Macroeconomics Test #2

The approximate rate of inflation in year 3 is: 5% 10% 19% 20%

5%

Which transaction is included in the nation's gross domestic product? A college student buys a used textbook from his roommate. A construction company purchases lumber to build a new house. A college student buys a pizza and has it delivered to her dorm room. A group of college students volunteer to rake leaves at an assisted living facility for senior citizens.

A college student buys a pizza and has it delivered to her dorm room.

The price measure MOST widely used to determine the inflation rate in the United States is the _____. producer price index consumer price index GDP deflator national income account

consumer price index

A nation's exports minus its imports: equals its private investment. is net exports is always a positive number is equal to net transfer payments

is net exports

The producer price index is often regarded as a warning sign of inflation because: prices of inputs will ultimately be reflected in prices of final products. producers are likely to have monopoly control over prices. consumers have to pay the prices charged. commodity producers can sell whatever they want at higher prices.

prices of inputs will ultimately be reflected in prices of final products.

​Nominal GDP in 2018 was: $200 $400 $450 $525

$400

Consider an economy that produces only smartphones and laptops. Last year, 10 smartphones were sold at $800 each, and 5 laptops were sold at $1,000 each, while this year, 15 smartphones were sold at $900 each, and 10 laptops were sold at $1,100 each. Real GDP this year, using last year as a base year, is: $22,000 $24,500 $11,000 $13,500

$22,000

You have just been awarded as cost of living increase tied to the CPI. The CPI has gone from 110 to 112. If your salary is $30,000 per year before the increase, what does it need to be to keep your real income the same?

$30,545

Suppose a market basket consists of 20 jars of peanut butter and 10 jars of jelly. What is the value of the market basket in 2017? $3 $40 $42 $44.50

$40

If, during 2019, the Republic of Sildavia recorded a GDP of $75 billion, interest payments of $15 billion, imports of $13 billion, profits of $7 billion, exports of $15 billion, and rent of $7 billion, wages during 2019 in Sildavia were: $46 billion. $36 billion. $26 billion. $16 billion.

$46 billion.

Assume that the real GDP of the United States is approximately $21 trillion and that the population of the United States is approximately 350 million. What is real GDP per capita? $35,000 $40,000 $60,000 Real per capita GDP can't be determined without more information

$60,000

Considering 2018 as the base year, real GDP between 2018 and 2019 grew at a rate of: 53.19%. 39.47%. -39.47%. -58.67%.

-39.47%.

Suppose a market basket consists of the following goods: 50 pens, 25 notepads, and 25 paperclips. Also assume that the unit prices of these goods are as follows for the years noted and that 2018 is the base year. What is the value of the price index in 2018? 100 111 90 0

100

Calculate the GDP deflator for 2019. 111 104 90 96

104

If the consumer price index is 180 in year 1 and 190 in year 2, the inflation rate between year 1 and year 2 is about: 5.26%. 5.56%. 6.5%. 10%.

5.56%.

A price index: always includes a base year. is used to measure the cost of a market basket across different years is normalized so that it equals 100 in the base year. All of the above are true

All of the above are true

Which equation breaks GDP down into the four sources of aggregate spending? GDP = C + I + G + X + IM. GDP = C + I + G - X - IM. GDP = C - I - G - X + IM. GDP = C + I + G + X - IM.

GDP = C + I + G + X - IM.

Which transaction would NOT be counted in GDP? Nike builds a retail store. Your mother buys a pound of Washington-grown apples. Your mother buys 100 shares of Nike stock. The Indiana state government pays for the repair of a damaged bridge over the Wabash River.

Your mother buys 100 shares of Nike stock.

An example of investment spending is the purchase of a: bond by a banker. loaf of bread by your aunt. new tractor by a farmer ticket to a football game by a student

new tractor by a farmer

Real per capita GDP is: real GDP divided by the population. real GDP divided by the amount of capital available in the economy. not a useful measure of human welfare. rarely used as a tool to compare countries' possible resources.

real GDP divided by the population.

If the price level and nominal GDP both doubled, then real GDP would: also double. increase by half. remain unchanged. decrease by half.

remain unchanged.

If real GDP falls while nominal GDP rises, then prices on average have: risen. fallen. stayed the same. Real GDP cannot rise when nominal GDP falls.

risen

The inflation or deflation rate is: the change in a price index divided by the initial value of the index. the change in a price index divided by the new index number. the difference between the initial price index number and the new price index number. computed by dividing the old price index number by the new price index number.

the change in a price index divided by the initial value of the index.

The price index in the current year is the cost of the market basket in ____ year divided by the cost of the market basket in ____ year times 100. the base; the current the current; the base a past; a future a future; a past

the current; the base

Which item would NOT be included in this year's GDP? the production of a television show the purchase of a new hybrid truck the hiring of a new school teacher the purchase of your neighbor's house, which was built in 2010

the purchase of your neighbor's house, which was built in 2010

GDP is the: total market value of all final goods and services produced in an economy in one year. total accumulated wealth of an economy. volume of all dollar transactions made in an economy in one year. dollar amount of all sales made in the economy in one year.

total market value of all final goods and services produced in an economy in one year.