ECON 206 Macro Final Exam

A painter pays 500 for the paint he uses to repaint a house . He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP.

$1200

The consumer price index was 225 in 2006 and 234 in 2007. The nominal interest rate during this period was 6.5 percent. What was the real interest rate during this period.

2.5 percent

in 2009, the imaginary nation of Florastan had a population of 8,300 and real GDP of 190,900. In 2010 it had a population of 8400 and real GDP of 200,445 What was the growth in real GDP per person in Florastan in 2010?

3.8 percent

Ethel purchased a bag of groceries in 1970 for $8. She purchased the same bag of groceries in 2006 for $25. If the price index was 38.8 in 1970 and the price index was 180 in 2006, then what is the price of the 1970 bag of groceries in 2006 dollars?

37.11 USD

In the economy of Ukzten in 2010, consumption was $3000, exports were 200 GDP was 8000, government purchases were 1000 and imports were 600 What was Ukztens investment in 2010.

4400

The price index was 120 in 2006 and 127.2 in 2007. What was the inflation rate?

6.0 percent

Which of the following events shifts aggregate demand rightward?

An increase in government expenditures, but not a change in the price level

The natural unemployment rate includes

Both frictional and structural unemployment

When the Federal Reserve conducts open-market operations to increase the money supply, it

Buys government bonds from the public.

Which of the following pairs of values of consumer price index is consistent with an inflation rate of 14 percent for 2011

CPI in 2010 = 150; CPI in 2011 = 171

If inflation is higher than what was expected

Creditors receive a lower real interest rate than they had anticipated

If the reserve requirement ratio is 15% and banks do not hold excess reserves, and people hold only deposits and no currency, then when the Fed sells 65 million of bond to the public, ban reserves

Decrease by 65 million and the money supply eventually decreases by 433.33 million

In the open- economy macroeconomic model, which of the following would make India's net capital outflow increase

Decrease in Indian interest rates

Other things the same, in an open economy macroeconomic model, which of the following would make India's net capital outflow increase?

Depreciated and so buys fewer Tai goods

Two countries are the same, except one is poorer. Assuming the traditional assumption about the production function is made there are

Diminishing returns to capital so the poor country grows faster.

The unemployment rate is computed as the number of unemployed

Divided by the labor force, all times 100

In the long run, the level of output

Is determined by supply side factors

In which of the following cases was the inflation rate 10 percent over the last year.

One year ago the price index had a value of 120 and now it has a value of 132

For an imaginary closed economy T = 5,000 S= 11000 C = 50,000; and government is running a budget deflect of 1,000. Then

Private savings = 12,000 and GDP = 67,000

If a country changes its corporate tax laws so that foreign businesses build and manage more business in that country, then the net capital outflow of that country

Rises and the net capital outflow of other countries rise.

If foreigners want to buy more U.S bonds, then in the market for foreign currency exchange the exchange rate

Rises and the quantity of dollars traded falls

The sale of stocks

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

The term hyperinflation refers to

a period of very high inflation

If a government started with a budget defect and moved to a surplus, the domestic real interest rate

and the real exchange rate would fall

Country A has a population of 1,000, of whom 400 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, and the country with the higher real GDP per person was country B

The interest rate effect

depends on the idea that increases in interest rates decreases the quality of goods and services demanded.

The unemployment rate is computed as the number of the unemployed

divided by the labor force, all times 100

Danielle did not work last week because flooding forced an evacuation of her workplace. The BLS counts Danielle as

employed and in the labor force