Macro Exam 2

Which of the following pairs of terms refer to the same thing?

"capital" and "physical capital"

An American soldier stationed in North Carolina receives a paycheck from the federal government for $300, which she uses to purchase a $100 MP3 player made in China by a Chinese firm and $200 for fruit and vegetables from a local farmers market. As a result, U.S. GDP increases by

$200

You have some estimates of national accounts numbers for a closed economy for the coming year. Under one set of expectations, government purchases will be $30 billion, transfer payments will be $10 billion, and taxes will be $45 billion. Under another set of expectations, GDP will be $200 billion, taxes will be $50 billion, transfer payments will be $20 billion, consumption will be $120 million, and investment will be $40 billion. Based on these numbers in the first case there should be a

$5 billion surplus, and in the second case a $10 billion deficit.

Phoenix furniture uses 12 workers, each working eight hours, to produce 192 rocking chairs. What is Phoenix's productivity?

2 rocking chairs per hour

Which of the following statements is true?

Americans have a higher standard of living than Indonesians because American workers are more productive than Indonesian workers.

Suppose the government deficit increases, but the interest rate remains the same. Which of the following things might have happened simultaneously to keep interest rates the same?

Consumers decide to decrease consumption and work more.

Social Security payments are indexed for inflation using the CPI. A recent newspaper editorial claimed that Social Security recipients are harmed by years of low inflation because they do not receive as large an increase in their payments as they do in years of high inflation. Which of the following statements is correct?

The newspaper editorial could be correct if the prices of the goods consumed by Social Security recipients change at a different rate than the prices of the goods in the market basket used to compute the CPI

Given that a country's real output has increased, in which of the following cases can we be sure that its productivity also has increased?

The total number of hours worked stayed the same. The total number of hours worked fell.

The local car dealership has an increase in inventory of 100 newly produced cars in 2015. In 2016, it sells all 100 cars. Which of the following statements is correct?

The value of the cars in inventory will be counted as part of 2015 GDP, and the value of the cars sold in 2016 will not increase 2016 GDP.

Which of the following bond buyers did not buy the bond that best met his or her objective?

a. Jackie wanted a bond with a high interest rate and was willing to take a lot of risk. She purchased a junk bond. b. Andrew wanted a bond that would allow him to legally avoid paying federal income taxes. He purchased a municipal bond. c. Cecilia held long-term bonds rather than short-term bonds to avoid risk. d. Suzy wanted to purchase a bond whose seller was unlikely to default. She purchased a bond that Standards and Poor's rated a low credit risk. C

Two of the economy's most important financial intermediaries are

banks and mutual funds

For the Bureau of Labor Statistics to place someone in the "unemployed" category, that person must

be available for work.

Country A experienced a growth rate of real GDP per person of 0.5 percent per year throughout the 1900's. In view of other countries' experiences, country A's growth was

exceptionally low.

Which of the following can explain faster growth of real GDP in country A than in Country B?

both greater population growth and greater productivity growth in Country A

a bond is a

certificate of partial ownership in an enterprise

Consider three different closed economies with the following national income statistics. Country A has taxes of $40 billion, transfers of $20 billion, and government expenditures of $30 billion. County B has private savings of $60 billion, and investment of $40 billion. Country C has GDP of $300 billion, investment of $90, consumption of $180 billion, taxes of $60 billion and transfers of $20 billion. From this information, we know that

country B has the largest government budget deficit.

Suppose over the last five years that the price of recycled aluminum increased from $800 a ton to $900 a ton. Over the same time a measure of the overall price level increased from 120 to 138. The real price of recycled aluminum

decreased, so it became less scarce

Skyline Chili wants to finance the purchase of new equipment for its restaurants. The firm has limited internal funds, so Skyline likely will

demand funds from the financial system by selling bonds

A national chain of grocery stores wants to finance the construction of several new stores. The firm has limited internal funds, so it likely will

demand the required funds by selling bonds.

Gasoline is considered a final good if it is sold by a

gasoline station to a motorist in Los Angeles.

Productivity is defined as the quantity of

goods and services produced from each unit of labor input

Unemployment insurance tends to

increase frictional unemployment.

You hold bonds issued by the city of Sacramento, California. The interest you earn each year on these bonds

is not subject to federal income tax and so these bonds pay a lower interest rate than otherwise comparable bonds issued by the U.S. government.

If the government currently has a budget deficit, then

it does not necessarily have a debt. its debt is increasing. government expenditures are greater than taxes.

which of the following would, by itself, reveal the most about a country's standard of living

its productivity

Which of the following is not an explanation for the existence of structural unemployment?

job search

Productivity is the

key determinant of living standards, and growth in productivity is the key determinant of growth in living standards.

Last year a country had 800 workers who worked an average of 8 hours and produced 12,800 units. This year the same country had 1000 workers who worked an average of 8 hours and produced 14,000 units. This country's productivity was

lower this year than last year. A possible source of this change in productivity is a change in the size of the capital stock.

Unemployment insurance

may improve the ability of the economy to match workers with appropriate jobs. reduces the job search efforts of the unemployed. increases the amount of frictional unemployment in the economy.

Suppose that over the last year the price of copper increased from $1.70 a pound to $1.79 per pound. Over the same time a measure of the overall price level increased from 300 to 309. The price of copper increased by

more than inflation, and this means it became scarcer.

Which of the following always uses prices and quantities from the same period?

nominal GDP but not real GDP.

Real GDP will increase

only when output increases.

If the government's expenditures exceeded its receipts, it would likely

sell bonds directly to the public

If there were no factors keeping wages from reaching equilibrium then there would be no

structural unemployment.

Which of the following statements is true?

the expected future profitability of a corporation influences the demand for that corporation's stock.

The statistical discrepancy that regularly arises in national income accounting refers to the slight difference between

the income and expenditure approaches to the calculation of GDP.

Indexation refers to

using a law or contract to automatically correct a dollar amount for the effects of inflation.