Macro HW

Refer to Table 29-7. If the Bank of Springfield has lent out all the money it can given its level of deposits, then what is the reserve requirement? a. 8.1 percent b. 11.0 percent c. 12.4 percent d. 89.0 percent

ASSETS: Reserves- $19,800 Loans- 160,200 LIABILITIES: Deposit- $180,000 ANSWER: b. 11.0 percent

Inefficient production is represented by which point(s)?

T

Refer to Table 24-1. What belongs in space D? a. 12% b. 154 c. 40% d. 15%

2005 is base year. Answer is: a. 12%

Refer to Table 24-1. What belongs in space A?

2005 is base year. Answer is: d. 154

Refer to Table 29-6. The Bank of Pleasantville's reserve ratio is a. 6.4 percent. b. 16.7 percent. c. 6.0 percent. d. 15.7 percent.

ASSETS: Reserves- $3k Loans- $47k LIABILITIES: Deposits- $50k ANSWER: c. 6.0 percent

Refer to Figure 2-5. It is not possible for this economy to produce at point

C

An increase in the reserve requirement increases reserves and decreases the money supply.

False

Expenditures by households on education are included in the investment component of GDP.

False

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

False

In the circular-flow diagram, factors of production are the goods and services produced by firms.

False

Substitution bias causes the CPI to understate the increase in the cost of living from one year to the next.

False

The content of the basket of goods and services used to compute the CPI changes every month.

False

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant.

False

When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables are positively related.

False

Refer to Table 24-2. If 2012 is the base year, then the CPI for 2013 was a. 95.7. b. 100.0. c. 104.4. d. 110.0.

The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. The answer is c. 104.4

Archie has a savings account at a bank. If he earns 6 percent interest on his account and if there is deflation, then his purchasing power rises by more than 6 percent over the course of a year.

True

Changes in inventory are included in the investment component of GDP.

True

Sandra routinely uses currency to purchase her groceries. She is using money as a medium of exchange.

True

The Bureau of Labor Statistics surveys consumers to determine a fixed basket of goods.

True

The real interest rate tells you how fast the purchasing power of your bank account rises over time.

True

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $8000, government purchases were $1200, and imports were $600. What was Talikastan's investment in 2015? a. $3200 b. $5600 c. $2000 d. $4400

a. $3200

In the economy of Talikastan in 2015, consumption was $1000, GDP was $1950, government purchases were $500, and investment was $700. What were Talikastan's net exports in 2015? a. -$250 b. $250 c. $2200 d. Net exports cannot be calculated from the information given.

a. -$250

In 1970, Professor Plum earned $12,000; in 1980, he earned $24,000; and in 1990, he earned $36,000. If the CPI was 40 in 1970, 60 in 1980, and 100 in 1990, then in real terms, Professor Plum's salary was highest in a. 1980 and lowest in 1970. b. 1980 and lowest in 1990. c. 1990 and lowest in 1970. d. 1990 and lowest in 1980

a. 1980 and lowest in 1970.

​If $500 of new reserves generates $1000 of new money in the economy, then the money multiplier is a. 2 and the reserve ratio is 50 percent. b. ​2 and the reserve ratio is 2 percent. c. ​0.5 and the reserve ratio is 50 percent. d. ​0.5 and the reserve ratio is 2 percent.

a. 2 and the reserve ratio is 50 percent.

Refer to Table 24-15. The inflation rate in 2015 was approximately a. ​41%. b. ​70%. c. ​140%. d. ​240%.

a. 41%

The consumer price index was 200 in 2012 and 208 in 2013. The nominal interest rate during this period was 9 percent. What was the real interest rate during this period? a. 5.00 percent b. 1.00 percent c. 5.15 percent d. 13.00 percent

a. 5.00 percent

Which of the following changes in the price index produces the greatest rate of inflation: 80 to 100, 100 to 120, or 150 to 170? a. 80 to 100 b. 100 to 120 c. 150 to 170 d. All of these changes produce the same rate of inflation.

a. 80 to 100

Which of the following agencies calculates the CPI? a. Bureau of Labor Statistics b. Congressional Budget Office c. Federal Reserve d. Bureau of National Price Standards and Records

a. Bureau of Labor Statistics

Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram? a. Dylan receives a salary for his work as a financial analyst for an investment firm. b. Kristin buys two business suits to wear to her job as a Chief Information Officer. c. Jim receives clean water in his home in exchange for paying his water bill. d. Caroline owns a nail salon and receives payments from her clients for her services

a. Dylan receives a salary for his work as a financial analyst for an investment firm.

One of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI a. fails to measure all changes in the quality of goods. b. displays a housing bias. c. accounts for changes in prices of some goods, but prices of certain goods are assumed to remain constant. d. All of the above are correct.

a. Fails to measure all changes in the quality of goods.

Refer to Table 29-8. The required reserve ratio is 12 percent and First National Bank sells $120 of its short-term securities to the Federal Reserve. This action will a. increase First National's reserves by $120. Its excess reserves are $240. b. decrease First National's reserves by $120. Its excess reserves are $0. c. increase First National's loans by $120. Its reserves decrease by $120. d. decrease First National's loans by $120. Its reserves increase by $120.

a. Increase First National's reserves by $120. Its excess reserves are $240.

Suppose an economy produces only iPhones and bananas. In 2010, 1000 iPhones are sold at $300 each and 5000 pounds of bananas are sold at $3 per pound. In 2009, the base year, iPhones sold at $400 each and bananas sold at $2 per pound. For 2010, a. nominal GDP is $315,000, real GDP is $410,000, and the GDP deflator is 76.83. b. nominal GDP is $410,000, real GDP is $315,000, and the GDP deflator is 130.16. c. nominal GDP is $315,000, real GDP is $410,000, and the GDP deflator is 130.16. d. nominal GDP is $410,000, real GDP is $315,000, and the GDP deflator is 76.83.

a. Nominal GDP is $315,000, real GDP is $410,000, and the GDP deflator is 76.83.

The Federal Deposit Insurance Corporation a. protects depositors in the event of bank failures. b. has become insolvent in recent years due to a large number of bank failures. c. is part of the Federal Reserve System. d. in practice has seldom been of much use.

a. Protects depositors in the event of bank failures.

A professional gambler moves from a state where gambling is illegal to a state where gambling is legal. Most of his income was, and continues to be, from gambling. His move a. raises GDP. b. decreases GDP. c. doesn't change GDP because gambling is never included in GDP. d. doesn't change GDP because in either case his income is included.

a. Raises GDP.

If the price of domestically produced power tools increases, then a. the consumer price index and the GDP deflator will both increase. b. the consumer price index will increase, and the GDP deflator will be unaffected. c. the consumer price index will be unaffected, and the GDP deflator will increase. d. the consumer price index and the GDP deflator will both be unaffected

a. The consumer price index and the GDP deflator will both increase.

Which of the following is not included in U.S. GDP? a. The market value of an oil change that Ben performs on his own car. b. The market value of an oil change at Speedy Lube. c. The market value of oil purchased by Ben. d. Production of foreign citizens living in the United States that work in an oil packaging facility.

a. The market value of an oil change that Ben performs on his own car.

When colonists in Virginia used tobacco as money, their money a. was commodity money. b. had no intrinsic value. c. was fiat money. d. had no store of value

a. Was commodity money.

Which of the following is an example of a positive, as opposed to normative, statement? a. When the minimum wage is increased, unemployment is a predictable consequence. b. The income tax rate should be increased to offset the budget deficit. c. Increasing government spending is the best way to help the economy move out of a recession. d. More than one of the above are positive statements

a. When the minimum wage is increased, unemployment is a predictable consequence.

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the a. amount of the other good that must be given up. b. market price of the additional amount produced. c. amount of resources that must be devoted to its production. d. number of dollars that must be spent to produce it.

a. amount of the other good that must be given up.

A bank's reserve ratio is 10 percent and the bank has $5,000 in deposits. Its reserves amount to a. $50. b. $500. c. $4,500. d. $4,950

b. $500

The reserve requirement is 12 percent. Lucy deposits $600 into a bank. By how much do excess reserves change? a. $600 b. $528 c. $72 d. $12

b. $528

The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the taz. Aggregate banking statistics show that collectively the banks of Tazi hold 300 million tazes of required reserves, 75 million tazes of excess reserves, have issued 7,500 million tazes of deposits, and hold 225 million tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank. Refer to Scenario 29-2. Suppose the Bank of Tazi purchased 50 million tazes of Tazian Treasury Bonds from the banks. Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same. By how much does the money supply change? a. 625 million tazes b. 1,000 million tazes c. 1,250 million tazes d. None of the above is correct

b. 1,000 million tazes

Refer to Table 23-6. In 2013, this country's GDP deflator was a. 1.0. b. 100.0. c. 171.4. d. 240.0.

b. 100.0

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $50; in 2014, the basket's cost was $51; and in 2016, the basket's cost was $52. The value of the CPI in 2014 was a. 98.0. b. 102.0. c. 104.0. d. 151.0.

b. 102.0

Refer to Table 29-4. The reserve ratio for this bank is a. 8 percent. b. 12.5 percent. c. 87.5 percent. d. 25 percent.

b. 12.5 percent

Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900? a. 150 burgers b. 225 burgers c. 300 burgers d. 450 burgers

b. 225 burgers

During wars the public tends to hold relatively more currency and relatively fewer deposits. This decision makes reserves a. and the money supply increase. b. and the money supply decrease. c. increase, but leaves the money supply unchanged. d. decrease, but leaves the money supply unchanged.

b. And the money supply decrease.

Tom is an organic gardener. For several years, he produced only for his own consumption, but this year he has sold his vegetables at a farmer's market. The vegetables Tom produces a. ​are not included in GDP, not for this year nor for previous years. b. ​are included in GDP for this year, but prior to this year the value of his vegetables was not included in GDP. c. ​would be included in GDP only if the vegetables were registered with the Department of Agriculture. d. ​are not part of GDP, since vegetables are not a good included in GDP.

b. Are included in GDP for this year, but prior to this year the value of his vegetables was not included in GDP.

The leverage ratio is calculated as a. assets minus liabilities. b. assets divided by bank capital c. the reciprocal of the required reserve ratio d. the required reserve ratio multiplied by bank capital.

b. Assets divided by bank capital

Real GDP is the yearly production of final goods and services valued at a. current prices. b. constant prices. c. expected future prices. d. the ratio of current prices to constant prices.

b. Constant prices.

Which of the following might explain why the United States has so much currency per person? a. U.S. citizens are holding a lot of foreign currency. b. Currency may be a preferable store of wealth for criminals. c. People use credit and debit cards more frequently. d. All of the above help explain the abundance of currency.

b. Currency may be a preferable store of wealth for criminals.

Which list ranks assets from most to least liquid? a. currency, fine art, stocks b. currency, stocks, fine art c. fine art, currency, stocks d. fine art, stocks, currency

b. Currency, stocks, fine art

During recessions, banks typically choose to hold more excess reserves relative to their deposits. This action a. increases the money multiplier and increases the money supply. b. decreases the money multiplier and decreases the money supply. c. does not change the money multiplier, but increases the money supply. d. does not change the money multiplier, but decreases the money supply

b. Decreases the money multiplier and decreases the money supply.

Which of the following statements is correct? a. Few economic models incorporate assumptions. b. Different economic models employ different sets of assumptions. c. Good economic models attempt to mimic reality as closely as possible. d. Economic models, to be accepted, must be tested by conducting experiments.

b. Different economic models employ different sets of assumptions.

An open-market purchase a. increases the number of dollars and the number of bonds in the hands of the public. b. increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public. c. decreases the number of dollars and the number of bonds in the hands of the public. d. decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public.

b. Increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public.

Tom and Lilly rented a house for $12,000 last year. At the start of the year they bought the house they had been renting directly from the owner for $250,000. They believe they could rent it for $12,000 this year, but stay in the house. How much does Tom and Lilly's decision to buy the house change GDP? a. it reduces GDP by $12,000 b. it does not change GDP c. it raises GDP by $238,000 d. it raises GDP by $250,000

b. It does not change GDP

A bank has a 5 percent reserve requirement, $5,000 in deposits, and has loaned out all it can given the reserve requirement. a. It has $25 in reserves and $4,975 in loans. b. It has $250 in reserves and $4,750 in loans. c. It has $1,000 in reserves and $4,000 in loans. d. None of the above is correct.

b. It has $250 in reserves and $4,750 in loans.

If the reserve ratio is 100-percent, then a new deposit of $1000 into a bank account a. eventually increases the money supply by $1000. b. leaves the size of the money supply unchanged. c. eventually decreases the size of the money supply by $1000. d. eventually increases the money supply by $2000.

b. Leaves the size of the money supply unchanged.

Which of the following items is included in M2? a. credit cards b. money market mutual funds c. corporate bonds d. large time deposits

b. Money market mutual funds

In the simple circular-flow diagram, households a. are the only decision makers. b. own the factors of production. c. are buyers of inputs. d. consume only some of the goods and services that firms produce.

b. Own the factors of production.

An important difference between the GDP deflator and the consumer price index is that a. the GDP deflator reflects the prices of goods and services bought by producers, whereas the consumer price index reflects the prices of goods and services bought by consumers. b. the GDP deflator reflects the prices of all final goods and services produced domestically, whereas the consumer price index reflects the prices of goods and services bought by consumers. c. the GDP deflator reflects the prices of all final goods and services produced by a nation's citizens, whereas the consumer price index reflects the prices of all final goods and services bought by consumers. d. the GDP deflator reflects the prices of all final goods and services bought by producers and consumers, whereas the consumer price index reflects the prices of all final goods and services bought by consumers.

b. The GDP deflator reflects the prices of all final goods and services produced domestically, whereas the consumer price index reflects the prices of goods and services bought by consumers.

Economists use the term inflation to describe a situation in which a. some prices are rising faster than others. b. the economy's overall price level is rising. c. the economy's overall price level is high, but not necessarily rising. d. the economy's overall output of goods and services is rising faster than the economy's overall price level.

b. The economy's overall price level is rising.

Which of the following would likely be studied by a microeconomist rather than a macroeconomist? a. the effect of foreign direct investment on economic growth b. the effect of a sales tax on the cigarette industry c. the effect of an investment tax credit on the economy's capital stock d. the effect of a war on government spending

b. The effect of a sales tax on the cigarette industry

A microeconomist — as opposed to a macroeconomist — might study a. the effect of a national healthcare program on the nation's unemployment rate. b. the effect of new regulations on production in the pulp and paper industry. c. the effect of changes in interest rates on gross domestic product. d. the growth rate of production in the economy.

b. The effect of new regulations on production in the pulp and paper industry.

The CPI is a measure of the overall cost of a. the inputs purchased by a typical producer. b. the goods and services purchased by a typical consumer. c. the goods and services produced in the economy. d. the stocks on the New York Stock Exchange.

b. The goods and services purchased by a typical consumer.

Imagine an economy in which: pieces of paper called yollars are the only thing that buyers give to sellers when they buy goods and services, so it would be common to use, say, 50 yollars to buy a pair of shoes; (2) prices are posted in terms of yardsticks, so you might walk into a grocery store and see that, today, an apple is worth 2 yardsticks; and (3) yardsticks disintegrate overnight, so no yardstick has any value for more than 24 hours. In this economy, a. the yardstick is a medium of exchange but it cannot serve as a unit of account. b. the yardstick is a unit of account but it cannot serve as a store of value. c. the yardstick is a medium of exchange but it cannot serve as a store of value, and the yollar is a unit of account. d. the yollar is a unit of account, but it is not a medium of exchange and it is not a liquid asset.

b. The yardstick is a unit of account but it cannot serve as a store of value.

Suppose prices of personal computers fall significantly and consumers respond by buying more personal computers. The consumer price index a. reflects this price decrease accurately. b. understates this price decrease due to the substitution bias. c. overstates this price decrease due to the income bias. d. overstates this price decrease due to the substitution bias.

b. Understates this price decrease due to the substitution bias.

A recession has traditionally been defined as a period during which a. nominal GDP declines for two consecutive quarters. b. nominal GDP declines for four consecutive quarters. c. real GDP declines for two consecutive quarters. d. real GDP declines for four consecutive quarters.

c. Real GDP declines for two consecutive quarters.

Which of these terms are used interchangeably? a. "goods and services" and "inputs" b. "goods and services" and "factors of production" c. "inputs" and "factors of production" d. "land, labor, and capital" and "goods and services"

c. "inputs" and "factors of production"

Suppose there are only two firms in an economy: Rolling Rawhide produces rawhide and sells it to Chewy Chomp, Inc., which uses the rawhide to produce and sell dog chews. With each $1 worth of rawhide that it buys from Rolling Rawhide, Chewy Chomp, Inc. produces a dog chew and sells it for $2.50. Neither firm had any inventory at the beginning of 2014. During that year, Rolling Rawhide produced enough rawhide for 2000 dog chews. Chewy Chomp, Inc. bought 90% of that rawhide for $1800 and promised to buy the remaining 10% for $200 in 2015. Chewy Chomp, Inc. produced 1800 dog chews during 2014 and sold each one during that year for $2.50. What was the economy's GDP for 2014? a. $3,800 b. $4,500 c. $4,700 d. $5,000

c. $4,700

David earned a salary of $43,500 in 1994 and $89,000 in 2010. The consumer price index was 148.2 in 1994 and 215.3 in 2010. David's 1994 salary in 2010 dollars is a. $43,849.05 b. $61,263.43 c. $63,195.34 d. $93,655.50

c. $63,195.34

The consumer price index is a. not very useful as a measure of the cost of living. b. a perfect measure of the cost of living. c. a useful measure, but not a perfect measure, of the cost of living. d. not used as a measure of the cost of living

c. A useful measure, but not a perfect measure, of the cost of living.

Refer to Figure 2-16. Inefficient production is represented by which point(s)? a. A, C b. B, C c. B, E d. D

c. B, E

Bank regulators impose capital requirements in order to a. increase the amount of leverage in the economy. b. provide an incentive for banks to hold risky assets. c. ensure banks can pay off depositors. d. increase the probability of a credit crunch.

c. Ensure banks can pay off depositors.

U.S. GNP a. includes production of foreigners working in the U.S. and production of U.S. citizens working in foreign countries. b. includes production of foreigners working in the U.S. but excludes production of U.S. citizens working in foreign countries. c. excludes production of foreigners working in the U.S. but includes production by U.S. citizens working in foreign countries. d. excludes production of foreigners working in the U.S. and production by U.S. citizens working in foreign countries.

c. Excludes production of foreigners working in the U.S. but includes production by U.S. citizens working in foreign countries.

For the economy as a whole, a. income must be greater than expenditure. b. unemployment must rise when GDP rises. c. expenditure must equal income. d. consumption must be greater than investment.

c. Expenditure must equal income.

​If the reserve ratio increased from 5 percent to 10 percent, then the money multiplier would a. ​rise from 5 to 10. b. ​rise from 10 to 20. c. ​fall from 20 to 10. d. ​fall from 10 to 5.

c. Fall from 20 to 10.

Government purchases include spending on goods and services by a. the federal government, but not by state or local governments. b. federal and state governments, but not by local governments. c. federal, state, and local governments. d. federal, state, and local governments, as well as household spending by employees of those governments.

c. Federal, state, and local governments.

Consumer goods that are produced, go into inventory, and are not sold during the current period are a. counted as intermediate goods and so are not included in current period GDP. b. counted in current period GDP only if the firm that produced them sells them to another firm. c. included in current period GDP as inventory investment. d. included in current period GDP as consumption.

c. Included in current period GDP as inventory investment.

Which of the following statements best captures the relationship between microeconomics and macroeconomics? a. For the most part, microeconomists are unconcerned with macroeconomics, and macroeconomists are unconcerned with microeconomics. b. Microeconomists study markets for small products, whereas macroeconomists study markets for large products. c. Microeconomics and macroeconomics are distinct from one another, yet they are closely related. d. Microeconomics is oriented toward policy studies, whereas macroeconomics is oriented toward theoretical studies.

c. Microeconomics and macroeconomics are distinct from one another, yet they are closely related.

Which of the following transactions is not included in GDP? a. oranges sold to households by a grocer. b. orange juice sold by a restaurant to its diners. c. oranges sold by a farmer to a grocery store. d. All of the above are included in GDP.

c. Oranges sold by a farmer to a grocery store.

The money stock in the economy is​ a. ​the amount of wealth accumulating in the economy, such as currency and demand deposits. b. ​the amount of wealth accumulating in the economy, such as money market mutual funds and stocks. c. ​the quantity of money circulating in the economy, such as currency and demand deposits. d. ​​the quantity of money circulating in the economy, such as money market mutual funds and stocks.

c. The quantity of money circulating in the economy, such as currency and demand deposits.

A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarter(s) does(do) these transactions raise consumption? a. the first and the second b. the first but not the second c. the second but not the first d. neither the first nor the second

c. The second but not the first

For some racquet sports, there have been increases in the size of the racquets; also, the methods and materials used for making racquets have improved. To which problem in the construction of the CPI is this situation most relevant? a. substitution bias b. introduction of new goods c. unmeasured quality change d. income bias

c. Unmeasured quality change

Refer to Figure 2-11. Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B? a. a decrease in unemployment b. a technological advance in the consumer goods industries c. a general technological advance d. an increase in the availability of capital-producing resources

c. a general technological advance

When a bank loans out $1,000, the money supply a. does not change. b. decreases. c. increases. d. may do any of the above.

c. increases

Normative conclusions a. come from positive analysis alone. b. are based on ignorance of positive analysis. c. involve value judgments. d. reflect the economist's role as scientist.

c. involve value judgments

Janelle earned a salary of $62,000 in 2004 and $80,000 in 2014. The consumer price index was 126 in 2004 and 170 in 2014. Janelle's 2004 salary in 2014 dollars is a. $45,953. b. $89,280. c. $107,953. d. $83,651.

d. $83,651.

M1 includes a. currency. b. demand deposits. c. traveler's checks. d. All of the above are correct

d. All of the above are correct

Which of the following steps does an economist take when studying the economy? a. devise theories b. collect data c. analyze data d. All of the above are correct.

d. All of the above are correct.

The consumption component of GDP includes spending on a. durable goods and nondurable goods, but not spending on services. b. durable goods and services, but not spending on nondurable goods. c. nondurable goods and services, but not spending on durable goods. d. durable goods, nondurable goods, and services.

d. Durable goods, nondurable goods, and services.

U.S. GDP and U.S. GNP are related as follows: a. GNP = GDP + Value of exported goods - Value of imported goods. b. GNP = GDP - Value of exported goods + Value of imported goods. c. GNP = GDP + Income earned by foreigners in the U.S. - Income earned by U.S. citizens abroad. d. GNP = GDP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad.

d. GNP = GDP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad.

Which of the following is not a tool of monetary policy? a. open market operations b. reserve requirements c. changing the discount rate d. increasing the government budget deficit

d. Increasing the government budget deficit

If the discount rate is raised then banks borrow a. more from the Fed so reserves increase. b. more from the Fed so reserves decrease. c. less from the Fed so reserves increase. d. less from the Fed so reserves decrease.

d. Less from the Fed so reserves decrease.

Suppose an economy's production consists only of corn and soybeans. In 2010, 20 bushels of corn are sold at $4 per bushel and 10 bushels of soybeans are sold at $2 per bushel. In 2009, the price of corn was $2 per bushel and the price of soybeans was $1 per bushel. Using 2009 as the base year, it follows that, for 2010, a. nominal GDP is $50, real GDP is $100, and the GDP deflator is 50. b. nominal GDP is $50, real GDP is $100, and the GDP deflator is 200. c. nominal GDP is $100, real GDP is $50, and the GDP deflator is 50. d. nominal GDP is $100, real GDP is $50, and the GDP deflator is 200.

d. Nominal GDP is $100, real GDP is $50, and the GDP deflator is 200.

Refer to Figure 2-16. The opportunity cost of obtaining 20 additional widgets by moving from point C to point D is a. 0 gadgets. b. 10 gadgets. c. 20 gadgets. d. none of the above; the economy cannot move from point C to point D.

d. None of the above; the economy cannot move from point C to point D.

When economists talk about growth in the economy, they measure that growth as the a. absolute change in nominal GDP from one period to another. b. percentage change in nominal GDP from one period to another. c. absolute change in real GDP from one period to another. d. percentage change in real GDP from one period to another.

d. Percentage change in real GDP from one period to another.

Which of the following pairs of individuals has a double coincidence of wants? a. Mary and Clark b. Clark and Nathan c. Nathan and Polly d. Polly and Paul

d. Polly and Paul

If net exports is a negative number for a particular year, then a. the value of firms' inventories declined over the course of the year. b. consumption exceeded the sum of investment and government purchases during the year. c. the value of goods sold to foreigners exceeded the value of foreign goods purchased during the year. d. the value of foreign goods purchased exceeded the value of goods sold to foreigners during the year.

d. The value of foreign goods purchased exceeded the value of goods sold to foreigners during the year.

An increase in the price of Irish whiskey imported into the United States will be reflected in a. both the U.S. GDP deflator and the U.S. CPI. b. neither the U.S. GDP deflator nor the U.S. CPI. c. the U.S. GDP deflator, but not the U.S. CPI. d. the U.S. CPI, but not the U.S. GDP deflator.

d. the U.S. CPI, but not the U.S. GDP deflator.