Exam 2 Macro

See figure

$86

Which of the following statements regarding U.S. economic growth is NOT correct?

The growth of real GDP per person accelerated between 1973 to 1984

The natural unemployment rate

is the unemployment rate that occurs when the economy is at a full employment

If the CPI is 120, this means that

prices are 20% higher than in the reference base period

An indirect tax is exemplified by

a sales tax

The best definition for economic growth is

a sustained expansion of production possibilities measured as the increase in real GDP over a given period

The Consumer Price Index is a measure of the average of the prices paid by ________ for a 58) fixed basket of consumer goods and services.

urban consumers

see figure

320$

Suppose that last year the Consumer Price Index was 124; this year it is 130.7. What was the inflation rate between these years?

5.4%

GDP can be computed as the sum of

Total expenditures of consumption, investment, and government expenditure on goods and services over a period of time

see figure

a;b

The growth rate of real GDP per person in the United States has

averaged approximately 2 percent per year over the past century

see figure

b; a

Suppose the country of Tiny Town experienced frictional unemployment. This frictional 49) unemployment would

be considered a natural occurrence in a growing economy

Suppose an economy has some inflation. Then, after a base year, the value of real GDP will

be greater than nominal GDP

Which type of unemployment increases during a recession?

cyclical unemployment

Depreciation is defined as the

decrease in stock of capital due to wear and tear

We are interested in long-term growth primarily because it brings

higher standards of living

Frictional unemployment is the result of

normal labor market turnover

In calculating GDP, household production is

not included because there is no market transaction

Which of the following best fits the definition of unemployed?

not working but looking for a job

The unemployment rate is defined as the

percentage of labor force not working

Of the following, the largest component of GDP is

personal consumption expenditure

A recession is commonly defined as occurring when

real GDP decreases for a period of 6 or more months

Of the following sequences of price levels, which CORRECTLY represents a 5 percent inflation 60) rate?

100,105,110.25,115.76

see figure

130

Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?

14

In 2011, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. Armeniaʹs real GDP per person in 2012 was

1545$

If real GDP per person is growing at 4 percent per year, approximately how many years will it take to double?

17.5

Over the last 100 years, the average U.S. growth rate in real GDP per person was about

2% per year

If the CPI basket of goods cost $200 in the reference base period and $450 in a later year, the 57) CPI in the later year equals

225

During 2013, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2012, real GDP was 105 billion and the population was 0.85 billion. Economiaʹs growth rate of real GDP per person is

3.23%

At the end of last year the Consumer Price Index was equal to 157.5 and at the end of this year it was equal to 163.8. What is the inflation rate over this time period?

4.0 %

see table

65 %

If consumption expenditures are $500 million, net investment is $100 million, depreciation equals $5 million, imports are $50 million, exports are $55 million, government expenditure on goods and services is $220 million, and government transfer payments are $20 million, then GDP is

830 Million

In 2011, Armenia had a real GDP of $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. What was Armeniaʹs economic growth rate from 2011 to 2012?

9.0%

GDP is the

A) total amount that buyers spent on the final goods and services produced in a country during a specific time. B) total amount of income earned in producing the final goods and services in a country during a specific time. C) value of the final goods and services produced in a country during a specific time. D) All of the above answers are correct. (THIS IS ANSWER)

see table

A,B and C

GDP equals

Aggregate Expenditure Value of the aggregate production in a country during a given time period Aggregate Income ALL OF THESE

In the circular flow of economic activity

Aggregate expenditure measures the dollar value of purchases of final goods and services

Of the following Asian countries, which has the lowest level of real GDP per person?

China

When economists speak of full employment, they refer to the case in which the sum of 42) frictional and structural unemployment is

Equal to the actual amount of unemployment

A loaf of bread purchased by one of your instructors would be best described as

Final Good

When real GDP is ________ potential GDP, the unemployment rate is ________ the natural 41) unemployment rate.

Greater than; less than

Which of the following relationships is CORRECT?

Gross Investment = Net Investment + Depreciation

The historical record for the United States for the past 100 years shows

Growth in real GDP per person during most years

Convergence of the income gap has been most dramatic between

Hong Kong and the United States

Which of the following people would be considered unemployed by the Bureau of Labor 35) Statistics? I. Mrs. X retires from her job at the age of 55 and does not look for another job. II. Mr. Y was laid off from his job as a welder, but expects to be rehired in 8 months.

II only

Proprietorsʹ income is a component of which approach to measuring GDP?

Incomes approach

According to the Economic Times (09/2012), Standard & Poorʹs forecast for Indiaʹs GDP growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Which of the following is TRUE?

India's PPF has been shifting rightward since 1997

During the 1990s, which of the following experienced the slowest rate of growth in real GDP per person?

Japan

The historical record for the United States over the last 100 years shows

Mostly positive economic growth, though the Great Depression caused actual GDP to dip well below potential GDP

Which of the following people would be counted as is employed in the Current Population Survey?

Rich, who is working 20 hours a week but wants a full-time job

Over the past fifty years, there has been substantial closure of the gap in real GDP per person 74) between which of the following groups of countries?

The United States and Japan

Over the past four decades

U.S. real GDP per person has increased

The use of purchasing power parity prices

accounts for differences in the prices of the same goods in different countries when measuring real GDP

The nationʹs structural unemployment will increase when

an increase in textile imports displaces older textiles workers who do not have the skills necessary to find new jobs

Gross domestic product can be calculated

either by valuing the nations output of goods and services or by valuing the income generated in the production process

A person quits her job in order to spend time looking for a better-paying job. This type of 47) unemployment is an example of

frictional unemployment

Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek work 44) with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best considered as

frictionally unemployed

Net investment equals

gross investment - depreciation

An increase in exports of goods or services with no change in imports of goods or services

increase GDP

Which of the following is NOT one of the components for computing GDP based upon the 14) income approach?

investment

an expansion

is defined as a period of real GDP growth

Potential GDP is

maximum amount of GDP that can be produces while avoiding shortages of labor, capital, land, entrepreneurship that would bring rising inflation

In the United States, GDP is typically measured

quarterly

By common definition, a recession occurs when

real GDP decreases for at least 2 successive quarters

According to the Economic Times (09/2012), Standard & Poorʹs forecast for Indiaʹs GDP 62) growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Based on this story, it is most likely that the slowdown reflects a

temporary business cycle showdown

Looking at inflation rates in the United States since the 1970s we see that

the 1970s experiences the highest inflation rates

Real GDP decreases during

the movement from peak to trough

Frictional unemployment increases when

the number of workers who quit one job to find another increases

The labor force is defined as the number of

the people who are employed and unemployed

The unemployment rate is measured as

the percentage of people in the labor force who are unemployed

Hyperinflation is defined as

very high inflation rates

The labor force participation rate is percentage of the ________ who are in the labor force.

working-age population

Which of the following is included in ʺcompensation of employeesʺ part of the income 20) approach to measuring GDP? I. Wages and salaries. II. Pension fund contributions. III. Social Security contributions.

I,II and III

Which of the following is TRUE regarding business cycles? I. Cycles are predictable. II. In each cycle, a peak follows an expansion. III. Potential GDP fluctuates around real GDP

II only

Which of the following is CORRECT?

Aggregate income, aggregate expenditure and GDP and are all equal

Which of the following is used to calculate the standard of living?

Real GDP/population

The unemployment rate is found by dividing the number of unemployed people by the

sum of working individuals plus unemployed workers, and multiplying by 100