Macro Exam 2
Refer to Table 8-5. The value of each automobile in gross domestic product equals
$25000
The CPI in 1990 was 131, and the CPI in 2010 was 218. If you earned a salary of $40,000 in 1990, what would be a salary with equivalent purchasing power in 2010?
$66565
Refer to 8-11. Real GDp for Tyrovia for 2018 using 2009 as the base year equals
$690
Refer to Table 8-5. The value added by the automobile dealer equals
$7000
Refer to Table 9-14. The real average hourly earnings for 1965 in 1982-1984 dollars equal
$8.28
Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 have part-time employment; 20 do not have employment, but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the U.S. Bureau of Labor would equal
(20/100) x 100
Refer to Table 7-6. What is the opportunity cost to produce 1 sword in Morocco?
1 belt
Refer to Table 8-14. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2018 equals
108.5
Refer to Figure 7-2. With the tariff in place, the United States imports
12 million pounds of coffee
Refer to Table 8-12. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The base year used in calculating real GDP is
2016
Refer to Table 9-11. Suppose an economy has only three goods and the typical family purchases the amounts given in the table above. If 2013 is the base year, then what is the CPI for 2018?
208
Refer to Table 7-6. With trade, what is the total gain in sword production?
40
Refer to Figure 7-2. Without the tariff in place, the United States consumes
45 million pounds of coffee
The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is
5% higher in year 2 than in year 1
Refer to Figure 7-2. The tariff revenue collected by the government equals
9 million
Refer to Figure 7-2. As a result of the tariff, domestic producers increase their quantity supplied by
9 million pounds of coffee
A sharp increase in the number of medical errors increases the number of lawyers hired to determine medical malpractice settlements. This will
Increase GDP and decrease well-being in the economy.
Which of the following transactions would take place in the "underground economy"?
John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes.
The United States has ________ social insurance programs, and generally has a ________ unemployment rate, as compared to Canada and Western Europe.
Less generous; lower
Full employment is not considered to be zero unemployment because
People do not find jobs instantaneously
If Brazil has a comparative advantage relative to Cuba in the production of sugar cane, then
The opportunity cost of production for sugar is lower in Brazil than in Cuba.
Which of the following could cause nominal GDP to decrease next, but real GDP to increase?
The price level falls and the quantity of final goods and services produced rises.
The terms of trade refers to
The ratio at which a country can trade its exports for imports from other countries.
total income in an economy is equal to
The sum of wages, interest, rent and profit.
A voluntary export restraint is an agreement negotiated by two countries that places ________ that can be imported by one country from another country.
a numerical limit on the quantity of a good
An example of business fixed investment spending is
a purchase of a computer by an accounting firm
All of the following are sources of comparative advantage except
a strong foreign currency exchange rate
________ is the ability to produce more of a good or service than competitors when using the same amount of resources.
absolute advantage
Macroeconomics, as opposed to microeconomics, includes the study of what determines the
average price levels of goods and services in the economy
the factors of production include
capital
Which of the following price indices comes closest to measuring the cost of living of the typical household?
consumer price index
Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports. Which of the following counter-arguments is made by economists who oppose trade restrictions?
consumers pay a high cost for jobs saved through trade restrictions
to calculate GDP by the expenditure method, one must add
consumption spending, investment spending, government purchases, and net exports
If you have trouble finding a job because of a slowdown in the overall economy, we would say that you are
cyclically unemployed
A student who just graduated from college but has not found a job would most likely be
frictionally unemployed
Household production refers to
goods and services people produce for themselves
If nominal GDP exceeds real GDP for a specific year, then the GDP deflator must be
greater than 100
Which of the following is not an example of a transfer payment?
health insurance payments to an army private
Gross domestic product understates the total production of final goods and services because of the omission of
household production
Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would
increase the measured labor force participation rate
An increase in unemployment insurance payments would, in effect, ________ the amount of time spent searching for a job, which would increase ________ unemployment.
increase; frictional
legalizing all forms of illegal activities
increases GDP and reduces the size of the underground economy.
In an "underground economy," the production of goods and services
is not measured or included in GDP
Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?
labor force participation rate
which of the following is likely to increase measured GDP?
marijuana becomes legal to grow and sell
If firms pay what are called "efficiency wages," they pay wages that
motivate workers to increase their productivity
In 2016, which component of GDP had a negative value?
net exports
Imports are goods and services bought domestically, but...
produced in other countries
To examine how the total production of an economy has changed over time, it would be better to examine
real GDP
Frictional unemployment is the result of
the process of matching workers with jobs.
Refer to Table 9-2. Assume the market basket for the consumer price index has two products—bread and milk—with the following values in 2013 and 2018 for price and quantity: The Consumer Price Index for 2018 equals
116
Refer to Figure 7-2. The increase in domestic producer surplus as a result of the tariff is equal to
14.625 million
Refer to Figure 7-2. Without the tariff in place, the United States produces
15 million pounds of coffee
Refer to Figure 7-2. With the tariff in place, the United States produces
24 million pounds of coffee
Refer to Table 7-6. What is the opportunity cost to produce 1 sword in Estonia?
3/5 of a belt
Refer to Figure 7-2. The loss in domestic consumer surplus as a result of the tariff is equal to
30.375 million
Refer to figure 7-2. With the tariff in place, the United States consumes
36 million pounds of coffee
You lend $5,000 to a friend for one year at a nominal interest rate of 10%. The CPI over that year rises from 180 to 190. What is the real rate of interest you will earn?
4.4%
An advantage of the establishment survey over the household survey of the labor market is that the establishment survey
is based on payrolls, rather than on unverified answers
If the quantity of goods and services produced in the economy decreases,
it may be possible for nominal GDP to increase
A consumer price index of 160 in 1996 with a base year of 1982-1984 would mean that the cost of the market basket
rose 60% from the cost of the market basket in the base year
Refer to Table 9-1. The labor force participation rate for this simple economy equals
(Labor Force / Working-Age population) x 100; (1,100 / 15,000) x 1000
Refer to Table 8-3. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals)
1200
If the number employed is 190 million, the working-age population is 230 million, and the number unemployed is 10 million, then the unemployment rate is
5%
which of the following is the best example of a tariff
A $5,000 per-car fee imposed on all sports utility vehicles imported into the United States
Which of the following goods is directly counted in GDP?
A 12-inch subway sandwich purchased by a student
When Sophie, a French citizen, purchases a Dell computer in Paris, France that was produced in Texas, the purchase is
A U.S. export and a French import
When Tesla, a U.S. company, purchases Italian-made Pirelli tires for its automobiles, the purchase is
A US import and an Italian export
Which of the following would result in GDP for an economy equal to $10 trillion?
C = $5 trillion, I = $5 trillion, G = $2 trillion, NX = -$2 trillion
When a tariff is placed on running shoes, the ________ to local businesses and local consumers are likely to be greater in dollar terms than the ________ to the owner of a shoe factory and its workers.
Losses; gains
which of the following is not directly counted in GDP?
intermediate goods
the purchase of a new house is included in
investment expenditures
Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as
not in the labor force
If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.
opportunity
The nominal interest rate equals the real interest rate ________ the inflation rate.
plus
Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called
structural unemployment
The United States has developed a comparative advantage in digital computers, airliners, and many prescription drugs. The source of its comparative advantage in these products is
technology
The broadest measure of the price level that includes all final goods and services is
the GDP deflator
which of the following is counted in GDP?
the cost of a speed boat purchased by drug smugglers
If prices in the economy rises, then
the purchasing power of a dollar declines
When an economy is at its natural rate of unemployment, which of the following will be true?
the unemployment rate will be greater than 0%
If inflation is positive and is perfectly anticipated
those that hold paper money lose
Refer to Figure 7-2. The tariff causes domestic consumption of coffee
to fall by 9 million pounds
If the minimum wage is set above the market wage
unemployment will rise
nominal GDP is GDP in a given year
valued in prices of that year
real GDP is GDP in a given year
valued in the prices of the base year
free trade refers to trade between countries that is...
without restrictions
Refer to Table 8-11. Nominal GDP for Tyrovia in 2018 equals
$1140
Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where they had to find and prepare their own food. Rob and Bill spent one day each fishing and picking berries. The table lists the pounds of output Rob and Bill produced. Refer to Table 7-1. Use the table above to select the statement that accurately interprets the data in the table.
Bill has an absolute advantage in picking berries and Rob has an absolute advantage in catching fish
Which of the following policies would reduce frictional unemployment?
Building an online job database that helps workers find jobs
Refer to Table 7-6. Which country has an absolute advantage in producing swords?
Estonia
Which country has a comparative advantage in producing swords?
Estonia
Suppose in 2018, you purchase a house built in 2003. Which of the following would be included in the gross domestic product for 2018?
The value of the services of the real estate agent
Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to overstate the true extent of joblessness?
Unemployed person falsely report themselves to be actively looking for a job
In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA
Values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.
When an actual inflation is less than expected inflation
borrowers lose and lenders gain
Which of the following causes the unemployment rate to understate the true extent of joblessness?
discouraged workers are not counted as unemployed
Autarky is a situation in which a country
does not trade with other countries
In the circular flow model, the value of total income for an economy ________ the value of total production.
equals
Domestically produced goods and services sold to other countries are referred to as
exports
Refer to Table 8-1. Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. Using the information in the above table, nominal GDP for this simple economy equals
$8750
Refer to Table 9-1. The unemployment rate for this simple economy equals
(100/1100) x 100
Consider the following values of the consumer price index for 1996, 1997, and 1998: The inflation rate for 1997 was equal to
(161-157 / 157) x 100 = 2.5%
which of the following is not a durable good?
clothing
Trade that is within a country or between countries is based on the principle of
comparative advantage
The Bureau of Labor Statistics would categorize a person as ________ if they were temporarily away from their job because they were ill.
employed
the labor force equals the number of people
employed plus unemployed