MACRO FINAL
Which of the following statistics is usually regarded as the best single measure of a society's economic well-being?
The real GDP
If the CPI was 95 in 1955 and is 475 today, then $100 today purchases the same amount of goods and services as
$20.00 in 1955
James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house. if he were to rent the house in which he lives, he could earn $12,000 per year. How much do the housing services provided by the two houses contribute to GDP?
$22,000
If the consumer price index is 200 in year 1980 and 300 today, then $600 in 1980 has the same purchasing power as ________ today.
$900 (600x300/200)
GDP Deflator Formula
GDP Deflator = (Nominal GDP for the year)/(Real GDP for the year)*100
Suppose that an economy produces 20,000 units of good A which sells at $3 a unit and 40,000 units of good B which sells at $1 per unit. Production of good A contributes
3/2 times as much to GDP as the production of good B
You deposit $2,000 in a savings account, and a year later you have $2,100. Meanwhile, the consumer price index rises from 200 to 204. In this case, the nominal interest rate is _____ percent, and the real interest rate is _____ percent.
5,3
Of social security benefits and federal income tax brackets, which is indexed?
Both are indexed
What components of GDP would each of the following transactions affect? -Ford sells a Mustang from its inventory to the Martinez family.
Consumption increases because a car is a good purchased by a household, but investment decreases because the car in Ford's inventory had been counted as an investment good until it was sold.
What components of GDP would each of the following transactions affect? -You pay a hairdresser for a haircut.
Consumption increases because a haircut is a service purchased by a household.
What components of GDP would each of the following transactions affect? -Uncle Henry buys a new refrigerator from a domestic manufacturer.
Consumption increases because a refrigerator is a good purchased by a household.
What components of GDP would each of the following transactions affect? -Your parents buy a bottle of French wine.
Consumption increases because the bottle is a good purchased by a household, but net exports decrease because the bottle was imported.
What components of GDP would each of the following transactions affect? -The federal government sends your grandmother a Social Security Check.
GDP is not affected because a Social Security check is a transfer payment, not a government purchase.
What components of GDP would each of the following transactions affect? -The Jackson family buys an old victorian house from from the Walker family.
GDP is not affected because nothing new is produced.
What components of GDP would each of the following transactions affect? -California hires workers to repave Highway 101.
Government purchases increase because the government spent money to provide a good to the public.
What components of GDP would each of the following transactions affect? -Ford manufactures a Focus and sells it ti Avis, the car rental company.
Investment increases because a car is an investment good to the car rental company.
What components of GDP would each of the following transactions affect? -Aunt Jane buys a new house from a local builder.
Investment increases because a house is an investment good.
What components of GDP would each of the following transactions affect? -Honda expands its factory in Ohio.
Investment increases because new structures and equipment were built.
Kiribati produced and sold 1 ton of tuna fish for $1500. Nauru also produced and sold 1 ton of tuna fish for $1200. If the other goods and services produced and sold at Kiribati and Nauru have the same market value, then after the tuna fish transaction the GDP of...
Nauru will be lest than Kiribati
The CPI is more commonly used as a gauge of inflation than the GDP deflator becuase
The CPI better reflects the goods and services bought by consumers
Because consumers can sometimes substitute cheaper goods for those that have risen in price,
The CPI overstates inflation
The CPI measures approximately the same economic phenomenon as
The GDP deflator
If a Pennsylvania gun manufacturer raises the price of rifles it sells to the U.S. Army, its price hikes will increase
The GDP deflator but not the CPI
What basket of goods and services is used to construct the CPI?
The goods and services that are typically bought by consumers as determined by government surveys
The term inflation is used to describe a situation in which...
The overall level of prices in the economy is increasing,
Which of the following headlines is more closely related to what microeconomists study than to what macroeconomists study?
The price of gasoline rises due to the rising oil prices.
When computing the cost of the basket of goods and services purchased by a typical consumer, which of the following changes from year to year?
The prices of goods and services
Ameenah bought a second hand/refurbished MacBook Pro from a website in October 2018. She paid $650 for the laptop and $25 for shipping. In this transaction, we will observe...
The value of the laptop will not be added to the GDP but the value of shipping will be added.
Micah buys a used car for $10,000 and spends $200 on a new radio that is made in the U.S. The end result of these two transactions is
US consumption purchases increase by $200 and US GDP increases by $200
When the consumer price index rises, the typical family
can spend fewer dollars to maintain the same standard of living
When looking at a graph of nominal and real interest rates you notice that nominal rates always lie above real rates. From this you conclude
consumer prices were always rising in the time frame represented on the graph
The largest component in the basket of goods and services used to compute the CPI is
housing
Susan switches 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 changing the oil is
included in GDP is susan pays speedy lube to change it but not id she does it herself.
The consumer price index is subject to substitution bias because
the law of demand applies to most, if not all goods
For an economy as a whole,
the market value of production or the total income must equal expenditure
Estimates of the values of which of the following non-market goods or services are included in GDP?
the rental value of owner occupied homes but not unpaid housework