Macro Study Set Test 1
A Japanese automaker produces $2 million worth of automobiles in its factory in the United States. How much of that is added to the GNP of the United States?
$0.00
Refer to Table 6.9. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's real GDP in year 2 is
$168
If GNP is $625 billion, receipts of factor income from the rest of the world are $25 billion, and payments of factor income to the rest of the world are $50 billion, then GDP is
$650 billion
According to Table 1 below, choose the answer that most accurately estimates Real GDP (2020) of the country Macro-Eco:
$8,929 (divide nominal gdp by the gdp deflator)
In 2021 Mr. Howard had 100,000 in savings account. In the end of year, he was paid an interest rate of 5% on his savings. The inflation rate was 7%. What was the real interest rate Mr. Howard earned in 2021?
-2%.
Which of the following is not considered capital?
10,000 US Dollars
A company produced 12 motorcycles in 2015. The company sold 8 in 2015 and added 4 to its inventories. The market value of the motorcycles in 2015 was $1,000 per unit. What is the value of this company's output that will be included in the 2015 GDP?
12,000 (8x$1,000)+(4x$1,000)=$12,000
If nominal GDP is $8 trillion and real GDP is $6 trillion, the GDP deflator is
133.33
If the consumer price index (CPI) was 97 in 2017, 100 in 2018, and 102 in 2019, then the base year must be:
2018
If the economy grows at 10 percent from year 1 to year 2 and real GDP is 300 in year 1, what will real GDP be in year 2?
330
People are counted as unemployed if they do not have a job but are available for work and have been actively seeking work for the previous _____ weeks.
4
If the current year's consumer price index is 230 and last year's consumer price index was 220, then the rate of inflation is: Question 2 options:
4.55
If Tom's salary was $40,000 last year, and this year he receives a cost-of-living increase tied to the consumer price index (CPI), what will his salary be this year assuming the CPI has risen from 102 to 105?
41,177
If frictional unemployment is 2%, structural unemployment is 3%, and cyclical unemployment is 3.5%, the natural rate of unemployment is ______.
5% (add structural and frictional unemployment)
If the CPI in 2015 was 114.7 and the CPI in 2016 was 124.5, then the rate of inflation between 2015 and 2016 was
8.5%
Which of the following are generally not counted in GDP?
All of the above are not generally included in GDP. (reductions in crime, production of pollution, increases in leisure time)
Which of the following transactions should not be included in the calculation of GDP?
Anna receives $200 in food stamps.
Which of the following statements is false?
Business cycles are always symmetric—the length of an expansion is the same as the length of a contraction.
Which price index calculates the prices for urban consumers paid on fixed basket of goods and services?
CPI
_____ unemployment is the result of changes in the business cycle.
Cyclical
Which of the following is a type of unemployment that is due to business cycles? This type of unemployment rises during economic recessions and falls during economic expansions.
Cyclical unemployment
The value of KFC fried chicken produced in Japan is included in the U.S. ________ and in the Japanese ________. Note: a) KFC is an American company; b) service takes place in a foreign country
GNP; GDP
A transfer payment is
a cash payment made by the government to people who do not supply goods, services or labor in exchange for the payment.
What is a person's classification if he or she has given up actively looking for work?
a discouraged worker/discouraged job seeker
If there are 1,400 people in the population; 700 are employed; and 100 are unemployed, what is the a) unemployment rate and b) labor force participation rate?
a) 12.5%; b) 57.14%
If there are 1,500 people in the population; 800 are employed; and 200 are unemployed, what is the a)unemployment rate and b)labor force participation rate?
a) Unemployment rate=200/(800+200)=200/1,000=20% b) Labor force= 200+800=1,000 Labor force participationrate=1,000/1,500= 67%
The behavior of all households and firms together is known as
aggregate behavior
In a business cycle, a peak represents the end of ________ and a trough represents the end of ________.
an expansion; a recession
Inflation is defined as
an increase in the overall price level
GDP minus final sales gives a measure of the
change in business inventories.
The single largest expenditure component in GDP is
consumption
Suppose that anticipated inflation is 5% for the coming year. The loan contracts are set at 8% with the expectation of a 3% return after inflation. If the actual inflation rate at the end of the year is 4% Note: Debtors (borrowers); Creditors (lenders) Think about real interest rate (return) and who will benefit from it.
creditors gain at the expense of debtors.
Nominal output is measured in ________ dollars and real output is measured in ________ dollars.
current; base year
The consumption component of GDP includes spending on __________
durable goods, nondurable goods, and services
When calculating GDP, ________ are added and ________ are subtracted.
exports; imports
Wages, interest, and dividends flow out of ________ and into ________.
firms; households
If Congress increases government spending, it is using
fiscal policy
In the circular flow diagram, households demand ___ and supply ___
goods and services ; labor
Which of these is NOT used to calculate GDP as part of the income approach?
government consumption
Government policymakers would like to have high ________ and low ________.
high output growth; low unemployment and inflation
In the CPI market basket, the category which has the largest weight is
housing
A period of very rapid increases in the overall price level is known as
hyperinflation
What macroeconomic condition is described in the article of a newspaper "The official data cited by Credit Libanais shows that food and clothing costs surged 190% and 172% respectively in May from a year earlier. Other reports show similar stats early this month."
hyperinflation
Other things equal, if a recession gets worse, the number of discouraged workers _____, and the number of those in the labor force _____.
increases; decreases
Taylor resigned from the job and decided to stay at home for a while. What is the impact of Taylor's decision on the labor-force participation rate? Recall: Labor force participation rate=Labor force/Population
it decreases
If the central bank increases the money supply, it is conducting
monetary policy
The difference between the interest rate on a loan and the inflation rate is the
real interest rate
What phase of the business cycle does the headline "Consumer Confidence at Highest Level in Three Years" suggest?
recovery
Legalizing all forms of illegal activities would
reduce the size of the underground economy and increase measured GDP.
Unemployment generally ________ during recessions and ________ during expansions.
rises; falls
If no foreign companies produce in a country, but many of the country's companies produce abroad, then
the country's GNP will tend to exceed its GDP.
Which of the following is an example of an intermediate good?
the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to
All of the following explain the growth in output per worker hour during the 20th century except
the worker-capital ratio decreased during that period.
In the circular flow diagram
total expenditures are equal to total receipts (payments)
Suppose an economy has historically grown at a rate of 1.25%. Economic activity decreased every quarter over the past year, but the decline stopped this quarter. The economy is expected to grow at a rate of 1.4% in the near future, but monetary authorities are concerned that inflation may increase. Currently, this economy is probably in the _____ stage of the business cycle.
trough
A paragraph from the report discussed in the UN Department of Economic and Social Affairs states that "With the rapid technological advancement of recent years, computers are increasingly encroaching on domains that were previously considered exclusively human. The astonishing progress in such areas as artificial intelligence (AI), robotics, 3D printing and genetics has enabled computers to perform the tasks of architects, medical doctors, music composers and even a 16th century Dutch master of painting. Nearly every day brings news of remarkable feats achieved by computers or robots, and with them a gnawing question: Will machines edge us out of brain jobs?" What type of unemployment is discussed in the UN report?
Structural
Which of the following is included in both the U.S. GDP and GNP?
The value of all cars produced by General Motors in the U.S.
The local Chevrolet dealership has an increase in inventory of 25 cars in 2006. In 2007, it sells all 25 cars. Which of the following statements is correct?
The value of the cars in inventory will be counted as part of 2006 GDP, and the value of the cars sold in 2007 will not increase 2007 GDP.
Stagflation occurs when the economy's ________ are both high.
inflation rate and unemployment rate
Which item would be included in the GDP accounts?
paying a $70 consultation fee over the phone with a doctor
Suppose that anticipated inflation is 5 % for the coming year, with loan contracts set at 9% with the expectation of a 4% return after inflation. If the actual inflation rate at the end of the year is 6%
people on a fixed income see the purchasing power of their incomes rise.
The ratio of total output to the total number of worker hours measures
productivity.
The demand for massage therapists declined in the spring of 2016, but the starting wages paid to massage therapists was still the same at the end of 2016. This is an example of a
sticky price
