All Wrong in HW and CC to Test 2
Let's say you plan to retire 40 years from now, and you decide you could live on $40,000 per year if you retired today. If the average annual inflation rate is 3% between now and your retirement date, about how much money should you expect to spend in your first year of retirement?
$130,400
The table here shows nominal U.S. GDP and the price level in the two years 2012 and 2018. Year Nominal GDP (billions of dollars) Price Level (GDP deflator) 2012 16,197 100 2018 20,501 110 GDP in 2018, measured in 2012 dollars, was how many billion?
$18,637
Refer to the accompanying table, where Q represents the quantity produced, internal cost and social cost are given for various quantities, and P represents the price consumers are willing to pay for various quantities, to answer the following questions. Q Internal Cost Social Cost P 100 $40 $60 $80 200 $50 $70 $70 300 $60 $80 $60 400 $70 $90 $50 500 $80 $100 $40 600 $90 $110 $30 The external cost is equal to ________ per unit.
$20
Suppose that Country B has consumption, investment, government spending, imports, and exports as follows. Consumption$90 Investment$50 Government Spending$30 Imports$20 Exports$50
$200
Suppose that Country A has consumption, investment, government spending, imports, and exports as in the table. Calculate country A' s GDP. Consumption$140 Investment$50 Government Spending$30 Imports$20 Exports$10
$210
Refer to the accompanying figure to answer the following questions. (10) To achieve the social optimum, the government could set a tax equal to ________ per unit sold.
$6
Suppose the country Inflatistan had a nominal GDP of $48 billion in 2007 and a nominal GDP of $114 billion in 2013. If the price level was 100 in 2007 and 190 in 2013, what was the real GDP in 2013 (using 2007 dollars)?
$60.0 billion
Refer to the accompanying table, where Q represents the quantity produced, internal cost and social cost are given for various quantities, and P represents the price consumers are willing to pay for various quantities, to answer the following questions. Q Internal Cost Social Cost P 100 $40 $60 $80 200 $50 $70 $70 300 $60 $80 $60 400 $70 $90 $50 500 $80 $100 $40 600 $90 $110 $30 The market equilibrium occurs where price is ________ and quantity is ________.
$60; 300
Consider the following data that gives the quantity produced and unit price for three different goods across two different years to answer the following questions. Assume that the base year is 2012. Good 2012 Price 2012 Quantity 2013 Price 2013 Quantity A $2.00 500 $2.50 600 B $4.00 1,000 $5.00 900 C $2.00 200 $1.00 300 What was the gross domestic product (GDP) deflator in 2012?
100
If the CPI today is 230, then what is the total inflation since the base year?
130%
(6) By approximately how much more did the unemployment rate increase for black men than for white men during the 2007-2009 recession?
2 to 3 percentage points
(6) By approximately how much more did the unemployment rate increase for black men than white men during the 2007-2009 recession?
2 to 3 percentage points
(6) What was the cyclical unemployment rate for white men in 2013?
2%
What was the cyclical unemployment rate for white men in 2013? (6)
2%
(8 & 9) How many firms currently in the Dow Jones Industrial Average are listed in Table 10.2 in the textbook as having the highest possible bond rating, as of 2018?
3
Consider the following data, where gross domestic product (GDP) values are measured in millions of dollars, to answer the following questions: Year Nominal GDP Real GDP GDP Deflator 2009 ________ $500 100 2010 $551.2 ________ 106 2011 $600.6 $546 ________ 2012 ________ $600.6 120 What was the inflation rate between 2010 and 2011? Round to the nearest decimal.
3.8 percent
You have been hired to determine if unemployment is running too high. First you must determine the natural state of unemployment. You have been provided the data in the following table: Frictional unemployment 2% Structural unemployment 2% Cyclical unemployment 1% Using these data, the natural rate of unemployment is
4%
You have been hired to determine if unemployment is running too high. First you must determine the natural state of unemployment. You have been provided the data in the table below. Frictional unemployment: 2% Structural unemployment: 2% Cyclical unemployment: 1% Using the data above, the natural rate of unemployment is
4%
What percentage of consumers' income was spent on residential rent in February 2019? (7)
7.9%
Refer to the table. This mountainous country produces only two goods: walking sticks and backpacks, sold mainly to tourists. You are told that the CPI for this country in 2019 was 141. If the base year is 2018, how many backpacks should be present in the basket of goods and services that was used to calculate the CPI, rounded to the nearest whole backpack? The number of walking sticks is 100. Goods 2018 2019 Quantity Price Quantity Price Walking sticks 100 $10 100 $15 Backpacks ? $15 ? $20
78
Refer to the following table below. Calculate the unemployment rate for this economy based on the data provided. Category Number of people (millions) Institutionalized 14 Full-time workers 113 Less than 16 years of age 40 Armed forces (non-civilian) 20 Part-time workers 27 Population 314 Looking for work 14
9.1%
Refer to the following table. Calculate the unemployment rate for this economy based on the data provided. Category Number of people (millions) Institutionalized 14 Full-time workers 113 Less than 16 years of age 40 Armed forces (noncivilian) 20 Part-time workers 27 Population 314 Looking for work 14
9.1%
Using the data provided in the following table, calculate the labor force participation rate. Number unemployed 2,000 Working-age population 40,000 Labor force 36,000 The labor force participation rate is
90%.
Which of the following people would be considered unemployed?
A 17-year-old offers to pet-sit, but no one hires her.
________ is the area in which policymakers can have their greatest impact.
Cyclical unemployment
__________ are on the demand side and __________ are on the supply side of the loanable funds market.
Firms and governments; households
Suppose you build an automotive engine and sell it to the local body shop for $7,000. The shop puts the engine in a car and sells the car to a dealer for $20,000. The dealer sells the car to a customer for $35,000. Which of the following statements is true based on all of these transactions?
GDP increases by $35,000.
Which of these statements about GDP is not true?
GDP is the output produced by workers and resources owned by residents of a nation.
Which of the following is an example of direct finance? I. Apple stocks II. Microsoft bonds III. A savings account in Citibank
I and II
Your bank offers to pay you a 3% interest rate on a one-year fixed-deposit savings account. The inflation rate is expected to be 2% by the end of the year. Which of the following will be true if you decide to keep the money in the bank and the inflation rate turns out to be 4% by the end of the year?
I will be worse off.
Which of the following is true of gross domestic product?
It can give us guidance on the living standards of a nation.
What is the effect of a decrease in investor confidence?
It decreases the demand for loanable funds.
Suppose the price of a bond is initially $900 but increases to $950. What is happening to the interest rate on that bond?
It decreases.
Which of the following represents frictional unemployment? • The demand for refrigerators falls when the economy enters a recession, and refrigerator manufacturers lay off some of their workers, one of which is Anton. • John is working for General Motors (GM) when GM decides to close its U.S. factories and relocate its car manufacturing division to Mexico. • After quitting his job in Ohio to be closer to his family in California, Jake is now looking for a new job.
Jake only
Which of the following would not be responsible for a drop in the unemployment rate?
More and more stay-at-home moms rejoin the labor force in search of jobs.
The equation of exchange is helpful for determining the effect of money supply changes on the price level. Using this concept, which of the following statements could be correct?
Real GDP falls by 3% and there is no inflation, but the money supply grew by 5%.Therefore, the change in velocity would be negative 8%.
Which of the following is true of a negative externality?
Some costs are borne by a third party.
Suppose that capital becomes more productive. What would we expect to happen?
The equilibrium interest rate and amount invested would both increase.
Suppose Congress is considering an increase in the retirement age for U.S. citizens. Based on this, which of the following is a true statement?
The equilibrium interest rate would fall, and investment would increase.
Which of the following is true when the economy is at full employment?
The unemployment rate is equal to the natural rate of unemployment.
If the real GDP in a country is at a higher output level than full-employment output, then which of the following is true?
The unemployment rate is lower than the natural rate.
Which of the following statements provides the clearest reason why it is beneficial for the United States when China buys U.S. government bonds?
When China owns U.S. financial assets, it helps to keep domestic interest rates low.
Which of the following statements is NOT true about inflation?
When in the 2-4% range, it can be the sign of a weak economy.
Assume an epidemic hits a nation hard. As a result, people now have lower life expectancies. The most likely result would be
a lower supply of loanable funds.
Which of the following can lower the level of frictional unemployment over time?
an increase in the number of online job search engines
The notion of consumption smoothing means
consumption varies less than income over a person's lifetime. In early life people tend to borrow, in late life people tend to dissave, but in their middle years they tend to save.
______ unemployment is the area in which policymakers can have their greatest impact
cyclical
The presence of secondary markets has what effect on the interest rates that firms have to pay on bonds issued by them?
decreases the rates
The cyclical unemployment rate is defined as the ________ unemployment rates.
difference between the existing (actual) and natural
The interest rate of a bond is equal to the
difference between the face value and the initial price all divided by the initial price.
In order to earn some extra money to pay for college, you have decided to open your own tattoo parlor one block from campus. You come up with a business plan and realize that you will need financing to get your business off the ground. You borrow money from classmates with the promise to repay them with interest in two years. Is this financing option direct or indirect?
direct
Which description implies a drop in interest rates?
either a leftward shift of the demand curve for loanable funds, or a rightward shift of the supply curve
(8 & 9) Which of the following events did NOT cause the Dow Jones Industrial Average to fall?
end of World War II in 1945
The pollution emitted by a car is an example of a(n) ________ cost.
external
Gross domestic product (GDP) is best defined as the total market value of all
final goods and services produced within a country within a given time.
If interest rates rise,
firms are willing to borrow less money because their costs of borrowing has increased.
Which of the following would NOT be counted in the calculation of GDP?
government spending on social security
You purchased a bond issued by firm XYZ that was rated AA. After a few months, you find out that the ratings of the bonds have changed to BBB. As a result, you can conclude that XYZ will pay __________ interest rates on the new bonds that it will being issuing.
higher
Lenders in the loanable funds market consist of
households and foreign entities.
Refer to the following figure when answering the following questions: (11) According to the figure, deflation was occurring
in none of the years shown.
Suppose that many interest rates in the United States recently fell. Which of the following factors could NOT have been the cause?
increase in the demand for loanable funds
Automobile manufacturers are planning to adopt a new technology that will increase their overall productivity by 30%. As a result, the amount of equilibrium investment will __________ and the equilibrium interest rate will __________ in the loanable funds market.
increase; increase
Suppose Microsoft's new gaming system is a commercial success. All else being equal, the price of Microsoft stocks __________ and the Dow Jones Industrial Average __________.
increases; increases
The equation M × V = P × Y
is true as a matter of definition.
Which of the following would be an example of someone experiencing cyclical unemployment?
landscapers laid off in response to drop in new housing construction during a recession.
You purchased a one-year Microsoft bond for $500, which promises to pay you 5% interest. If the market interest rate then quickly rises to 7% and you want to turn around and sell your bond, you can expect to receive what amount?
less than $500
Refer to the following graph to answer the following questions: (12) Assuming the figure represents the market for loanable funds, it would be true that
line 1 represents savings (supply), and line 2 represents investment (demand).
Which of the following would not be a use for GDP data
measuring inflation
Inflation sometimes causes people to pay ________ capital gains tax than they ought to, ________.
more; if much of their calculated profits from selling assets was due to inflation
Which of the following is included in the government purchases category of gross domestic product (GDP)?
payments to people in the military
A country with a small per capita gross domestic product (GDP) is
poor.
Data on the natural rate of unemployment and actual employment are provided in the following table: Natural rate of unemployment 5% Actual unemployment 8% Based on these numbers, the amount of cyclical unemployment in the economy is
positive.
Data on the natural rate of unemployment and actual employment are provided in the table below. Natural rate of unemployment: 5% Actual unemployment: 8% Based on these numbers, the amount of cyclical unemployment in the economy is
positive.
What factor causes the overall demand for loanable funds to shift from year to year?
productivity of capital
An increase in the interest rate will result in an increase in the
quantity supplied of loanable funds and movement up along the supply curve of loanable funds.
Besides home mortgages, what other kind of debt is commonly securitized?
student loans
Suppose a change in Americans' habits leads to people becoming less patient and more susceptible to instant gratification, causing their time preferences to become stronger. We can therefore say in the loanable funds market, the
supply curve shifts left.
There is a widespread fear that the Social Security retirement system will collapse. As a result, people begin to assume that they will need to pay their own way in retirement. Therefore, in the loanable funds market, the
supply curve shifts right.
The interest rate represents ________ to ________ and ________ to ________.
the cost of borrowing; firms and governments; a reward to saving; households
Suppose a law is passed in Congress limiting the amount of ownership of foreign debt. We would expect that
the interest rate on treasury bonds will increase.
Consider the market for refined oil. In the market equilibrium,
the internal supply equals the internal demand.
The concept of the loanable funds market is
the market by which lenders (savers) and borrowers exchange funds for earlier availability at a premium, which is represented by the interest rate.
Deflation is best described as when
the overall level of prices of goods falls.
Inflation occurs when
the overall level of prices rises.
Which of the following would be included in the U.S. GDP?
the sale of a song written by a Californian to a customer in Kansas
If the federal government taxes the interest rate that savers receive,
the supply of loanable funds decreases.
For the following questions, suppose a country has the following quarterly growth data for the last three years: Year Q1 Q2 Q3 Q4 2010 3.1% 3.2% 2.2% 2.1% 2011 3.1% -4.1% −2.2% 1.5% 2012 1.3% 1.2% 3.2% 3.3% The country's long-run average growth rate is 3 percent. In how many of these quarters did gross domestic product (GDP) contract?
two
Which of the following would indirectly provide financing to borrowers?
your savings account in the local bank