Macro Econ Exam 2

If an automobile manufacturer pays $200 for a car windshield, $400 for four car tires, $100 for a car radio, and sells cars made with these parts for $20,000, then each car the automobile manufacturer sells contributes how much to GDP?

$20,000 bc just the value of final good

Jim and Fred are the only two cashiers employed at a retail store. Each of them works the same 40 hours per week and each can check out 30 customers per hour by manually entering the price of each product purchased into the cash register. The store owner replaces the old cash registers with new ones that automatically scan product prices into the register. With the new cash registers, Jim and Fred can each check out 60 customers per hour. Their average labor productivity as a team before the new cash registers were introduced was ______ customers per hour and ______ customers per hour after the new machines were installed.

30; 60

Labor income in the U.S. equals approximately ______ of GDP.

75 percent

Which of the following would be classified as a final good? A. New computer software sold to a computer manufacturer for installation in new computers B. The services provided by lawyers to a computer manufacturer C. Computer chips sold to a computer manufacturer for installation in new computers D. A new computer sold to a business firm.

A new computer sold to a business firm

Which of the following is NOT a capital good? A. Batteries purchased by a car manufacturer to install in new cars B. Machines purchased by a car manufacturer to measure metal thicknesses C. A new house purchased by a family D. A new apartment building purchased by a corporation

A: Batteries purchased by a car manufacturer to install in new cars

Which of the following expenditures would increase the investment component of U.S. GDP? A. You purchase a new house. B. You purchase a new car. C. You purchase 1,000 shares of stock. D. You pay a commission to your stock broker for selling some stocks that you owned.

A: you purchase a new house.

Which of the following would be included in the GDP of the United States? A. Boeing builds a plane in Seattle that is sold to Air Canada. B. General Motors produces a car in Germany that is sold in Michigan. C. Nestle produces a candy bar in Switzerland that is sold in San Francisco. D. Planet Hollywood serves customers in a restaurant in Hong Kong.

Boeing builds a plane in Seattle that is sold to Air Canada. (only include united states)

The situation when the price of most goods and services are falling over time is called:

Deflation

Who of the following would be considered a discouraged worker? A. Ray wants to work forty hours per week, but can only find work for twenty hours per week. B. Anna Marie has been looking for a job every day for the last month, but has not been hired. C. Frank would like to work, but has not looked for work because he believes no jobs are available. D. Melissa has a Ph.D. in physics, but is currently employed full time driving a taxi.

Frank would like to work, but has not looked for work because he believes there are no jobs

Wages and salaries are examples of

Labor income

Who from among the following would be classified as employed? A. Brenda Smith, an 18 year old full-time college student. B. Mario Faubert, a NHL hockey player at home sick with the flu. C. Jack Little, a 21 year old new college graduate actively looking for his first job. D. Sarah Lopez, a retired public school teacher.

Mario Faubert, a NHL hockey player at home sick with the flu

Suppose that the total production of an economy consists of 10 oranges and 5 candy bars, each orange sells for $0.20, and each candy bar sells for $1.00. Which expression of the output of this economy is most consistent with the GDP?

This economy produces $7.00 worth of food

Despite some problems with equating GDP with economic well-being, higher real GDP per person does imply greater economic well-being because it tends to be positively associated with:

better education, health and life expectancy

Workers whose spells of unemployment are broken up by brief periods of employment or withdrawal from the labor force are referred to as ______ workers

chronically unemployed

Nominal GDP measures the ______ of production.

current dollar value

______ start new economic enterprises, while ______ run the enterprises on a day-to-day basis.

entrepreneurs; managers

An example of a government policy to enhance technological progress is:

government support for basic research

The market value of final goods and services produced within a country during a period of time is called:

gross domestic product

It is difficult to engage in long-term financial planning when inflation is:

high and erratic

When a worker learns how to use a new business-related software program, this is an example of investing in:

human capital

An extremely high rate of inflation is called _____.

hyperinflation

Arguing that economic growth will eventually stop because we will run out of natural resources:

ignores the power of markets to recognize shortages and induce changes in behavior

Governments contribute to increased average labor productivity in each of the following ways except by:

imposing taxes on wages

National defense services provided by the military are:

included in GDP at cost

One family earned an income of $28,000 in 1995. Over the next five years, their income increased by 15%, while the CPI increased by 15%. After five years, this family's nominal income ______, and their real income ______.

increased; did not change

In the long run, increases in output per person arise primarily from:

increases in average labor productivity

The construction of the interstate highway system in the United States is an example of a government policy to promote economic growth by:

increasing physical capital

To ensure that your salary maintains its real purchasing power from year to year, your nominal salary must be:

indexed

To prevent people paying a higher percentage of their income in taxes even when their real incomes have not changed, Congress:

indexed the income tax brackets to the CPI

GDP equals the value added by producers of:

intermediate goods and services, as well as final goods and services.

The value of unpaid work by a homemaker ______ included in GDP and the value of housekeeping services sold in a market ______ included in GDP.

is not; is

Growth of real GDP per person is totally determined by the growth of average:

labor productivity and the proportion of the population employed

Deflating a nominal quantity is the process of dividing a ____ quantity by a ______ in order to express the quantity in ______ terms.

nominal; price index; real

If the borrower and lender agree to a loan at 8% when the inflation rate is 3%, then 8% is the ______ interest rate and 5% is the ______ interest rate.

nominal; real

Suppose that the price of chicken rises sharply compared to the price of turkey. In response, consumers buy more turkey and less chicken than they did in the CPI base year. In this situation the CPI will tend to ______ inflation as a result of ______ bias.

overstate; substitution

The ______ is the rate of change of the _______.

rate of inflation; CPI

The wage paid to workers measured in terms of real purchasing power is called the:

real wage

If total output is calculated by adding up the market value of goods and services produced, then more expensive items:

receive a greater weight than cheaper items

Advances in information and communication technology are the principal factors cited for the:

speedup in productivity growth from 1995-2000

study

study

study chart

study chart

The quality adjustment bias of the CPI refers to the failure of statisticians to:

take into account improvements of goods and services

Additional economic growth should be pursued when:

the marginal costs of growth are less than the marginal benefits

Which of the following is a real quantity? A. The current wages paid to factory workers B. The cost of a new car C. The number of tons of steel produced in 2005 D. The current price of a barrel of oil

the number of tons of steel produced in 2005

A person 16 years or older who does not work, but is actively looking for work, is officially classified as:

unemployed

If two countries are economically identical except that there is significant air and water pollution in one, then the level of GDP:

will be the same in both countries