ECON 104 FINAL
If the marginal propensity to consume is 0.80, a $40 increase in disposable income will lead to a $3232 increase in consumption and a $88 increase in savings.
$32 and $8
Below is a list of years and their annual average CPI values. Use these data to answer the following questions. Year 1960 1980 2000 2020 CPI Value. 29.6 82.4 172.2 258.811 Assume that the price of a product was $16.2 in 1980, what would the value of the product be when converted to values in 2020?
$50.88
Consider the figure. This economy is in macroeconomic equilibrium at what level of real GDP? $80 billion. What is the level of planned investment? $
$80 billion $10 billion
If the marginal propensity to consume (MPC) is 0.9, how much additional consumption will result from an increase of $100 billion of disposable income?
$90 billion
Suppose Apple plans to produce 9.3 million iPhones this year. The company expects to sell 7.7 million. Suppose that at the end of the year, Apple has sold 8.8 million iPhones. What is the level of actual inventories? What is the level of planned inventories?
0.5 1.6
Fill in the missing blanks in the following table. Assume for simplicity that taxes are zero. Also assume that the values represent billions of dollars. National Income and Real GDP (Y) Consumption (C) Saving (S) $10,000 $8,000 $2000 $11,000 $8,800 $2200 $12,000 $9,600 $2400 $13,000 $10,400 $2600 $14,000. $11,200 $2800 In the above example, the marginal propensity to consume is In the above example, the marginal propensity to save is
0.80 and 0.20
Real-Time Data Analysis Exercise* Consider the following data for the United States: Year Real GDP - ($ billion) 2015 - 17,390.3 2016 - 17,680.3 *Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis. The percentage change in real GDP from 2015 to 2016= _____ This percentage change in real GDP is also known as -
1.64% the economic growth rate.
1. You were required to complete an assignment using FRED. It was called ____ FRED Activities in 10 Minutes. 2. Our World in Data (ourworldindata.org) is maintained by researchers at: 3. The data we looked at from Our World in Data was:
10 University of Oxford The poverty gap
Suppose that a simple economy produces only the following four goods and services: shoes, hamburgers, shirts, and cotton. Further, assume that all of the cotton is used in the production of shirts. Use the information in the following table to calculate Nominal Gross Domestic ProductLOADING... (Nominal GDP) for 2021. PRODUCTION AND PRICE STATISTICS FOR 2021 Product Quantity Price Shoes 125 $65.00 Hamburgers 110 $3.00 Shirts 60 $30.00 Cotton 2,200 $0.75 The Nominal GDP for the year 2021 is $
10,255
The monthly market basket for consumers consists of pizza, t-shirts, and rent. The table below shows market basket quantities and prices for the base year (Year 1) and in the following year. Product Base Year (Year 1). Price in the Price in Quantity Base Year. Year 2 Pizza 15 $3.00 $3.75 T-Shirts 4 $20.00 $18.00 Rent 1 $500.00 $550.00 In Year 1, the CPI for the economy is _______ In Year 2, the CPI for this economy is ________
100 108.5
Assume you were given the following demand for loanable funds equation: Q = 100 - 4i Where, Q is the quantity of loanable funds demanded and i is the interest rate. Where would this line cross the horizontal (the x) axis? Where would this line cross the vertical (the y) axis?
100 25
Consider the simple economy that produces only three products. Use the information in the following table to calculate the (annual rate of) inflation for 2020 as measured by the consumer price index (CPI). BASE YEAR (2010) 2019 2020 Product Quantity Price Price Price Haircuts 2 $10.00 $11.00 $16.20 Hamburgers. 7 2.00 2.45 2.40 Movies 5 15.00 15.00 14.00 Using the information in the table, the CPI for 2019, with 2010 as the base year, is _______ The inflation rate for 2020 as measured by the consumer price index (CPI) is _______
104.7 4.49%
A simple economy produces two goods, Corn Bread and Software. Price and quantity data are as follows: Production and Prices in Year 1 (Base year) Product Quantity Price Per Unit Corn Bread 130 $2.00 Software 900 $40.00 Production and Prices in Year 2 Product Quantity Price Per Unit Corn Bread 162.50 $3.00 Software 1,350.00 $80.00 In Year 2, nominal GDP is equal to: ______ and real GDP is ________
108,487.5 and 54,325
If real GDP per capita grows at a rate of 6.3 percent per year, it will take ______ years to double.
11.1
The following table gives nominal and real GDP for an economy for two years. Year 1 Year 2 Nominal GDP. 1210.0 1540.0 Real GDP 1,100 1,320 Based on the table, in Year 2, the value of the GDP deflator is The inflation rate between Year 1 and Year 2 is
116.6 6%
Assume the base year is the year 2000. Suppose the you were given the following CPI values across a number of years: Year. CPI Value 2015 150.9 2016. 166.5 2017 182.5 2018 204.4 What is the inflation rate in 2018?
12%
Assume the base year is the year 2000. Suppose the you were given the following CPI values across a number of years: Year CPI Value 2015. 152.8 2016. 172.3 2017. 180.6 2018. 198.1 What is the inflation rate in 2016?
12.76%
Suppose that a simple economy produces only the following four goods and services: shoes, hamburgers, shirts, and cotton. Further, assume that all of the cotton is used in the production of shirts. Use the information in the following table to calculate Nominal Gross Domestic ProductLOADING... (Nominal GDP) for 2021. PRODUCTION AND PRICE STATISTICS FOR 2021 Product Quantity Price Shoes 150 $70.00 Hamburgers 125 3.00 Shirts 75 30.00 Cotton 2,000 0.80 The Nominal GDP for the year 2021 is $____
13,125
Congratulations! Your boss has given you a raise. However, you want to know whether your purchasing power has actually increased, since inflation is rising as well. The table below gives you data for wages and the Consumer Price Index (CPI) for the last two years. Wage ($/day) CPI Year 1. $2,500 110 Year 2 $2,875 112.2 The nominal percentage increase in your wage is ______ The real percentage increase in your wage is ________
15% 13%
Below is a list of years and their annual average CPI values. Use these data to answer the following questions. Year 1960 1980 2000 2020 CPI Value. 29.6 82.4 172.2 258.811 Assume that the price of a product was $17.56 in 1960, what would the value of the product be when converted to values in 2020?
153.54
Suppose the consumer price index (CPI) of a country follows the path shown in the figure to the right. During which period did the country experience zero inflation? During which period did the country experience an increasing rate of inflation? During which period did the country experience a slow down in inflation, although the inflation rate remained positive? (This situation is called "disinflation.") During which period did the country experience deflation?
2000 to 2005. 1990 to 1995. 1995 to 2000. 2005 to 2010.
Calculate the missing values in the table below by using the provided data. (Enter your responses as whole numbers.) Category Value Working-age population** 261,840 Employed** 153,154 Unemployed** 8400 Unemployment rate. 5.2% Labor force** 161554 Labor force participation rate. 61.7% ** Numbers in thousands
261,840 8400 161,554
You are given the following two equations: QSL=17+r QDL=68 − 3r The equilibrium quantity of loanable funds is equal to
29.75
Please answer the following two questions based off of your required reading in The Economist titled Why a dawn of technological optimism is breaking. How many reasons did this article give as to why the "great stagnation" may be ending? This article believes that governments should play an important role in seeing the future increase in techology and productivity.
3 true
The graph below shows three production functions. PFo shows the current production function for the economy, and capital per worker is currently (K/L)o; thus ouput per worker is (Y/L)o. Suppose that there is an increase in capital per worker. Which of the points on the graph could show the new capital per worker and output per worker?
3, the point on PF0 farthest to the right
In an economy, the working-age population is 300 million. Of this total, 240 million workers are employed. 9 million workers are unemployed. 42 million workers are not available for work (homemakers, full-time students, etc.). 6 million workers are available for work but are discouraged and thus are not seeking work. 3 million workers are available for work but are not currently seeking work due to transportation or childcare problems. The unemployment rate in this economy is ____
3.6%
You are given the following two equations: QSL=24+r QDL=64 − 3.6r The equilibrium quantity of loanable funds is equal to
32.7
How many Minor Quizzes will be dropped this semester? How many Major Quizzes will be dropped this semester? How many Packback Assignments will be dropped this semester?
4 1 2
The problems below involve a fictitious country called Nittany Nation. Some useful economic data for Nittany Nation is provided in the table below: Nittany Nation Economic Data Year GDP 1970 $6653 2014 $35629 2015 $37068 Note: You should use a non-programmable calculator for these calculations. The fictitious country of Nittany Nation saw it's GDP per-capita increase from $35629 in 2014 to $37068 in 2015. What was the growth rate in 2015? The fictitious country of Nittany Nation saw it's GDP per-capita increase from $6653 in 1970 to $37068 in 2015. What was the average annual growth rate over this time?
4.04% and 3.89%
The problems below involve a fictitious country called Nittany Nation. Some useful economic data for Nittany Nation is provided in the table below: Nittany Nation Economic Data Year GDP 1970 $6333 2014 $35585 2015. $37369 Note: You should use a non-programmable calculator for these calculations The fictitious country of Nittany Nation saw it's GDP per-capita increase from $35585 in 2014 to $37369 in 2015. What was the growth rate in 2015? The fictitious country of Nittany Nation saw it's GDP per-capita increase from $6333 in 1970 to $37369 in 2015. What was the average annual growth rate over this time?
5.01 and 4.02
Assume that the value of a home increases from $209367 to $222592, one would say we say a percentage change of:
5.9%
A simple economy produces two goods, Bread and Computer Games. Price and quantity data are as follows: Production and Prices in Year 1 (Base year) Product Quantity Price Per Unit Bread 105 $1.00 Computer Games. 500 $35.00 Production and Prices in Year 2 Product Quantity Price Per Unit Bread 131.25 $1.50 Computer Games. 750.00. $70.00 In Year 2, nominal GDP is equal to: $______ and real GDP is $_____
52,696.88 and 26,381.25
The labor force participation rate is the percentage of the working-age population in the labor force. Suppose an economy is given by: Population = 292 million Working-age population = 190 million Labor force = 127 million The number of people employed = 115 million The number of people unemployed = 12 million The labor force participation rate for this economy is
66.8%
The nominal interest rate is 12%. The inflation rate is 5%. The real interest rate is equal to ______
7%
You are given the following two equations: QSL=19+r QDL=55 − 3.6r The equilibrium real interest rate is equal to
7.83%
Suppose that a simple economy produces only the following four goods and services: shoes, hamburgers, shirts, and cotton. Further, assume that all of the cotton is used in the production of shirts. Use the information in the following table to calculate Nominal Gross Domestic Product (Nominal GDP) for 2021. PRODUCTION AND PRICE STATISTICS FOR 2021 Product Quantity Price Shoes 100 $60.00 Hamburgers. 100 2.00 Shirts. 50 25.00 Cotton 1,800 0.60 The Nominal GDP for the year 2021 is $_____
7450
Suppose the information in the following table is for a simple economy that produces only the following four goods: shoes, hamburgers, shirts, and cotton. Further, assume that all of the cotton is used to produce shirts. 2012 Statistics 2020 Statistics 2021 Statistics Product Quantity Price Quantity Price. Quantity Price Shoes 100 $52.00 115 $65.00 110 $70.00 Hamburgers. 85 3.00 120 3.00 135 3.50 Shirts. 70 40.00 60 35.00 85 35.00 Cotton 11,000 0.09 10,000 0.08 11,000 0.07 a. If the base year is the year 2012, then real GDP for 2020 equals _________ and the real GDP for 2021 equals ___________ b. The (annual) growth rate of real GDP in 2021 is
8740 and 9525 8.98%
Real GDP per capira is often used as a measure of general well-being. While increases in real GDP often do lead to increases in the well-being of the population, why is real GDP not a perfect measure of well-being?
All of the above.
The relationship between the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) can best be described as
All of the above.
The example we will be using in this course the most in about what? Inflation focuses on individual prices and not the price level as a whole. The _________ is the most well-known publisher for data on prices.
A T-Shirt Factory false Bureau of Labor Statistics (BLS)
When looking at output & production, you are given a simplified exam in the Canvas readings. What what that example? The main way economists measure output and production is through: When you see the term per-capita reported on a statistic that just means:
A T-shirt Factory Gross Domestic Product (GDP) the data have been divided by population to get it per-person
Which of the following is not an explanation for why firms keep inventories?
Because goods are produced in quantities that match the exact amounts consumers want to purchase at a given time.
Which groups tend to have above-average unemployment rates, and which groups tend to have below-average unemployment rates? Consider the following choices. Which one is not accurate?
Black teenagers as a group have lower unemployment rates than white teenagers.
Suppose the fixed interest rate on a loan is 5.75% and the rate of inflation is expected to be 4.25%. The real interest rate is 1.5%. Suppose now that instead of 4.25%, the inflation rate unexpectedly reaches 5.5%. Who gains and who loses from this unanticipated inflation? (Mark all that apply.)
Borrowers gain from a lower real interest rate. Lenders lose from a lower real interest rate
Your week 5 reading titled, The Costs of Being Poor, was published by the Centre on Poverty & Social Policy from which university? The findings of this study shows that, when adjusted for inflation, we see 3.2 million more people living in poverty in 2018. Which of the following income quintile's did not experience inflation inequality when it came to measuring their income growth? Jaravel's research shows that, at least in recent years, inflation is steeper at the top of the income distribution.
Columbia True Income Quintile 5 False
In this lesson, we introduced one way of measuring the price level. That was by using the: The inflation rate is equal to:
Consumer Price Index (CPI) the percentage change in the price level over the past year.
The following questions are related to the New York Magazine article titled, There's Deflation, But You're Probably Not Enjoying Lower Prices. a. The BLS inflation data for April 2020 showed which of the following? b. Which of the following part of CPI seemed to have fallen the most according to the data? c. Food prices, like fuel prices, tend to be sensitive to shocks on the supply side, which is a reason why monetary policy-makers tend to look at a "core inflation" statistic that excludes food- and fuel-price changes. d. According to this article, the inflation statistic from April 2020 is likely materially higher than it really should be, if you're trying to measure prices as experienced by consumers.
Consumer prices fell 0.8 percent from a month earlier. retail gasoline true false
______is unemployment caused by a recession. As output (GDP) is increasing, the amount of cyclical unemployment would
Cyclical unemployment decrease
Briefly explain whether you agree or disagree with the following statement: "I don't believe the government price statistics. The CPILOADING... for 2018 was 220, but I know that the inflation rateLOADING... couldn't have been as high as 120 percent in 2018."
Disagree. The inflation rate is the percentage increase in the price level from the previous year, not the base year.
When we introduced employment in this lessons, we referenced Tweets by two US Politicians. Who were they? Currently, the unemployment rate is: The unemployment rate never reaches 0% Which of the following governmental agencies released the Jobs Report?
Donald Trump & Bernie Sanders Below 6% true Bureau of Labor Statistics
Firms care about their after-tax rate of return on investment projects. The graph on the right represents the market for loanable funds.The initial demand and supply curves are D1and S1, respectively. Use the line drawing tool to shift the demand and or supply curve to illustrate the effect of an increase in business taxes. (For simplicity, assume no change in the federal budget deficit or budget surplus). Properly label this new line. When business taxes increase, the equilibrium interest rate decreases and the equilibrium quantity of loanable funds decreases What will be the effect of an increase in business taxes on the quantity of investment by firms and the economy's capital stock in the future?
Draw D2 to the lower left of D1 The quantity of investment will decrease and the economy's future capital stock will decrease.
In the circular flow of expenditure and income, why must the total value of production in an economy equal the total value of income?
Every penny spent on a good or service must end up as someone's income.
Which of the following is not a main determinant of net exports? How would an increase in the growth rate of GDP in Canada and Mexico affect U.S. net exports? An increase in the growth rate of GDP in Canada and Mexico will
Expectations of future profitability in the United States. increase U.S. net exports by increasing exports to these countries.
What are the four main determinants of investment? How would an increase in interest rates affect investment?
Expectations of future profitability, interest rates, taxes and cash flow. Real investment spending declines.
What does the acronym FRED stand for? In the video under the Introduction to FRED page on Canvas, what data were being looked at? Which Federal Reserve Bank hosts FRED?
Federal Reserve Economic Database Gross Domestic Product St. Louis
Suppose John Q. Worker is currently unemployed. Each day, John Q. Worker spends the entire day searching available job openings for an appropriate position given his set of skills, abilities, and interests. If someone asks John Q. what he does for work, he tells them that he is currently "in-between jobs." Which of the following best classifies John Q.'s unemployment status?
Frictionally unemployed
Which of the following is considered to be a problem in using GDP as a measure of national well-being?
GDP is not adjusted for changes in the enviroment
Which of the following equals the amount of public saving? A government that collects more in taxes than it spends experiences
Government tax revenue minus the sum of government purchases and transfer payments to households. a budget surplus.
GDP is an imperfect measure of economic well-being because it fails to measure what types of production? Even if GDP included these types of production, why would it still be an imperfect measure of economic well-being?
Household production and the underground economy. All of the above.
Indicate whether each of the following is a final good, an intermediate good, or neither. Coffee beans purchased by a coffee shop One share of Google stock A new pick-up truck purchased by a consumer A new home purchased by a family
Intermediate good Neither Final good Final good
The line on the graph to the right represents what economists call a "demand" curve. This line represents information about the number of cups of lemonade that Caroline and Emily can sell each day at various prices. The number of cups of lemonade demanded is shown on the X-Axis and the price on the Y-Axis. Individual points on a line or curve can also be identified and labeled. Problem statement: → Caroline and Emily can sell 15 cups of lemonade at a price of 50 cents; the point (15, $0.50) is on this demand line. Instruction: → Use the point drawing tool to identify this point, and label the point "B." To access the tool palette used to draw your answer to the question, click anywhere inside of the graph. Click on the Point Drawing Tool icon and then click on the point (15, $0.50). To label the point, click on the question marks and choose the letter "B."
Label the point (15, $0.50) the letter B
Use the figure to calculate the marginal propensity to consume (MPC) between point A and point B.
MPC = 0.75 change in vertical divided by change in horizontal
What date/time are the Open Zoom Help Hours for our class? Your Packback assignments are due at 11:59pm ET on which night of the week? You will have minor quizzes every Tuesday and Thursday throughout the semester. You get free access to the New York Times and the Wall Street Journal as a Penn State student.
MW at 10:30am & TTh at 1pm Sunday true true
Which of the following statements regarding net exports is not correct?
Net exports are typically one of the largest components of aggregate expenditure.
Which state did Professor Tierney grow up in? The final exam is cummulative and worth 20% of the overall grade. Extensions for assignments are only given for university-excused absenses and the request must come before the dude date. There will be no extensions given to students who request extensions after the due date unless under extreme circumstances.
New York true true true
Real-Time Data Analysis Exercise* The Standard & Poor's/Case-Shiller Home Price Index is one of the leading indicators of housing price trends in the United States. The base year for the index is January 2000. The following table lists index numbers for February 2020 and February 2021 for five cities. City February 2021 February 2020 New York 228.8 203.9 Miami. 277.0 249.5 Phoenix 236.5 201.5 Dallas 216.5 195.2 San Diego. 312.8 267.2 *Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis. Calculate the percentage changes in the price indices from February 2020 to February 2021 for the following cities The prices of homes changed the most during this year in Based on these numbers, can you determine which city had the most expensive homes in February 2021
New York: 12.2% Miami: 11.0% Phoenix: 17.4% Dallas: 10.9% San Diego 17.1% Pheonix It is not possible to determine this with the information provided.
If prices steadily increase year over year, which of the following must be true? If production steadily increases year over year, which of the following must be true? If production and prices steadily increase year over year, which of the following must be true?
None of these are correct Real GDP will always increase year over year. All of these are correct
When we talk about economic growth (increases in real GDP per capita), we can break it down into two sources: inputs and productivity. Which of the follow statements is true? Both Robert Solow and Paul Romer won Nobel Prizes for their work.
One way to increase productivity is to improve allocative efficiency. true
Refer to the graph. According to the economic concept of catch-up, which of the following is CORRECT?
Poorer countries should grow more quickly and will be at point A.
In a closed economy, the values for GDP, consumption spending, investment spending, transfer payments, and taxes are as follows: Y = $12 trillion C = $9 trillion I = $3 trillion TR = $2 trillion T = $3 trillion Using the information above, what is the value of private saving and public saving?
Private saving equals $2 trillion and public saving equals $1 trillion.
An article in the Wall Street Journal notes, "Productivity improvements are a key ingredient for the U.S. economy to maintain a 3% growth rate, a goal of the Trump administration." Source: Eric Morath, "U.S. Worker Productivity Advances at Best Rate since 2010," Wall Street Journal, May 2, 2019. a. What economic variable was the Trump administration hoping would grow at a rate of 3 percent per year? b. What is the connection between productivity growth and growth in the variable you identified in part (a)? Productivity refers to ____________, and increases in productivity are a key determinant of this variable's growth rate.
Real GDP the quantity of goods and services that can be produced per worker or per hour of work
For this week, you needed to complete and assigment that had you work with FRED where you worked through a few different activities. Answer the following questions based off of that work. Step 7 shows changing the bars from blue to what color? Step 4 had you convert the graph from a bar graph to a line graph. You can a download high-quality image of custom graphs.
Red False True
Problem statement: → The table below provides information about the number of cups of lemonade that Caroline and Emily can sell each day at various prices. The data points are plotted on the graph, with the number of cups of lemonade on the X-Axis and the price on the Y-Axis. Cups of lemonade sold per day Price 0 $2.00 5 $1.50 10 $1.00 15 $0.50 20 $0 You can connect the points with a straight line using the Line Drawing Tool. To access the tool palette used to draw your answer to the question, click anywhere inside of the graph. Click once on the beginning coordinate to start the line, then move the mouse to ending coordinate, and click again to finish. Instruction: → Use the line drawing tool to draw a single line representing the demand schedule above, beginning at the price of $2.00 and ending at the price of $0. Properly label this line. Note: since the demand schedule can be represented by a straight line, you only need to plot the beginning and ending points of the line.
Straight Demand Line from (0, $2) to (20, $0)
Bob Wesley believes that structural unemployment should be eliminated in order for an economy to be healthy. In making this argument, which of the following relevant issues is he ignoring?
Structural unemployment will exist in an economy that is innovative.
Suppose that Sally J. Society recently lost her job as an underwater welder. In looking for a new job, she discovers that the only available jobs are for economists and that there are no openings for underwater welders because the trade is now obsolete. If Sally J. Society decides to return to school to earn an Economics degree, what is the best classification of her unemployment status?
Structurally unemployed
In the Medium article Professor Tierney wrote titled GDP Doesn't Tell the Whole Story, which alternate to GDP was the artcle about?
The Gross National Happiness Index
In the elaboration video, what world event did they use as an example? Students should never combine elaboration with retrieval practice.
The World Wars False
A way to achieve more economic growth is by increasing the knowledge capital of firms. Suppose policymakers wanted to assist in this increase. Which of the following policies would not help? When reading about endogenous growth theory you will likely run into physical capital being referred to as ideas and knowledge capital being referred to as objects.
The government could reduce corporate tax rates for service and retail companies. false
A company lowered the prices of its products, expecting an increase in demand and sales by at least 10 percent. However, sales increased by only 4 percent. Which of the following, if true, can explain this outcome?
The government increased personal income tax rates earlier this year.
________ is the percentage of the working-age population in the labor force. Suppose an economy is given by: Population = 292 million Working-age population = 176 million Labor force = 130 million The number of people employed = 120 million The number of people unemployed = 10 million The labor force participation rate for this economy is ______
The labor force participation rate 73.9%
According to the Page One Economics article posted by the St. Louis Fed titled How Do Imports Affect GDP that you were required to read for this week, addressed which of the following topic?
The misconceptions about how imports affect overall GDP.
How would it affect the unemployment rate if the Bureau of Labor Statistics counted as unemployed both (1) discouraged workers and (2) people who work part-time but would prefer to work full-time?
The unemployment rate would increase.
According to your required reading titled, What full employment really means, the rise of "gig economy" work might push the natural rate down.
True
Indicate whether the following statement is true or false and why. "A wage rising slower than the rate of inflation is actually falling."
True. If wages are increasing slower than the average price of goods and services, purchasing power falls.
Why does inflation make nominal GDP a poor measure of the increase in total production from one year to the next? How does real GDP deal with the problem inflation causes with nominal GDP?
When nominal GDP increases from year to year, the increase is due partly to changes in prices and partly to changes in quantities. All of the above.
In the aggregate expenditure model, when is planned investment greater than actual investment?
When there is an unplanned decrease in inventories.
Which equation represents the relationship between GDP and the four major expenditure components? What are the four major components of expenditures in GDP?
Y = C + I + G + NX Consumption, Investment, Government Purchases, and Net Exports
Suppose that the inflation rate turns out to be much higher than most people expected. In that case,
a borrower will gain from the situation while a lender will lose.
Suppose that the inflation rate turns out to be much lower than most people expected. In that case
a borrower will lose from the situation while a lender will gain.
Suppose that you are available to go to work but have not looked for a job for at least the last four weeks because you believe that there aren't any jobs available. You would be counted as Which of the following is the correct formula for calculating the unemployment rate?
a discouraged worker. (number of unemployed/labor force) x 100
Which of the following is the definition of the new growth theory? When are additions to knowledge capital subject to diminishing returns? Which of the following is not a government policy that will increase the accumulation of knowledge capital?
a model of long-run economic growth that emphasizes that technological change is influenced by economic incentives when we look only at their effect on an individual firm encouraging the growth of labor unions
Consider the following data for a closed economy: Y = $13 trillion C = $9 trillion I = $2 trillion TR = $1 trillion T = $2 trillion Use the data to calculate the following. (Enter your responses as integers.)
a. Private saving: $33 trillion. b. Public saving: $negative 1−1 trillion. c. Government purchases: $22 trillion. d. The government budget balance is $negative 1−1 trillion and as a result the government budget is in deficit.
Consider the following data for a closed economy: Y = $15 trillion C = $9 trillion G = $2 trillion Spublic = $−1.0 trillion T = $3 trillion Use the data to calculate the following: (Enter your responses rounded to one decimal place.)
a. Private saving is: $55 trillion. b. Investment spending is: $44 trillion. c. Transfer payments are: $22 trillion. d. The government budget balance is: $negative 1−1 trillion and as a result the government budget is in deficit.
We say that the economy as a whole is in macroeconomic equilibrium if
all of the above
The Romer model suggests that the accumulation of knowledge capital can be slowed because knowledge is both nonrival and nonexcludable. How does the federal government intervene in the market to increase the amount of knowledge capital? A good is said to be rival if the person or firm owning the good can keep others from using it in some way.
all of the above false
Business cycles are
alternating periods of expanding and contracting economic activity, which are usually illustrated using movements in real GDP.
To answer this question you must have listened to the podcast Surprisingly Awesome -- Interest Ratesopens in a new tab and taken notes. a. After the Dutch legalized interest and set up borrowing and lending areas, they b. What movie is being filmd in New Orleans while this podcast is being recorded? c. According to this podcast, how did the rich Italians get so rich? d. The base interest rate in the US is called the:
became the richest country in the world. The Big Short They charged interest on loans. federal funds rate.
What index is used to measure the average prices paid by a typical family? An average of the prices of the goods and services purchased by a typical family is the: Suppose the economy's consumer price index (CPI) in 2008 was 188 and the CPI in 2009 was 198. The inflation rate over the period from 2008-2009 was equal to
consumer price index (CPI). 5.3%
The diagram shows the relationship betwen consumption and income for the years 1970 through 2018. Which of the following statements is true? The line that represents the relationship between consumption and disposable income is called the __________. The slope of the this line is the __________.
consumption function; marginal propensity to consume
Complete the following table to indicate what effect an increase in each of the consumption components will have on consumption. An increase in... will (increase/decrease) consumption. the price level decrease consumption. household wealth increase consumption. expected future income increase consumption. current disposable income increase consumption. the interest rate decrease consumption.
decrease, increase, increase, increase, decrease
Consider the per-worker production function. Equal increases in the quantity of capital per hour worked lead to diminishing increases in output per hour worked.
diminishing
In most countries, political stability has little to do with economic growth.
false
Currently, in the basket of good created by the BLS for the CPI, there are about 100 different types of goods and servies placed into 8 major categories. BLS employees then visit 23,000 stores across 87 cities to record the prices every 6 months to update the CPI.
false false
The Bureau of Economic Analysis (BEA) is part of the Department of Labor. When data are seasonally adjusted they are adjusted to remove seasonal variation in the data. Inflation occurs when prices in an economy rise as a whole (deflation is when they stay constant). GDP doesn't measure many things such as happiness or equality.
false true false true
The financial system of a country is important for long-run economic growth because
firms need the financial system to acquire funds from households.
Endogenous growth theory (the Romer model) states that Romer's growth theorydiffers from Solow since
firms will add to an economy's stock of knowledge capital by engaging in research and development or by contributing to technological change. the Solow growth theory focuses on technological change and the quantity of capital available to workers whereas the new growth theory states that accumulation of knowledge capital is a key determinant of economic growth.
When the economy is at full employment, which types of unemployment remain? The "normal" underlying level of unemployment in the economy is
frictional and structural All of the above.
According to your required reading titled, What full employment really means, the phenomenon short-term unemployment coulse become long-term unempllyment is known as:
hysteresis
Suppose the per-worker production function was shaped as shown in the graph at right. If a country was accumulating increasing quantities of capital per hour worked, this country would experience
increasing labor productivity and higher levels of economic growth.
What is the rule of 70? The rule of 70 If real GDP per capita grows at a rate of 3.9percent per year, it will take ____ years to double
is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to double. 17.9
The real interest rate Suppose an economy has an inflation rate of 3.6% and a bank makes a loan with an interest rate of 5.9%. In this case, the real interest rate is _________
is equal to the nominal interest rate minus the inflation rate. 2.3%
The unemployment rate that includes discouraged workers and people working part-time who would prefer full-time jobs
is higher than the official unemployment rate, and the difference between the two grows larger in recessions.
At the macro-economy level, At the firm level,
knowledge capital exhibits increasing returns and physical capital exhibits decreasing returns. both knowledge capital and physical capital exhibit decreasing returns.
The accumulation of knowledge capital can slow down due to firms underinvesting in research and development. This can then cause slowing of economic growth. Which of the following would be a reason for this to happen? Government policy can increase the accumulation of knowledge capital in all the following ways except by:
knowledge capital is both nonrival and nonexcludable; other firms can freely access the research and development of one particular firm. investing in physical capital accumulation.
Economic growth models predicts that the Have poor countries been catching up to rich countries?
level of per capita GDP in poor countries will increase faster than rich countries and the poor nations will catch up with the rich nations. There has been catch-up by some poor but industrialized countries.
The following graph shows the market for loanable funds. On the graph, 1.) Use the line drawing tool to show the effect of an increase in the profitability of new investment. Label this line 'D2'. 2.) Use the point drawing tool to show the new equilibrium point. Label this point 'B'.
line D2 to the upper right of D1 point B where D2 and S1 cross
Refer to the graph to answer the following questions: a. With the shift in the demand for loanable funds, the equilibrium real interest rate increases and the equilibrium quantity of loanable funds increases. b. The fact that the equilibrium quantity of loanable funds may increase along with an increase in the real rate of interest c. How much would the quantity of loanable funds demanded have increased if the interest rate had remained at i1? d. How much does the quantity of loanable funds supplied increase with the increase in the interest rate from i1 to i2?
loanable funds and increases assumes that demand for loanable funds increases with supply remaining unchanged. from L1 to L3 from L1 to L2
The following questions are related to your required reading in the Wall Street Journal titled, The Fed's Point Man on Productivity. Since 2004, total facot productivity growth has been True or False: The technology boom of the 1990s did not help business become more efficient because the benefits of tech innovations flow more to leisure activitys, such as social media and smartphone apps.
lower than 1% but greater than 0%. false
Look at the following statements. Choose whether the statement is a microeconomic or a macroeconomic issue. a. The effect of higher cigarette taxes on the quantity of cigarettes sold. b. The effect of higher income taxes on the total amount of consumer spending c. The reasons for the economies of East Asian countries growing faster than the economies of sub-Saharan African countries. d. The reasons for low rates of profit in the airline industry.
micro macro macro micro
The difference between microeconomics and macroeconomics is Identify whether the following topics belong in microeconomics or macroeconomics: How does the price of corn change if the price of wheat increase? Microeconomics Identify the best measurement of total output in the US economy. Macroeconomics How will an increase in government spending impact the inflation rate? Macroeconomics The most efficient market structure is perfect competition. Microeconomics
microeconomics studies smaller parts of the economy such as markets and individuals, while macroeconomics studies the economy as a whole.
Into which category of aggregate expendituresLOADING... would the following transaction fall? A consumer in Japan orders a computer online from Dell.
net export expenditure
All of the following are problems in measuring the unemployment rate except that When there are workers that drop out of the labor force, the official BLS measure of the unemployment rate understates the true degree of unemployment.
people on active military service are included as unemployed. understates
The economic growth model predicts that poor countries will grow faster than rich countries. Which of the following best explains what is actually happening to real per capita GDPs of countries?
poor countries, rich countries Lower-income industrial countries are catching up with higher-income industrial countries.
If the GDP deflator in 2012 has a value of 98.0, then
prices have decreased 2 percent between the base year and 2012.
If the GDP deflator in 2015 has a value of 97.0, then When is the GDP Deflator in a specific year equal to 100?
prices have decreased 3 percent between the base year and 2015 All of the above are true.
On a 45°-line diagram (or Keynesian Cross), the horizontal axis measures real GDP, while the vertical axis measures real aggregate expenditure The aggregate expenditures line will be The macroeconomic equilibrium will be
real GDP and real aggregate expenditure upward sloping with a flatter slope than the 45 line where the AE line intersects the 45°-line.
On the graph of the consumption function, the horizontal axis measures _______, while the vertical axis measures _______. The graph on the right shows a consumption function, C1. The current income-consumption combination is shown by point A. Suppose the level of income increases. 1.) Use the point drawing tool or the line drawing tool (as appropriate) to show the impact of the increase in income. Label the new income-consumption combination 'B' or the new consumption function, if any, C2. Suppose there is an increase in expected future income. 2.) Use the line drawing tool to show the impact of such an increase. Label the new consumption function C3.
real national income or real GDP; real consumption spending draw the lin, C3 to the upper right of C1, and point be on the right of point A on the line
Shaded areas on a FRED graph represent: What source does FRED get the GDP data from? You can download data from FRED directly to Excel
recessions US Bureau of Economic Analysis true
What economic concept was used as an example in the Concrete Examples video you were required to watch? Dual Coding means which of the following?
scarcity Using both words and visuals while studying concepts.
A reform of the Chinese school system results in more highly trained workers. This will cause a shift of China's per-worker production function
shift of
The unemployment rate Suppose an economy is given by the following: Population = 243 million Labor force = 188 million The number of people employed = 173.9 million The number of people unemployed = 14.1 million Given the information above, the unemployment rate is ______
shows the percentage of the labor force that is considered unemployed. 7.5%
a. An increase in the real interest rate results in little increase in private saving by households. 4 b. A decrease in the real interest rate results in a substantial increase in spending on investment projects by businesses. 1 c. The federal government eliminates 401(k) retirement accounts. 2 d. The federal government reduces the tax on corporate profits (assume no change in the federal budget deficit or budget surplus). 3
single supply line single demand line supply shift to the left demand shift to the right
Economic growth will Some economies are able to maintain high growth rates despite diminishing returns to capital by using
slow down or stop if more capital per hour is used because of diminishing returns to capital. better or enhanced technology, along with accumulating capital; these economies are growing because technology, unlike capital, is subject to increasing returns.
Which of the following does the aggregate expenditure macroeconomic model seek to explain?
the business cycle
Macroeconomics is the study of Microeconomics is the study of The level of total investment by firms in new machinery and equipment helps to determine how rapidly the economy grows. This is a _______ issue. However, to understand how much new machinery and equipment firms decide to purchase, one must analyze the incentives individual firms face, which is a ______issue.
the economy as a whole, including topics such as inflation, unemployment, and economic growth. how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices. macroeconomic, microeconomic
Why do economists believe that setting a goal of zero percent unemployment is not feasible or desirable? Creating a goal of zero percent unemployment for an economy is not feasible nor is it desirable because
the economy needs some short-term unemployment in order to allow for better matching of jobs with workers that possess the proper skill sets.
In determining whether to borrow funds, firms compare the rate of return they expect to make on an investment with Which of the following factors determines the supply of loanable funds? Holding all else constant, a federal government budget deficit will
the interest rate they must pay to borrow the necessary funds. the willingness of households and governments to save decrease the supply of loanable funds and increase the equilibrium real interest rate.
Capital can be differentiated between physical capital and human capital. Human capital is Which of the following is the best example of human capital?
the knowledge and skills workers acquire from education and training or from their life experiences a worker gets a college degree
Gross Domestic Product (GDP) is Consumption is the largest component of GDP in the US.
the market value of all final goods and services produced in a country during a period of time. true
Gross domestic product is best defined as What happens if we measure GDP by adding up the value of every good and service produced in the economy?
the market value of all final goods and services produced in a country during a period of time, typically one year. GDP is overestimated because of double counting.
The difference between the nominal interest rate and the real interest rate is
the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate.
The labor force participation rate is calculated by Use the graph to the right to help determine which of the following statements regarding the labor force participation rates of adult men and women since 1950 is false.
the percentage of the working-age population that is in the labor force or (Labor force/Working−age population)×100. The labor force participation rates of adult men and adult women were equal in 1990.
Which of the following is included in the economist's definition of investment? In calculating GDP, which levels of government spending are included in government purchases?
the purchase of new machines, factories, or houses spending by federal, state, and local governments
Changes in the CPI overstate the true inflation rate due to four "biases." If apple prices rise rapidly during the month while orange prices fall, consumers will reduce their apple purchases and increase their orange purchases. Which of the four biases is concerned with this consumer behavior? The BLS collects price statistics from traditional full-price retail stores, which do not reflect the prices some consumers pay by shopping at discount stores or on the Internet. This is a description of which bias?
the substitution bias the outlet bias
The natural rate of unemployment is When the economy is at full employment, unemployment is equal to
the sum of structural unemployment and frictional unemployment. the natural rate of unemployment.
At point A in the graph to the right, planned aggregate expenditure is greater than GDP. At point B, planned aggregate expenditure is equal to GDP. At point C, planned aggregate expenditure is less than GDP. At point A, the unintended change in inventories can be shown on the graph by:
the vertical distance between point A and the 45 degree line
Consider the per-worker production function graph. If there is an increase in capital per hour worked, holding technology constant, then If there is an increase in technology, holding constant the quantity of capital per hour worked, then
there is a movement from A to B. there is a movement from A to C
Transfer payments are not included in GDP calculations because
transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service.
Spacing out your studying is a better learning strategy than cramming. In the Spaced Practice video, they suggested studying how many days a week when showing you the schedule?
true 6
Interleaving means you shouldn't study one idea for too long. Instead, you should change up your topics. Interleaving will help you make connections across material.
true true
In the 3rd quarter, 2020, the US RGDP was reported to increase at a seasonally and inflation-adjusted 33.1% annual rate, a record increase. When the BEA reports the GDP data from a quarter, they are reporting what a full year would look like (again, adjusting for both inflation and seasonality effects) if this quarterly production occurred. RGDP in the US declined at an annualized rate by about 31% in the second quarter, 2020. It then increases at an annualized rate by about 33% in the third quarter. Thus, the US RGDP has increases slightly over the 2nd and 3rd quarters of 2020. The two articles you had to read regarding the increase/decrease of GDP during last two quarters were on which website?
true true false medium
According to your required reading titled, On the Persistence of the Black-White Unemployment Gap, the Black unemployment rate is consistently _______ the White unemployment rate in the US.
twice
An important conclusion to draw from the circular-flow diagram is that In the circular-flow diagram, who supplies factors of production in exchange for income?
we can measure GDP by calculating the total value of expenditures on final goods and services, or we can measure GDP by calculating the value of total income. households
A politician makes the following argument: "The economy would operate more efficiently if frictional unemployment were eliminated. Therefore, a goal of government policy should be to reduce the frictional rate of unemployment to the lowest possible level." Eliminating all frictional unemployment
will not be good for the economy since the presence of frictional unemployment increases economic efficiency.
You were required to watch a YouTube video by Chad Jones of Stanford. Please answer the following questions based on that video. Approximately what percentage of doctors, lawyers, and managers were white men in the year 1960 Approximately what percentage of doctors, lawyers, and managers were white men in the year 2010 Women were 6464 times more likely to be a secretary in 1980 and 44 times less likely to be a lawyer. Growth in LF participation plus growth in GDP per worker equals the growth in GDP per person.
90% 60% 64 and 4 true
Read the following statement and indicate where you agree or disagree. "During times when individuals and investors buy many shares of stock, investment will be high and, in turn, GDP will be as well"
Disagree: Investment as a component of GDP refers to the purchase of physical and human capital and inventory, not stock purchases.
Long-run growth in GDP is determined by Technological progress is affected by (check all that apply)
capital, labor productivity, and technology. investment in capital, new software developments, private property rights, entrepreneurship
The three types of unemployment are The type of unemployment most likely to result in hardship for the people who are unemployed is
frictional, structural, and cyclical unemploment. structural because this type of unemployment requires retraining to acquire new job skills.
Scarcity means that resources are ______ and our wants as a society are _______. Which of the following was not one of the three biggiest in macroeconomics talked about in the Canvas readings? We refer to data on the economy as:
limited; unlimited money economic indicators
