Macro Test 2

in 2016, this country's

real GDP was $780, and the GDP deflator was 112.8

A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

$250 to GDP

The CPI is a measure of the overall cost of the goods and services bought by

a typical consumer

If the demand for loanable funds shifts to the left, then the equilibrium interest rate

and quantity of loanable funds falls.

An increase in the price of dairy products produced domestically will be reflected in

both the GDP deflator and the consumer price index

Institutions that help to match one person's saving with another person's investment are collectively called the

financial system

For an economy as a whole

income must equal expidenture

In 1931, President Herbert Hoover was paid a salary of $75,000. Government 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

Assume the following information for an imaginary, closed economy. GDP = $5 trillion; consumption = $3.1 trillion; government purchases = $0.7 trillion; and taxes = $0.9 trillion. For this economy, investment amounts to

$1.2 Trillion

In the economy of Talikastan in 2015, consumption was $700, exports were $200, government purchases were $300, imports were $150, and investment was $400. What was Talikastan's GDP in 2015?

$1450

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 in rent. How much do the housing services provided by the two houses contribute to GDP?

$22,000

Fine Edge manufacturers lawn mowers. In 2014 it had $2 million worth of lawn mowers in inventory. In 2015 it sold $10 million worth of lawn mowers to consumers and had $1 million worth of lawn mowers in inventory. How much did the lawn mowers produced by Fine Edge add to GDP in 2015?

$9 million

If 2010 is the base year, then the inflation rate in 2015 equals

( (CPI in 2015-CPI in 2014) / (CPI in 2014) ) * 100

Suppose that in a closed economy GDP is equal to 15,000, government purchases are equal to 3,000, consumption equals 10,500, and taxes equal 3,500. What are private saving and public saving?

1,000 and 500, respectively

A country's real GDP rose from $500 to $530 while its nominal GDP rose from $600 to $700. What was this country's inflation rate?

10.0%

If 2012 is the base year, then the CPI for 2012 was

100.0

if 2012 is the base year, then the CPI for 2013 was

104.4

Over the past century in the United States, real GDP per person has grown, on average, by about

2 percent per year

Phoenix furniture uses 12 workers, each working eight hours, to produce 192 rocking chairs. What is Phoenix's productivity?

2 rocking chairs per hour

According to the "Rule of 70" approximation technique, a country that experiences 3 percent annual growth for decades will have doubled its real output in about

23 years

This country's inflation rate from 2017 to 2018 was

28.0%

If the nominal interest rate is 8 percent and the rate of inflation is 3 percent, then the real interest rate is

5 percent

If national saving in a closed economy is greater than zero, which of the following must be true?

All of the above are correct (-Either public saving or private saving must be greater than zero. -Investment is positive. - Y-C-G>0 )

If a firm sells a total of 100 shares of stock, then

All of the above are correct (-the supply of, and demand for, those shares determine the price per share. -each share represents ownership of 1 percent of the firm. -the firm is engaging in equity finance.)

All else equal, if there are diminishing returns, then which of the following is true if a country increases its capital by one unit?

Output will rise but by less than it did when the previous unit was added

The slope of the supply of loanable funds curve represents the

Positive relation between the real interest rate and saving

a bond buyer is a

Saver. Long term bonds have more risk than short term bonds.

If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,

There is a shortage and the interest rate is below the equilibrium level.

What would happen in the market for loanable funds if the government were to decrease the tax rate on interest income?

There would be an increase in the amount of loanable funds borrowed

If there are constant returns to scale, the production function can be written as

Y/L=A F (1, K/L, H/L, N/L)

Crowding out occurs when investment declines because

a budget deficit makes interest rates rise

The producer price index measures the cost of a basket of goods and services

bought by firms

The inflation rate is calculated

by determining the percentage increase in the price index from the preceding period

In the calculation of the CPI, books are given greater weight than magazines if

consumers buy more books than magazines

other things the same, when an economy increases its saving rate

consumption falls now and production rises later

You know that a candy bar cost five cents in 1962. You also know the CPI for 1962 and the CPI for today. Which of the following would you use to compute the price of the candy bar in today's prices?

five cents x (today's CPI / 1962 CPI)

If an American-based firm opens and operates a new clothing factory in Honduras, then it is engaging in

foreign direct investment

In the 1800s, Europeans purchased stock in American companies that used the funds to build railroads and factories. The Europeans who did this engaged in

foreign portfolio investment

Municipal bonds pay a relatively

low rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax.

Compared to short-term bonds, other things the same, long-term bonds generally have

more risk and so they pay higher interest rates

Suppose that the prices of dairy products have risen relatively less than prices in general over the last several years. To which problem in the construction of the CPI is this situation most relevant?

substitution bias

the price of Italian shoes imported into the United States increases, then

the consumer price index will increase, but the GDP deflator will not increase

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarter(s) does(do) these transactions raise investment?

the first but not the second

Which of the following is a good gauge of economic progress?

the growth rate of real GDP per person, but not the level of real GDP per person