restaurant charges only $10 a meal, what is Alex and Tyler's joint consumer surplus from a meal at China Star?
$21
Table: Three-Good Economy I Product Quantity (2008) Price (2008) Quantity (2009) Price (2009) Computers 25 $800.00 30 $1,000.00 Pizzas 90 9.00 100 10.00 Burgers 180 1.80 200 2.00 (Table: Three-Good Economy I) Suppose an economy produces only the three final goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. What is the nominal GDP in 2008?
$21,134
Table: iPhones Year Quantity produced Price 2000 100 $100 2010 90 110 Reference: Ref 6-7 (26-7) (Table: iPhones) This table shows data for a country producing only iPhones. If 2000 prices are used in the calculation of real GDP, the GDP deflator for 2010 is:
110
Real GDP for the year 2000 (measured in 2005 dollars) is equal to:
2005 prices × 2000 quantities.
If a nation doubles its GDP per capita in 20 years, what is its annual growth rate?
3.5%
During the 2nd quarter of 2018 Real GDP grew at a rate of ______ % in the US according to the advanced estimate. Note: do not put the percent sign in your answer.
4.1 (with margin: 0.05)
Which of the following is the best definition of a recession?
A period of significant, widespread decline in real income and employment lasting more than a few months.
Which of the following would be included in U.S. GNP?
Cars produced in a Honda (a Japanese Company) plant in Marysville, Ohio.
A tractor is an example of:
physical capital.
The least corrupt countries tend to be located on which continent?
Europe
The market value of all final goods and services produced within a given country in a year divided by the country's population is:
GDP per capita.
Which statement best describes the economic growth patterns in the world since World War II?
Japan and South Korea experienced rapid growth while Argentina and Nigeria experienced slow growth.
Which statement is NOT true about net exports?
Spending on imports in the United States cannot contribute to the GDP of other nations.
In 2011, the United States Senate voted to end ethanol subsidies. What will be the effect of this bill in the market for ethanol?
Supply will decrease
Which of the following government outlays is a transfer payment that would NOT be included in GDP?
The Defense Department buys a new aircraft carrier.
Five new sellers enter a market (that previously had seven) and begin producing a good. Which of the following choices explains what happens to the equilibrium Q and P?
The supply curve will shift to the right, the equilibrium P will fall, and the equilibrium Q will rise.
What effect do computer chip sellers' expectations of falling chip prices in the coming months have on the current computer chip market?
The supply of computer chips increases, pushing down the equilibrium price and increasing the equilibrium quantity.
Table: Small-Town GDP Town Real GDP (U.S. dollars) Population A 4,859,307 250 B 10,000,050 175 C 6,000,000 320 D 3,549,289 90 Reference: Ref 6-1 (26-1) (Table: Small-Town GDP) Which of the four towns in this table has the highest standard of living?
Town B
Why are transfer payments not counted as part of GDP?
Transfer payments do not involve the purchase of a final good or service.
The growth that results from better ideas or technological knowledge is:
cutting-edge growth
Based on the nature of China's growth in recent years, it is likely that its growth rate will _____ in coming years.
decrease
If, for a given amount of a good or service, willingness to pay decreases, then:
demand has decreased.
Under communal property, effort is:
divorced from payment, so there is little incentive to work.
As the price of lead falls (a key input in the production of automobile batteries), the costs of producing batteries decreases, shifting the supply curve of batteries:
down and to the right.
In the Solow model with constant technological knowledge (A), if the economy is initially above its steady-state capital stock:
economic decline will occur.
A country increases its physical capital by engaging in:
education and training
A country increases its physical capital by engaging in:
education and training.
Which is an ultimate cause of economic growth among countries around the world?
geography
In the Solow model with constant technological knowledge (A), when the economy reaches a steady state:
growth stops.
A nominal variable is one that:
has not been adjusted for inflation.
Institutions ultimately come from:
history, culture, and geography.
Which is NOT a factor of production?
incentives
Which is NOT a key institution for economic growth?
income equality
Nintendo Wii's controllers use two AA batteries. When the price of Nintendo Wii fell from $199 to $149, the demand for AA batteries:
increased since they are a complement good to the Nintendo Wii.
In 1980 when Iraq attacked Iran, the price of oil _______ because of a(n) ______.
increased; disruption in the supply of oil
Which would be most effective in ensuring sustained long-term economic growth?
increasing technological knowledge
In the past several hundred years, economic growth has been:
increasing.
The average age in the United States is _____, causing the demand for prescription drugs to _____.
increasing; increase
The difference between per capita GDP in North Korea and South Korea is due to:
institutions.
In a steady state, the level of investment:
is equal to depreciation.
Imagine a free market in which at a price of $10, quantity supplied is 50 units and quantity demanded is 40 units. Equilibrium price in this market:
is less than $10.
In the Solow model production function, Y = F(A, K, eL), L stands for:
labor.
If supply increases, ceteris paribus, the quantity exchanged will be ______ at the new market equilibrium point.
larger
If the size of the market grows, then:
more resources are spent in research and development.
Table: Prices and Quantities in a 4-Good Economy Product Price Quantity Shovels $20 50 Books 50 100 Tomatoes 1 500 Pizzas 10 120 Reference: Ref 6-2 (26-2) (Table: Prices and Quantities in a 4-Good Economy) Suppose an economy produces only the four goods listed in this table. All of the country's tomatoes are used in the production of pizzas. What is the GDP in this country?
$7,200
Table: Prices and Quantities in a 4-Good Economy Product Price Quantity Shovels $20 50 Books 50 100 Tomatoes 1 500 Pizzas 10 120 (Table: Prices and Quantities in a 4-Good Economy) Suppose an economy produces only the four goods listed in this table. What is the GDP in this country?
$7,200
Table: iPhones Year Quantity produced Price 2000 100 $100 2010 90 110 Reference: Ref 6-7 (26-7) (Table: iPhones) This table shows data for a country producing only iPhones. The growth rate of real GDP between 2000 and 2010 (in 2000 dollars) is:
-10%
The rate of inflation for July 2018 as measured by the CPI was _____ %. Note: do not put the percent sign in your answer.
0.2 (with margin: 0.05)
The rate of inflation for July 2018 as measured by the CPI was _____ %. Note: do not put the percent sign in your answer.
0.2000
During the 1st quarter of 2018 Real GDP grew at a rate of ______ % in the US according to the final estimate. Note: do not put the percent sign in your answer.
2.2 (with margin: 0.05)
As of August 2018 the US rate of inflation, measured by the CPI was _____ % over the last 12 months (not seasonally adjusted). Note: do not put the percent sign in your answer.
2.7 (with margin: 0.1)
(Figure: Production Function 1) Refer to the figure. In this diagram of the Solow model, if output is 600, consumption equals:
200.
Figure: Production Function 1 Reference: Ref 8-2 (28-2) (Figure: Production Function 1) Refer to the figure. In this diagram of the Solow model, if output is 600, consumption equals:
200.
A car produced by the American company GM in a plant located in Canada would be included in
U.S. GNP, but not U.S. GDP.
Which is NOT likely an ultimate cause of economic growth around the world?
communal resources
An increase in the price you pay for a haircut will:
contribute to GDP as a purchase of a service.
In the Solow model, if the first unit of capital increases output by one unit, then the second unit of capital will cause total output to:
increase, but by less than one unit.
Which is NOT an example of an institution that creates incentives aligning self-interest with the interest of society?
low inflation
Consider the (world) market supply curve for oil. Saudi oil production inhabits the _____ part of the curve, and Canadian oil production inhabits the _____ part of the curve.
lower; upper
The single best indicator of a recession is:
negative real GDP growth.
In a steady state, the capital stock:
neither increases nor decreases.
Programmers produce a large amount of software on an unpaid, open-source basis. As a result:
no software should be counted in GDP.
If a country is experiencing inflation, it would mean that:
nominal GDP is growing and real GDP is falling.
If we hold ideas, education, and labor constant in the Solow model, then output (GDP) is a function of:
physical capital only.
Relative to the United States, Argentina was _____ in 1950 and _____ in 2000.
poor; poor
A rural village in a developing country has an economy based on agriculture. Then the government of the country provides the village with newly developed hybrid seeds that more than double the agricultural yield per acre. This story illustrates the growth of per capita GDP in the village through which factor(s) of production?
technological knowledge
The "A" term in the production function Y = F(A, K, eL) represents which factor of production in the Solow growth model?
technological knowledge
If you accept a job in Mexico after college, your income will be part of GNP in:
the United States only.
When GDP per capita goes up by 10 percent:
the distribution of the increase in income may vary.
The law of demand states that:
the lower the price, the greater the quantity demanded.
Diminishing returns to capital implies that _____ diminishes as more capital is added.
the marginal product of capital
