midterm 2

https://imgur.com/RYi0qCE Use the information in the table above to calculate the value of national saving.

$25 million

Suppose a country is producing​ $20 million of real GDP. If the economy grows at 10 percent per​ year, approximately how many years will to take for real GDP to grow to​ $80 million?

14

The table shows answers given by people interviewed in the Current Population Survey. Which people are structurally​ unemployed? https://imgur.com/MdYB1Lu

B and C.

On January​ 1, 2017 ​Terry's Towing Service owned 10 tow trucks valued at ​$800 comma 000. During 2017​, ​Terry's bought 4 new trucks for a total of ​$400 comma 000. At the end of 2017​, the market value of all the​ firm's trucks was ​$1 comma 120 comma 000. What was​ Terry's gross​ investment? Calculate​ Terry's depreciation, and net investment.

Terry's gross investment was ​$400,000. ​Terry's depreciation was ​$80,000. ​Terry's net investment was 320000 dollars.

The people on Coral Island buy only juice and cloth. The CPI basket contains the quantities bought in 2013​ (the reference base​ year). The average household spent ​$28 on juice and ​$72 on cloth in 2013 when the price of juice was ​$2 a bottle and the price of cloth was ​$9 a yard. In​ 2014, juice is ​$6 a bottle and cloth is ​$5 a yard. Calculate the CPI and the inflation rate in 2014.

The CPI in 2014 is 124. The inflation rate in 2014 is 24 percent.

The people who live on Second Life Island consume only juice and cloth. Last​ year, which was the CPI base​ year, the price of juice was ​$2 a​ bottle, the price of cloth was ​$4 a​ length, and the average urban household spent ​$20 on juice and ​$12 on cloth. This​ year, the price of juice is ​$4 a bottle and the price of cloth is ​$10 a length. -What is the CPI in the current​ year?

The CPI in the current year is 218.8.

The effect of the United States returning millions of workers to their countries of origin is​ _____ the U.S. PF and​ _____ in potential GDP.

a movement down​ along; a decrease

In the​ figure, when the real wage rate is​ $10 an​ hour, ________.

a shortage of labor exists and the real wage rate will rise

Structural unemployment is

associated with the general decline of specific industries.

Which of the following statements are TRUE regarding the demand for​ labor? I. The quantity of labor demanded depends on the real wage rate. II. If the money wage rate increases and the price level remains the​ same, the quantity of labor demanded decreases.

both I and II

Unemployment caused by the fluctuation of the business cycle is called​ ________ unemployment.

cyclical

The left graph shows an​ economy's labor market. Draw a point that shows equilibrium in the labor market. The right graph shows the​ economy's production function. Draw a point on the production function that shows potential GDP in this economy.

https://imgur.com/HSz3SkC

In calculating​ GDP, household production is

not included because there is no market transaction.

The bias in the CPI typically

overstates inflation.

A new 2017 Honda Civic produced in 2017 and purchased in 2018 is

part of GDP in 2017.

When cyclical unemployment increases and other things remain the​ same, ______.

the natural unemployment rate does not change

An economy is at full employment when​ ______.

there is no cyclical unemployment

Australia​'s real GDP was 1 comma 599 billion dollars in 2014 and 1 comma 637 billion dollars in 2015. Australia​'s population growth rate in 2015 was 1.4 percent. Calculate a. The growth rate of real GDP. b. The growth rate of real GDP per person. c. The approximate number of years it takes for real GDP per person in Australia to double if the 2015 growth rate of real GDP and the population growth rate are maintained.

-The growth rate of real GDP in Australia in 2015 was 2.4 percent. -The growth rate of real GDP per person in Australia in 2015 was 1 percent. -The approximate number of years it takes for real GDP per person in Australia to double if the 2015 growth rate of real GDP and population growth rate are maintained is 70.

Gross domestic product is the

-total amount of income earned in producing the final goods and services in a country during a specific time. -total amount that buyers spent on the final goods and services produced in a country during a specific time. -value of the final goods and services produced in a country during a specific time.

The CPI basket contains 400 oranges and 800 pens. In the base​ year, the price of an orange is​ $1.00 and the price of a pen is​ $0.75. This​ year, urban consumers each buy 300 oranges at​ $2.00 each and 850 pens at​ $1.00 each. The CPI this year is​ ________.

160

If the nominal interest rate is 11 percent and the inflation rate is 9​ percent, then the real interest rate is approximately

2 percent.

Suppose the price level this year is 150 and the price level last year was 125. The inflation rate between last year and this year was

20 percent.

Suppose the economy is experiencing frictional unemployment of 1​ percent, structural unemployment of 3 percent and cyclical unemployment of 4 percent. What is the natural unemployment​ rate?

4 percent.

The figure shows the circular flow model. During 2016​, flow A was ​$321 billion​, flow B was ​$198 billion​, flow D was ​$54 billion​, and flow E was $ 18 billion. Calculate GDP and government expenditure. https://imgur.com/Vlz3foj

GDP is ​$321 billion. Government expenditure is ​$51 billion.

Lori is a student who teaches golf on Saturdays. In a year she earns ​$30 comma 000 after paying her taxes. At the beginning of 2017​, Lori owned ​$2 comma 000 worth of​ books, DVDs, and golf clubs and she had ​$4 comma 000 in a savings account at the bank. During 2017​, the interest on her savings account was ​$120 and she spent a total of ​$20 comma 000 on consumption goods and services. There was no change in the market values of her​ books, DVDs, and golf clubs. How much did Lori save in 2017​? What was her wealth at the end of 2017​?

In 2017​, Lori saved ​$10,120. ​Lori's wealth at the end of 2017 was ​$16,120.

The first table describes an​ economy's labor market in 2018 and the second table describes its production function in 2018. What are labor productivity and potential GDP in​ 2018? https://imgur.com/mp6FWfT

Potential GDP is ​$10500. Labor productivity is ​$105 per hour of labor.

An economy produces only apples and oranges. The base year is​ 2015, and the table gives the quantities produced and the prices. Calculate real GDP in 2015 and 2016 expressed in​ base- year prices. https://imgur.com/XmlIeKp

Real GDP in 2015 expressed in​ base-year prices is ​$60. Real GDP in 2016 expressed in​ base-year prices is ​$255.

A south sea island produces only coconuts. In​ 2014, the price of a coconut is ​$2.50 and the quantity produced is 350. In 2017​, the price of a coconut is ​$2.00 and the quantity produced is 250. 2014 is the reference base year. What is real GDP in 2017 in terms of​ base-year prices?

Real GDP in 2017 in terms of​ base-year prices is​ $625.

The first table describes an​ economy's labor market in 2018 and the second table describes its production function in 2018. -What are the equilibrium real wage​ rate, the quantity of labor employed in​ 2018, labor​ productivity, and potential GDP in​ 2018? https://imgur.com/JYzQbfR

The equilibrium real wage rate is ​$40 an hour. The quantity of labor employed is 125 hours. Potential GDP is ​$8125. Labor productivity is ​$65 per hour of labor.

The table provides some data on real GDP and the population of Eastiana in 2015 and 2016. -What is the growth rate of real GDP in Eastiana in 2016​? -What is the growth rate of real GDP per person in Eastiana in 2016​? https://imgur.com/by2fWEk

The growth rate of real GDP in Eastiana in 2016 is 12 percent. The growth rate of real GDP per person in Eastiana in 2016 is 8 percent.

The table provides some data on real GDP and the population of Japan in 2011 and 2012. Calculate the growth rate of real GDP and the growth rate of real GDP per person. Calculate the approximate number of years it takes for real GDP per person in Japan to double if the population growth rate and the real GDP growth rate are maintained at their 2012 levels. https://imgur.com/RrGwkPe

The growth rate of real GDP is 1.49 percent. The growth rate of real GDP per person is 1.56 percent. If the population growth rate and the real GDP growth rate are maintained at their 2012 ​levels, real GDP per person in Japan will double in approximately 42 years .

In 2016 and in​ 2017, consumers in Dexter consumed only books and pens. The prices and quantities for 2016 and 2017 are listed in the table. The reference base period for​ Dexter's CPI is​ 2016, and 2016 is also the year of the Consumer Expenditure Survey. -Calculate the inflation rate in 2017. https://imgur.com/HDZx4H8

The inflation rate in 2017 is​ 310.0 percent.

What is the present value of ​$500 three years in the future if the interest rate is 2 ​percent?

The present value of ​$500​, three years in the future if the interest rate is 2 percent is ​$471.16.

A firm agreed to pay its workers ​$31 an hour in 2016 and ​$38 an hour in 2017. The price level for these years was 241 in 2016 and 245 in 2017. -Calculate the real wage rate in each year​ (to the nearest​ cent). -What is the real wage increase received by these workers in​ 2017?

The real wage rate in 2016 was ​$12.86. The real wage rate in 2017 was ​$15.51. The change in the real wage rate between 2016 and 2017 is 2.65 dollars.

The table gives information reported by the Bureau of Labor Statistics for January 2017. Calculate the unemployment​ rate, the labor force participation​ rate, and the​ employment-to-population ratio. https://imgur.com/595JI5J

The unemployment rate is 5.0 percent. The labor force participation rate is 63.0 percent. The​ employment-to-population ratio is 59.8 percent.

Population increases are the limiting factor in the growth process in

classical growth theory.

Suppose real GDP for a country is​ $13 trillion in​ 2010, $14 trillion in​ 2011, $15 trillion in​ 2012, and​ $16 trillion in 2013. Over this time​ period, the real GDP growth rate is

decreasing

New growth theory predicts that

economic growth can last indefinitely.

Which of the following most likely would decrease frictional​ unemployment?

effective Internet-based employment services and job registries

An increase in labor productivity increases potential GDP because​ ______.

employment increases and a given amount of employment produces more real GDP

When economists speak of full​ employment, they refer to the case in which the sum of frictional and structural unemployment is

equal to the actual amount of unemployment.

Suppose the market for loanable funds is in equilibrium. If the expected profit​ falls, the equilibrium real interest rate​ ________ and the quantity of loanable funds​ ________.

falls; decreases

Structural unemployment

generally lasts longer than frictional unemployment.

The Ricardo-Barro effect says that

government budget deficits have no crowding out effect because taxpayers increase their savings to match the quantity of loanable funds demanded by the government.

In the absence of the Ricardo-Barro ​effect, an increase in the government deficit results in a​ ________ real interest rate and a​ ________ equilibrium quantity of investment.

higher; lower

-Draw a demand for loanable funds curve. Label it DLF0. -Draw a supply of loanable funds curve. Label it SLF0. -Draw a point at the equilibrium real interest rate and quantity of loanable funds. Label it 1. -Draw a curve that shows a decrease in the demand for loanable funds. Label it DLF1. -Draw a curve that shows an increase in the supply of loanable funds. Draw it in such a way that the equilibrium quantity of loanable funds does not change. Label it SLF1. -Draw a point at the new equilibrium real interest rate and quantity of loanable funds. Label it 2.

https://imgur.com/EOs3Mcl

Draw a labor supply curve and a labor demand curve. Label them LS0 and LD0. Draw a point the equilibrium quantity of labor and the equilibrium real wage rate. Label it 1. Draw and label a curve that shows the effect of an increase in labor productivity. Draw a point at the new equilibrium quantity of labor and the equilibrium real wage rate. Label it 2.

https://imgur.com/aHVwHsm

Suppose that the United States cracks down on illegal immigrants and returns millions of workers to their home countries. -Draw a labor supply curve and a labor demand curve for the United States. Label the curves LS0 and LD0. -Draw a point at the equilibrium quantity of labor and the equilibrium real wage rate. Label it 1. Now suppose the United States returns millions of illegal immigrant workers to their home countries. -Draw and label a curve that shows the effect of this return of workers. -Draw a point at the new equilibrium quantity of labor and the equilibrium real wage rate. Label it 2.

https://imgur.com/te2soYR

Neoclassical growth theory assumes that technological progress

is a purely chance event.

The currently used method for calculating the CPI

probably overstates inflation.

The relationship between real GDP and potential GDP is that

real GDP fluctuates about potential GDP.

An increase in the working-age population results in a

rightward shift of the supply of labor curve and an increase in potential GDP.

As labor continues to​ increase, a nation will

see a movement along the aggregate production​ function, but real GDP will increase less and less.

If new capital increases labor​ productivity, the supply of labor ​ ________ and the demand for labor​ ________.

stays the​ same; increases

In the​ figure, at the real wage rate of​ $50... https://imgur.com/EBOtVi5

there is a surplus of 60 billion hours per year.

​Michael, an Internet service​ provider, bought an existing business worth ​$400 comma 000 on December​ 31, 2017. During 2018​, his business grew and he bought ​$200 comma 000 of new servers. The market value of his older servers fell by ​$50 comma 000. What was​ Michael's gross​ investment, depreciation and net investment during 2018​?

​Michael's gross investment during 2018 was ​$200,000. ​Michael's depreciation during 2018 was ​$50,000. ​Michael's net investment during 2018 was ​$150,000.