macroeconomics
The Father of "Macroeconomics"
John M. Keynes
Angus the sheep farmer sells wool to Barnaby the knitter for $20. Barnaby makes two sweaters, each of which has a market price of $40. collette buys one of them, while the other remains on the shelf of Barnaby's store to be sold later. What is GdP here?
$80
5.A country reported nominal GDP of $105 billion in 2021 and $85 billion in 2020. It also reported a GDP deflator of 130 in 2021 and 125 in 2020. Between 2020 and 2021, (A): real output and the price level both rose. (B): real output rose and the price level fell. (C): real output fell and the price level rose. (D): real output and the price level both fell.
(A): real output and the price level both rose.
8. Which of the following statements is correct?Several answers can be correct (A): The percentage change in the CPI is a measure of the inflation rate, but the percentage change in the GDP deflator is not a measure of the inflation rate .(B): Both CPI and GDP deflator are measures of inflation rate (C): Compared to the GDP deflator, CPI is the more common gauge of inflation. (D): The GDP deflator better reflects the goods and services bought by consumers than does the CPI.
(C): Compared to the GDP deflator, CPI is the more common gauge of inflation.
the main reason the cost of living varies across regions of the country is differences in the price of a. food.b. clothing.c. housing.d. medical care.
.c. housing
The cPi measures approximately the same economic phenomenon as a. nominal GdP. b. real GdP. c. the GdP deflator. d. the unemployment rate.
1. c
Carly wants to buy and operate an ice-cream truck but doesn't have the financial resources to start the business. She borrows $20,000 from her friend freddie, to whom she promises an interest rate of 7 percent, and gets another $30,000 from her friend Sam, to whom she promises a third of her profits. what best describes this situation? a. freddie is a stockholder, and carly is a bondholder. b. freddie is a stockholder, and Sam is a bondholder. c. Sam is a stockholder, and carly is a bondholder. d. Sam is a stockholder, and freddie is a bondholder.
1. d
The largest component in the basket of goods and services used to compute the cPi is a. food and beverages. b. housing. c. medical care. d. apparel.
2. b
A bond tends to pay a high interest rate if it is a. a short-term bond rather than a long-term bond. b. a municipal bond exempt from federal taxation. c. issued by the federal government rather than a corporation. d. issued by a corporation of dubious credit quality.
2. d
The main advantage of mutual funds is that they provide a. a return insured by the government. b. an easy way to hold a diversified portfolio. c. an asset that is widely used as the medium of exchange. d. a way to avoid fluctuations in stock and bond prices.
3. b
If a Pennsylvania gun manufacturer raises the price of rifles it sells to the u.S. army, its price hikes will increase a. both the cPi and the GdP deflator. b. neither the cPi nor the GdP deflator. c. the cPi but not the GdP deflator. d. the GdP deflator but not the cPi.
3. d
Because consumers can sometimes substitute cheaper goods for those that have risen in price, a. the cPi overstates inflation. b. the cPi understates inflation. c. the GdP deflator overstates inflation. d. the GdP deflator understates inflation.
4. a
if the government collects more in tax revenue than it spends, and households consume more than they get in after-tax income, then a. private saving and public saving are both positive. b. private saving and public saving are both negative. c. private saving is positive, but public saving is negative. d. private saving is negative, but public saving is positive.
4. d
A closed economy has income of $1,000, government spending of $200, taxes of $150, and investment of $250. what is private saving? a. $100 b. $200 c. $300 d. $400
5. c
if the cPi is 200 for the year 1980 and 300 today, then $600 in 1980 has the same purchasing power as _________ has today. a. $400 b. $500 c. $700 d. $900
5. d
if a popular tV show on personal finance convinces Americans to save more for retirement, the _________ curve for loanable funds would shift, driving the equilibrium interest rate _________. a. supply; up b. supply; down c. demand; up d. demand; down
6. b
the main reason the cost of living varies across regions of the country is differences in the price of a. food. b. clothing. c. housing. d. medical care.
6. c
if the business community becomes more optimistic about the profitability of capital, the _________ curve for loanable funds would shift, driving the equilibrium interest rate _________. a. supply; up b. supply; down c. demand; up d. demand; down
7. c
you deposit $2,000 in a savings account, and a year later you have $2,100. meanwhile, the cPi rises from 200 to 204. in this case, the nominal interest rate is _________ percent, and the real interest rate is _________ percent. a. 1; 5 b. 3; 5 c. 5; 1 d. 5; 3
7. d
Which of the following policy actions would unambiguously reduce the supply of loanable funds and crowd out investment? a. an increase in taxes and a decrease in government spending b. a decrease in taxes together with an increase in government spending c. an increase in both taxes and government spending d. a decrease in both taxes and government spending
8. b
from 2008 to 2012, in the aftermath of the financial crisis, the ratio of government debt to Gdp in the United States a. increased markedly. b. decreased markedly. c. was stable at a historically high level. d. was stable at a historically low level.
9. a
Which is the best measure of economic prosperity? A. The level of real GDP B. The level of nominal GDP 3. The growth rate of real GDP 4. The price level
A. The level of real GDP
Mark correct statements
Aggregate demand determines short run fluctuations of output -true Gold standard does not limit ability of Central bank to stabilize economy XXX-false Supply side determine a long run growth of the economy-true Great depression was caused by MS fall because of rise in interest rates-true
Which of the following statements is correct? seveal may be correct A Nation can not be rich without abundant natural recources B Human capital per worker is a determinant of productivity C Human capital and technological knowledge are not the same thing. D All technological knowledge is proprietary
B Human capital per worker is a determinant of productivity C Human capital and technological knowledge are not the same thing.
the cPi measures approximately the same economic phenomenon as a. nominal GdP.b. real GdP.c. the GdP deflator.d. the unemployment rate.
C. the GdP deflator.
The key determinant of the standard of living in a country is A. The total amount of its physical capital. B. Its growth rate of real GDP C. the amount of goods and services produced from each hour of a worker's time D. the total amount of goods and services produced within the country.
C. the amount of goods and services produced from each hour of a worker's time
The behavior of market prices over time indicates that natural resources are A a limit to economic growth. B the major determinant of productivity. C unrelated to economic growth D not a limit to economic growth.
D not a limit to economic growth.
Which of the following is an example of human capital? A. Any capital goods that require a human to be present B. The amount you get paid each week to work at the library C. The comfortable chair in your room where you read macroeconomics D. The things you have learned this semester
D. The things you have learned this semester
Countries that excited earlier form Gold Standard suffered more during Great Depression
False
During the Great Depression hyperinflation was observed
False
After Great Depression Keynesian view dominated until 70's
True
Great depression became the reason to divide economics into Microeconomics and Macroeconomics
True
The main lesson of 1970's
Unexpected increase in money supply can lower unemployment
An economy produces 10 cookies in year 1 at a price of $2 per cookie and 12 cookies in year 2 at a price of $3 per cookie. From year 1 to year 2, real GdP increases by
a. 20 percent.
1. What components of GDP (if any) would each of the following transactions affect? Explain.
a. Uncle Fester buys a new refrigerator from a domestic manufacturer.-CONSUMPTION b. Aunt Dolly hires a local contractor to build her a new house.-INVESTMENT c. The Huang family buys an old Victorian house from the Ellis family.-It doesn't affect to GDP d. You pay a hairdresser for a haircut.-CONSUMPTION e. Ford sells a Mustang from its inventory to the Martinez family.-It doesn't affect to GDP f. Ford manufactures a Focus and sells it to Avis, the car rental company.-INVESTMENT g. California hires workers to repave Highway 66.-GOVERNMENT h. The federal government sends your grandmother a Social Security check.-It doesn't affect to GDP because a social security is transfer payment, i. Your parents buy a bottle of French wine.-GDP doesn't change j. Honda expands its factory in Ohio.-INVESTMENT
Which is the largest component of GdP? a. consumption b. investmentc. government purchases d. net exports
a. consumption
1. In the GDP accounts production equals a. income. b.income + saving. c. income − government expenditures. d. income − imports.
a. income.
thomas Robert malthus believed that population growth would a. put stress on the economy's ability to produce food, dooming humans to remain in poverty. b. spread the capital stock too thinly across the labor force, lowering each worker's productivity. c. promote technological progress, because there would be more scientists and inventors. d. eventually decline to sustainable levels, as birth control improved and people had smaller families.
a. put stress on the economy's ability to produce food, dooming humans to remain in poverty.
Because consumers can sometimes substitute cheaper goods for those that have risen in price, a. the cPi overstates inflation. b. the cPi understates inflation. c. the GdP deflator overstates inflation. d. the GdP deflator understates inflation.
a. the cPi overstates inflation.
The catch up effect refers to the idea that a saving will always catch-up with investment spending b country can grow faster and catch-up if it starts out relatively poor. c population eventually catches-up with increased output. d if investment is low, increased saving will help investment to "catch-up."
b country can grow faster and catch-up if it starts out relatively poor.
With increase in the number of people retired and a decrease in the number of people working productivity a and real GDP per person rise. b rises but real GDP per person falls. c falls and real GDP per person rises. d and real GDP per person fall
b rises but real GDP per person falls.
if the price of a hot dog is $2 and the price of a hamburger is $4, then 30 hot dogs contribute as much to GdP as _________ hamburgers.
b. 15
the largest component in the basket of goods and services used to compute the cPi is a. food and beverages. b. housing. c. medical care. d. apparel.
b. housing.
After graduation, an American college student moves to Japan to teach english. her salary is included
b. only in Japan's GdP.
In closed economy if saving rises in some period, then in that period a a.consumption and investment fall. b consumption rises and investment falls. c consumption falls and investment rises. d consumption rises and investment falls.
c consumption falls and investment rises.
When the Japanese car maker toyota expands one of its car factories in the United States, what is the likely impact of this event on the gross domestic product and gross national product of the United States? a. GDP rises and GnP falls. b. GnP rises and GDP falls. c. GDP and GnP both rise but GDP rises by more. d. GDP and GnP both rise but GnP rises by more.
c. GDP and GnP both rise but GDP rises by more.
An American buys a pair of shoes made in italy. how do the u.S. national income accounts treat the transaction?
c. Net exports fall, while GdP does not change.
Because capital is subject to diminishing returns, higher saving and investment do not lead to higher a. income in the long run. b. income in the short run. c. growth in the long run. d. growth in the short run.
c. growth in the long run.
Which of the following is an example of a nonrenewable resource? A The knowledge possessed by scientists BLumber C Livestock D coal
coal
Sam bakes a cake and sells it to carla for $10. Woody pays diane $30 to tutor him. in this economy, GdP is
d. $40.
if the cPi is 200 for the year 1980 and 300 today, then $600 in 1980 has the same purchasing power as _________ has today.a. $400 b. $500 c. $700 d. $900
d. $900
you deposit $2,000 in a savings account, and a year later you have $2,100. meanwhile, the cPi rises from 200 to 204. in this case, the nominal interest rate is _________ percent, and the real interest rate is _________ percent. a. 1; 5 b. 3; 5 c. 5; 1 d. 5; 3
d. 5; 3
Which of the following does Not add to u.S. GdP?Boeing manufactures and sells a plane to Air France. General motors builds a new auto factory in North carolina. the city of New york pays a salary to a policeman. the federal government sends a Social Security check to your grandmother.
d. The federal government sends a Social Security check to your grandmother.
if a Pennsylvania gun manufacturer raises the price of rifles it sells to the u.S. army, its price hikes will increase a. both the cPi and the GdP deflator. b. neither the cPi nor the GdP deflator. c. the cPi but not the GdP deflator. d. the GdP deflator but not the cPi.
d. the GdP deflator but not the cP
10. if all quantities produced rise by 5 percent and all prices fall by 5 percent, which of the following best describes what occurs?
real GdP rises by 5 percent, while nominal GdP is unchanged.
An economy's gross domestic product is
total income and total spending.