Macro homework 2

29. Suppose the economy is closed with national saving of $2 trillion, consumption of $8 trillion, and government purchases of $1 trillion. What is GDP?

$11 trillion

27. 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?

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

26. 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?

1,500 and -500, respectively

15. In 2009, the imaginary nation of Mainland had a population of 7,000 and real GDP of 210,000. In 2010 the population was 7,300 and real GDP of 223,380. Over the year in question, real GDP per person in Mainland grew by

2 percent, which is about the same as average U.S. growth over the last onehundred years

28. Suppose that in a closed economy GDP is 11,000, consumption is 7,500, and taxes are 2,000. What value of government purchases would make national savings equal to 1,000 and at that value would the government have a deficit or surplus?

2,500, deficit

14. 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

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

30. 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?

9,500

12. Which of the following is a financial-market transaction?

A saver buys a bond a corporation has just issued so it can purchase capital

16. Stock represents

All of the above are correct (a claim to a share of the profits of a firm. ownership in a firm. equity finance)

38. Natural resources

All of the above are correct (are inputs provided by nature. include land, rivers, and mineral deposits. take two forms: renewable and nonrenewable)

35. Which of the following is considered human capital? Knowledge acquired from

All of the above are correct (early childhood education programs job training on-the-job experience)

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

All of the above are correct. (Fish Soybeans Wood)

20. 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

28. Last year the imaginary country of Bahkan had a population of 10,000, 6,000 people worked 8 hours a day and produced a real GDP of $30,000,000. The imaginary country of San Andreo had a population of 15,000, 8,000 people worked 7 hours a day and produced a real GDP of $33,000,000. Which of the following is correct?

Bahkan had the higher productivity and the higher real GDP per person

26. 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?

Both b and c are correct (The total number of hours worked stayed the same. The total number of hours worked fell.)

2. If you were to start a business delivering documents, you might need to purchase cell phones, bicycles, desks, and chairs

These purchases are called capital investment. If you raise the funds to purchase them from others you are a borrower

30. 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.

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

42. Technological knowledge refers to

available information on how to produce things

21. Which of the following is both a financial institution and a financial intermediary?

banks

10. Two of the economy's most important financial intermediaries are

banks and mutual funds

1. When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures

capital investment

11. A bond is a

certificate of indebtedness

39. Which of the following is an example of a nonrenewable resource?

coal

18. All else equal, when people become more optimistic about a company's future, the

demand for the stock and the price will both rise

14. 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

25. Productivity

explains most of the differences in the standard of living across countries

20. Financial intermediaries are

financial institutions through which savers can indirectly provide funds to borrowers

4. Institutions that help to match one person's saving with another person's investment are collectively called the

financial system

22. In determining living standards, productivity plays a key role

for both nations and individuals

18. Productivity is defined as the quantity of

goods and services produced from each unit of labor input

11. If one wants to know how the material well-being of the average person has changed over time in a given country, one should look at the

growth rate of real GDP per person

45. In the equation for the production function H/L represents

human capital per worker

13. Countries that have lower levels of real GDP per person than the United States

in some cases have growth rates that are higher than that of the United States and in other cases lower than that of the United States

43. Technological knowledge

is a determinant of productivity

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

its productivity

34. Human capital is the

knowledge and skills that workers acquire through education, training, and experience

Compared to stocks, bonds offer the holder

lower risk and lower potential return

5. The primary economic function of the financial system is to

match one person's saving with another person's investment

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

real GDP per person

6. Given that Monika's income exceeds her expenditures, Monika is best described as a

saver or as a supplier of funds

7. At the broadest level, the financial system moves the economy's scarce resources from

savers to borrowers

8. As an alternative to selling shares of stock as a means of raising funds, a large company could, instead,

sell bonds

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

sell bonds directly to the public

41. An understanding of the best ways to produce goods and services is called

technology

23. The key determinant of the standard of living in a country is

the amount of goods and services produced from each hour of a worker's time

9. The economy's two most important financial markets are

the bond market and the stock market

5. Which of the following is a good gauge of economic progress?

the growth rate of real GDP per person, but not the level of real GDP per person

8. Which of the following can be measured by the level of real GDP per person?

the standard of living but not productivy

17. The prices of stock traded on exchanges are determined by

the supply of, and demand for, the stock

15. The sale of stocks

to raise money is called equity finance, while the sale of bonds to raise funds is called debt finance

36. Which of the following is human capital?

understanding how to use a company's accounting software

10. As of 2008, using real GDP per person as a measure, we would classify

Canada as an advanced economy, Mexico as a middle-income country, and Pakistan as a poor country

21. Which of the following is not correct?

Countries that have had higher output growth per person have typically done so without higher productivity growth

29. Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods.

Country A has lower productivity and lower real GDP per person than country B.

7. Which of the following statements is correct?

Differences in natural resources can explain some of the differences in standards of living around the world.

19. Which of the following is a correct way to measure productivity?

Divide the quantity of output by the number of hours worked

27. Waldo works eight hours and produces 7 units of goods per hour. Emerson works six hours and produces 10 units of goods per hour.

Emerson's productivity and output are greater than Waldo's

25. Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 1,500, consumption equals 7,500, and government purchases equal 2,000. What is national saving?

None of the above is correct (-500 0 2,000)

12. Which of the following is not correct?

The ranking of countries by average income changes very little over time

3. In which of the following countries has economic growth been sufficiently strong in recent history to propel that country from being among the poorest in the world to being among the richest in the world?

Singapore

4. In which of the following countries has economic growth been sufficiently strong in recent history to propel that country from being among the poorest in the world to being among the richest in the world?

South Korea

16. Which of the following is correct?

The level of real GDP per person is a good gauge of economic prosperity, and the growth rate of real GDP per person is a good gauge of economic progress

22. Which of the following is a financial intermediary?

a mutual fund

1. Which of the following are residents of rich countries likely to have in greater quantities, or better quality, than residents of poor countries?

all of the above (housing healthcare life expectancy)

9. The level of real GDP person

and the growth rate of real GDP per person vary widely across countries

3. When a country saves a larger portion of its GDP than it did before, it will have

more capital and higher productivity

33. Which of the following would not be considered physical capital?

on-the-job training

2. A country experiencing a growth rate of 8% per year can go from being one of the poorest to one of the richest in how many generations?

one

31. The equipment and structures available to produce goods and services are called

physical capital

32. The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to produce furniture are called

physical capital

24. In a closed economy, what does (Y - T - C) represent?

private saving

6. Productivity is the amount of goods and services

produced for each hour of a worker's time. It is linked to a nation's economic policies

17. The one variable that stands out as the most significant explanation of large variations in living standards around the world is

productivity

44. In the equation for the production function Y/L represents

productivity

23. In a closed economy, what does (T - G) represent?

public saving