Homework answers / question archive / 1) When Country X has high economic growth, this country has                    A) a high level of real Gross Domestic Product (GDP)

1) When Country X has high economic growth, this country has                    A) a high level of real Gross Domestic Product (GDP)

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1) When Country X has high economic growth, this country has

           

       A) a high level of real Gross Domestic Product (GDP).

            B) a high level of per capita real Gross Domestic Product (GDP).

            C) a large increase in per capita real Gross Domestic Product (GDP).

            D) a large increase in personal income.

 

2) The real GDP in a nation has just increased from $2 billion to $2.1 billion.

           

            A) This country has experienced economic growth because there is a $.1 billion increase    in real GDP.

            B) We do not know if this country experienced economic growth since the increase in the             population was not given.

            C) We do not know if this country experienced economic growth since information on      nominal GDP was not given.

            D) This country did not experience economic growth since $.1 billion is not a large            number.

 

3) The definition of a job loser is an individual

 

            A) who quits his job voluntarily.

            B) whose employment was terminated involuntarily due to a downturn in the economy.

            C) who competed for a promotion at his company and did not get it.

            D) who is underemployed.

 

4) The price level has been rising 5 percent a year for twenty years and is expected to continue to do so. The nominal rate of interest is 8 percent. The real rate of interest is

           

            A) 0 percent.

            B) 8/5 = 1.6 percent.

            C) 3 percent.

            D) 5 percent.

 

 

 

 

 

 

 

5) Suppose that Country A and Country B each had the same per capita real Gross Domestic Product (GDP) of $10,000 in 2008. Country A's per capital real Gross Domestic Product (GDP) had a growth rate of 3 percent per year and Country B's per capital real Gross Domestic Product (GDP) had a growth rate of 4 percent per year. By 2013, the per-capita real Gross Domestic Product (GDP) for the two countries, respectively, were

 

            A) $11,941 and $12,653.

            B) $11,593 and $12,167.

            C) $10,300 and $10,400.

            D) $14,000 and $16,000.

 

6) Economic growth depends on

           

            A) low tax rates.

            B) high government spending.

            C) high rates of consumption.

            D) increases in the capital stock as a result of saving.

7) The rate of inflation and the purchasing power of money are

            A) positively related.
            B) totally unrelated.
            C) inversely related.
            D) randomly related.
 

8) Last year the price of a dozen eggs was $1, and this year the price is $1.30. Which of the

following  does NOT express this price change accurately?

 

            A) The price increased 30 percent.

            B) The price increased by 30 cents.

            C) If last year was the base year, the index number for this year would be 130.

            D) If this year is the base year, the index number for last year would be 130.

 

9) Under which one of the following situations would you be better off?

           

            A) You have $10,000 in your savings account paying 5 percent per year and           unanticipated

            inflation is 8 percent per year.

            B) You have paid $500 for a $1,000 U.S. savings bond that matures in 10 years and

            unanticipated inflation is 10 percent per year.

            C) You lend a friend $1,000 at 6 percent to be repaid in one year and unanticipated           inflation is

            7 percent during the year.

            D) You borrowed $2,500 at 7 percent to pay for this year?s college expenses and   unanticipated

            inflation is 12 percent during the year.

 

10) Which of the following transactions is included in Gross Domestic Product?

           

            A) A Social Security check received by a retired couple

            B) A gift card that a mother gives her son

            C) A used textbook that one student gives another student in exchange for an iPod

            D) Tips received by a waitress who reports them to the IRS

 

11) Economic growth may overstate changes in the standard of living if

           

            A) people are retiring at a younger age.

            B) the average workweek is increasing.

            C) the number of students attending college is increasing.

            D) expected life spans are increasing.

 

12) A family sells the house they have lived in for two years to a friend. They received $150,000 and paid $120,000 two years ago. This transaction

 

            A) increases GDP by $150,000

            B) increases GDP by $30,000

            C) has no effect on GDP because the house was not made this year

            D) has no effect on GDP because the house is an intermediate good

 

13) The number of people that are fired in a month is

 

            A) a stock.

            B) a flow.

            C) both a stock and a flow.

            D) neither a stock nor a flow.

 

14) Which of the following best represents economic growth?

 

            A) a movement down a given production possibilities curve.

            B) a movement up a given production possibilities curve.

            C) an outward or, equivalently, a rightward shift of the production possibilities curve.

            D) an inward or, equivalently, leftward shift of the production possibilities curve.

 

15) When looking at economic growth in a country, the distribution of output and income

 

            A) generally follows predictable patterns.

            B) is not taken into consideration.

            C) is skewed toward the lowest quintile of the population.

            D) is shared equally.

 

16) The unemployment rate will decrease when

 

            A) the duration of unemployment increases.

            B) the average workweek falls from 40 to 39 hours.

            C) the age of the labor force increases.

            D) people get discouraged and quit looking for work.

 

17) All of the following are incomes earned in the factor market EXCEPT

 

            A) wages.

            B) prices of goods and services.

            C) profits.

            D) rents.

 

18) If you buy stocks and bonds, the dollar value of those stocks and bonds is

 

            A) included in Gross Domestic Product (GDP) under investment.

            B) included in Gross Domestic Product (GDP) under consumer expenditures.

            C) not included in calculating Gross Domestic Product (GDP) for they merely represent a             transfer of ownership.

            D) included in Gross Domestic Product (GDP) if the stocks and bonds were issued by      business firms but not if they were issued by governments.

 

19) Individuals who have stopped looking for work because they are convinced that they will not find a job are considered

            A) structurally unemployed.

            B) discouraged workers.

            C) part of the labor force.

            D) underemployed.

 

20) Which of the following best describes a nation's Gross Domestic Product?

 

            A) The market value of all goods and services produced in the economy, including            intermediate goods

            B) The total market value of all final goods and services produced in the economy during a year

            C) The constant dollar value of all goods produced in the economy during a year period

            D) The market value of all goods and services less depreciation

 

21) In 2009, policy makers in the United States were dealing with a recession.  Workers who were laid off due to the economic slowdown would be

 

            A) frictionally unemployed.

            B) structurally unemployed.

            C) cyclically unemployed.

            D) seasonally unemployed.

 

 

 

 

22) Refer to the above table. You are given information on Jasmin's consumption for 2005 and 2015. Using 2005 as the base year, compute the price index for 2015. The index equals

 

            A) 1.5.

            B) 70.588.

            C) 141.667.

            D) 107.143.

 

23) Other things being equal, an increase in consumption spending implies

 

            A) a decline in saving.

            B) a decline in government spending.

            C) a higher standard of living in the future.

            D) that economic growth will soon increase.

 

24) There has been some concern in the United States that people are not saving enough. This is a concern because

 

            A) decreases in saving lead to decreases in labor productivity.

            B) decreases in saving lead to decreases in investment.

            C) decreases in saving lead to increases in the capital stock.

            D) decreases in saving lead to increases in consumption in the future.

 

25) New growth theorists conclude that

 

            A) invention is more important than innovation in spurring economic growth.

            B) the amount of technological innovation in an economy is independent of the rewards   offered for innovation.

            C) rates of global economic growth are limited by the amount of raw materials available.

            D) economic growth can continue as long as we keep coming up with new ideas.

 

26) If inflation is occurring and nominal Gross Domestic Product (GDP) is decreasing over time, then real Gross Domestic Product (GDP) is

 

            A) increasing.

            B) decreasing at the same rate as nominal Gross Domestic Product (GDP).

            C) decreasing more slowly than nominal Gross Domestic Product (GDP).

            D) decreasing faster than nominal Gross Domestic Product (GDP).

 

27) Suppose Social Security contributions rise by $1 billion while Social Security benefits also rise by $1 billion. Further, personal income taxes fall by $500 million. As a result,

 

            A) both personal and disposable personal income should increase.

            B) national income, personal income, and disposable income should increase.

            C) disposable income should increase while personal income and national income are         unchanged.

            D) personal income, disposable personal income, and national income remain unchanged.

 

28) Which of the following individuals is NOT counted as unemployed?

           

            A)  Jamil, who recently quit his job and is looking for a new position

            B) Jackie, who was recently fired and is now applying for another job

            C) Jack, who has become discouraged about ever finding a job and has stopped looking

            D)Jennifer, who just graduated from college and is now seeking employment with the       company of her dreams.
 

 

29) In computing a price index,

 

A)  the most recent year is always set equal to 100.

B) both the quantities in the market basket and the prices change from year to year.

C) the quantities in the market basket stay the same while the prices differ.

D) the base year must be one for which the inflation rate was zero.

 

Consumption expenditures on goods and services	1500
Total government spending on goods and services	590
Gross private domestic investment	355
Imports	50
Exports	70
Depreciation (capital consumption allowance)	200
Net U.S. income earned abroad	-75

 

30) According to the above table, national income is

 

A) $2,190.

B) 2,550.

C) 2,465.

D) 2,750.