Question 1

Households indirectly own physical capital through their ownership of:

Accepted Answer

A) cash. 
B) cash 
C) stocks. 
D) stocks 
E) savings accounts.
F)savings accounts
G)their house
H)their house. 
A) cash. 
B) cash 
C) stocks. 
D) stocks 
E) savings accounts.
F)savings accounts
G)their house
H)their house.

Question 2

In 1986, the United States recorded real GDP growth of 3.5% and nominal GDP growth of 5.5%. What was the inflation rate in 1945?

Accepted Answer

A) 9% 
B) 3.5% 
C) 2% 
D) -2% 
A) 9% 
B) 3.5% 
C) 2% 
D) -2%

Question 3

Dale is a stay-at-home-parent whose typical day consists of getting the kids ready for school, doing the laundry, cooking three meals, and cleaning the house. How are Dale's home activities counted in GDP?

Accepted Answer

A) They are counted by subtracting Dale's opportunity cost in terms of lost income. 
B) They are counted at market value. 
C) They are counted by assigning a value that is equivalent to what it would have taken to pay a housekeeper to perform the same tasks. 
D) They are not counted. 
A) They are counted by subtracting Dale's opportunity cost in terms of lost income. 
B) They are counted at market value. 
C) They are counted by assigning a value that is equivalent to what it would have taken to pay a housekeeper to perform the same tasks. 
D) They are not counted.

Question 4

Consider the following data. Assume that the economy produces only shoes.
 $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Pairs of } \
\text { Shoes Sold }
\end{array} & \begin{array} { c } 
\text { Actual } \
\text { Price }
\end{array} \
\hline \text { Last year } & 500 & \$ 100 \
\hline \text { This year } & 510 & \$ 105 \
\hline
\end{array}$$ ​
(a) Calculate nominal GDP for each of the years.
(b) Calculate the average price over the two years.
(c) Calculate real GDP for each of the years.
(d) Calculate the growth rate of real GDP.

Accepted Answer

The answer of Consider the following data. Assume that the...

Question 5

Which of the scenarios below represents a macroeconomic decision?

Accepted Answer

A) You are deciding whether to buy a used textbook or rent a textbook for the semester. 
B) Your school is making a decision on whether to hire a new professor. 
C) The president of Uzbekistan is deciding whether to boost spending on the tourism sector. 
D) Marios is making a decision on which university to attend. 
A) You are deciding whether to buy a used textbook or rent a textbook for the semester. 
B) Your school is making a decision on whether to hire a new professor. 
C) The president of Uzbekistan is deciding whether to boost spending on the tourism sector. 
D) Marios is making a decision on which university to attend.

Question 6

(Table: Real and Nominal Output) Use Table: Real and Nominal Output. Nominal GDP in year 2 is equal to: $$\begin{array} { | l | l | l | } 
\hline \text { Year } & \text { Units of Output } & \text { Price per Unit } \
\hline 1 & 40 & \$ 1 \
\hline 2 & 30 & \$ 2 \
\hline 3 & 50 & \$ 2 \
\hline 4 & 70 & \$ 4 \
\hline 5 & 60 & \$ 6 \
\hline 6 & 60 & \$ 8 \
\hline
\end{array}$$

Accepted Answer

A) $40 
B) $40. 
C) $60 
D) $60. 
E) $100
F)$100.
G)$280
H)$280. 
A) $40 
B) $40. 
C) $60 
D) $60. 
E) $100
F)$100.
G)$280
H)$280.

Question 7

Suppose that nominal GDP is $1,000 in 2018 and $1,500 in 2019. If the overall price level increased by _____ between 2018 and 2019, we could say that real GDP _____.

Accepted Answer

A) 50%; stayed constant 
B) 50%; stayed constant. 
C) less than 50%; decreased 
D) less than 50%; decreased. 
E) more than 50%; increased.
F)more than 50%; increased
G)50%; increased.
H)50%; increased 
A) 50%; stayed constant 
B) 50%; stayed constant. 
C) less than 50%; decreased 
D) less than 50%; decreased. 
E) more than 50%; increased.
F)more than 50%; increased
G)50%; increased.
H)50%; increased

Question 8

How do these transactions affect GDP for the current year?
(a) A manufacturer pays its workers $7.5 million as wages.
(b) Stockholders make $34 million worth of capital gains in two months.
(c) The local hot sauce factory purchases and uses $50,000 worth of habanero peppers and $8,000 worth of salt and spices to make habanero sauce, which is then sold for $122,000.

Accepted Answer

The answer of How do these transactions affect GDP for...

Question 9

(Table: Peanut Butter and Jelly Economy) Use Table: Peanut Butter and Jelly Economy. Between 2018 and 2019, nominal GDP _____ by _____. $$\begin{array} { | l | l | l | l | l | l | } 
\hline \text { Product } & \text { 2018 Output } & \begin{array} { l } 
\text { 2018 Prices } \
\text { (base year) }
\end{array} & \text { Product } & \text { 2019 Output } & \text { 2019 Prices } \
\hline \text { Peanut butter } & 200 \text { units } & \text { \$1 per unit } & \text { Peanut butter } & 250 & \text { \$1.10 per unit } \
\hline \text { Jelly } & 100 \text { units } & 2 \text { per unit } & \text { Jelly } & 100 & 2.50 \text { per unit } \
\hline
\end{array}$$

Accepted Answer

A) increased; 12.5% 
B) increased; 12.5%. 
C) decreased; 12.5%. 
D) decreased; 12.5% 
E) increased; 16.67%
F)increased; 16.67%.
G)increased; 31.25%
H)increased; 31.25%. 
A) increased; 12.5% 
B) increased; 12.5%. 
C) decreased; 12.5%. 
D) decreased; 12.5% 
E) increased; 16.67%
F)increased; 16.67%.
G)increased; 31.25%
H)increased; 31.25%.

Question 10

You purchase a new car (produced this year) for $38,000. After six months, you sell the car for $31,500. How much does GDP rise because of these two transactions?

Accepted Answer

A) GDP rises by $31,500. 
B) GDP rises by $69,500. 
C) GDP rises by $38,000. 
D) GDP rises by $6,500. 
A) GDP rises by $31,500. 
B) GDP rises by $69,500. 
C) GDP rises by $38,000. 
D) GDP rises by $6,500.

Question 11

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the growth rate of real GDP between the two years using last year as the base year?
$$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Textbooks } \
\text { Sold }
\end{array} & \begin{array} { c } 
\text { Actual } \
\text { Price }
\end{array} \
\hline \text { Last year } & 5,000 & \$ 50 \
\hline \text { This year } & 5,250 & \$ 55 \
\hline
\end{array}$$

Accepted Answer

A) 5% 
B) 10% 
C) 15% 
D) 2.5% 
A) 5% 
B) 10% 
C) 15% 
D) 2.5%

Question 12

Consider an economy that produces only smartphones and laptops. Last year, 10 smartphones were sold at $800 each, and 5 laptops were sold at $1,000 each, while this year, 15 smartphones were sold at $900 each, and 10 laptops were sold at $1,100 each. Nominal GDP this year is:

Accepted Answer

A) $13,500 
B) $13,500. 
C) $24,500 
D) $24,500. 
E) $11,000
F)$11,000.
G)$13,000
H)$13,000. 
A) $13,500 
B) $13,500. 
C) $24,500 
D) $24,500. 
E) $11,000
F)$11,000.
G)$13,000
H)$13,000.

Question 13

Consider an economy that produces only smartphones and laptops. Last year, 10 smartphones were sold at $800 each, and 5 laptops were sold at $1,000 each, while this year, 15 smartphones were sold at $900 each, and 10 laptops were sold at $1,100 each. Real GDP this year, using last year as a base year, is:

Accepted Answer

A) $22,000. 
B) $22,000 
C) $24,500. 
D) $24,500 
E) $11,000.
F)$11,000
G)$13,500.
H)$13,500 
A) $22,000. 
B) $22,000 
C) $24,500. 
D) $24,500 
E) $11,000.
F)$11,000
G)$13,500.
H)$13,500

Question 14

In the circular flow diagram, firms:

Accepted Answer

A) buy goods. 
B) buy goods 
C) buy services. 
D) buy services 
E) sell resources..
F)sell resources
G)buy resources.
H)buy resources 
A) buy goods. 
B) buy goods 
C) buy services. 
D) buy services 
E) sell resources..
F)sell resources
G)buy resources.
H)buy resources

Question 15

Consider the data shown in the table. Assume that the economy produces only frozen fish. What is the average price between the two years?
$$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Tons of Frozen } \
\text { Fish Sold }
\end{array} & \begin{array} { c } 
\text { Actual } \
\text { Price }
\end{array} \
\hline \text { Last year } & 100 & \$ 1,800 \
\hline \text { This year } & 105 & \$ 1,850 \
\hline
\end{array}$$

Accepted Answer

A) $1,825 
B) $1,800 
C) $1,850 
D) $1,900 
A) $1,825 
B) $1,800 
C) $1,850 
D) $1,900

Question 16

If Malaysia's GDP is approximately $315 billion, and its population is 32 million, what is its approximate GDP per person?

Accepted Answer

A) $9,844 
B) $98,438 
C) $984.40 
D) $9.844 
A) $9,844 
B) $98,438 
C) $984.40 
D) $9.844

Question 17

Which of the following is a scaled number?

Accepted Answer

A) government budget deficit as a percentage of GDP 
B) the country's national debt 
C) total tax revenues in the economy 
D) the sum of all incomes earned in the economy 
A) government budget deficit as a percentage of GDP 
B) the country's national debt 
C) total tax revenues in the economy 
D) the sum of all incomes earned in the economy

Question 18

Suppose that, in year 1, an economy produces 200 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year, the economy produces 210 golf balls that sell for $3.50 each and 80 pizzas that sell for $9 each. The value of nominal GDP in years 1 and 2, respectively, is:

Accepted Answer

A) $1,200 and $1,455. 
B) $1,200 and $1,455 
C) $1,455 and $1,200. 
D) $1,455 and $1,200 
E) $12,000 and $14,550.
F)$12,000 and $14,550
G)$275 and $290
H)$275 and $290. 
A) $1,200 and $1,455. 
B) $1,200 and $1,455 
C) $1,455 and $1,200. 
D) $1,455 and $1,200 
E) $12,000 and $14,550.
F)$12,000 and $14,550
G)$275 and $290
H)$275 and $290.

Question 19

A lumberyard pays workers $600 in wages to cut down lumber, which is then sold to a wood processing factory for $1,000. The wood processing factory pays workers $300 to process the wood, which is then sold to a furniture factory for $1,900. The furniture factory pays workers $950 to produce furniture, which is then sold for $8,400.
(a) Holding all else equal, what is the profit made by the lumberyard?
(b) Holding all else equal, what is the profit made by the wood processing factory?
(c) Holding all else equal, what is the profit made by the furniture factory?
(d) What is the sum of all the wages in this example?
(e) What is total GDP, according to the income approach?

Accepted Answer

The answer of A lumberyard pays workers $600 in wages...

Question 20

(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. Nominal GDP in 2019 was: $$\begin{array} { | l | l | l | l | l | } 
\hline & \text { 2018 Output } & \text { 2018 Prices } & \text { 2019 Output } & \text { 2019 Prices } \
\hline \text { Lemonade } & 200 \text { glasses } & \text { \$1 per glass } & 220 \text { glasses } & \text { \$1 per glass } \
\hline \text { Cookies } & 100 \text { cookies } & \text { \$2 per cookie } & 100 \text { cookies } & \text { \$2.25 per cookie } \
\hline
\end{array}$$

Accepted Answer

A) $400. 
B) $400 
C) $420. 
D) $420 
E) $445.
F)$445
G)$820.
H)$820 
A) $400. 
B) $400 
C) $420. 
D) $420 
E) $445.
F)$445
G)$820.
H)$820

Exam 21: Sizing up the Economy Using Gdp

Households indirectly own physical capital through their ownership of:

In 1986, the United States recorded real GDP growth of 3.5% and nominal GDP growth of 5.5%. What was the inflation rate in 1945?

Dale is a stay-at-home-parent whose typical day consists of getting the kids ready for school, doing the laundry, cooking three meals, and cleaning the house. How are Dale's home activities counted in GDP?

Which of the scenarios below represents a macroeconomic decision?

(Table: Real and Nominal Output) Use Table: Real and Nominal Output. Nominal GDP in year 2 is equal to: Year Units of Output Price per Unit 1 40 \ 1 2 30 \ 2 3 50 \ 2 4 70 \ 4 5 60 \ 6 6 60 \ 8

Suppose that nominal GDP is $1,000 in 2018 and $1,500 in 2019. If the overall price level increased by _____ between 2018 and 2019, we could say that real GDP _____.

You purchase a new car (produced this year) for $38,000. After six months, you sell the car for $31,500. How much does GDP rise because of these two transactions?

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the growth rate of real GDP between the two years using last year as the base year? Textbooks Sold Actual Price Last year 5,000 \ 50 This year 5,250 \ 55

Consider an economy that produces only smartphones and laptops. Last year, 10 smartphones were sold at $800 each, and 5 laptops were sold at $1,000 each, while this year, 15 smartphones were sold at $900 each, and 10 laptops were sold at $1,100 each. Nominal GDP this year is:

In the circular flow diagram, firms:

Consider the data shown in the table. Assume that the economy produces only frozen fish. What is the average price between the two years? Tons of Frozen Fish Sold Actual Price Last year 100 \ 1,800 This year 105 \ 1,850

If Malaysia's GDP is approximately $315 billion, and its population is 32 million, what is its approximate GDP per person?

Which of the following is a scaled number?

Suppose that, in year 1, an economy produces 200 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year, the economy produces 210 golf balls that sell for $3.50 each and 80 pizzas that sell for $9 each. The value of nominal GDP in years 1 and 2, respectively, is:

The Core Principles of Economics

Demand: Thinking Like a Buyer

Supply: Thinking Like a Seller

Equilibrium: Where Supply Meets Demand

Elasticity: Measuring Responsiveness

When Governments Intervene in Markets

Welfare and Efficiency

Gains From Trade

International Trade

Externalities and Public Goods

Labor Demand and Supply

Wages, Workers, and Management

Inequality, Social Insurance, and Redistribution

Market Structure and Market Power

Entry, Exit, and Long-Run Profitability

Business Strategy

Sophisticated Pricing Strategies

Game Theory and Strategic Choices

Decisions Involving Uncertainty

Decisions With Private Information

Economic Growth

Unemployment

Inflation and Money

Consumption and Saving

Investment

The Financial Sector

International Finance and the Exchange Rate

Business Cycles

IS-MP Analysis: Interest Rates and Output

Phillips Curve

The Fed Model: Linking Interest Rates, Output, and Inflation

Aggregate Demand and Aggregate Supply

Monetary Policy

Government Spending, Taxes, and Fiscal Policy

Appendix: Aggregate Expenditure and the Multiplier

Filters

Suppose that nominal GDP is $1,000 in 2018 and $1,500 in 2019. If the overall price level increased by _ between 2018 and 2019, we could say that real GDP _.