Marco Quiz 2 answers
In 1931, President Herbert Hoover was paid a salary of $75,000. Government statistics show a consumer price index of 15.2 for 1931 and 214.5 for 2009. President Hoover's 1931 salary was equivalent to a 2009 salary of about...
(214.5/15.2) x $75,000 = $1,058,388
If the CPI is 300 in 1980 and is 350 today. Then $600 in 1980 has the same purchasing power as ___ today.
(350/300) x $600 = $700 today
You deposit $2000 in a savings account, and a year later you have $2020. Meanwhile, the CPI rises from 200 to 204. In this case, the nominal interest rate is _______ percent, and the real interest rate is _____.
(Current CPI - Old CPI) / Old CPI = inflation rate = 2% real interest rate = nominal - inflation -1 = 1 - 2
Suppose a basket of goods and services has been selected to calculate the CPI and 2002 has been chosen as the base year. In 2002, the basket's cost was $75; in 2004, the basket's cost was $79.50; and in 2006, the basket's cost was $85.86. The value of the CPI was...
(cost of basket/cost of base basket) x 100
Which of the following statements regarding the impact of population growth on productivity is true?
- There is no evidence that rapid population growth stretches natural resources to the point that it limits growth in productivity - Rapid population growth may dilute the capital stock, lowering productivity - Rapid population growth may promote technological progress, increasing productivity
The catch-up effect means that, other things equal, relatively poor countries tend to grow...
faster than relatively rich countries; this is called the catch-up effect
Foxconn, a Taiwanese manufacturing company, is building a production facility in Southeast Wisconsin. This may be considered...
foreign direct investment
Because capital is subject to diminishing returns, higher saving and investment do not lead to higher....
growth in the long run
Despite its status as one of the richest countries in the world, Japan...
has few natural resources
If the price of Italian shoes imported into the United States increases, then...
the consumer price index will increase, but the GDP deflator will not increase
Under which of the following conditions would you prefer to be the borrower?
the nominal rate of interest is 20% and the inflation rate is 25% = -5% real inflation rate
Economic theory leads to several conclusions about economic growth. Which of the following is NOT one of these conclusions?
In order to increase the growth rate of per capita real income *permanently*, we must increase a country's saving rate *you can never increase real income permanently
Which one of the following is a metaphor cited by our textbook's author for distinguishing between technological knowledge and human capital?
Technological knowledge is the quality of society's textbooks, whereas human capital is the amount of time and effort that the population devotes to studying and learning them
The CPI differs from the GDP deflator in that...
increases in the prices of *foreign*-produced goods that are sold to U.S. consumers show up in the CPI but not in the GDP deflator
Most economists are _____ that natural resources will eventually limit economics growth. As evidence, they note that the process of most natural resources, adjusted for overall inflation, have tended to ____ over time
not concerned, fall