Question 1

The CPI is a:

Accepted Answer

A) Laspeyres price index. 
B) Paasche price index. 
C) Laspeyres quantity index. 
D) Paasche quantity index.

Question 2

In the national income accounts, government purchases are goods and services purchased by:

Accepted Answer

A) the federal government. 
B) the federal and state governments. 
C) state and local governments. 
D) federal, state, and local governments.

Question 3

One senator criticizes the government for making an inadequate effort to stimulate the economy based on data from the BLS establishment survey that shows the number of jobs in the economy has fallen. Another senator counters that the number of employed workers in the economy has increased over the same period, based on the BLS household survey. Explain how both senators can be correct.

Accepted Answer

The answer of One senator criticizes the government for making...

Question 4

The underground economy:

Accepted Answer

A) is included in the latest GDP accounts. 
B) includes only illegal activities. 
C) includes domestic workers for whom Social Security tax is not collected. 
D) excludes the illegal drug trade.

Question 5

A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bread for $6. The value added by the miller is:

Accepted Answer

A) $1. 
B) $2. 
C) $3. 
D) $6.

Question 6

Assume that a rancher sells McDonald's a quarter-pound of meat for $1 and that McDonald's sells you a hamburger made from that meat for $2. In this case, the value included in GDP should be:

Accepted Answer

A) $0.50. 
B) $1. 
C) $2. 
D) $3.

Question 7

All of the following are a stock except:

Accepted Answer

A) a consumer's wealth. 
B) the government budget deficit. 
C) the number of unemployed people. 
D) the amount of capital in the economy.

Question 8

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and net exports are -$1,910, then government purchases are:

Accepted Answer

A) $2,977. 
B) $1,910. 
C) -$843. 
D) $1,067.

Question 9

GNP equals GDP income earned domestically by foreigners income that nationals earn abroad.

Accepted Answer

A) plus; plus 
B) minus; minus 
C) minus; plus 
D) plus; minus

Question 10

In the circular flow model, the flow of dollars from firms to households is paid and the flow of dollars from households to firms is paid .

Accepted Answer

A) as wages and profits; for goods and services 
B) for value added; as imputed values 
C) in current dollars; in constant dollars 
D) as interest and dividends; for depreciation and taxes

Question 11

If nominal GDP in 2009 equals $14 trillion and real GDP in 2009 equals $11 trillion, what is the value of the GDP deflator?

Accepted Answer

A) 0.79 
B) 1.03 
C) 1.27 
D) 1.30

Question 12

When prices of different goods are increasing by different amounts, the price index that will rise the fastest is:

Accepted Answer

A) Fisher's ideal index. 
B) the CPI. 
C) the GDP deflator. 
D) a Paasche index.

Question 13

If the adult population equals 250 million, of which 145 million are employed and 5 million are unemployed, the labor force participation rate equals percent.

Accepted Answer

A) 50 
B) 58 
C) 60 
D) 67

Question 14

The market value of all final goods and services produced within an economy in a given period of time is called:

Accepted Answer

A) industrial production. 
B) gross domestic product. 
C) the GDP deflator. 
D) general durable purchases.

Question 15

To avoid double counting in the computation of GDP, only the value of goods are included.

Accepted Answer

A) final 
B) used 
C) intermediate 
D) investment

Question 16

An estimate of the number of unemployed workers in the economy can be obtained from:

Accepted Answer

A) both the household and establishment surveys. 
B) from the household survey, but not from the establishment survey. 
C) from the establishment survey, but not from the household survey. 
D) from neither the household nor the establishment surveys.

Question 17

Real GDP means the value of goods and services is measured in prices.

Accepted Answer

A) current 
B) actual 
C) constant 
D) average

Question 18

In 2009, American net borrowings from abroad, per person, in current dollars, amounted to approximately:

Accepted Answer

A) $100. 
B) $220. 
C) $1,300. 
D) $10,000.

Question 19

If nominal GDP grew by 5 percent and real GDP grew by 3 percent, then the GDP deflator grew by approximately percent.

Accepted Answer

A) 2 
B) 3 
C) 5 
D) 8

Question 20

The core inflation rate:

Accepted Answer

A) measures the change in producer prices. 
B) is measured using a Paasche index. 
C) excludes food and energy prices. 
D) includes the price of exports and includes the price of imports.

Exam 2: The Data of Macroeconomics