Exam 2: The Measurement and Structure of the National Economy

The country of Myrule has produced the following quantity of gauges and potatoes,with the price of each listed in dollar terms. (a)Using Year 1 as the base year,what is the growth rate of real GDP from Year 1 to Year 2? (b)Based on the GDP deflator,what is the inflation rate from Year 1 to Year 2?

Capital goods are

The accounting framework used in measuring current economic activity is called

Currently,the U.S.national income and product accounts (NIPA)use what type of price index to calculate real GDP?

Private disposable income equals

The nominal interest rate minus the inflation rate is the

In 2008,expected inflation exceeded inflation.In 2009,inflation exceeded expected inflation.Therefore the real interest rate was ________ than the expected real interest rate in 2008 and the real interest rate was ________ than the expected real interest rate in 2009.

You are given information on the consumer price index (CPI),where the values given are those for December 31 of each year. In which year was the inflation rate the highest?

The U.S.inflation rate ________ in the 1960s and 1970s,________ in the 1980s,and ________ in the 1990s and 2000s.

In a given year,a country's GDP = $9841,net factor payments from abroad = $889,taxes = $869,transfers received from the government = $296,interest payments on the government's debt = $103,consumption = $8148,and government purchases = $185.The country had private saving equal to

Which of the following is not a category of consumption spending in the national income accounts?

Loretta agrees to lend Ted $500,000 to buy computers for his consulting firm.They agree to a nominal interest rate of 8%.Both expect the inflation rate to be 2%. (a)Calculate the expected real interest rate. (b)If inflation turns out to be 3% over the life of the loan,what is the real interest rate? Who gains from unexpectedly high inflation,Loretta or Ted? (c)If inflation turns out to be 1% over the life of the loan,what is the real interest rate? Who gains from unexpectedly low inflation,Loretta or Ted?

In the country of Kwaki,people produce canoes,fish for salmon,and grow corn.In one year they produced 5000 canoes using labor and natural materials only,but sold only 4000,as the economy entered a recession.The cost of producing each canoe was $1000,but the ones that sold were priced at $1250.They fished $30 million worth of salmon.They used $3 million of the salmon as fertilizer for corn.They grew and ate $55 million of corn.What was Kwaki's GDP for the year?

A disadvantage of chain-weighting is that

Historical analysis of real interest rates in the United States shows that

In a given year,a country's GDP = $9841,net factor payments from abroad = $889,taxes = $869,transfers received from the government = $296,interest payments on the government's debt = $103,consumption = $8148,and government purchases = $185.The country had private saving equal to

The Fed prefers to focus on inflation based on which price index?

How does chain weighting lead to a different measurement of real GDP than the methods used by the BEA prior to 1996? What are the advantages of chain weighting? What are the disadvantages?

Fred the farmer purchased five new tractors at $20,000 each.Fred sold his old tractors to other farmers for $50,000.The net increase in GDP of these transactions was

By Marks buys a one-year German government bond (called a bund)for $400.He receives principal and interest totaling $436 one year later.During the year the CPI rose from 150 to 162,but he had thought the CPI would be at 159 by the end of the year.By Marks had expected the real interest rate to be ________,but it actually turned out to be ________.