Practice Exam 1

If in some year nominal GDP was $20 billion and the GDP deflator was 50, what was real GDP?

$40 billion

In one day OWL Cabinet Company made 40 cabinets with 320 hours of labor. What was OWL Cabinet Company's productivity?

1/8 cabinet per hour

Kelani's Dairy produces 960 gallons of milk per day. Each milker at the dairy works 8 hours per day and produces the same number of gallons of milk per hour. If the Kelani Dairy's productivity is 12 gallons of milk per hour of labor, then how many milkers does the shop employ?

10

Last year real GDP in the imaginary nation of Populia was 907.5 billion and the population was 3.3 million. The year before real GDP was 750 billion and the population was 3 million. What was the growth rate of real GDP per person during the year?

10 percent

Dawson is offered a Job in Atlanta that pays $80,000. He is offered a similar job in San Francisco that pays $71,200. Which pair of CPIs would ensure that the two salaries have the same purchasing power?

100 in Atlanta and 89 in San Francisco

Kelani Furniture uses 5 workers, each working 8 hours, to produce 80 rocking chairs. What is the productivity of these workers?

2 chairs per hour

Kelani furniture uses 12 workers, each working 8 hours, to produce 192 rocking chairs. What is Kelani's productivity?

2 rocking chairs per hour

Last year real GDP in the imaginary nation of Kelani was 561.0 billion and the population was 2.2 million. The year before, real GDP was 500.0 billion and the population was 2.0 million. What was the growth rate of real GDP per person during the year?

2%

In 2009, the imaginary nation of Florastan had a population of 8,044 and real GDP of 36,198,000. In 2010 it had a population of 7,800 and real GDP of 35,880,000. What was the growth rate of real GDP per person in Florastan between 2009 and 2010? Remember GDP per capita= GDP in millions/ Population in millions

2.2 percent

If the consumer price index was 96 in 2012, 100 in 2013, and 102 in 2014, then the base year must be

2013

The consumer price index was 225 in 2008 and 232.2 in 2009. The nominal interest rate during this period was 6.5 percent. What was the real interest rate during this period?

3.3 percent

Between October 2018 and October 2019, the CPI in Canada rose from 120 to 124 and the CPI in Mexico rose from 210 to 229.1. What were the inflation rates for Canada and Mexico over this one-year period?

3.3 percent for Canada and 9.1 percent for Mexico

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

If the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was

6 percent

If the nominal interest rate is 10 percent and the rate of inflation is 3 percent, then the real interest rate is

7

The CPI was 220 in 2018 and 231 in 2019. Zeynep borrowed money in 2018 and repaid the loan in 2019. If the nominal interest rate on the loan was 12 percent, then the real interest rate was

7 percent

The price index was 220 in one year and 238.2 in the next year. What was the inflation rate?

8.3 percent

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been chosen as the base year. In 2012, the basket's cost was $80.00; in 2013, the basket's cost was $84; and in 2014, the basket's cost was $87.60. The value of the CPI was

All of the above are correct -100 in 2012. -105 in 2013. -109.5 in 2014.

Industrial machinery is an example of

All of the above are correct -a factor of production that in the past was an output from the production process. -physical capital -something that influences productivity.

Which of the following is a determinant of productivity

All of the above are correct -human capital per worker -physical capital per worker -natural resources per worker

Which of the following are residents of rich countries likely to have in greater quantities, or better quality, than residents of poor countries?

All of the above is correct -housing -healthcare -life expectancy

Adam and Doug both build birdhouses. Adam works 20 hours a week and produces 12 bird houses. Doug works 30 hours a week and produces 15 bird houses. Which of the following is correct?

Doug's production is higher than Adam's, but Adam's productivity is higher than Doug's.

The steps involved in calculating the consumer price index and the inflation rate, in order, are as follows:

Fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index, and compute the inflation rate.

GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

GDP per person

The information for 2008 in millions in the table below was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of real GDP per person from highest to lowest? Country: GDP (Constant US$): GDP (Constant US$): Population Germany: 2,091,573: 3,649,493: 82.11 Japan: 5,166,281: 4,910,839: 127.70 U.S.: 11,513,872: 14,093,309: 304.06

Japan, United States, Germany

Y/L represents

Productivity

Suppose the price index was 110 in 2014, 120 in 2015, and 125 in 2016. Which of the following statements is correct?

The economy experienced inflation between 2014 and 2015 and between 2015 and 2016.

Rachel babysits for her sister for no pay. When she babysits for someone else she charges $8 an hour. When is Rachel's babysitting included in GDP

When she babysits for someone else, but not when she babysits for her sister

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

foreign direct investment.

In recent decades Americans have increased their purchase of stocks of foreign-based companies. The Americans who have bought these stocks were engaged in

foreign portfolio investment.

Productivity is defined as the quantity of

goods and services produced from each unit of labor input

If an economy's GDP rises, then it must be the case that the economy's

income and expenditure both rise

The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators. Refer to the table. The cost of the basket Year: Price of a book: Price of a calculator 2012: $24: $9 2013: $30: $11 2014: $32: $12

increased from 2012 to 2013 and increased from 2013 to 2014.

When the overall level of prices in the economy is increasing, economists say that the economy is experiencing

inflation

The notion that our ability to conserve natural resources is growing more rapidly than their supplies are dwindling is supported by the fact that

inflation-adjusted prices of natural resources are stable or falling over time.

GDP

is used to monitor the performance of the overall economy and is the single best measure of a society's economic well-being

The logic behind the catch-up effect is that

new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital.

Which entity within the U.S. government is responsible for computing and reporting the CPI?

the Department of Labor

The CPI is a measure of the overall cost of

the goods and services purchased by a typical consumer.

GDP is defined as the

value of all final goods and services produced within a country in a given period of time