Macro Exam 1

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657 , investment is $741 and net exports are -$1,910, then governmental purchases are

$2,977

If the consumption function is given C = 150 + .85Y and Y increases by 1 unit, then C increases by

.85 Units

If the unemployment rate is 6 percent and the number of employed is 188 million, then the labor force equals ____ million

200

If 7 million workers are unemployed, 143 million workers are employed and the adult population equals 200 million, then the unemployment rate equals approximately ____ percent

4.7

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. IF 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 4 in 2009, then real GDP (in 2002 prices) in 2009 was

6.50

If the adult population equals 250 million, of which 145 million are employed and 5 million are unemployed, the labor force participation rate equals ___ percent

60

When a firm sells a product out of inventory, investment expenditures ______ and consumption expenditures _____

decrease, increase

The price received by each factor of production for its services is determined by

demand and supply of factors

Consumption depends positively on ______ and investment depends negatively on ______

disposable income; the real interest rate

A production function is a technological relationship between

factors of production and the quantity of output produced

The market value of all final goods and services produced within an economy in a given period of time is called

gross domestic product

National saving refers to

income minus consumption minus government spending

When government spending increases and taxes are increased by an equal amount, interest rates

increase

In the neoclassical model with fixed income, if there is a decrease in government spending with no change in taxes, then public saving ____ and private saving _____

increases; does not change

When bread is baked but put away for later sale, this is called

investment in inventory

Real GDP is a better measure of economic well-being than nominal GDP, because real GDP:

measures changes in the quantity of goods and services produced by holding prices constant

In equilibrium, total investment equals

national saving

In the national income accounts, consumption expenditures include all of the following except household purchases of

new residential housing

Into which of the three categories (employed unemployed or out of the labor force) would an interviewer for the Current Population Survey place each of the following people? Frank Peabody is attending college full-time to earn a degree in elementary education?

out of the labor force

A fixed weight price index like the CPI ____ the change in the cost of living because it ____ take into account that people can substitute less expensive goods for ones that have become more expensive

overestimates; does not

A competitive, profit maximizing firm hires labor until the

price of output multiplied by the marginal product of labor equals the wage

A firm's economic profit is

revenue minus cost

As a result of the following economic events, please indicate whether US GDP rises, falls or stays unchanged. The City of Coral Gables, Florida buys a new police car, manufactured in US.

rises

An increase in the price of imported goods will show up in

the CPI but not in the GDP deflator

In the national income accounts, government purchases are goods and services purchased by

the federal, state and local governments

The employment statistics computed from the establishment survey do not include

the self employed

Two equivalent ways to view GDP are as the

total income of everyone in the economy or the total expenditure on the economy's output of goods and services

If an increasing proportion of the adult population is retired, then the labor for participation rate

will decrease

If the number of employed increases while the number of unemployed does not change, the unemployment rate

will decrease

Into which of the three categories (employed unemployed or out of the labor force) would an interviewer for the Current Population Survey place each of the following people? Jennifer Temple is working as a second-grade schoolteacher.

Employed

Into which of the three categories (employed unemployed or out of the labor force) would an interviewer for the Current Population Survey place each of the following people? Martin Hampton is working as a high school social science teacher but is at home sick with the flu.

Employed

Into which of the three categories (employed unemployed or out of the labor force) would an interviewer for the Current Population Survey place each of the following people? Kyle Brown does not currently have a job. He wants to be an elementary-school teacher. He has the appropriate degree. He has not looked for a position in the last month because he doesn't believe schools are currently hiring.

Out of the labor force

As a result of the following economic events, please indicate whether US GDP rises, falls or stays unchanged. Ford produces a new car in the US, but adds it to its inventory of unsold vehicles instead of selling it to a US consumer right away.

Rises

As a result of the following economic events, please indicate whether US GDP rises, falls or stays unchanged. General Electric, a US company, buys a piece of machinery manufactured by another company located in Germany, and installs that machinery in one of its own factories in the US.

Stays unchanged

As a result of the following economic events, please indicate whether US GDP rises, falls or stays unchanged. You (as an individual consumer in the US) buy a new car, manufactured in Japan,

Stays unchanged

Into which of the three categories (employed unemployed or out of the labor force) would an interviewer for the Current Population Survey place each of the following people? Brenda Dewey does not currently have a job. She has sent her resume to several school districts in the past week in hope of finding a teaching position.

Unemployed

Other things equal, an increase in the interest rate leads to

a decrease in the quantity of investment goods demanded

The property of diminishing marginal product means that, after a point, when additional quantities of

a factor is added when another factor remains fixed, the marginal product of that factor diminishes

The marginal product of labor is

additional output produced when one additional unit of labor is added

If bread is produced by using a constant returns to scale production function, then if the

amounts of equipment and workers are both doubles, twice as much bread will be produced

The two most important factors of production are

capital and labor

In the national income accounts, the purchase of durables, nondurables and services by households are classified as

consumption