Question 1

The participation rate equals

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 2

Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's profit is

Accepted Answer

A)  $0. 
B)  $2,000. 
C)  $3,000. 
D)  $15,000. 
E)  $25,000. 
A)  $0. 
B)  $2,000. 
C)  $3,000. 
D)  $15,000. 
E)  $25,000.

Question 3

For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table:
  
-What is the real GDP in year 1 using base year 2?

Accepted Answer

A)  $418 
B)  $300 
C)  $360 
D)  $338 
E)  $294 
A)  $418 
B)  $300 
C)  $360 
D)  $338 
E)  $294

Question 4

Intermediate goods are

Accepted Answer

A)  irrelevant in the overall economy. 
B)  purchased by consumers. 
C)  goods that are produced and used as inputs into the production process. 
D)  sold to foreigners. 
E)  not a consumption good. 
A)  irrelevant in the overall economy. 
B)  purchased by consumers. 
C)  goods that are produced and used as inputs into the production process. 
D)  sold to foreigners. 
E)  not a consumption good.

Question 5

For the following question(s), suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below.
  
-If a particular measure of real GDP consistently underestimates growth in real GDP, then the rate of inflation as measured by the GDP deflator

Accepted Answer

A)  will consistently be overestimated. 
B)  will consistently be underestimated. 
C)  will be overestimated and underestimated equally often. 
D)  cannot be calculated. 
E)  is not a good predictor of the inflation rate in the CPI. 
A)  will consistently be overestimated. 
B)  will consistently be underestimated. 
C)  will be overestimated and underestimated equally often. 
D)  cannot be calculated. 
E)  is not a good predictor of the inflation rate in the CPI.

Question 6

The income approach to calculating GDP is

Accepted Answer

A)  the sum of all business income earned. 
B)  the sum of all consumer income earned. 
C)  all the spending on goods and services earned by consumer's income. 
D)  the sum of all incomes earned from production. 
E)  net of taxes. 
A)  the sum of all business income earned. 
B)  the sum of all consumer income earned. 
C)  all the spending on goods and services earned by consumer's income. 
D)  the sum of all incomes earned from production. 
E)  net of taxes.

Question 7

Real GDP values current production at

Accepted Answer

A)  current year prices. 
B)  the best estimate of next year's prices. 
C)  the average of price levels over the entire sample period. 
D)  base year prices. 
E)  the purchase price not the asking prices of goods and services. 
A)  current year prices. 
B)  the best estimate of next year's prices. 
C)  the average of price levels over the entire sample period. 
D)  base year prices. 
E)  the purchase price not the asking prices of goods and services.

Question 8

Discouraged workers are

Accepted Answer

A)  those who have given up looking for work, even though they would like to be employed. 
B)  those who quit working because they are dissatisfied with their jobs. 
C)  those who unmotivated workers who bring down a country's productivity. 
D)  those who would like to find a second job to supplement their income, but have not yet found one. 
E)  those who only work in the summer months. 
A)  those who have given up looking for work, even though they would like to be employed. 
B)  those who quit working because they are dissatisfied with their jobs. 
C)  those who unmotivated workers who bring down a country's productivity. 
D)  those who would like to find a second job to supplement their income, but have not yet found one. 
E)  those who only work in the summer months.

Question 9

When there is rapid inflation,

Accepted Answer

A)  growth in nominal GDP exceeds growth in real GDP. 
B)  growth in real GDP exceeds growth in nominal GDP. 
C)  growth in real GDP and nominal GDP are roughly equal. 
D)  there can never be any growth in nominal GDP. 
E)  government tries to increase growth in real GDP. 
A)  growth in nominal GDP exceeds growth in real GDP. 
B)  growth in real GDP exceeds growth in nominal GDP. 
C)  growth in real GDP and nominal GDP are roughly equal. 
D)  there can never be any growth in nominal GDP. 
E)  government tries to increase growth in real GDP.

Question 10

Investment spending is

Accepted Answer

A)  less volatile than consumption spending. 
B)  much more volatile than consumption spending. 
C)  equally as volatile as government spending. 
D)  equally volatile as GDP. 
E)  a larger fraction of GDP than consumption is. 
A)  less volatile than consumption spending. 
B)  much more volatile than consumption spending. 
C)  equally as volatile as government spending. 
D)  equally volatile as GDP. 
E)  a larger fraction of GDP than consumption is.

Question 11

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's contribution to GDP is

Accepted Answer

A)  $900. 
B)  $1,000. 
C)  $1,100. 
D)  $1,800. 
E)  $2,000. 
A)  $900. 
B)  $1,000. 
C)  $1,100. 
D)  $1,800. 
E)  $2,000.

Question 12

The income approach to calculating GDP includes

Accepted Answer

A)  consumer spending. 
B)  exports of income earned. 
C)  net interest income. 
D)  government surpluses. 
E)  investment. 
A)  consumer spending. 
B)  exports of income earned. 
C)  net interest income. 
D)  government surpluses. 
E)  investment.

Question 13

Even when measured accurately, GDP may be a misleading measure of economic welfare because it cannot account for

Accepted Answer

A)  the value of government spending and how efficiently we produce goods and services. 
B)  how efficiently we produce goods and services and the value of non-market production. 
C)  the value of non-market production and the consequences of an unequal distribution of income. 
D)  the consequences of an unequal distribution of income and the value of government spending. 
E)  the cost of intermediate goods and services. 
A)  the value of government spending and how efficiently we produce goods and services. 
B)  how efficiently we produce goods and services and the value of non-market production. 
C)  the value of non-market production and the consequences of an unequal distribution of income. 
D)  the consequences of an unequal distribution of income and the value of government spending. 
E)  the cost of intermediate goods and services.

Question 14

For the following question(s), suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below.
  
-When we try to measure real GDP and the price level, if we underestimate the growth in real GDP, we will

Accepted Answer

A)  always underestimate the rate of inflation. 
B)  sometimes underestimate the rate of inflation. 
C)  always overestimate the rate of inflation. 
D)  sometimes overestimate the rate of inflation. 
E)  not be able to measure the rate of inflation. 
A)  always underestimate the rate of inflation. 
B)  sometimes underestimate the rate of inflation. 
C)  always overestimate the rate of inflation. 
D)  sometimes overestimate the rate of inflation. 
E)  not be able to measure the rate of inflation.

Question 15

Suppose that GDP is equal to 1,000, national saving is equal to 200, the current account deficit is equal to 100, and the government budget deficit is equal to 50. Private savings must equal

Accepted Answer

A)  150. 
B)  200. 
C)  250. 
D)  300. 
E)  350. 
A)  150. 
B)  200. 
C)  250. 
D)  300. 
E)  350.

Question 16

National savings must equal

Accepted Answer

A)  I + NX + NFP. 
B)  I - NX - NFP. 
C)  Y - NFP + C + G. 
D)  Yd - C. 
E)  T - TR - INT - G. 
A)  I + NX + NFP. 
B)  I - NX - NFP. 
C)  Y - NFP + C + G. 
D)  Yd - C. 
E)  T - TR - INT - G.

Question 17

Approaches to measuring GDP include

Accepted Answer

A)  cost approach. 
B)  GDP approach. 
C)  income approach. 
D)  trade approach. 
E)  value-subtracted approach. 
A)  cost approach. 
B)  GDP approach. 
C)  income approach. 
D)  trade approach. 
E)  value-subtracted approach.

Question 18

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's profit is

Accepted Answer

A)  $100. 
B)  $200. 
C)  $400. 
D)  $800. 
E)  $1,000. 
A)  $100. 
B)  $200. 
C)  $400. 
D)  $800. 
E)  $1,000.

Question 19

For the following question(s), suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below.
  
-Significant problems with measuring real GDP and the price level include

Accepted Answer

A)  changes in the importance of intermediate goods. 
B)  purchases of used goods. 
C)  changes in the population size. 
D)  changes in the quality of goods over time. 
E)  changes in the size of the government. 
A)  changes in the importance of intermediate goods. 
B)  purchases of used goods. 
C)  changes in the population size. 
D)  changes in the quality of goods over time. 
E)  changes in the size of the government.

Question 20

GDP may inaccurately measure the value of aggregate output because it may not properly account for

Accepted Answer

A)  production in the underground economy and the true value of government production. 
B)  the true value of government production and the proper value of purchases and sales of used goods. 
C)  the proper value of purchases and sales of used goods and depreciation of consumer durables. 
D)  the depreciation of consumer durables and production in the underground economy. 
E)  all services produced. 
A)  production in the underground economy and the true value of government production. 
B)  the true value of government production and the proper value of purchases and sales of used goods. 
C)  the proper value of purchases and sales of used goods and depreciation of consumer durables. 
D)  the depreciation of consumer durables and production in the underground economy. 
E)  all services produced.

The participation rate equals

Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's profit is

For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table: -What is the real GDP in year 1 using base year 2?

Intermediate goods are

The income approach to calculating GDP is

Real GDP values current production at

Discouraged workers are

When there is rapid inflation,

Investment spending is

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's contribution to GDP is

The income approach to calculating GDP includes

Even when measured accurately, GDP may be a misleading measure of economic welfare because it cannot account for

Suppose that GDP is equal to 1,000, national saving is equal to 200, the current account deficit is equal to 100, and the government budget deficit is equal to 50. Private savings must equal

National savings must equal

Approaches to measuring GDP include

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's profit is

For the following question(s), suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below. -Significant problems with measuring real GDP and the price level include

GDP may inaccurately measure the value of aggregate output because it may not properly account for

Introduction

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

Exam 2: Measurement

The participation rate equals

Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's profit is

For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table: -What is the real GDP in year 1 using base year 2?

Intermediate goods are

The income approach to calculating GDP is

Real GDP values current production at

Discouraged workers are

When there is rapid inflation,

Investment spending is

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's contribution to GDP is

The income approach to calculating GDP includes

Even when measured accurately, GDP may be a misleading measure of economic welfare because it cannot account for

Suppose that GDP is equal to 1,000, national saving is equal to 200, the current account deficit is equal to 100, and the government budget deficit is equal to 50. Private savings must equal

National savings must equal

Approaches to measuring GDP include

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's profit is

For the following question(s), suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below. -Significant problems with measuring real GDP and the price level include

GDP may inaccurately measure the value of aggregate output because it may not properly account for

Introduction

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters