Question 1

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below.

-Year 2 nominal GDP is

Accepted Answer

A)  $200. 
B)  $270. 
C)  $310. 
D)  $390. 
A)  $200. 
B)  $270. 
C)  $310. 
D)  $390.

Question 2

Jim's Nursery produces and sells $1100 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)  $1000. 
C)  $1100. 
D)  $1800. 
A)  $900. 
B)  $1000. 
C)  $1100. 
D)  $1800.

Question 3

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below.

-What is the inflation rate using base year 1?

Accepted Answer

A)  10%. 
B)  15%. 
C)  20%. 
D)  25%. 
A)  10%. 
B)  15%. 
C)  20%. 
D)  25%.

Question 4

National saving minus private saving is equal to

Accepted Answer

A)  the government surplus. 
B)  private disposable income. 
C)  the current account deficit. 
D)  interest on the government debt. 
A)  the government surplus. 
B)  private disposable income. 
C)  the current account deficit. 
D)  interest on the government debt.

Question 5

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below.

-The base year matters for the computation of real GDP because

Accepted Answer

A)  otherwise we cannot compute growth rates. 
B)  relative prices can change over time. 
C)  it allows an international comparison of GDP. 
D)  it establishes a target for macroeconomic policy. 
A)  otherwise we cannot compute growth rates. 
B)  relative prices can change over time. 
C)  it allows an international comparison of GDP. 
D)  it establishes a target for macroeconomic policy.

Question 6

Suppose we have the following information about a plumber: wages $30,000,repair sales $200,000,taxes $5,000,loan interest $15,000,plumbing materials $20,000. What is the contribution to GDP of this plumber using the product approach?

Accepted Answer

A)  $200,000. 
B)  $180,000. 
C)  $50,000. 
D)  $30,000. 
A)  $200,000. 
B)  $180,000. 
C)  $50,000. 
D)  $30,000.

Question 7

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below.

-In the United States,real GDP is currently calculated using

Accepted Answer

A)  a variable-weighting scheme. 
B)  a chain-weighting scheme. 
C)  a fixed-weighting scheme. 
D)  an autoregressive scheme. 
A)  a variable-weighting scheme. 
B)  a chain-weighting scheme. 
C)  a fixed-weighting scheme. 
D)  an autoregressive scheme.

Question 8

The GDP deflator is a broader measure of the price level than the CPI because

Accepted Answer

A)  it covers sales tax. 
B)  it covers rents. 
C)  it covers investment. 
D)  it factors out fluctuations in seasonal items. 
A)  it covers sales tax. 
B)  it covers rents. 
C)  it covers investment. 
D)  it factors out fluctuations in seasonal items.

Question 9

Pamela's bakery produces 500 loaves of bread in a given year. Pamela pays $100 for flour and yeast,pays $600 in wages,pays $50 in interest on an existing loan,and pays $100 in taxes to the government. One of Pamela's bread slicing machines,which cost $75 each,wears out over the course of the year and must be scrapped. Pamela's profit for the year equals $75. Pamela's bread,therefore,sells for

Accepted Answer

A)  $0.50 per loaf. 
B)  $1.00 per loaf. 
C)  $2.00 per loaf. 
D)  cannot tell, insufficient information 
A)  $0.50 per loaf. 
B)  $1.00 per loaf. 
C)  $2.00 per loaf. 
D)  cannot tell, insufficient information

Question 10

You are a baker. You paid $150K in wages,$50K for dough,$20K for power,$5K in interest for a business loan,$25K in taxes,and made a profit of $10K. How much did you contribution to GDP using the product approach?

Accepted Answer

A)  $80K 
B)  $85K 
C)  $190K 
D)  $260K 
A)  $80K 
B)  $85K 
C)  $190K 
D)  $260K

Question 11

To calculate value added,we need to subtract

Accepted Answer

A)  only the cost of domestically-produced intermediate inputs. 
B)  only the cost of foreign-produced intermediate inputs. 
C)  the cost of domestic- and foreign-produced intermediate inputs. 
D)  total imports. 
A)  only the cost of domestically-produced intermediate inputs. 
B)  only the cost of foreign-produced intermediate inputs. 
C)  the cost of domestic- and foreign-produced intermediate inputs. 
D)  total imports.

Question 12

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 be biased upward. 
B)  will be biased downward. 
C)  will be unbiased. 
D)  cannot be calculated. 
A)  will be biased upward. 
B)  will be biased downward. 
C)  will be unbiased. 
D)  cannot be calculated.

Question 13

Assume that in an economy with 200M inhabitants,90M work,4M are looking for a job,3M receive unemployment insurance compensation,and 6M receive unemployment insurance compensation and are looking for a job. What is the participation rate?

Accepted Answer

A)  51.5% 
B)  50% 
C)  45% 
D)  38.5% 
A)  51.5% 
B)  50% 
C)  45% 
D)  38.5%

Question 14

A furniture maker used to buy its wood,but has now bought the lumber company. How does this impact GDP?

Accepted Answer

A)  It reduces it. 
B)  It does not change. 
C)  It increases it. 
D)  We cannot tell. 
A)  It reduces it. 
B)  It does not change. 
C)  It increases it. 
D)  We cannot tell.

Question 15

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below.

-Suppose that Year 1 is the base year. What is the growth rate of GDP?

Accepted Answer

A)  35% 
B)  55% 
C)  70% 
D)  110% 
A)  35% 
B)  55% 
C)  70% 
D)  110%

Question 16

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 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. 
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 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.

Question 17

Suppose that the BMW plant in Spartanburg,SC,produces $10 million worth of vehicles in a given year. Of this total amount,$1 million in profits are returned to the owners of the company in Germany. The $1 million in profits

Accepted Answer

A)  contributes to both U.S. GDP and U.S. GNP. 
B)  contributes to U.S. GNP, but not U.S. GDP. 
C)  contributes to U.S. GDP, but not U.S. GNP. 
D)  contributes to neither U.S. GDP, nor U.S. GNP. 
A)  contributes to both U.S. GDP and U.S. GNP. 
B)  contributes to U.S. GNP, but not U.S. GDP. 
C)  contributes to U.S. GDP, but not U.S. GNP. 
D)  contributes to neither U.S. GDP, nor U.S. GNP.

Question 18

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below.

-Suppose that Year 1 is the base year. Year 2 real GDP is

Accepted Answer

A)  $200. 
B)  $270. 
C)  $310. 
D)  $390. 
A)  $200. 
B)  $270. 
C)  $310. 
D)  $390.

Question 19

When a firm produces output,

Accepted Answer

A)  The value of the output produced is included in GDP 
B)  The firm's output contributes to GDP only to the extent that there is value-added. 
C)  The firm's output will not count as GDP if it is stored as inventory. 
D)  The firm's output will not count as GDP if it is exported. 
A)  The value of the output produced is included in GDP 
B)  The firm's output contributes to GDP only to the extent that there is value-added. 
C)  The firm's output will not count as GDP if it is stored as inventory. 
D)  The firm's output will not count as GDP if it is exported.

Question 20

Suppose that the government collects $3 million in taxes,pays $2 million in social security benefits,pays $0.5 million in interest on the national debt,and pays workers $1 million to sit at their desks and work as little as possible. The government's contribution to GDP is

Accepted Answer

A)  $0. 
B)  $1 million. 
C)  $3 million. 
D)  $3.5 million. 
A)  $0. 
B)  $1 million. 
C)  $3 million. 
D)  $3.5 million.

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below. -Year 2 nominal GDP is

Jim's Nursery produces and sells $1100 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

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below. -What is the inflation rate using base year 1?

National saving minus private saving is equal to

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below. -The base year matters for the computation of real GDP because

Suppose we have the following information about a plumber: wages $30,000,repair sales $200,000,taxes $5,000,loan interest $15,000,plumbing materials $20,000. What is the contribution to GDP of this plumber using the product approach?

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below. -In the United States,real GDP is currently calculated using

The GDP deflator is a broader measure of the price level than the CPI because

You are a baker. You paid $150K in wages,$50K for dough,$20K for power,$5K in interest for a business loan,$25K in taxes,and made a profit of $10K. How much did you contribution to GDP using the product approach?

To calculate value added,we need to subtract

If a particular measure of real GDP consistently underestimates growth in real GDP,then the rate of inflation as measured by the GDP deflator

Assume that in an economy with 200M inhabitants,90M work,4M are looking for a job,3M receive unemployment insurance compensation,and 6M receive unemployment insurance compensation and are looking for a job. What is the participation rate?

A furniture maker used to buy its wood,but has now bought the lumber company. How does this impact GDP?

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below. -Suppose that Year 1 is the base year. What is the growth rate of GDP?

Discouraged workers are

Suppose that the BMW plant in Spartanburg,SC,produces $10 million worth of vehicles in a given year. Of this total amount,$1 million in profits are returned to the owners of the company in Germany. The $1 million in profits

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below. -Suppose that Year 1 is the base year. Year 2 real GDP is

When a firm produces output,

Suppose that the government collects $3 million in taxes,pays $2 million in social security benefits,pays $0.5 million in interest on the national debt,and pays workers $1 million to sit at their desks and work as little as possible. The government's contribution to GDP is

Introduction

Business Cycle Measurement

Consumer and Firm Behavior: 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

Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking

Inflation, the Phillips Curve, and Central Bank Commitment

Filters

Exam 2: Measurement

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below. -Year 2 nominal GDP is

Jim's Nursery produces and sells $1100 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

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below. -What is the inflation rate using base year 1?

National saving minus private saving is equal to

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below. -The base year matters for the computation of real GDP because

Suppose we have the following information about a plumber: wages $30,000,repair sales $200,000,taxes $5,000,loan interest $15,000,plumbing materials $20,000. What is the contribution to GDP of this plumber using the product approach?

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below. -In the United States,real GDP is currently calculated using

The GDP deflator is a broader measure of the price level than the CPI because

You are a baker. You paid $150K in wages,$50K for dough,$20K for power,$5K in interest for a business loan,$25K in taxes,and made a profit of $10K. How much did you contribution to GDP using the product approach?

To calculate value added,we need to subtract

If a particular measure of real GDP consistently underestimates growth in real GDP,then the rate of inflation as measured by the GDP deflator

Assume that in an economy with 200M inhabitants,90M work,4M are looking for a job,3M receive unemployment insurance compensation,and 6M receive unemployment insurance compensation and are looking for a job. What is the participation rate?

A furniture maker used to buy its wood,but has now bought the lumber company. How does this impact GDP?

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below. -Suppose that Year 1 is the base year. What is the growth rate of GDP?

Discouraged workers are

Suppose that the BMW plant in Spartanburg,SC,produces $10 million worth of vehicles in a given year. Of this total amount,$1 million in profits are returned to the owners of the company in Germany. The $1 million in profits

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below. -Suppose that Year 1 is the base year. Year 2 real GDP is

When a firm produces output,

Suppose that the government collects $3 million in taxes,pays $2 million in social security benefits,pays $0.5 million in interest on the national debt,and pays workers $1 million to sit at their desks and work as little as possible. The government's contribution to GDP is

Introduction

Business Cycle Measurement

Consumer and Firm Behavior: 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

Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking

Inflation, the Phillips Curve, and Central Bank Commitment

Filters