Midterm 2 Questions

Using 2022 as the base year, Real GDP in 2022 was: $_________.

525

Tons of Frozen Fish Sold Actual Price Last Yr 100 $1,800 This Yr 105 $1,850 The growth rate of Nominal GDP is ________ percent [round to the nearest percent]. Answer:

8

Using your answer choices from the two preceding questions, CAR's economic growth rate between 2011 and 2012 was _______ %. (Round to the nearest hundredth of a percent.)

4.63

Using 2021 as the base year, Real GDP in 2021 was: $_________.

400

Using 2021 as the base year, Real GDP in 2022 was: $_________.

450

Using 2022 as the base year, Real GDP in 2021 was: $_________.

470

Tons of Frozen Fish Sold Actual Price Last Yr 100 $1,800 This Yr 105 $1,850 The growth rate of Real GDP is ____ percent (round to the nearest percent).

5

Tons of Frozen Fish Sold Actual Price Last Yr 100 $1,800 This Yr 105 $1,850 Using average price, Real GDP for this year is $_____.

191,625

Tons of Frozen Fish Sold Actual Price Last Yr 100 $1,800 This Yr 105 $1,850 Nominal GDP for this year is $ ________ .

194,250

In 1945, the United States recorded real GDP growth of -1% and nominal GDP growth of 1.6%. What was the inflation rate in 1945?

2.6%

What was CAR's real GDP per person in 2011?

$504.75

What was CAR's real GDP per person in 2012?

$528.13

As expected, the growth rates of Real GDP using 2021 or 2022 as the base year...

... are different because relative prices change between 2021 and 2022 (i.e., price of peanut butter relative to price of jelly).

Tons of Frozen Fish Sold Actual Price Last Yr 100 $1,800 This Yr 105 $1,850 The growth rate of the price level (aka inflation) is ________ percent [round to the nearest percent].

3

The president of the World Bank is on his way to a meeting with the president of Colombia. He bumps into you in the hallway and wants to know how long it will take for Colombian per capita GDP to double. All he knows is that the average annual growth rate has been about 7 percent. You quickly tell him that, assuming Colombian per capita GDP keeps growing at the same pace into the future, it will take about ________ years because you understand the Rule of 70.

10

Using 2022 as the base year, the growth rate of Real GDP from 2021 to 2022 was [round to the nearest tenth of a percent]: _________%.

11.7

(Table: Measuring GDP). In the table, GDP is equal to _________ billion.

1155

Using 2021 as the base year, the growth rate of Real GDP from 2021 to 2022 was [round to the nearest tenth of a percent]: _________%.

12.5

Tons of Frozen Fish Sold Actual Price Last Yr 100 $1,800 This Yr 105 $1,850 Nominal GDP for last year is $ ________ .

180,000

Tons of Frozen Fish Sold Actual Price Last Yr 100 $1,800 This Yr 105 $1,850 Using average price, Real GDP for last year is $_____.

182,500

Suppose there are only two countries, country A and country B. Country A imports $200 million worth of goods and services from country B. Country B imports $100 million worth of goods and services from country A. Net exports for country _____ equal _____.

A; -$100 million

Refer to the diagram of the circular flow of income. The key lessons from this diagram are that (select all that apply) a) all flows of resources are matched by flows of money. b) total spending must equal total income. c) all inputs are provided by households. d) the market value of total output must be equal to total spending.

ALL a) all flows of resources are matched by flows of money. b) total spending must equal total income. c) all inputs are provided by households. d) the market value of total output must be equal to total spending.

Total spending in the economy is calculated as:

C + I + G + (X - M).

To acquire human capital, a person would:

learn to use a printing press.

You purchase a new car (produced this year) for $38,000. After six months, you sell the car for $31,500. How much does GDP rise because of these two transactions?

GDP rises by $38,000.

Technological advancement can be shown by which of these production functions?

Graph B

Consider the following graphs, which are discussed in the textbook. Focus on the graph that looks at the relationship between GDP per person and life expectancy. What can explain this relationship?

Higher income per person allows for better health care, sanitation, and nutrition.

Which of the following countries enjoyed significant catch-up economic growth in the second half of the twentieth century?

South Korea

Dale is a stay-at-home-parent whose typical day consists of getting the kids ready for school, doing the laundry, cooking three meals, and cleaning the house. How are Dale's home activities counted in GDP?

They are not counted.

Diminishing returns to physical capital imply that, with human capital per worker and technology held fixed, each successive increase in physical capital leads to _____ real GDP per worker (or productivity).

a smaller increase in

The capital stock in an economy stops growing when:

investment equals depreciation.

The aggregate production function Y = f(L, H, K) shows that economic growth can occur if [select ALL that apply]: a) human capital increases. b) physical capital increases. c) labor productivity falls. d) the capital stock in the country depreciates. e) the depreciation rate increases. f) labor productivity increases.

a) human capital increases. b) physical capital increases. f) labor productivity increases.

A rise in population in a country:

boosts real GDP but not necessarily real GDP per person.

The moral of the story of the Solow growth model is that:

capital accumulation alone cannot lead to sustainable economic growth.

Gross domestic product is the value of all _____ produced in an economy over a given period.

final goods and services

In the market for inputs:

households sell resources

Technological progress is advanced through:

research and development.

Which of the following explains the shape of the aggregate production function?

the law of diminishing returns

Which of the following is (are) included in investment? Select all that apply a) military spending b) social security payments c) the purchase of an aircraft by a domestic airline d) the construction of a highway by the federal government e) the purchase of $45,000 worth of bonds f) the purchase of $32,000 worth of stock

the purchase of an aircraft by a domestic airline

If technology advances:

workers can produce more with fixed amounts of physical and human capital.