Principles of Macroeconomics Mississippi College (Dr. Bolen) Exam 2 (Chapters 8,9,10,11)

Ch. 8 Year, Guns Produced, Price of Guns, Butter Produced, Price of Butter 2009 80 $5 40$ 4 2018 90 6 60 10 Consider the following data for Tyrovia, a country that produces only two products: guns and butter. Nominal GDP for Tyrovia in 2018 equals $1,140. $560. $690. $880.

$1,140

Ch. 8 Consumption expenditures $800 Investment expenditures 200 Government purchases 300 Exports 100 Imports 200 Wages 800 Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals $1,600. $2,200. $1,200. $1,400.

$1,200

Ch. 8 In a small economy, investment is $1,500, consumption spending is $6,000, government purchases are $1,500, exports are $2,000 and imports are $1,000. What is GDP for this economy? $10,700 $10,300 $10,200 $10,000

$10,000

Ch. 8 2013 ​ 2018​ Product Quantity Price Quantity Price Camera 100 $10 120 $12 Legal serv. 50 15 45 20 Books 200 40 210 45 A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2013 and 2018 are shown in the table above. What is real GDP in 2018, using 2013 as the base year? $28,885 $11,790 $11,200 $10,275

$10,275

Ch. 9 Year CPI 2017 207 2018 215 Consider the following values of the consumer price index for 2017 and 2018. The inflation rate for 2018 was equal to 8.0 percent. 215 percent. 3.9 percent. 21.5 percent.

3.9 percent

If real GDP per capita doubles between 2005 and 2020, what is the average annual growth rate of real GDP per capita? 21% 10.5% 4.7% 15%

4.7%

Ch. 9 If the number of unemployed workers is 200 million, and the number in the labor force is 500 million, what is the unemployment rate? 0.4% 40% 4% 14%

40%

Ch. 9 If the number employed is 190 million, the working-age population is 230 million, and the number unemployed is 10 million, then the unemployment rate is 5%. 10%. 5.2%. 8%. 50%.

5%.

________ are financial securities that represent partial ownership of a firm. Certificates of deposit Bonds Stocks Treasury bills

Stocks

Ch. 8 Which of the following could cause nominal GDP to decrease next year, but real GDP to increase? The price level rises and the quantity of final goods and services produced falls. The price level falls and the quantity of final goods and services produced falls. The price level falls and the quantity of final goods and services produced rises. The price level rises and the quantity of final goods and services produced rises.

The price level falls and the quantity of final goods and services produced rises.

Ch. 8 Which of the following goods is directly counted in GDP? the plastic bags that Subway purchases to wrap its sandwiches a 12-inch Subway sandwich purchased by a student the lettuce that Subway purchases for its sandwiches the bread that Subway purchases for its sandwiches

a 12-inch Subway sandwich purchased by a student

Ch. 9 Cyclical unemployment is the result of a slowdown in the economy. a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. the search process of matching workers with jobs. the ups and downs in inflation.

a slowdown in the economy

Ch. 8 The underground economy can be described as production of intermediate goods and services. economic production that includes mining. production of infrastructure that spurs growth in the rest of the economy. economic activity that is hidden from the government to avoid taxes or because the activity is illegal.

economic activity that is hidden from the government to avoid taxes or because the activity is illegal.

Ch. 9 The natural rate of unemployment is the amount of unemployment________ equal to frictional plus structural unemployment. that exists when the economy is in an expansion. associated with the business cycle. that exists when the economy goes into recession.

equal to frictional plus structural unemployment.

Ch. 9 The short-term unemployment arising from the process of matching workers with jobs is called seasonal unemployment. frictional unemployment. cyclical unemployment. structural unemployment.

frictional unemployment

Ch. 8 The output of U.S. citizens who work in Canada would be included in the gross national product of Canada and the gross national product of the United States. gross national product of Canada. gross domestic product of the United States. gross domestic product of Canada.

gross domestic product of Canada.

Ch. 8 Gross domestic product understates the total production of final goods and services because of the omission of exports. inflation. intermediate goods. household production.

household production

When the economy enters a recessionary phase of the business cycle, unemployment tends to decrease. change in the same direction as the rate of inflation. be unchanged. increase.

increase

Inflation tends to ________ during the expansion phase of the business cycle and ________ during the recession phase of the business cycle. increase; increase further decrease; increase decrease; decrease further increase; decrease

increase; decrease

Ch. 8 During a business cycle expansion, total production ________ and total employment ________. decreases; increases decreases; decreases increases; decreases increases; increases

increases; increases

Ch. 8 Which of the following is not directly counted in GDP? consumer goods intermediate goods investment expenditures government purchases

intermediate goods

Ch. 10 Which of the following increases labor productivity? a decline in the health of the population inventions of new machinery, equipment, or software decreases in the availability of computers and factory buildings an increase in the aggregate hours of work

inventions of new machinery, equipment, or software

Ch. 8 The purchase of a new house is included in government purchases. investment expenditures. consumption expenditures. net exports.

investment expenditures

Ch. 8 Gross national product (GNP) of the United States is the market value of all final goods and services consumed by citizens of the United States anywhere in the world. produced within the United States. consumed within the United States. produced by citizens of the United States anywhere in the world.

produced by citizens of the United States anywhere in the world.

Ch. 10 A good measure of the standard of living is total real GDP. real GDP per capita. nominal GDP per capita. total nominal GDP.

real GDP per capita

Ch. 9 Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called cyclical unemployment. seasonal unemployment. frictional unemployment. structural unemployment.

structural unemployment

There is a federal budget deficit when the government spends more that it collects in taxes. the government spends less that it collects in taxes. taxes are too high. the government spends the same amount it collects in taxes.

the government spends more that it collects in taxes.

Ch. 8 Product Quantity Price Shoes 40 $60.00 DVDs 100 $18.00 Tomatoes 2,000 $1.00 Ketchup 300 $4.00 Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simple economy equals $5,800. $6,400. 2,440 units. $7,400.

$6,400

Year, Guns Produced, Price of Guns, Butter Produced, Price of Butter 2009 80 $5 40 $4 2018 90 6 60 10 Consider the following data for Tyrovia, a country that produces only two products: guns and butter. Real GDP for Tyrovia for 2018 using 2009 as the base year equals $1,140. $690. $880. $560.

$690

Ch. 9 Suppose your grandfather earned a salary of $12,000 in 1964. If the CPI is 31 in 1964 and 219 in 2018, then the value of your grandfather's salary in 2018 dollars is approximately $26,280. $37,200. $63,830. $84,775.

$84,775

Ch. 9 Total population 20,000 Working-age population 15,000 Employment 1,000 Unemployment 100 Consider the data above for a simple economy. The labor force participation rate for this simple economy equals (1,000/15,000) × 100. (1,000/1,100) × 100. (1,100/20,000) × 100. (1,100/15,000) × 100.

(1,100/15,000) × 100.

Ch. 9 Total population 20,000 Working-age population 15,000 Employment 1,000 Unemployment 100 Consider the data above for a simple economy. The unemployment rate for this simple economy equals (100/1,100) × 100. (100/15,000) × 100. (100/20,000) × 100. (100/1,000) × 100.

(100/1,100) × 100.

Ch. 9 Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 have part-time employment; 20 do not have employment, but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the U.S. Bureau of Labor would equal (20/60) × 100. (30/80) × 100. (20/80) × 100. (20/100) × 100.

(20/100) × 100.

Ch. 10 Year Real GDP (billions of 2000 dollars) 2015 $10,100 2016 10,950 2017 11,425 2018 11,300 Using the table above, what is the approximate growth rate of real GDP from 2017 to 2018? -2% -1% 2% 1%

-1%

Ch. 10 Suppose that real GDP for 2017 was $10,000 billion and real GDP for 2018 was $11,000 billion. What is the rate of growth of real GDP between 2017 and 2018? 1% 5% 2% 10%

10%

Ch. 8 Year Nominal GDP Real GDP 2017 14,078 13,254 2018 14,441 13,312 Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2018 equals 92.2. 102.6. 108.5. 109.1.

108.5

Ch. 9 Base Year (2013) 2018 Product Quantity Price Price Milk 50 $1.20 $1.50 Bread 100 1.00 1.10 Assume the market basket for the consumer price index has two products—bread and milk—with the following values in 2013 and 2018 for price and quantity: The Consumer Price Index for 2018 equals 118. 85. 116. 86.

116

Ch. 8 If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator is 800 80 12.5 125

125

Ch. 8 If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years? 270% 50% 2.7% 5%

2.7%

Ch. 9 Year CPI 2017 175 2018 180 Suppose that the data in the table above reflect price levels in the economy. What is the inflation rate between 2017 and 2018? 5% 4.6% 3.5% 7.5% 2.9%

2.9%

________ are financial securities that represent promises to repay a fixed amount of funds. Interest rates Bonds Stocks Mutual funds

Bonds