Macro Econ Test #2 - Assignment Essays

Q: Refer to the above data. If year 2 is the base year, then the percentage increase in real GDP from year 2 to year 4 is:

80 percent 18 3=54=Year 4 Real GDP, 10 3=30=Year 2 Real GDP, (54-30)/30 = 80%

question

If the annual inflation rate is 5 percent a year, about how many years will it take for the price level to double?

answer

14 years 70/5

question

If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inflation premium is:

answer

3 percent

question

Transfer payments such as Social Security or unemployment compensation are counted in the calculation of GDP.

answer

False

question

If real GDP falls from one period to another, we can conclude that:

answer

None of these necessarily occurred.

question

Which is included in the expenditures approach to GDP?

answer

Spending on meals by consumers at restaurants

question

The value of corporate stocks and bonds traded in a given year is:

answer

Excluded from the calculation of GDP because they make no contribution to current production of goods and services

question

Kevin has lost his job in an automobile plant because of the use of robots for welding on the assembly line. Kevin plans to go to technical school to learn how to repair microcomputers. The type of unemployment Kevin is faced with is:

answer

Structural

question

For a nation's real GDP per capita to rise during a year:

answer

real GDP must increase more rapidly than population

question

A nation has a population of 260 million people. Of these, 60 million are retired, in the military, in institutions, or under 16 years old. There are 188 million who are employed and 12 million who are unemployed. What is the unemployment rate?

answer

6 percent 12/200

question

A GDP price index one year was 110, and the next year it was 115. What is the approximate percentage change in the price level from one year to the next as measured by that index?

answer

4.5% (115-110)/110

question

Refer to the above data. If year 2 is the base year, the price index for year 3 is:

answer

133 (154/153)

question

Refer to the above data. If year 2 is the base year, then the percentage increase in real GDP from year 2 to year 4 is:

answer

80 percent 183=54=Year 4 Real GDP, 103=30=Year 2 Real GDP, (54-30)/30 = 80%

question

GDP tends to underestimate the productive activity in the economy because it excludes:

answer

The personal labor time homeowners spend on home repairs

question

In calculating GDP, consumption expenditures include:

answer

consumer durable goods, consumer nondurable goods, and services.

question

GDP data are criticized as being inaccurate measures of economic welfare because:

answer

of all of these considerations.

question

Suppose Smith pays $100 to Jones.

answer

We need more information to determine whether GDP has changed.

question

If a person's nominal income increases by 2% while the price level increases by 6%, the person's real income:

answer

Decreases by 4%

question

Gross domestic product (GDP) is equal to personal consumption expenditures:

answer

Plus gross private domestic investment, plus government purchases, plus net exports

question

The business cycle is best defined as alternating periods of increases and decreases in the level of economic activity.

answer

True

question

Nominal gross domestic product

answer

can change when there is a change in either output or the price level

question

Assume that in 2002 the nominal GDP was $350 billion and in 2003 it was $375 billion. On the basis of this information we:

answer

cannot make a meaningful comparison of the economy's performance in 2002 relative to 2003.

question

An example of an intermediate good or service would be:

answer

A desk bought by an accountant for her office

question

A recession is a decline in:

answer

GDP that lasts six months or longer

question

Recently a teachers' union argued that the standard of living of teachers working for the school district was falling. The negotiating team for the school board replied that this was not true because the teachers had received significant increases in nominal income through collective bargaining. Could the union statement be correct?

answer

Yes, because real income may fall if price increases are proportionately greater than the increases in nominal income

question

In this current recession, the unemployment rates for men are:

answer

Higher than those for women

question

Net exports is a positive number when a nation's exports of goods and services exceed its imports.

answer

True

question

The business cycle is so named because upswings and downswings in business activity are equal in terms of duration and intensity.

answer

False

question

People who work part time, but desire to work full time, are considered to be officially unemployed.

answer

False

question

The natural rate of unemployment:

answer

Is equal to the total of frictional and structural unemployment

question

To avoid multiple counting in calculating GDP, only:

answer

Final goods and services should be counted

question

A trough in the business cycle occurs when:

answer

Employment and output reach their lowest levels

question

Cost-of-living adjustment clauses (COLAs):

answer

tie wage increases to changes in the price level.

question

A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?

answer

Cyclical

question

Inflation is defined as an increase in prices of all final goods and services produced in an economy.

answer

False

question

Official unemployment rate statistics may:

answer

Understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment

question

Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated inflation occurs in the economy, then:

answer

Lenders are hurt, but borrowers benefit

question

The price of the CPI market basket is $8,500 in 2005, $9,250 in 2006, and $10,700 in 2007. Assuming the base year is 1990, what is the value of the price index in 1990?

answer

100

question

If the price index is 130, this means that:

answer

Prices are 30 percent higher than in the base year

question

Nancy returns to school to study medicine. After graduating, she spends six months looking for a job. During this period she is considered:

answer

Frictionally unemployed.

1 of 39

question

If the annual inflation rate is 5 percent a year, about how many years will it take for the price level to double?

answer

14 years 70/5

question

If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inflation premium is:

answer

3 percent

question

Transfer payments such as Social Security or unemployment compensation are counted in the calculation of GDP.

answer

False

question

If real GDP falls from one period to another, we can conclude that:

answer

None of these necessarily occurred.

question

Which is included in the expenditures approach to GDP?

answer

Spending on meals by consumers at restaurants

question

The value of corporate stocks and bonds traded in a given year is:

answer

Excluded from the calculation of GDP because they make no contribution to current production of goods and services

question

answer

Structural

question

For a nation's real GDP per capita to rise during a year:

answer

real GDP must increase more rapidly than population

question

answer

6 percent 12/200

question

A GDP price index one year was 110, and the next year it was 115. What is the approximate percentage change in the price level from one year to the next as measured by that index?

answer

4.5% (115-110)/110

question

Refer to the above data. If year 2 is the base year, the price index for year 3 is:

answer

133 (154/153)

question

Refer to the above data. If year 2 is the base year, then the percentage increase in real GDP from year 2 to year 4 is:

answer

80 percent 183=54=Year 4 Real GDP, 103=30=Year 2 Real GDP, (54-30)/30 = 80%

question

GDP tends to underestimate the productive activity in the economy because it excludes:

answer

The personal labor time homeowners spend on home repairs

question

In calculating GDP, consumption expenditures include:

answer

consumer durable goods, consumer nondurable goods, and services.

question

GDP data are criticized as being inaccurate measures of economic welfare because:

answer

of all of these considerations.

question

Suppose Smith pays $100 to Jones.

answer

We need more information to determine whether GDP has changed.

question

If a person's nominal income increases by 2% while the price level increases by 6%, the person's real income:

answer

Decreases by 4%

question

Gross domestic product (GDP) is equal to personal consumption expenditures:

answer

Plus gross private domestic investment, plus government purchases, plus net exports

question

The business cycle is best defined as alternating periods of increases and decreases in the level of economic activity.

answer

True

question

Nominal gross domestic product

answer

can change when there is a change in either output or the price level

question

Assume that in 2002 the nominal GDP was $350 billion and in 2003 it was $375 billion. On the basis of this information we:

answer

cannot make a meaningful comparison of the economy's performance in 2002 relative to 2003.

question

An example of an intermediate good or service would be:

answer

A desk bought by an accountant for her office

question

A recession is a decline in:

answer

GDP that lasts six months or longer

question

answer

Yes, because real income may fall if price increases are proportionately greater than the increases in nominal income

question

In this current recession, the unemployment rates for men are:

answer

Higher than those for women

question

Net exports is a positive number when a nation's exports of goods and services exceed its imports.

answer

True

question

The business cycle is so named because upswings and downswings in business activity are equal in terms of duration and intensity.

answer

False

question

People who work part time, but desire to work full time, are considered to be officially unemployed.

answer

False

question

The natural rate of unemployment:

answer

Is equal to the total of frictional and structural unemployment

question

To avoid multiple counting in calculating GDP, only:

answer

Final goods and services should be counted

question

A trough in the business cycle occurs when:

answer

Employment and output reach their lowest levels

question

Cost-of-living adjustment clauses (COLAs):

answer

tie wage increases to changes in the price level.

question

A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?

answer

Cyclical

question

Inflation is defined as an increase in prices of all final goods and services produced in an economy.

answer

False

question

Official unemployment rate statistics may:

answer

Understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment

question

Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated inflation occurs in the economy, then:

answer

Lenders are hurt, but borrowers benefit

question

The price of the CPI market basket is $8,500 in 2005, $9,250 in 2006, and $10,700 in 2007. Assuming the base year is 1990, what is the value of the price index in 1990?

answer

100

question

If the price index is 130, this means that:

answer

Prices are 30 percent higher than in the base year

question

Nancy returns to school to study medicine. After graduating, she spends six months looking for a job. During this period she is considered:

answer

Frictionally unemployed.

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