econ

100 in 2009, 110 in 2010, and 117 in 2011

Refer to Table 24-6. If the base year is 2009, then the consumer price index is

10 percent

Refer to Table 24-6. If the base year is 2010, then the economy's inflation rate in 2010 is

The price of a hamburger was $3.80 rather than $5.50 in 2010, with other prices in the table remaining fixed

Refer to Table 24-6. Which of the following scenarios is consistent with this statement? "The rate of inflation was 23.75 percent for 2011."

did not change if the inflation rate was 20 percent

Rosa deposits $100 in a bank account that pays an annual interest rate of 20 percent. A year later, after Rosa has accumulated $20 in interest, she withdraws her $120. Rosa's purchasing power

I + NX

S=

less risky than long-term bonds and so they feature lower interest rates

Short-term bonds are generally

104.0

Suppose a basket of goods and services has been selected to calculate the CPI and 2002 has been selected as the base year. In 2002, the basket's cost was $50; in 2004, the basket's cost was $52; and in 2006, the basket's cost was $54.60. The value of the CPI in 2004 was

interest rates rise and the equilibrium quantity of loanable funds fall

Suppose a country has only a sales tax. Now suppose it replaces the sales tax with an income tax that includes a tax on interest income. This would make equilibrium

interest rates rise and the equilibrium quantity of loanable funds fall.

Suppose a country has only a sales tax. Now suppose it replaces the sales tax with an income tax that includes a tax on interest income. This would make equilibrium

1,000, 500, and 1,500, respectively

Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 2,500 consumption equals 7,500 and government purchases equal 2,000. What are private saving, public saving, and national saving?

1,500 and -500, respectively

Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 2,500, consumption equals 7,000, and government purchases equal 3,000. What are private saving and public saving?

price of basket current/price of basket base X 100

CPI

only changes in prices

Changes in the GDP deflator reflect

$88

Refer to Table 23-1. What were country A's exports in 2010?

$1975

Refer to Table 23-1. What were country A's government purchases in 2010?

inflation was 25% and output did not grow

Refer to Table 23-7. From 1975 to 1976,

100

Refer to Table 24-1. If 2006 is the base year, then the CPI for 2006 was

$69,960

Refer to Table 24-11. Megan's 2008 salary in 2010 dollars is

100

Refer to Table 24-2. If 2009 is the base year, then the CPI for 2009 was

increased from 2004 to 2005 and increased from 2005 to 2006

Refer to Table 24-4. If the base year is 2004, then the CPI

bond.

A certificate of indebtedness that specifies the obligations of the borrower to the holder is called a

The DVDs will be counted as a change in inventory in the second quarter and so will be included in second-quarter GDP

A movie company makes 500,000 DVDs of one of its latest releases. It sells 300,000 of them before the end of the second quarter, and holds the others in its warehouse. How will the 200,000 unsold DVDs be treated in the GDP statistics?

real GDP per person

A nation's standard of living is best measured by its

the method to reduce costs of producing automobile glass, but not the formula for the substance that prevents smudging

A professor at a university finds a way to reduce the costs of producing automobile glass. The method is very easy for anyone to copy. A company develops a substance which prevents eyeglasses from smudging. It receives a patent on the formula. Which of these are common technological knowledge?

declining real GDP

A recession is always associated with

Congress passes a reform of the tax laws that encourages greater investment

According to the loanable funds model, which of the following events would result in higher interest rates and greater saving?

Tara's productivity is greater than Alexis's. This difference could be explained by Tara having more physical capital than Alexis

Alexis and Tara both mine salt. Alexis mines 400 pounds in 40 hours. Tara mines 300 pounds in 20 hours. Which of the following is correct?

the GDP deflator reflects the prices of all final goods and services produced domestically, whereas the consumer price index reflects the prices of goods and services bought by consumers.

An important difference between the GDP deflator and the consumer price index is that

the nominal interest rate exceeds the real interest rate

As long as prices are rising over time, then

corporate bond, U.S. government bond, municipal bond

Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating. Which list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate

overstates the cost of living

By not taking into account the possibility of consumer substitution, the CPI

households and noncorporate businesses have left after paying taxes and non-tax payments to the government

Disposable personal income is the income that

$37.11

Ethel purchased a bag of groceries in 1970 for $8. She purchased the same bag of groceries in 2006 for $25. If the price index was 38.8 in 1970 and the price index was 180 in 2006, then what is the price of the 1970 bag of groceries in 2006 dollars?

faster than rich countries. In fact, some countries that were poor in 1870 are now rich

Evidence shows that other things the same, poor countries grow

private saving = $12,000 and GDP = $67,000

For an imaginary closed economy, T = $5,000; S = $11,000; C = $50,000; and the government is running a budget deficit of $1,000. Then

the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied, and as a result the real interest rate will rise

For an imaginary economy, when the real interest rate is 5 percent, the quantity of loanable funds demanded is $100,000 and the quantity of loanable funds supplied is $100,000. Currently, the nominal interest rate is 6 percent and the inflation rate is 2 percent. Currently

S = I + NX

For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S, as the total income in the economy that is left after paying for consumption and government purchases, then for an open economy, it is true that

Nominal GDP/Real GDP X 100

GDP deflator

12.5%.

Refer to Table 24-4. If the base year is 2006, then the inflation rate in 2005 was

federal, state, and local governments

Government purchases include spending on goods and services by

income and expenditures

Gross domestic product measures

Depreciation losses are subtracted from the total income of a nation's citizens

How is net national product (NNP) calculated?

Y - T - C = T - G

I =

each share represents ownership of 1% of the firm

If a firm sells a total of 100 shares of stock, then

supply bonds by selling them

If a firm wants to borrow it can

prices to have risen more than inflation, but they have not

If natural resources had become scarcer, then we would expect their

96.1 so prices are lower than in the base year

If real GDP is 5,100 and nominal GDP is 4,900, then the GDP deflator is

$4.1 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars

In 1949, Sycamore, Illinois built a hospital for about $500,000. In 1987, the county restored the courthouse for about $2.4 million. A price index for nonresidential construction was 14 in 1949, 92 in 1987, and 114.5 in 2000. According to these numbers, the hospital cost about

4 percent, which is high compared to average U.S. growth over the last one-hundred years.

In 2009, the imaginary nation of Mainland had a population of 6,000 and real GDP of 120,000. In 2010 the population was 6,200 and real GDP of 128,960. Over the year in question, real GDP per person in Mainland grew by

1% population growth and 3% real GDP growth

In 2009, the imaginary nation of Platland had a population of 10,000 and real GDP of 42,000,000. During the year its real GDP grew by about 1.98%. Which of the following sets of growth rates is consistent with this growth in real GDP

All of the above are correct

In a closed economy, national saving equals

the relevant production function has the constant-returns-to-scale property

In a particular production process, if the quantities of all inputs used are increased by 60 percent, then the quantity of output increases by 60 percent as well. This means that

The value of the consumer price index is always 100 in the base year.

In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct?

the costs of the remodeling materials and the increase in rent, but not the price of the house

In early2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

market prices

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily

11 percent of GDP

In the United States in 2009, purchases of capital equipment, inventories, and structures represented approximately

low in the 1970s and high in the 1990s

In the United States, real interest rates were

divide their income among spending, taxes, and saving

In the actual economy, households

$1600

In the economy of Ukzten in 2010, consumption was $6000, exports were $1000, GDP was $10,000, government purchases were $2000, and imports were $600. What was Ukzten's investment in 2010?

labor productivity

Refer to Scenario 25-1. If the production function has the constant-returns-to-scale property, then if we know the values of A, K/L, H/L, and N/L, we also know the value of

decrease the demand for existing shares of the stock, causing the price to fall

In the late summer of 2005 some regions of the country were suffering from drought. What effect would we expect this to have on the stock of companies such as John Deere that manufacture farm equipment?

is equal to its domestic production

Income generated by a nation's domestic production

(CPI 2 - CPI 1)/ (CPI 1) X 100

Inflation Rate (year 2)

$39,097.74

Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006. The consumer price index was 160 in 1996 and 266 in 2006. Janelle's 2006 salary in 1996 dollars is

5.9 percent

Last year real GDP per person in the imaginary nation of Olympus was 4,500. The year before it was 4,250. By about what percentage did Olympian real GDP per person grow during the period?

riskier than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds.

Long-term bonds are

long-run growth and short-run fluctuations in real GDP

Much of macroeconomics attempts to explain

$19

One bag of oranges is sold for $6.00 to a company that turns them into juice which is sold to consumers for $12.00. Another bag of oranges is purchased by a grocery store for $6.00 who then sells it to a consumer for $7. Taking these four transactions into account, how much is added to GDP?

supply of the stock increases and the price decreases

Other things being constant, when a firm sells new shares of stock, the

real GDP per person grew faster in Oceania than in Freedonia

Over the last ten years productivity grew faster in Oceania than in Freedonia and the population and total hours worked remained the same in both countries. It follows that

Price/ Base Price X 100

Price Index

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

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?

Bolivia, Thailand, Sweden, United States

Rank the countries from highest to lowest based on underground economic activity as a percentage of GDP

Current GDP/Price Index

Real GDP

Real GDP/population

Real GDP per person=

the real interest rate

Refer to Figure 26-1. What is measured along the vertical axis of the graph?

$38,000

Refer to Scenario 26-1. For this economy, government purchases amount to

It was unchanged

Suppose that twenty-five years ago a country had nominal GDP of $1,000, a GDP deflator of 200, and a population of 100. Today it has nominal GDP of $3,000, a GDP deflator of 400, and population of 150. What happened to the real GDP per person?

9,500

Suppose the economy is closed and consumption is 6,500, taxes are 1,500, and government purchases are 2,000. If national saving amounts to 1,000, then what is GDP?

generally move together

The CPI and the GDP deflator

$3,698.92

The CPI was 172 in 2007, and the CPI was 46.5 in 1982. If your parents put aside $1,000 for you in 1982, then how much would you have needed in 2007 in order to buy what you could have bought with the $1,000 in 1982?

U.S. government purchases increase by $30,000; U.S. net exports decrease by $30,000; and U.S. GDP is unaffected

The U.S. Air Force pays a Turkish citizen $30,000 to work on a U.S. base in Turkey. As a result

6.0 percent

The price index was 120 in 2006 and 127.2 in 2007. What was the inflation rate?

household spending that is investment rather than consumption

The purchase of a new house is the one form of

the expenditures for these goods whoever buys them

Total income from the domestic production of final goods and services equals

the bond market, and we associate the term equity finance with the stock market.

We associate the term debt finance with

flow of resources available to fund private investment

We interpret the meaning of "loanable funds" as the

The supply of loanable funds would shift left.

What would happen in the market for loanable funds if the government were to increase the tax on interest income?

Gone With the Wind

When box office receipts are corrected for inflation, the most popular movie of all time is

decreases, so the CPI understates the change in the cost of living if the quality change is not accounted for

When the quality of a good deteriorates while its price remains the same, the purchasing power of the dollar

a smaller quantity of that good and a larger quantity of substitutes for that good.

When the relative price of a good increases, consumers respond by buying

106 to 112

Which of the following changes in the price index produces the greatest rate of inflation: 106 to 112, 112 to 118, or 118 to 124?

The demand for loanable funds shifted rightward

Which of the following could explain an increase in the interest rate and the equilibrium quantity of loanable funds

The government reduced the tax rate on savings

Which of the following events could explain a decrease in interest rates together with an increase in investment?

All of the above are correct

Which of the following is an example of a renewable natural resource?

computers becoming obsolete

Which of the following is an example of depreciation?

Historically, in periods where the rate of population growth was high, so was the rate of growth in world real GDP per person

Which of the following is correct

All of the above are correct

Which of the following items plays a role in determining productivity

For an airline: oil used to make jet fuel, the pilots' knowledge of flying, jets.

Which of the following lists contains, in this order, natural resources, human capital, and physical capital?

an expansion of eligibility for Individual Retirement Accounts

Which of the following policy changes would lead to a decrease in the real interest rate and an increase in investment and saving?

There is no ironclad rule for the declaration of recessions

Which of the following statements about recessions is true

Most buyers of stocks and bonds prefer those issued by large and familiar companies

Which of the following statements is correct

The real interest rate is the nominal interest rate minus the rate of inflation.

Which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate?

inventory investment

Which of the following subcomponents of GDP can be either positive or negative?

All of the above are correct

Which of these events would cause the consumer price index to overstate the increase in the cost of living?

rises from $0.80 to $1.00 while the price of a loaf of bread rises from $2.00 to $2.50

With respect to the consumer price index, which of the following does not serve as an example of how the substitution bias arises? Between 2010 and 2011, the price of a pound of pean

Workland has higher productivity but lower real GDP per person than Laborland

Workland has a population of 10,000, of whom 7,000 work 8 hours a day to produce a total of 224,000 final goods. Laborland has a population of 5,000, of whom 4,000 work 12 hours a day to produce a total of 120,000 final goods

(Y - T - C) + (T - G)

Y=

C + I + G+NX

Y=