MACRO tes 2 review

the consumer price index implicitly assumes that the demand curve for each good and service in the representative market basket is

vertical

if an economy experiences deflation, the real interest rate

will be greater than the nominal interest rate

consider the following data for a simple economy. what is the GDP deflator for 2010 using 2009 as base year?

97.39%

the nominal GDP of the U.S. in 2010 was approximately 14.6 trillion. this means that

all of the above are true

when actual inflation is less than expected inflation

borrowers lose and lenders gain

which of the following would be a consequence of substitution bias in the CPI

businesses would over-compensate employees for inflation when giving the cost of living rises

to calculate GDP by the expenditure method, one must add

consumption spending, investment spending, government spending, and net exports

most of the unemployment the occurred during the Great Depression was

cyclical unemployment

a country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

GDP is much larger than GNP

Increases in capital per hour worked cannot sustain high rates of economic growth unless accompanied by technological change

TRUE

Nominal GDP will increase if either the price level or the quantity of goods and services produced rises

TRUE

To examine how the total production of an economy has changed over time, it would be better to examine real GDP

TRUE

the GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is 5% higher in year 2 than in year 1

TRUE

which of the following policies would reduce structural unemployment

a job retraining program

the natural rate of unemployment is the amount of unemployment

equal to frictional plus structural unemployment

if nominal GDP exceeds real GDP for a specific year, then the GDP deflator must be

greater than 100

Gross domestic product understates the total production of final goods and services because of the omission of

household production

a sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements. This will

increase GDP and decrease well-being in the economy

in the united states since the mid-1980s, consumption as a percentage of GDP has

increased

during a business, cycle expansion, total production_________ and total employment ________

increases, increases

the resources lost for dealing with inflation

is called shoe leather cost

which of the following is true about the consumer price index

it assumes that consumers purchase the same amount of each product in the market basket each month

The labor force participation rate equals the

labor force divided by working-age population * 100

human capital refers to which of the following

the accumulated knowledge and skills workers acquire from education and training or from their life experiences

potential GDP refers to

the level of GDP attained when al firms are producing at capacity

which of the following cause the unemployment rate as measured by the Bureau of Labor statistics to overstate the true extent of joblessness

unemployed persons falsely report themselves to be actively looking for a job

suppose that the labor movement has a revival in the United States and the majority of workers join labor unions. as a result we would expect

unemployment rate to rise

consider the data above (in billions of dollars) for an economy: GDP for this economy equals

$1,600

assume the market basket for the CPI has three products: cokes, hamburgers, and CDs with the following values in 2006 and 2011 for price and quantity: The consumer price index for 2011 equals

121

Using the table above, what is the approximate average annual growth rate from 2008 to 2011

2%

consider the following values of the consumer price index for 96, 97, and '98. the inflation rate for 1997 was equal to

2.5 %

Consider the following data on nominal GDP and real GDP, the inflation rate in 2010

2.807

suppose the working age population of a fictional economy falls into following categories....90 retired or homemakers, 60 full time, 20 part time, 20 no employment...the official unemployment rate as calculated by the U.S. Bureau of Labor would equal

20.00%

consider the following data on nominal GDP and real GDP, the base year used in calculating real GDP is

2009

if the growth rate of real GDP rises from 3 to 4 % per year, then the number of years required to double real GDP will decrease from

23.3 years to 17.5 years

imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest. If the inflation rate was 7%, what was the real interest rate you paid?

3 %

if real GDP in a small country in 2010 is $8 billion and real GDP in the same country is 8.3 billion, the growth rate of real GDP between 2010 and 2011 is

3.75%

in 2011, Kendall Ford, and automobile dealership spent $20,000 on a new car lift for its repair shop, $2,000 on a new copy mating, and $600,000 on Ford Motor company stock. Unsold cars and trucks were valued at 400,000 on January 1, 2011 and unsold cars and trucks were value at 900,000. what is Kendall Ford's total investment spending in 2011

522,000

Eliminating frictional unemployment would be good for the economy

FALSE

The inflation rate measures the average prices of goods and services in the economy

FALSE

efficiency wage is another name for the minimum wage

FALSE

for developed countries like the US, GDP will always exceed GNP

FALSE

residential investment includes spending by firms on office buildings

FALSE

the nominal interest rate, plus the inflation rate equals the real interest rate

FALSE

The Bureau of Labor Statistics would category a retiree who is not working as

out of the labor force

a good measure of the standard of living is

real GDP per capita

you earned 30,000 in 1990 and your salary rose to 80,000 in 2011. if the CPI rose from 82 to 202 between 1990 and 2011 which of the following is true

the purchasing power of your salary increased between 1900 and 2011

frictional unemployment is the result of

the search process of matching workers with jobs

gross domestic product is calculated by summing up

the total market value of final goods and services produced in the economy during a period of time

suppose in 2012 you purchased a house built in 2003, which of the following would be included in the gross domestic product for 2012

the value of the services of the real estate agent