Question 1

What is the difference between spending from a microeconomic standpoint versus spending from a macroeconomic standpoint?

Accepted Answer

A) In microeconomics, spending refers to one individual's spending, whereas in macroeconomics, spending refers to government expenditure. 
B) In microeconomics, spending refers to expenditure on consumer goods only, whereas in macroeconomics, spending refers to business expenditures only. 
C) In microeconomics, spending refers to domestic spending, whereas in macroeconomics, spending refers to foreign spending. 
D) In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy. 
A) In microeconomics, spending refers to one individual's spending, whereas in macroeconomics, spending refers to government expenditure. 
B) In microeconomics, spending refers to expenditure on consumer goods only, whereas in macroeconomics, spending refers to business expenditures only. 
C) In microeconomics, spending refers to domestic spending, whereas in macroeconomics, spending refers to foreign spending. 
D) In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy.

Question 2

According to the information in Table: Calculating GDP, what is GDP? $$\text { Table: Calculating GDP } \
\begin{array} { | l | l | } 
\hline \text { Rent } & \$ 2,400 \
\hline \text { Consumption Spending } & 7,900 \
\hline \text { Social Security benefit } & 6,100 \
\hline \text { Investment spending } & 2,100 \
\hline \text { Wages and salaries } & 6,500 \
\hline \text { Exports } & 800 \
\hline \text { Interest } & 1,900 \
\hline \begin{array} { l } 
\text { Government purchases } \
\text { of goods and services }
\end{array} & 2,600 \
\hline \text { Profits } & 1,400 \
\hline \text { Imports } & 1,200 \
\hline \text { Purchase of stocks } & 6,300 \
\hline \begin{array} { l } 
\text { Unemployment } \
\text { compensation }
\end{array} & 3,950 \
\hline \text { Payroll taxes } & 2,965 \
\hline \text { Sales taxes } & 1,300 \
\hline
\end{array}$$

Accepted Answer

A)  $47,475. 
B)  $47,475 
C)  $12,200 
D)  $12,200. 
E)  $21,485.
F)$21,485
G)$34,085.
H)$34,085 
A)  $47,475. 
B)  $47,475 
C)  $12,200 
D)  $12,200. 
E)  $21,485.
F)$21,485
G)$34,085.
H)$34,085

Question 3

(Table: Pizza Economy III) Use Table: Pizza Economy III. Using 2018 as the base year, real GDP in 2018 was: $$\begin{array} { | l | l | l | l | l | } 
\hline & \begin{array} { l } 
\text { 2018 Units of } \
\text { Output }
\end{array} & \begin{array} { l } 
\text { 2018 Price per } \
\text { Unit }
\end{array} & \begin{array} { l } 
\text { 2019 Units of } \
\text { Output }
\end{array} & \begin{array} { l } 
\text { 2019 Price } \
\text { per Unit }
\end{array} \
\hline \text { Gino's Pizza } & 4,000 & \$ 10 & 4,000 & \$ 8 \
\hline \text { Bee's Spaghetti } & 3,000 & \$ 9 & 1,000 & \$ 6 \
\hline \text { Claudia's Cookies } & 2,000 & \$ 6 & 1,000 & \$ 1 \
\hline \text { Andre's Salad } & 5,000 & \$ 7 & 2,000 & \$ 4 \
\hline
\end{array}$$

Accepted Answer

A) $47,000. 
B) $47,000 
C) $69,000. 
D) $69,000 
E) $72,000
F)$72,000.
G)$114,000.
H)$114,000 
A) $47,000. 
B) $47,000 
C) $69,000. 
D) $69,000 
E) $72,000
F)$72,000.
G)$114,000.
H)$114,000

Question 4

Which item would NOT be included in GDP for 2019?

Accepted Answer

A) the production of a television show 
B) the production of a television show. 
C) the purchase of a new work truck 
D) the purchase of a new work truck. 
E) the hiring of a new police officer..
F)the hiring of a new police officer
G)your purchase of your neighbor's 2015 Toyota
H)your purchase of your neighbor's 2015 Toyota. 
A) the production of a television show 
B) the production of a television show. 
C) the purchase of a new work truck 
D) the purchase of a new work truck. 
E) the hiring of a new police officer..
F)the hiring of a new police officer
G)your purchase of your neighbor's 2015 Toyota
H)your purchase of your neighbor's 2015 Toyota.

Question 5

You have decided to live off of nature. You cut down an old dead tree and use the wood to make a small canoe for yourself. Then you fashion a fishing rod from some old wire and an old hook. You dig up worms to use as bait, and you catch two fish and cook them for your dinner. Based on all these activities, how much did GDP change?

Accepted Answer

A) GDP rises by the market value of the canoe, the fishing rod, and the fish. 
B) GDP rises by the market value of the fish only. 
C) GDP does not change. 
D) GDP rises by the value of the canoe because it is a durable good. 
A) GDP rises by the market value of the canoe, the fishing rod, and the fish. 
B) GDP rises by the market value of the fish only. 
C) GDP does not change. 
D) GDP rises by the value of the canoe because it is a durable good.

Question 6

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

Accepted Answer

A) $450; $400 
B) $450; $400. 
C) $525; $450 
D) $525; $450. 
E) $525; $400
F)$525; $400.
G)$450; $575
H)$450; $575. 
A) $450; $400 
B) $450; $400. 
C) $525; $450 
D) $525; $450. 
E) $525; $400
F)$525; $400.
G)$450; $575
H)$450; $575.

Question 7

In the circular flow diagram, firms:

Accepted Answer

A) sell goods and services. 
B) sell goods and services 
C) buy goods outside of investment spending. 
D) buy goods outside of investment spending 
E) sell labor
F)sell labor.
G)buy services outside of investment spending.
H)buy services outside of investment spending 
A) sell goods and services. 
B) sell goods and services 
C) buy goods outside of investment spending. 
D) buy goods outside of investment spending 
E) sell labor
F)sell labor.
G)buy services outside of investment spending.
H)buy services outside of investment spending

Question 8

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the nominal GDP for last 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) $250,000 
B) $262,500 
C) $288,750 
D) $275,625 
A) $250,000 
B) $262,500 
C) $288,750 
D) $275,625

Question 9

(Table: Per Capita GDP) Use Table: Per Capita GDP. Per capita nominal GDP in 2016 was: $$\begin{array} { | l | l | l | l | } 
\hline \text { Year } & \text { Nominal GDP } & \text { Price Level } & \text { Population } \
\hline \mathbf { 2 0 1 6 } & \$ 3,000 & 100 & 5 \
\hline \mathbf { 2 0 1 9 } & 8,000 & 200 & 10 \
\hline
\end{array}$$

Accepted Answer

A) $600 
B) $600. 
C) $400 
D) $400. 
E) $300.
F)$300
G)$30.
H)$30 
A) $600 
B) $600. 
C) $400 
D) $400. 
E) $300.
F)$300
G)$30.
H)$30

Question 10

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

Accepted Answer

A) $180,000 
B) $191,625 
C) $182,500 
D) $194,250 
A) $180,000 
B) $191,625 
C) $182,500 
D) $194,250

Question 11

(Table: Price and Output Data) Use Table: Price and Output Data. The value of year 4's output in real dollars is: $$\begin{array} { | l | l | l | } 
\hline \text { Year } & \text { Output } & \text { Price per Unit } \
\hline 1 & 2 & \$ 2 \
\hline 2 & 3 & 4 \
\hline 3 = \text { base period } & 4 & 5 \
\hline 4 & 6 & 6 \
\hline 5 & 7 & 9 \
\hline
\end{array}$$

Accepted Answer

A) $5.20. 
B) $5.20 
C) $6. 
D) $6 
E) $30.
F)$30
G)$36
H)$36. 
A) $5.20. 
B) $5.20 
C) $6. 
D) $6 
E) $30.
F)$30
G)$36
H)$36.

Question 12

(Table: Price and Output Data) Use Table: Price and Output Data. Between years 2 and 3, the amount of change in nominal GDP due to inflation was: $$\begin{array} { | l | l | l | } 
\hline \text { Year } & \text { Output } & \text { Price per Unit } \
\hline 1 & 2 & \$ 2 \
\hline 2 & 3 & 4 \
\hline 3 = \text { base period } & 4 & 5 \
\hline 4 & 6 & 6 \
\hline 5 & 7 & 9 \
\hline
\end{array}$$

Accepted Answer

A) 100% 
B) 100%. 
C) 34%. 
D) 34% 
E) 22%.
F)22%
G)5%
H)5%. 
A) 100% 
B) 100%. 
C) 34%. 
D) 34% 
E) 22%.
F)22%
G)5%
H)5%.

Question 13

(Table: Per Capita GDP) Use Table: Per Capita GDP. Per capita nominal GDP in 2019 was: $$\begin{array} { | l | l | l | l | } 
\hline \text { Year } & \text { Nominal GDP } & \text { Price Level } & \text { Population } \
\hline \mathbf { 2 0 1 6 } & \$ 3,000 & 100 & 5 \
\hline \mathbf { 2 0 1 9 } & 8,000 & 200 & 10 \
\hline
\end{array}$$

Accepted Answer

A) $600. 
B) $600 
C) $800. 
D) $800 
E) $300.
F)$300
G)$1,600
H)$1,600. 
A) $600. 
B) $600 
C) $800. 
D) $800 
E) $300.
F)$300
G)$1,600
H)$1,600.

Question 14

The rule of 70 is a simple rule of thumb for:

Accepted Answer

A) evaluating long-term growth rates. 
B) calculating the level of real GDP. 
C) finding the sum of all expenditures in the economy. 
D) calculating the unemployment rate. 
A) evaluating long-term growth rates. 
B) calculating the level of real GDP. 
C) finding the sum of all expenditures in the economy. 
D) calculating the unemployment rate.

Question 15

In 2017, the total population of Africa was estimated to be about 1,250,000,000 people. This number, in billions, is:

Accepted Answer

A) 1,250. 
B) 125. 
C) 1.25. 
D) 12.5. 
A) 1,250. 
B) 125. 
C) 1.25. 
D) 12.5.

Question 16

_____ spending is the largest component of U.S. GDP, at approximately 68% of aggregate spending.

Accepted Answer

A) Government 
B) Government. 
C) Consumer 
D) Consumer. 
E) Investment
F)Investment.
G)Net export
H)Net export. 
A) Government 
B) Government. 
C) Consumer 
D) Consumer. 
E) Investment
F)Investment.
G)Net export
H)Net export.

Question 17

(Scenario: Good A and Good B) The town of York produces two goods, good A and good B. The table presents information regarding York's production of these two goods and their prices over three years. In 2018, nominal GDP was _____ nominal GDP in _____. $$\begin{array} { | l | l | l | l | } 
\hline & \text { Year 2017 } & \text { Year 2018 } & \text { Year 2019 } \
\hline \text { Quantity of good A } & 3 & 4 & 5 \
\hline \text { Price of good A } & \$ 500 & \$ 550 & \$ 550 \
\hline \text { Quantity of good B } & 10 & 10 & 10 \
\hline \text { Price of good B } & \$ 2 & \$ 4 & \$ 5 \
\hline
\end{array}$$

Accepted Answer

A)  greater than; 2018. 
B)  greater than; 2018 
C)  greater than; 2017 
D)  greater than; 2017. 
E)  equal to; 2019
F) equal to; 2019.
G) equal to; 2017.
H) equal to; 2017 
A)  greater than; 2018. 
B)  greater than; 2018 
C)  greater than; 2017 
D)  greater than; 2017. 
E)  equal to; 2019
F) equal to; 2019.
G) equal to; 2017.
H) equal to; 2017

Question 18

(Table: Pizza Economy III) Use Table: Pizza Economy III. Considering 2018 as the base year, real GDP between 2018 and 2019 grew at a rate of: $$\begin{array} { | l | l | l | l | l | } 
\hline & \begin{array} { l } 
\text { 2018 Units of } \
\text { Output }
\end{array} & \begin{array} { l } 
\text { 2018 Price per } \
\text { Unit }
\end{array} & \begin{array} { l } 
\text { 2019 Units of } \
\text { Output }
\end{array} & \begin{array} { l } 
\text { 2019 Price } \
\text { per Unit }
\end{array} \
\hline \text { Gino's Pizza } & 4,000 & \$ 10 & 4,000 & \$ 8 \
\hline \text { Bee's Spaghetti } & 3,000 & \$ 9 & 1,000 & \$ 6 \
\hline \text { Claudia's Cookies } & 2,000 & \$ 6 & 1,000 & \$ 1 \
\hline \text { Andre's Salad } & 5,000 & \$ 7 & 2,000 & \$ 4 \
\hline
\end{array}$$

Accepted Answer

A) 53.19% 
B) 53.19%. 
C) 39.47%. 
D) 39.47% 
E) ?39.47%.
F)?39.47%
G)?58.67%
H)?58.67%. 
A) 53.19% 
B) 53.19%. 
C) 39.47%. 
D) 39.47% 
E) ?39.47%.
F)?39.47%
G)?58.67%
H)?58.67%.

Question 19

(Table: Measuring GDP). In the table, GDP is equal to: $${ \text { Measuring GDP (billions of dollars) } } \
\begin{array} { | l | l | } 
\hline \text { Personal consumption expenditures } & \$ 600 \
\hline \text { Gross private domestic investment } & 200 \
\hline \text { Net exports } & - 5 \
\hline \text { State and local government purchases of goods and services } & 200 \
\hline \text { Federal government purchases of goods and services } & 100 \
\hline \text { Imports } & 15 \
\hline
\end{array}$$

Accepted Answer

A) $600 billion. 
B) $600 billion 
C) $850 billion. 
D) $850 billion 
E) $1,095 billion
F)$1,095 billion.
G)$1,085 billion.
H)$1,085 billion 
A) $600 billion. 
B) $600 billion 
C) $850 billion. 
D) $850 billion 
E) $1,095 billion
F)$1,095 billion.
G)$1,085 billion.
H)$1,085 billion

Question 20

Consider the data shown in the table. Assume that the economy produces only barrels of oil. What is the real GDP for this year?
$$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Barrels of } \
\text { Oil Sold }
\end{array} & \begin{array} { c } 
\text { Actual } \
\text { Price }
\end{array} \
\hline \text { Last year } & 80,000 & \$ 60 \
\hline \text { This year } & 83,000 & \$ 63 \
\hline
\end{array}$$

Accepted Answer

A) $5,104,500 
B) $5,229,000 
C) $4,920,000 
D) $4,800,000 
A) $5,104,500 
B) $5,229,000 
C) $4,920,000 
D) $4,800,000

Exam 21: Sizing up the Economy Using Gdp

What is the difference between spending from a microeconomic standpoint versus spending from a macroeconomic standpoint?

Which item would NOT be included in GDP for 2019?

In the circular flow diagram, firms:

Consider the data shown in the table. Assume that the economy produces only textbooks. What is the nominal GDP for last year? Textbooks Sold Actual Price Last year 5,000 \ 50 This year 5,250 \ 55

(Table: Per Capita GDP) Use Table: Per Capita GDP. Per capita nominal GDP in 2016 was: Year Nominal GDP Price Level Population \ 3,000 100 5 8,000 200 10

Consider the data shown in the table. Assume that the economy produces only frozen fish. What is the nominal GDP for last year? Tons of Frozen Fish Sold Actual Price Last year 100 \ 1,800 This year 105 \ 1,850

(Table: Price and Output Data) Use Table: Price and Output Data. The value of year 4's output in real dollars is: Year Output Price per Unit 1 2 \ 2 2 3 4 3= base period 4 5 4 6 6 5 7 9

(Table: Price and Output Data) Use Table: Price and Output Data. Between years 2 and 3, the amount of change in nominal GDP due to inflation was: Year Output Price per Unit 1 2 \ 2 2 3 4 3= base period 4 5 4 6 6 5 7 9

(Table: Per Capita GDP) Use Table: Per Capita GDP. Per capita nominal GDP in 2019 was: Year Nominal GDP Price Level Population \ 3,000 100 5 8,000 200 10

The rule of 70 is a simple rule of thumb for:

In 2017, the total population of Africa was estimated to be about 1,250,000,000 people. This number, in billions, is:

_____ spending is the largest component of U.S. GDP, at approximately 68% of aggregate spending.

Consider the data shown in the table. Assume that the economy produces only barrels of oil. What is the real GDP for this year? Barrels of Oil Sold Actual Price Last year 80,000 \ 60 This year 83,000 \ 63

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

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