Econ Exam 2 Homework Questions

Front 1

Which of the following statistics is usually regarded as the best single measure of a society’s economic well­-being?

Back 1

gross domestic product

Front 2

For an economy as a whole...

Back 2

income must equal expenditure.

Front 3

Which of the following is a way to compute GDP?

Back 3

add up the market values of all final goods and services.

Front 4

The value of the housing services provided by the economy's owner-occupied houses is...

Back 4

included in GDP, and the estimated rental values of the houses are used to place a value on these housing services.

Front 5

Grapes are considered intermediate goods...

Back 5

if the purchaser uses them to make wine to sell others but not if the purchaser eats them.

Front 6

A U.S.-owned automobile factory uses $100,000 worth of parts purchased from foreign countries along with U.S. inputs to produce 30 cars worth $20,000 each. Twenty of these cars are sold and 10 are left in inventory. How much did these actions add to GDP?

Back 6

$500,000

Front 7

Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included...

Back 7

in German GDP, but is not included in U.S. GDP.

Front 8

The consumption component of GDP includes spending on...

Back 8

durable goods, nondurable goods, and services.

Front 9

For the purpose of calculating GDP, investment is spending on...

Back 9

capital equipment, inventories, and structures, including household purchases of new housing.

Front 10

Which of the following is included in government purchases?

Back 10

the services of a U.S. government attorney valued at the cost of her salary

Front 11

Net exports equal

Back 11

Y - (C + I + G).

Front 12

Changes in nominal GDP reflect

Back 12

both changes in prices and changes in the amounts being produced.

Front 13

A country’s real GDP rose from $500 to $530 while its nominal GDP rose from $600 to $700. What was this country’s inflation rate?

Back 13

10.0%

Front 14

This country’s inflation rate from 2017 to 2018 was...

Back 14

28.0%

Front 15

GDP does not reflect...

Back 15

a. the value of leisure.

b. the value of goods and services produced at home.

c. the quality of the environment.

Front 16

GDP is the market value of all final goods and services produced by a country’s citizens in a given period of time.(T/F)

Back 16

False

Front 17

New home construction is included in the consumption component of GDP.(T/F)

Back 17

False

Front 18

Changes in the GDP deflator reflect only changes in the prices of goods and services.(T/F)

Back 18

True

Front 19

Other things equal, in countries with higher levels of real GDP per person, life expectancy and literacy rates are higher than in countries with lower levels of real GDP per person. (T/F)

Back 19

True

Front 20

The consumer price index is used to

Back 20

monitor changes in the cost of living over time.

Front 21

The inflation rate you are likely to hear on the nightly news is calculated from

Back 21

the CPI.

Front 22

To calculate the CPI, the Bureau of Labor Statistics uses

Back 22

the prices of some consumer goods.

Front 23

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been chosen as the base In 2012, the basket’s cost was $80.00; in 2013, the basket’s cost was $84; and in 2014, the basket’s cost was $87.60. The value of the CPI was

Back 23

100 in 2012

105 in 2013

109.5 in 2014

Front 24

The price index was 136 in one year and 142 in the next year. What was the inflation rate between the two years?

Back 24

4.41 percent

Front 25

If the CPI was 125 this year and 120 last year, then

Back 25

a. the cost of the CPI basket of goods and services increased by 4.2 percent this year.

b. the price level increased by 4.2 percent this year.

c. the inflation rate for this year was 4.2 percent.

Front 26

One problem with the consumer price index stems from the fact that, over time, consumers tend to buy larger quantities of goods that have become relatively less expensive and smaller quantities of goods that have become relatively more expensive. This problem is called

Back 26

substitution bias.

Front 27

If the CPI was 104 in 1967 and is 390 today, then $10 in 1967 purchased the same amount of goods and services as

Back 27

$37.50 purchases today.

Front 28

Henri earned a salary of $50,000 in 2001 and $70,000 in 2006. The consumer price index was 177 in 2001 and 5 in 2006. Henri's 2006 salary in 2001 dollars

Back 28

$46,666.67.

Front 29

Indexation refers to

Back 29

using a law or contract to automatically correct a dollar amount for the effects of inflation.

Front 30

The nominal interest rate tells you

Back 30

how fast the number of dollars in your bank account rises over time.

Front 31

If the nominal interest rate is 8 percent and the rate of inflation is 3 percent, then the real interest rate is

Back 31

5 percent.

Front 32

The consumer price index was 120 in 2013 and 126 in 2014. The nominal interest rate during this period was 8 What was the real interest rate during this period?

Back 32

3 percent

Front 33

Which of the following is not correct?

Back 33

a. The U.S. economy has never experienced deflation.

b. Since 1965, the U.S. nominal interest rate has exceeded the U.S. real interest rate.

c. Since 1965, the U.S. economy has experienced rising consumer prices in most years.

d. During deflation, the real interest rate exceeds the nominal interest rate.

Front 34

The CPI is a measure of the overall cost of the goods and services bought by a typical consumer(T/F)

Back 34

True

Front 35

Data from the Bureau of Labor Statistics show that consumer spending on transportation is only slightly higher than consumer spending on food and beverages.(T/F)

Back 35

True

Front 36

If the quality of a good deteriorates from one year to the next while its price remains the same, then the value of a dollar falls.(T/F)

Back 36

True

Front 37

The real interest rate tells you how fast the purchasing power of your bank account rises over time.(T/F)

Back 37

True

Front 38

Over the past century in the United States, real GDP per person has grown, on average, by about

Back 38

2 percent per year.

Front 39

A nation’s standard of living is determined by

Back 39

the productivity of its workers.

Front 40

In 2010, real GDP per person in Bangladesh was

Back 40

less than it was in the U.S. in 1870.

Front 41

Which of the following measures how the level of well-being in a country has changed over time?

Back 41

growth rate of real GDP per person.

Front 42

Which of the following nations experienced average rates of economic growth of a bit under 2% over the last 100 years or so?

Back 42

the United States

Front 43

Last year real GDP in the imaginary nation of Populia was 5 billion and the population was 3.3 million. The year before real GDP was 750 billion and the population was 3 million. What was the growth rate of real GDP per person during the year?

Back 43

10 percent

Front 44

Which of the following is a correct way to measure productivity?

Back 44

Divide the quantity of output by the number of hours worked.

Front 45

Industrial machinery is an example of

Back 45

a. a factor of production that in the past was an output from the production process.

b. physical capital.

c. something that influences productivity.

Front 46

Which of the following is an example of human capital?

Back 46

the things you have learned this semester

College education

Front 47

Proprietary technology is knowledge that is...

Back 47

known only by the company that discovered it.

Front 48

In an economy where net exports are zero, if saving rises in some period, then in that period

Back 48

consumption falls and investment rises.

Front 49

The traditional view of the production process is that capital is subject to

Back 49

diminishing returns.

Front 50

In recent decades Americans have increased their purchase of stocks of foreign-based companies. The Americans who have bought these stocks were engaged in...

Back 50

foreign portfolio investment.

Front 51

According to research by Robert Fogel, what proportion of the increase in the standard of living in Britain between 1790 and 1980 can be accounted for by greater caloric intake?

Back 51

30 percent

Front 52

Which of the following will increase a country’s real GDP per person?

Back 52

reducing restrictions on foreign trade and foreign investment

Front 53

All else equal, which of the following would tend to cause real GDP per person to rise?

Back 53

a. a change from inward-oriented policies to outward-oriented policies

b. an increase in investment in human capital

c. strengthening of property rights.

Front 54

Although growth rates across countries vary some, rankings of countries by income remain pretty much the same over time. (T/F)

Back 54

False

Front 55

Studies confirm that controlling for other variables such as the percentage of GDP devoted to investment, poor countries tend to grow at a faster rate than rich countries. (T/F)

Back 55

True

Front 56

Economist Michael Kremer found that world growth rates fell as population increased.

Back 56

False

Front 57

The GDP deflator is a ratio of _______________ prices.

Back 57

current to fixed.

Front 58

Net Export is calculated as _______________

Back 58

Export-import

Front 59

New houses are included in the ______________ component of the GDP.

Back 59

Investment

Front 60

Inflation rate is measured as percentage change in prices from one period to the-----period.

Back 60

Next

Front 61

The GDP is not a perfect measure of standard of living because it does not take _____________ of increasing production into account.

Back 61

Social Problems

Front 62

The government purchases do not include the...

Back 62

transfer payments.

Front 63

The GDP is the market value of goods and services produced by _____________ of a country.

Back 63

Residents

Front 64

The equation of the GDP components is:

Back 64

Y=C+I+G+NX

Front 65

Durable good is a good that can be used for:

Back 65

more than one period.