# INTRODUCTION TO MACROECONOMICS MIDTERM- SAMPLE QUESTIONS

 To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video
Save this PDF as:

Size: px
Start display at page:

Download "INTRODUCTION TO MACROECONOMICS MIDTERM- SAMPLE QUESTIONS"

## Transcription

1 INTRODUCTION TO MACROECONOMICS MIDTERM- SAMPLE QUESTIONS MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In May 2009, Ford Motor Company's sales were down 20 percent from a year earlier. These events were caused by A) an economic expansion. B) an economic recession. C) a reduction in advertising. D) declining quality of service. 1) 2) During a business cycle expansion, total production and total employment. 2) A) increases; increases B) increases; decreases C) decreases; decreases D) decreases; increases 3) In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA A) values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up. B) simply counts the total number of goods produced in the market place and then adds them up. C) simply counts the total number of goods and services produced in the marketplace and then adds them up. D) values goods at their market prices, multiplies them by the quantity produced, and then adds them up. 3) 4) Which of the following goods is directly counted in GDP? 4) A) a 12-inch Subway sandwich purchased by a student B) the plastic bags that Subway purchases to wrap its sandwiches C) the lettuce that Subway purchases for its sandwiches D) the bread that Subway purchases for its sandwiches Table 19-1 Product Quantity Price Sweatshirts 50 \$35.00 Dental examinations Coffee drinks 1, Coffee beans 2, ) Refer to Table Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. Using the information in the above table, nominal GDP for this simple economy equals A) 3,090 units. B) \$7,250. C) \$8,750. D) \$9,750. 5) 6) The nominal GDP of the U.S. in 2010 was approximately \$14.6 trillion. This means that 6) A) the value of output in 2010 was around \$14.6 trillion. B) total spending in 2010 was around \$14.6 trillion. C) total income in 2010 was around \$14.6 trillion. D) all of the above are true. 1

2 7) The purchase of a new automobile is included in 7) A) consumption expenditures on services. B) consumption expenditures on durable goods. C) consumption expenditures on nondurable goods. D) investment expenditures. 8) The purchase by a household in China of a CD produced in the United States is included in U.S. 8) A) net exports. B) consumption expenditures. C) government purchases. D) investment expenditures. Table 19-4 Consumption expenditures \$800 Investment expenditures 300 Government purchases 300 Government transfer payments 400 Exports 300 Imports 100 9) Refer to Table Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals A) \$2,200. B) \$2,100. C) \$1,600. D) \$1, ) The sum of the value added of every firm involved in producing all final goods and services gross domestic product. A) is sometimes greater than and other times less than B) is less than C) equals D) is greater than 9) 10) Table 19-5 Stage of Production Seller Buyer Price 1 Steel mill Auto manufacturer \$10,000 2 Auto manufacturer Auto dealer 18,000 3 Auto dealer Consumer 25,000 Consider the table above showing three stages of production of an automobile. 11) Refer to Table The value added by the automobile dealer equals 11) A) \$7,000. B) \$15,000. C) \$18,000. D) \$25,000. Scenario 19-1 CANOES-R-US makes canoes. It buys the shell of the canoe from another firm for \$300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for \$800. The retail canoe store then sells the canoe to a consumer for \$1, ) Refer to Scenario The value added of CANOES-R-US for each canoe equals 12) A) \$1,200. B) \$800. C) \$500. D) \$400. 2

3 13) Refer to Scenario The value of each canoe in gross domestic product equals 13) A) \$1,200. B) \$800. C) \$500. D) \$ ) Nominal GDP is GDP in a given year 14) A) adjusted for inflation. B) valued in the prices of the base year. C) adjusted for anticipated inflation. D) valued in the prices of that year. Table 19-8 Year Guns Produced Price of Guns Butter Produced Price of Butter \$5 40 \$ Consider the following data for Tyrovia, a country that produces only two products: guns and butter. 15) Refer to Table Real GDP for Tyrovia for 2011 using 2005 as the base year equals 15) A) \$1,140. B) \$880. C) \$690. D) \$560. Table 19-9 Year Nominal GDP Real GDP 2008 \$7,400 \$7, ,813 7, ,301 8, ,760 8,516 16) Refer to Table Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The base year used in calculating real GDP is A) B) C) D) ) Table Year Oranges Produced Price of Oranges Shirts Produced Price of Shirts ,800 \$ \$ , Consider the data shown above for Vicuna, a country that produces only two products: oranges and shirts. 17) Refer to Table Nominal GDP for Vicuna for 2009 equals 17) A) \$4,920. B) \$5,100. C) \$5,300. D) \$5, ) Suppose that nominal GDP in 2011 was less than real GDP in Given this information, we know for certain that A) real GDP in 2011 was less than real GDP in the base year. B) the price level in 2011 was less than the price level in the base year. C) the price level in 2011 was greater than the price level in the base year. D) real GDP in 2011 was greater than real GDP in the base year. 18) 3

4 19) To examine how the total production of an economy has changed over time, it would be better to examine A) nominal GDP. B) the GDP deflator. C) GDP at current prices. D) real GDP. 19) 20) If prices in the economy rise, then 20) A) the purchasing power of a dollar stays constant. B) the purchasing power of a dollar cannot be determined. C) the purchasing power of a dollar rises. D) the purchasing power of a dollar declines. 21) The GDP deflator is the 21) A) difference between real GDP and nominal GDP multiplied by 100. B) ratio of nominal GDP to real GDP multiplied by 100. C) difference between nominal GDP and real GDP multiplied by 100. D) ratio of real GDP to nominal GDP multiplied by ) The GDP deflator is a measure of the 22) A) average level of prices of intermediate goods and services in the economy. B) average level of prices of final goods and services in the economy. C) total production of the economy adjusted for inflation. D) total production of the economy unadjusted for inflation. 23) If nominal GDP exceeds real GDP for a specific year, then the GDP deflator must be 23) A) less than 100. B) less than 0. C) greater than 100. D) equal to ) The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is A) 105% higher in year 2 than in year 1. B) 105% higher in year 1 than in year 2. C) 5% higher in year 1 than in year 2. D) 5% higher in year 2 than in year 1. 24) Table Year Nominal GDP Real GDP ,078 13, ,441 13,312 25) Refer to Table Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2011 equals A) B) C) D) ) The Bureau of Labor Statistics would categorize a person as if they were temporarily away from their job because they were ill. A) a discouraged worker B) out of the labor force C) unemployed D) employed 25) 26) 27) The labor force equals the number of people 27) A) unemployed. B) employed. C) employed plus unemployed. D) in the working-age population. 4

5 28) Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would A) decrease the number of persons in the labor force. B) decrease the number of persons in the working-age population. C) increase the measured unemployment rate. D) increase the measured labor force participation rate. 28) Consider the data above for a simple economy. Table 20-1 Total population 20,000 Working-age population 15,000 Employment 1,000 Unemployment ) Refer to Table The labor force participation rate for this simple economy equals 29) A) (1,100/20,000) 100. B) (1,100/15,000) 100. C) (1,000/1,100) 100. D) (1,000/15,000) ) The unemployment rate equals the number of unemployed divided by the, all times ) A) labor force B) number of employed C) working-age population D) total population 31) Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will A) decrease. B) increase. C) remain constant. D) not change in a way that can be predicted. 32) Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as A) employed. B) not in the labor force. C) unemployed. D) not in the working-age population. 31) 32) 33) A student who just graduated from college but has not found a job would most likely be 33) A) seasonally unemployed. B) frictionally unemployed. C) structurally unemployed. D) cyclically unemployed. 34) Structural unemployment is the result of 34) A) the search process of matching workers with jobs. B) the ups and downs in inflation. C) a slowdown in the economy. D) a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. 5

6 35) Full employment is not considered to be zero unemployment, because 35) A) people do not find jobs instantaneously. B) some cyclical unemployment always exists. C) there are not enough jobs for everyone who wants one. D) some people do not want a job. 36) A lumberjack loses his job because timber cutting restrictions were imposed by the EPA to protect the spotted owl habitat. This lumberjack would be A) cyclically unemployed. B) seasonally unemployed. C) frictionally unemployed. D) structurally unemployed. 37) The advice to "retrain" would be most appropriate for which of the following types of unemployment? A) cyclical unemployment B) frictional unemployment C) structural unemployment D) core unemployment 38) An increase in unemployment insurance payments would, in effect, the amount of time spent searching for a job, which would increase unemployment. A) increase; cyclical B) increase; frictional C) decrease; frictional D) decrease; cyclical 36) 37) 38) 39) Which of the following would decrease the unemployment rate? 39) A) an increase in the efficiency wage B) government aid to retrain unemployed workers C) an increase in labor union membership D) an increase in the minimum wage 40) Which of the following policies would reduce structural unemployment? 40) A) a job retraining program B) building an on-line job database that helps workers find jobs C) an increase in the minimum wage D) implementing an unemployment insurance policy 41) Which of the following policies would reduce frictional unemployment? 41) A) a job retraining program B) a decrease in the minimum wage C) building an on-line job database that helps workers find jobs D) implementing an unemployment insurance policy 42) If the price level rose in three consecutive years from 100 to 120 to 140, then the annual inflation rate over those years would A) decrease. B) increase. C) equal 20%. D) remain the same. 42) 43) Which of the following would be the best measure of the cost of living? 43) A) real GDP per person B) consumer price index C) GDP deflator D) real GDP 6

7 Table 20-3 Base Year (2006) 2011 Product Quantity Price Price Cokes 100 \$0.50 \$0.75 Hamburgers CDs ) Refer to Table Assume the market basket for the consumer price index has three products Cokes, hamburgers, and CDs with the following values in 2006 and 2011 for price and quantity: The Consumer Price Index for 2011 equals A) 75. B) 93. C) 108. D) ) 45) The real interest rate equals the nominal interest rate the inflation rate. 45) A) divided by B) minus C) times D) plus 46) If real GDP in a small country in 2010 is \$8 billion and real GDP in the same country in 2011 is \$8.3 billion, the growth rate of real GDP between 2010 and 2011 A) is 3.0%. B) is 3.6%. C) is 3.75%. D) cannot be determined from the information given. 47) If the growth rate of real GDP rises from 3% to 4% per year, then the number of years required to double real GDP will decrease from A) 23.3 years to 20.6 years. B) 11.2 years to 10.8 years. C) 28.0 years to 21.0 years. D) 23.3 years to 17.5 years. 46) 47) 48) A firm can fund an expansion of its operations by 48) A) loaning money. B) buying stock. C) issuing bonds. D) paying dividends. 49) One difference between stocks and bonds is that 49) A) stocks do not involve a promise to repay a purchaser of the stock, while bonds represent a promise to repay the purchase price of the bond. B) stocks are usually issued in electronic form, while bonds are usually issued in paper form. C) stocks represent ownership in companies, while bonds represent ownership in banks. D) stocks are financial securities, while bonds are labor market securities. 50) In a closed economy, which of the following components of GDP is not included? 50) A) net exports B) investment C) government spending D) consumption 51) In a closed economy, private saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers) A) Y - G - T + TR B) Y - C - T C) Y + TR - C - T D) Y - G - T 51) 7

8 52) Under which of the following circumstances would the government be running a deficit? 52) A) G = \$7 trillion T = \$10 trillion TR = \$3 trillion B) G = \$7 trillion T = \$7 trillion TR = \$0 C) G = \$5 trillion T = \$5 trillion TR = \$1 trillion D) G = \$5 trillion T = \$7 trillion TR = \$1 trillion 53) If government saving is negative, then 53) A) T > TR. B) T - TR < G. C) Y + TR < C - T. D) G > T. 54) Which of the following will increase investment spending in the economy, holding everything else constant? A) an increase in the federal government surplus B) an increase in consumer dissavings C) an increase in transfer payments D) an increase in the budget deficit 55) The demand for loanable funds is downward sloping because the the interest rate, the the number of profitable investment projects a firm can undertake, and the the quantity demanded of loanable funds. A) lower; greater; greater B) greater; greater; greater C) lower; smaller; greater D) greater; smaller; greater 56) A government budget surplus from reduced government spending (no change in net taxes) will the level of investment in the economy and the level of saving (private plus public) in the economy. A) decrease; increase B) increase; decrease C) decrease; decrease D) increase; increase 54) 55) 56) 57) Which of the following would you expect to increase the equilibrium interest rate? 57) A) a change from an income tax to a consumption tax B) an increase in the budget deficit C) an increase in the percentage of income after net taxes that households save D) a decrease in the profitability of investment projects firms are considering 8

9 Answer Key Testname: MIDTERM_SAMPLE_QTIONS 1) B 2) A 3) A 4) A 5) C 6) D 7) B 8) A 9) C 10) C 11) A 12) C 13) A 14) D 15) C 16) B 17) A 18) B 19) D 20) D 21) B 22) B 23) C 24) D 25) C 26) D 27) C 28) D 29) B 30) A 31) C 32) B 33) B 34) D 35) A 36) D 37) C 38) B 39) B 40) A 41) C 42) A 43) B 44) D 45) B 46) C 47) D 48) C 49) A 50) A 9

10 Answer Key Testname: MIDTERM_SAMPLE_QTIONS 51) C 52) C 53) B 54) A 55) A 56) D 57) B 10

### Macroeconomics Instructor Miller GDP Practice Problems

Macroeconomics Instructor Miller GDP Practice Problems 1. Gross domestic product in the economy is measured by the A) total number of goods and services produced in the economy. B) dollar value of all

More information

### HW 2 Macroeconomics 102 Due on 06/12

HW 2 Macroeconomics 102 Due on 06/12 1.What are the three important macroeconomic goals about which most economists, and society at large, agree? a. economic growth, full employment, and low interest rates

More information

### 7. Which of the following is a flow variable? A) wealth B) the number unemployed C) government debt D) income

Name: Date: 1. GDP is all of the following except the total: A) expenditure of everyone in the economy. B) income of everyone in the economy. C) expenditure on the economy's output of goods and services.

More information

### Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004

Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004 Sample Final Exam Name Id # Part B Instructions: Please answer in the space provided and circle your answer on the question paper as well.

More information

### Exam 1 Review. 3. A severe recession is called a(n): A) depression. B) deflation. C) exogenous event. D) market-clearing assumption.

Exam 1 Review 1. Macroeconomics does not try to answer the question of: A) why do some countries experience rapid growth. B) what is the rate of return on education. C) why do some countries have high

More information

### Multiple Choice Identify the choice that best completes the statement or answers the question.

Unit 2 review Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Which of the following is false about the circular-flow diagram? A. Households are the primary

More information

### MEASURING GDP AND ECONOMIC GROWTH CHAPTER

MEASURING GDP AND ECONOMIC GROWTH CHAPTER Objectives After studying this chapter, you will able to Define GDP and use the circular flow model to explain why GDP equals aggregate expenditure and aggregate

More information

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Suvey of Macroeconomics, MBA 641 Fall 2006, Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Modern macroeconomics emerged from

More information

### Chapter 11: Activity

Economics for Managers by Paul Farnham Chapter 11: Measuring Macroeconomic Activity 11.1 Measuring Gross Domestic Product (GDP) GDP: the market value of all currently yproduced final goods and services

More information

### 6. Real GDP means the value of goods and services is measured in prices. A) current B) actual C) constant D) average

Name: Date: 1. Assume that total output consists of 4 apples and 6 oranges and that apples cost \$1 each and oranges cost \$0.50 each. In this case, the value of GDP is: A) 10 pieces of fruit. B) \$7. C)

More information

### Economics 212 Principles of Macroeconomics Study Guide. David L. Kelly

Economics 212 Principles of Macroeconomics Study Guide David L. Kelly Department of Economics University of Miami Box 248126 Coral Gables, FL 33134 dkelly@miami.edu First Version: Spring, 2006 Current

More information

### Chapter 24. What will you learn in this chapter? Valuing an economy. Measuring the Wealth of Nations

Chapter 24 Measuring the Wealth of Nations 2014 by McGraw-Hill Education 1 What will you learn in this chapter? How to calculate gross domestic product (GDP). Why each component of GDP is important. What

More information

### PRACTICE- Unit 6 AP Economics

PRACTICE- Unit 6 AP Economics Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The term liquid asset means: A. that the asset is used in a barter exchange.

More information

### Econ 202 Section 2 Midterm 2

Douglas, Fall 2009 November 3, 2009 A: Special Code 0000 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section 2 Midterm 2 1. The sale of stocks

More information

### Study Questions 8 (Keynesian Model) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Study Questions 8 (Keynesian Model) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In the Keynesian model of aggregate expenditure, real GDP is

More information

### Macroeconomics, 10e, Global Edition (Parkin) Chapter 24 Finance, Saving, and Investment. 1 Financial Institutions and Financial Markets

Macroeconomics, 10e, Global Edition (Parkin) Chapter 24 Finance, Saving, and Investment 1 Financial Institutions and Financial Markets 1) The term "capital," as used in macroeconomics, refers to A) the

More information

### Why expenditure = income. The Circular Flow. Circular flow. Gross Domestic Product

Gross Domestic Product Why expenditure = income Two definitions: 1. Total expenditure on final goods and services 2. Total income earned by factors of production In In every transaction, the the buyer

More information

### The Circular Flow 1/15/2013. Gross Domestic Product: Expenditure and Income

IN THIS CHAPTER, YOU WILL LEARN: ECON 3010 Intermediate Macroeconomics Chapter 2 The Data of Macroeconomics the meaning and measurement of the most important macroeconomic statistics: gross domestic product

More information

### ANSWERS TO END-OF-CHAPTER QUESTIONS

ANSWERS TO END-OF-CHAPTER QUESTIONS 7-1 In what ways are national income statistics useful? National income accounting does for the economy as a whole what private accounting does for businesses. Firms

More information

### Chapter 12. Aggregate Expenditure and Output in the Short Run

Chapter 12. Aggregate Expenditure and Output in the Short Run Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics Aggregate Expenditure (AE)

More information

### 13. If Y = AK 0.5 L 0.5 and A, K, and L are all 100, the marginal product of capital is: A) 50. B) 100. C) 200. D) 1,000.

Name: Date: 1. In the long run, the level of national income in an economy is determined by its: A) factors of production and production function. B) real and nominal interest rate. C) government budget

More information

### Economics 152 Solution to Sample Midterm 1

Economics 152 Solution to Sample Midterm 1 N. Das PART 1 (81 POINTS):Answer the following 27 multiple choice questions on the scan sheet. Each question is worth 3 points). 1. Gross domestic product (GDP)

More information

### Cosumnes River College Principles of Macroeconomics Problem Set 11 Will Not Be Collected

Name: Solutions Cosumnes River College Principles of Macroeconomics Problem Set 11 Will Not Be Collected Fall 2015 Prof. Dowell Instructions: This problem set will not be collected. You should still work

More information

### The level of price and inflation Real GDP: the values of goods and services measured using a constant set of prices

Chapter 2: Key Macroeconomics Variables ECON2 (Spring 20) 2 & 4.3.20 (Tutorial ) National income accounting Gross domestic product (GDP): The market value of all final goods and services produced within

More information

### Chapter 6 Economic Growth

Chapter 6 Economic Growth 1 The Basics of Economic Growth 1) The best definition for economic growth is A) a sustained expansion of production possibilities measured as the increase in real GDP over a

More information

### MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL*

Chapter 11 MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL* The Demand for Topic: Influences on Holding 1) The quantity of money that people choose to hold depends on which of the following? I. The price

More information

### Chapter 4 Measuring GDP and Economic Growth

Chapter 4 Measuring GDP and Economic Growth 1 Gross Domestic Product 1) Gross domestic product is the total produced within a country in a given time period. A) market value of all final and intermediate

More information

### Econ 202 Section 2 Final Exam

Douglas, Fall 2009 December 17, 2009 A: Special Code 0000 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section 2 Final Exam 1. The present value

More information

### Measuring a Nation s Income THE MEASUREMENT OF GROSS DOMESTIC PRODUCT. In this chapter, look for the answers to these questions:

In this chapter, look for the answers to these questions: What is Gross Domestic Product (GDP)? 5 How is GDP related to a nation s total income and spending? What are the components of GDP? How is GDP

More information

### Unemployment and Inflation

Unemployment and Inflation Unemployment Inflation Costs of Unemployment Personal Cost Loss of income Loss of self-esteem Increase in stress related psychological problems Increase in incidence of crime,

More information

### CHAPTER 20 GROSS DOMESTIC PRODUCT ACCOUNTING

CHAPTER 20 GROSS DOMESTIC PRODUCT ACCOUNTING Chapter in a Nutshell Gross domestic product was introduced in the previous chapter as a basic measure of macroeconomic performance. This chapter identifies

More information

### Chapter 8. GDP : Measuring Total Production and Income

Chapter 8. GDP : Measuring Total Production and Income Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics Related Economic Terms Macroeconomics:

More information

### Measuring Economic Performance. Chapter 2

Measuring Economic Performance Chapter 2 Outline Gross Domestic Product Measuring GDP Through Spending Measuring GDP Through Production Measuring GDP Through Income Saving and Investment Transactions with

More information

### Measuring a Nation s Income

Measuring a Nation s Income I. Review of the Definitions of Microeconomics and Macroeconomics A. Definition of microeconomics: the study of how households and firms make decisions and how they interact

More information

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Econ 111 Summer 2007 Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The classical dichotomy allows us to explore economic growth

More information

### Econ 202 Final Exam. Table 3-1 Labor Hours Needed to Make 1 Pound of: Meat Potatoes Farmer 8 2 Rancher 4 5

Econ 202 Final Exam 1. If inflation expectations rise, the short-run Phillips curve shifts a. right, so that at any inflation rate unemployment is higher. b. left, so that at any inflation rate unemployment

More information

### Macroeconomics Instructor: Jen Dinsmore Hanson Homework Assignment Chapter 9. Multiple Choice Questions

Macroeconomics Instructor: Jen Dinsmore Hanson Homework Assignment Chapter 9 Multiple Choice Questions 1. Net domestic product is usually preferred to GDP by economists because net national product A.

More information

### ECONOMIC GROWTH* Chapter. Key Concepts

Chapter 5 MEASURING GDP AND ECONOMIC GROWTH* Key Concepts Gross Domestic Product Gross domestic product, GDP, is the market value of all the final goods and services produced within in a country in a given

More information

### The Data of Macroeconomics

CHAPTER 2 The Data of Macroeconomics Modified for ECON 2204 by Bob Murphy 2016 Worth Publishers, all rights reserved IN THIS CHAPTER, YOU WILL LEARN:... the meaning and measurement of the most important

More information

### Chapter: Practice Exam for Macro Indicators. Instruction: Name: Date: Multiple Choice

Chapter: Practice Exam for Macro Indicators Instruction: Name: Date: Multiple Choice 1. GDP does not include A) vegetables grown and consumed by a nonfarm family. B) the purchase of a new Porsche. C) the

More information

### NATIONAL INCOME AND PRODUCT ACCOUNTING MEASURING THE MACROECONOMY

NATIONAL INCOME AND PRODUCT ACCOUNTING MEASURING THE MACROECONOMY 1. NIPA: GNP and GDP 2. Saving and Wealth 3. Prices and Inflation 4. Unemployment 5. Problems with Measuring the Macroeconomy There are

More information

### 31. Gross Domestic Product equals a. Y = C + I G + NX. b. Y = C I + G + NX. c. Y = C + I + G + NX.

GDP Review Questions 13. Gross Domestic Product measures the a. quantity of the goods and services produced in a given year, listed item by item, within a country. b. income of the business sector within

More information

### 7. Which of the following is not an important stock exchange in the United States? a. New York Stock Exchange

Econ 20B- Additional Problem Set 4 I. MULTIPLE CHOICES. Choose the one alternative that best completes the statement to answer the question. 1. Institutions in the economy that help to match one person's

More information

### At the end of Chapter 10, you will be able to answer the following:

1 Objectives for Chapter 10 The Circular Flow Model At the end of Chapter 10, you will be able to answer the following: 1. Explain the basic circular flow model. 2. Define "consumption" and "saving" 3.

More information

### Name: Date: 3. Which of the following is a flow variable? A) wealth B) the number unemployed C) government debt D) income

Name: Date: 1. GDP is all of the following except the total: A) expenditure of everyone in the economy. B) income of everyone in the economy. C) expenditure on the economy's output of goods and services.

More information

### real r = nominal r inflation rate (25)

3 The price of Loanable Funds Definition 19 INTEREST RATE:(r) Charge per dollar per period that borrowers pay or lenders receive. What affects the interest rate: inflation. risk. taxes. The real interest

More information

### What three main functions do they have? Reducing transaction costs, reducing financial risk, providing liquidity

Unit 4 Test Review KEY Savings, Investment and the Financial System 1. What is a financial intermediary? Explain how each of the following fulfills that role: Financial Intermediary: Transforms funds into

More information

### CHAPTER 8. Practise Problems

CHAPTER 8 Practise Problems 1. The labor force is: A) the total of people employed. B) the total population. C) the total of the population of working age. D) the total of people employed and unemployed.

More information

### Supplement Unit 3. Gross Domestic Product (GDP): What Is It and How Is It Measured?

1 Supplement Unit 3. Gross Domestic Product (GDP): What Is It and How Is It Measured? Gross Domestic Product (GDP) is the market value of all final user goods and services produced domestically during

More information

### EC201 Intermediate Macroeconomics. EC201 Intermediate Macroeconomics Problem Set 1 Solution

EC201 Intermediate Macroeconomics EC201 Intermediate Macroeconomics Problem Set 1 Solution 1) Given the difference between Gross Domestic Product and Gross National Product for a given economy: a) Provide

More information

### Households Wages, profit, interest, rent = \$750. Factor markets. Wages, profit, interest, rent = \$750

KrugmanMacro_SM_Ch07.qxp 11/9/05 4:47 PM Page 87 Tracking the Macroeconomy 1. Below is a simplified circular-flow diagram for the economy of Micronia. a. What is the value of GDP in Micronia? b. What is

More information

### Tracking the Macroeconomy

chapter 7(23) Tracking the Macroeconomy Chapter Objectives Students will learn in this chapter: How economists use aggregate measures to track the performance of the economy. What gross domestic product,

More information

### Answers to Text Questions and Problems. Chapter 22. Answers to Review Questions

Answers to Text Questions and Problems Chapter 22 Answers to Review Questions 3. In general, producers of durable goods are affected most by recessions while producers of nondurables (like food) and services

More information

### Practice Problems Mods 25, 28, 29

Practice Problems Mods 25, 28, 29 Multiple Choice Identify the choice that best completes the statement or answers the question. Scenario 25-1 First National Bank First National Bank has \$80 million in

More information

### University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi

University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 27 Expenditure Multipliers 1) Disposable income is A) aggregate income minus transfer

More information

### Unit 4: Measuring GDP and Prices

Unit 4: Measuring GDP and Prices ECO 120 Global Macroeconomics 1 1.1 Reading Reading Module 10 - pages 106-110 Module 11 1.2 Goals Goals Specific Goals: Understand how to measure a country s output. Learn

More information

### Name: Date: 3. Variables that a model tries to explain are called: A. endogenous. B. exogenous. C. market clearing. D. fixed.

Name: Date: 1 A measure of how fast prices are rising is called the: A growth rate of real GDP B inflation rate C unemployment rate D market-clearing rate 2 Compared with a recession, real GDP during a

More information

### Chapter 5 Measuring Economic Activity: GDP and Unemployment

Chapter 5 Measuring Economic Activity: GDP and Unemployment Overview This chapter looks in detail at how economists measure two major macroeconomic variables: gross domestic product (GDP) and the unemployment

More information

### EC2105, Professor Laury EXAM 2, FORM A (3/13/02)

EC2105, Professor Laury EXAM 2, FORM A (3/13/02) Print Your Name: ID Number: Multiple Choice (32 questions, 2.5 points each; 80 points total). Clearly indicate (by circling) the ONE BEST response to each

More information

### Economics 101 Multiple Choice Questions for Final Examination Miller

Economics 101 Multiple Choice Questions for Final Examination Miller PLEASE DO NOT WRITE ON THIS EXAMINATION FORM. 1. Which of the following statements is correct? a. Real GDP is the total market value

More information

### ECON 1010 Principles of Macroeconomics Exam #2. Section A: Multiple Choice Questions. (30 points; 2 pts each)

ECON 1010 Principles of Macroeconomics Exam #2 Section A: Multiple Choice Questions. (30 points; 2 pts each) #1. If the price level in the economy and the nominal wages both doubled, then real wages would

More information

### 11.1 Estimating Gross Domestic Product (GDP) Objectives

11.1 Estimating Gross Domestic Product (GDP) Objectives Describe what the gross domestic product measures. Learn two ways to calculate the gross domestic product, and explain why they are equivalent. 11.1

More information

### The Return of Saving

Martin Feldstein the u.s. savings rate and the global economy The savings rate of American households has been declining for more than a decade and recently turned negative. This decrease has dramatically

More information

### Macroeconomics: GDP, GDP Deflator, CPI, & Inflation

HOSP 2207 (Economics) Learning Centre Macroeconomics: GDP, GDP Deflator, CPI, & Inflation Macroeconomics is the big picture view of an economy. Microeconomics looks at the market for a specific good, like

More information

### ECON300, Spring 2012 Intermediate Macroeconomics Professor: Hui He. Homework 1 Suggested Answer (Total points: 100)

ECON300, Spring 2012 Intermediate Macroeconomics Professor: Hui He Homework 1 Suggested Answer (Total points: 100) Understanding the growth rate and how to measure it Problem no. 1 on page 35. (10 points)

More information

### ECON 201: Introduction to Macroeconomics Final Exam December 13, 2012 NAME:

ECON 201: Introduction to Macroeconomics Final Exam December 13, 2012 NAME: Circle your TA s name: Amy Thiago Samir Circle your section time: 9 a.m. 3 p.m. INSTRUCTIONS: 1) The exam lasts 2 hours. 2) The

More information

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Study Questions 5 (Money) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The functions of money are 1) A) medium of exchange, unit of account,

More information

### Macroeconomics Machine-graded Assessment Items Module: Macroeconomic Measures of Performance

Macroeconomics Machine-graded Assessment Items Module: Macroeconomic Measures of Performance Machine-graded assessment question pools are provided for your reference and are organized by learning outcome.

More information

### Savings, Investment Spending, and the Financial System

Savings, Investment Spending, and the Financial System 1. Given the following information about the closed economy of Brittania, what is the level of investment spending and private savings, and what is

More information

### Macroeconomics Instructor Miller Fiscal Policy Practice Problems

Macroeconomics Instructor Miller Fiscal Policy Practice Problems 1. Fiscal policy refers to changes in A) state and local taxes and purchases that are intended to achieve macroeconomic policy objectives.

More information

### Week 4 Tutorial Question Solutions (Ch2 & 3)

Chapter 2: Q1: Macroeconomics P.52 Numerical Problems #3 part (a) Q2: Macroeconomics P.52 Numerical Problems #5 Chapter 3: Q3: Macroeconomics P.101 Numerical Problems #5 Q4: Macroeconomics P102 Analytical

More information

### University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi

University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 25 Exch Rate & BofP 1) Foreign currency is A) the market for foreign exchange.

More information

### The Short-Run Macro Model. The Short-Run Macro Model. The Short-Run Macro Model

The Short-Run Macro Model In the short run, spending depends on income, and income depends on spending. The Short-Run Macro Model Short-Run Macro Model A macroeconomic model that explains how changes in

More information

### GDP: Measuring Total Production and Income

Chapter 7 (19) GDP: Measuring Total Production and Income Chapter Summary While microeconomics is the study of how households and firms make choices, how they interact in markets, and how the government

More information

### CHAPTER 7 Measuring Domestic Output, National Income, and the Price Level

CHAPTER 7 Measuring Domestic Output, National Income, and the Price Level Topic Question numbers 1. GDP concept 1-15 2. C, I, G, and X n components 16-43 3. Investment and the capital stock 44-57 4. GDP

More information

### MEASURING GDP AND ECONOMIC GROWTH*

Chapter 5 MEASURING GDP AND ECONOMIC GROWTH* Gross Domestic Product Topic: GDP 1) Gross domestic product is the total produced within a country in a given time period. A) market value of all final and

More information

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Survey of Macroeconomics, MBA 641 Fall 2006, Quiz 4 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The central bank for the United States

More information

### University of Lethbridge Department of Economics ECON 1012 Introduction to Microeconomics Instructor: Michael G. Lanyi. Chapter 20 Measuring GDP

University of Lethbridge Department of Economics ECON 1012 Introduction to Microeconomics Instructor: Michael G. Lanyi Chapter 20 Measuring GDP 1) Gross domestic product is A) the market value of all the

More information

### 4. In the G of the GDP formula why do we not count Welfare and Social Security payments?

DUE DATE: NAME: ECONOMIC HEALTH INDICATORS: GDP AND CPI WORKSHEET CHAPTER 11 USE THE ATTACHED NOTES OR THE POWERPOINTS TO ANSWER THE FOLLOWING QUESTIONS.!!!KEEP THE ATTACHED NOTES. DO NOT TURN IN THE NOTES!!!!

More information

### Econ 202 Final Exam. Douglas, Spring 2006 PLEDGE: I have neither given nor received unauthorized help on this exam.

, Spring 2006 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Final Exam 1. When the government spends more, the initial effect is that a. aggregate

More information

### Practice Problems on NIPA and Key Prices

Practice Problems on NIPA and Key Prices 1- What are the three approaches to measuring economic activity? Why do they give the same answer? The three approaches to national income accounting are the product

More information

### Pre-Test Chapter 6 ed17 2

Pre-Test Chapter 6 ed17 2 Multiple Choice Questions 1. (Last Word) The U.S. government agency responsible for compiling the national income accounts is the: A. Census Bureau. B. Bureau of Labor Statistics

More information

### Chapter 32 A Macroeconomic Theory of the Open Economy

Chapter 32 A Macroeconomic Theory of the Open Economy TRUE/FALSE 1. Over the past two decades, the United States has persistently exported more goods and services than it has imported. ANS: F DIF: 1 REF:

More information

### Reference: Gregory Mankiw s Principles of Macroeconomics, 2 nd edition, Chapters 10 and 11. Gross Domestic Product

Macroeconomics Topic 1: Define and calculate GDP. Understand the difference between real and nominal variables (e.g., GDP, wages, interest rates) and know how to construct a price index. Reference: Gregory

More information

### 3 Macroeconomics LESSON 8

3 Macroeconomics LESSON 8 Fiscal Policy Introduction and Description Fiscal policy is one of the two demand management policies available to policy makers. Government expenditures and the level and type

More information

### 1 Multiple Choice - 50 Points

Econ 201 Final Winter 2008 SOLUTIONS 1 Multiple Choice - 50 Points (In this section each question is worth 1 point) 1. Suppose a waiter deposits his cash tips into his savings account. As a result of only

More information

### Chapter 2 The Measurement and Structure of the National Economy

Chapter 2 The Measurement and Structure of the National Economy Multiple Choice Questions 1. The three approaches to measuring economic activity are the (a) cost, income, and expenditure approaches. (b)

More information

### Practice Problems on the Capital Market

Practice Problems on the Capital Market 1- Define marginal product of capital (i.e., MPK). How can the MPK be shown graphically? The marginal product of capital (MPK) is the output produced per unit of

More information

### Lecture 3: National Income Accounting Reference - Chapter 5. 3) The Income Approach

Lecture 3: National Income Accounting Reference - Chapter 5 3) The Income Approach The income approach defines GDP in terms of the income derived or created from producing final goods and services. Net

More information

### 13 EXPENDITURE MULTIPLIERS: THE KEYNESIAN MODEL* Chapter. Key Concepts

Chapter 3 EXPENDITURE MULTIPLIERS: THE KEYNESIAN MODEL* Key Concepts Fixed Prices and Expenditure Plans In the very short run, firms do not change their prices and they sell the amount that is demanded.

More information

### Chapter 13. Aggregate Demand and Aggregate Supply Analysis

Chapter 13. Aggregate Demand and Aggregate Supply Analysis Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics In the short run, real GDP and

More information

### MEASURING A NATION S INCOME

10 MEASURING A NATION S INCOME WHAT S NEW IN THE FIFTH EDITION: There is more clarification on the GDP deflator. The Case Study on Who Wins at the Olympics? is now an FYI box. LEARNING OBJECTIVES: By the

More information

### MACROECONOMIC AND INDUSTRY ANALYSIS VALUATION PROCESS

MACROECONOMIC AND INDUSTRY ANALYSIS VALUATION PROCESS BUSINESS ANALYSIS INTRODUCTION To determine a proper price for a firm s stock, security analyst must forecast the dividend & earnings that can be expected

More information

### Chapter 13 Money and Banking

Chapter 13 Money and Banking Multiple Choice Questions Choose the one alternative that best completes the statement or answers the question. 1. The most important function of money is (a) as a store of

More information

### 2.5 Monetary policy: Interest rates

2.5 Monetary policy: Interest rates Learning Outcomes Describe the role of central banks as regulators of commercial banks and bankers to governments. Explain that central banks are usually made responsible

More information

### Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions

Name: _ Days/Times Class Meets: Today s Date: Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions Read these Instructions carefully! You must follow them exactly! I) On your Scantron card you

More information

### GDP Measuring Output and Income Part II. Alternative Measures Real World Approximations. Reading: RJB for lecture 5

GDP Measuring Output and Income Part II Alternative Measures Real World Approximations Reading: RJB for lecture 5 GDP: Statistical Approximations The Bureau of Economic Analysis (BEA) provides both annual

More information

### Reading the balance of payments accounts

Reading the balance of payments accounts The balance of payments refers to both: All the various payments between a country and the rest of the world The particular system of accounting we use to keep

More information

### = C + I + G + NX ECON 302. Lecture 4: Aggregate Expenditures/Keynesian Model: Equilibrium in the Goods Market/Loanable Funds Market

Intermediate Macroeconomics Lecture 4: Introduction to the Goods Market Review of the Aggregate Expenditures model and the Keynesian Cross ECON 302 Professor Yamin Ahmad Components of Aggregate Demand

More information