Macroeconomics Previous Exams + New Material HW - Stern

Suppose when labor,L=50 and capital,K=100, output,Y=$2,000. How much will Ynew be if this company cuts both inputs of production in half, i.e.,Lnew=25 and Knew=50?

$1,000

Suppose when labor,L=50 and capital,K=100, output,Y=$500. How much will Ynew be if this company doubles both inputs of production, i.e., Lnew=100 andKnew=200?

$1,000

Consumption spending is $8.5 billion, gross private domestic investment is $4 billion, exports $1billion are and government expenditures are $2 billion. If GDP is $14 billion, how much are imports in this economy?

$1.5 billion

John is a famous British author. He buys all necessary writing supplies for $50 and writes queen Elizabeth's biography that he sells to a publisher for $200,000. If the publisher prints 1 million copies of John's book which sell for $20 each, what is publisher's value added?

$19,800,000

John is a famous British author. He buys all necessary writing supplies for $50 and writes queenElizabeth's biography that he sells to a publisher for $200,000. If the publisher prints 1 million copies of John's book which sell for $20 each, what is John's value added?

$199,950

Suppose you open a saving account at your bank and deposit $10,000 in it. How much money will you have in your account in 15 years, if the bank is paying an average of 5% interest on this type of accounts?

$20,789

Suppose you open a saving account at your bank and deposit $10,000 in it. How much money will you have in your account in 20 years, if the bank is paying an average of 5% interest on this type of accounts?

$26,533

Refer to Table 3-2 above. What is equilibrium level of real GDP, Yold, in this economy?

$3,000

Refer to Table 1-1. What is nominal GDP in 2017?

$3,320

Refer to Table 1-1. What was real GDP in 2017, using 2018 as the base year?

$3,690

Refer to Table 1-4. Suppose that a simple economy produces only four goods and services: shoes,DVDs, sugar, and coke. Assume all sugar is used in making the coke. Using the information in the above table, nominal GDP for this simple economy equals...

$5,400

Refer to Table 2-4. Looking at the table above, real average hourly earnings in 2014 were

$5.29

Refer to Table 2-3. Looking at the table above, real average hourly earnings in 2015 were

$5.63

If the consumption function is defined as C=6,050+0.75Y, what is the autonomous level of consumption expenditure?

$6,050

Refer to Table 1-5. What was real GDP in 2018, using 2017 as the base year?

$6,360

Refer to Table 1-4. Suppose that a simple economy produces only four goods and services: shoes,DVDs, sugar, and coke. Assume one half of the sugar is used in making the coke and the other half of the sugar is purchased by consumers. Using the information in the above table, nominal GDP for this simple economy equals...

$6,400

The CPI in 1990 was 131, and the CPI in 2010 was 218. If your aunt earned a salary of $40,000 in 1990, what would be her salary in 2010 dollars?

$66,565

Refer to Table 1-5. What is nominal GDP in 2018?

$7,035

If real GDP per capita in Niger is estimated to be $7,400 in 2023, what will real GDP per capita be in 2028 if real GDP per capita grows at an annual rate of 2.8%?

$8,496

Suppose your grandfather earned a salary of $12,000 in 1964. If the CPI is 31 in 1964 and 219 in 2016, then the value of your grandfather's salary in 2016 dollars is approximately...

$84,775

If real GDP per capita in Kenya is $8,000, what will real GDP per capita in Kenya be after 5 years if real GDP per capita grows at an annual rate of 3.2%?

$9,365

Refer to Table 3-1. Given the consumption schedule in the table above, by how much will consumption, C, change if disposable income,Yd, goes down by $300?

-$270

Refer to Table 1-6 above. What is the slope of the demand for ice cream cones?

-0.5

Consider the following data for a closed economy: Y=$12 trillion C=$6 trillion I=$4 trillion TR=$4 trillion T=$2 trillion Based on the information above, what is the level of public saving, Spub, in the economy?

-4 trillion

Refer to Table 1-2 above. What is the slope of the supply of ice cream cones?

0.5

Refer to Table 3-1. Given the consumption schedule in the table above, the marginal propensity to consume, mpc, is

0.9

Suppose labor productivity grows by 2% this year. If the capital-to-labor ratio increases by 3%, how much is technological progress?

1%

Suppose real GDP grows by 4% this year. If both capital and labor increase by 3%, how much is technological progress?

1%

Refer to Table 2-2. Consider the above values of the consumer price index for 1996, 1997, and 1998. The inflation rate between 1997 and 1998 was equal to

1.2%

Refer to Table 1-6. Consider the following data on nominal GDP and real GDP (values are in billions of dollars). The GDP deflator for 2015 equals...

106.2

Refer to Table 1-3. Consider the following data on nominal GDP and real GDP (values are in billions of dollars). The GDP deflator for 2016 equals...

108.5

Refer to Table 2-1.Assume the market basket for the consumer price index has two products bread and milk with the above values in 2015 and 2016 for price and quantity. Assuming that2015 is the base year, the CPI for 2016 equals

116

Refer to Table 2-1. Assume the market basket for the consumer price index has three products Cokes, hamburgers, and CDs with the above values in 2022 and 2023 for price and quantity. Assuming that 2022 is the base year, the CPI for 2023 equals

121

If real GDP per capita doubles between 2015 and 2020, what is the average annual growth rate of real GDP per capita?

14%

Refer to Figure 1-1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2015 and 2016.

15.4%

Refer to Table 2-1. Assuming again that 2015 is the base year and using the CPI that you calculated in question #2, what was the inflation rate between 2015 and 2016?

16%

Significant economic growth did NOT begin in the world until

1750 AD

Suppose the working-age population (WAP) is 300 million, the labor-force participation rate (LFPR) is 80%, and the unemployment rate is 20%. How many people are employed in this economy?

192 million

Real GDP was $19,121.1 billion in Q.3 of 2019. Real GDP was $18,732.7 billion in Q.3 of 2018. What was the % change in real GDP between 2018 to 2019?

2.1%

Refer to Table 2-2. Suppose that the data in the table above reflect price levels in the economy. What was the inflation rate between 2017 and 2018?

2.9%

Refer to Table 2-1. Assuming again that 2022 is the base year and using the CPI that you calculated in question #2, what was the inflation rate between 2022 and 2023?

21%

Suppose the working-age population is 300 million and the labor-force participation rate is 80%. If the unemployment rate is 5%, how many people are employed in this economy?

228 million

Suppose labor productivity grows by 6% this year. If the capital-to-labor ratio increases by 9%, how much is technological progress?

3%

Suppose real GDP grows by 6% this year. If both capital and labor increase by 3%, how much is technological progress?

3%

The CPI in 1980 was 82, and the CPI in 2006 was 202. What was the average inflation rate over this 26-year period?

3.5%

If the CPI was 31 in 1964 and 219 in 2016, what was the average inflation rate over this 52-year period?

3.8%

Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $45 per hour. Refer to Table 1-7. Using the MB-MC analysis, how many hours should Ivan extend his hours of operations?

4 hours

Consider the following data for a closed economy: Y=$12 trillion I=$2 trillion G=$2 trillion TR=$2 trillion T=$2 trillion Refer to Scenario 2-1. Based on the information above, what is the level of private saving, Spriv, in the economy?

4 trillion

If real GDP per capita doubles between 2008 and 2023, what is the average annual growth rate of real GDP per capita?

4.7%

Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2012 and 2013

40%

Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $25per hour. Using the MB-MC analysis, how many hours should Ivan extend his hours of operations?

5 hours

Suppose the labor-force participation rate (LFPR) is 75%, there are 300 million employed, and the unemployment rate is 20%. What is the working-age population (WAP) in this economy?

500 million

Refer to Table 1-7 above. What is the employment rate (ER) in this economy?

75%

Refer to Table 1-5 above. What is the labor force participation ratio (LFPR) in this economy?

80%

If U.S. dollar appreciates against the Australian dollar from 1.20 AU $/US $ to 1.35 AU $/US $, what will happen to the AE line and equilibrium real GDP, Y? Use the "Keynesian Cross" to answer this question

AE shifts down; Y decreases

Refer to Figure 2-2. Which of the following is consistent with the graph depicted above?

Consumers start saving more

The Industrial Revolution began in

England around 1750

Zane's Antiques is a service that restores antique clocks. Zane has just spent $125 purchasing a 1920s-era clock which he expects to restore and sell for $600 once the work is completed. After having spent $125, Zane realizes that he will need to spend an additional $400 on materials to complete the restoration. Alternatively, he can sell the clock now (without restoring it) for $300.What should he do-spend an extra $400, finish the restoration and sell the clock for $600 or sell it as is for $300 (without finishing the restoration)?

He should sell the clock now for $300, without finishing the restoration

Suppose you want to open a jewelry store in your home town. You consider taking out a small business loan from a local bank. Which of the scenarios below would you prefer as a borrower? Scenario I:Nominal interest rate is 10%, inflation is 5%. Scenario II:Nominal interest rate is 9%, inflation is 6%. Scenario III:Nominal interest rate is 7%, inflation is 3%. Scenario IV:Nominal interest rate is 9%, real interest rate is 6%.

II

Suppose you are the president of a small bank in your home town. Your bank specializes in issuing small loans to local businesses. Which of the scenarios below would you prefer as a lender? Scenario I:Nominal interest rate is 10%, inflation is 5%. Scenario II:Nominal interest rate is 9%, inflation is 6%. Scenario III:Nominal interest rate is 8%, inflation is 1%. Scenario IV:Nominal interest rate is 9%, real interest rate is 6%.

III

Which of the following is a positive economic statement?

If the price of gasoline rises, a smaller quantity of it will be bought

Refer to Figure 3-1. According to the figure above, at what point is aggregate expenditure greater than GDP (i.e.,AE>Y)?

J

Refer to Table 1-2 above. Using the slope that you calculated in question #10 above, write down the equation for the supply of ice cream cones

P = 2 + 0.5*Qs

The following equations represent the demand and supply for bird feeders. (QD=35-P) (QS=-5+3P) What is the equilibrium price (P*) and quantity (Q*-in thousands) of bird feeders?

P*=$10;Q*=25 thousand

Refer to Table 1-6 above. Using the slope that you calculated in question #23 above, write down the equation for the demand for ice cream cones.

P=4-0.5*Qs

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?

Real GDP grows by 2.3% in the second quarter

Refer to Figure 2-1. Which of the following is consistent with the graph depicted above?

Technological change increases the profitability of new investment

Which of the following is NOT a reason why low-income countries might experience low economic growth?

The country has a good education system

Consider two countries, Alpha and Beta. In Alpha, real GDP per capita is $5,000. In Beta, real GDP per capita is $15,000. Based on the theory of global convergence, what would you predict about the growth rates in real GDP per capita across these two countries?

The growth rate of real GDP per capita will be higher in Alpha than it is in Beta

Consider two countries, Alpha and Beta. In Alpha, real GDP per capita is $15,000. In Beta, realGDP per capita is $5,000. Based on the theory of global convergence, what would you predict about the growth rates in real GDP per capita across these two countries?

The growth rate of real GDP per capita will be lower in Alpha than it is in Beta

Which of the following is a positive economic statement?

The minimum wage law causes unemployment

Which of the following is a normative economic statement?

The price of milk is too high

Which of the following goods is a final good and is directly counted in GDP?

a Starbucks capuccino purchased by a student

Which of the following is an example of human capital?

a college education

Minimum wage laws cause unemployment because the legal minimum wage is set...

above the equilibrium market wage, causing labor demand to be less than labor supply

Which of the following will cause an increase in consumption spending, C?

an increase in expected future income

Refer to Table 1-3 above. What phase of the business cycle was this economy in between years 2004and 2005?

boom

economics is the study of the __________ people make to attain their goals, given their __________ resources

choices; scarce

Which of the following price indices comes closest to measuring the cost of living of the typical household?

consumer price index

In a market economy, who decides what goods and services will be produced?

consumers and producers

If property rights are not enforced in a country, then

entrepreneurs are unlikely to risk their own funds investing in such an economy

Which of the following is a normative economic statement?

fashion designers should be allowed to copyright designs to promote innovation

Consumer spending ________ and investment spending ________

follows a smooth trend; is more volatile and subject to fluctuations

Zane's Antigues is a service that restores antigue clocks. Zane has just spent $125 purchasing a1920s-era clock which he expects to restore and sell for $600 once the work is completed. Afterhaving spent $125, Zane realizes that he will need to spend an additional $200 on materials tocomplete the restoration. Alternatively, he can sell the clock now (without restoring it) for $300.What should he do-spend an extra $200, finish the restoration and sell the clock for $600 or sell itas is for $300 (without finishing the restoration)?

he should finish the restoration and then sell the clock for $600

Developing countries with low saving rates and poor levels of health and education are likely to experience

low rates of growth in real GDP per capita

Refer to Table 1-2 above. How would you call year 2005?

peak

Long-run economic growth requires all of the following EXCEPT

political instability

The study of economics arises due to...

scarcity

An assembly line worker loses her job because of automation (and being replaced by a robot). What type of unemployment is she experiencing?

structural

A lumberjack loses his job because timber cutting restrictions were imposed by the EPA to protect the spotted owl habitat. This lumberjack would be...

structurally unemployed

When the price of gasoline rises, some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars. The fact that the CPI does not fully account for such changes in consumer behavior is called

substitution bias

When the price of the orange juice increases, some consumers begin drinking more apple juice or cranberry juice, instead of their favorite-the orange juice. The fact that the CPI does not fully account for such changes in consumer behavior is called

substitution bias

What two factors are the keys to determining labor productivity?

technology and the quantity of capital per hour worked

Human capital refers to which of the following?

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

Refer to Figure 3-1. If the economy is at a level of aggregate expenditure given by point K, then

the economy is in equilibrium, i.e.Y=AE

Suppose in 2023, you purchase a car made in 2018. Which of the following would be included in GDP for 2023?

the fees that you paid to the car dealership

Suppose in 2023, you purchase a house built in 2015. Which of the following would be included in GDP for 2023?

the fees that you paid to your real estate agent

In a centrally planned economy, who decides what goods and services will be produced?

the government

Refer to Table 1-3 above. How would you call year 2007?

trough