Name Assignment 1 Description Instructions Clearly mark what you believe is the best answer to each of the following problems Modify

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1 1 of 9 2/15/ :36 PM ECO212Q - ECON PRIN & PROBS (SPRING 2008) (ECO212Q-082) > CONTROL PANEL > TEST MANAGER > TEST CANVAS Test Canvas Add, modify, and remove questions. Select a question type from the Add drop-down list and click Go to add questions. Use Creation Settings to establish which default options, such as feedback and images, are available for question creation. Add Calculated Formula Creation Settings Name Assignment 1 Description Instructions Clearly mark what you believe is the best answer to each of the following problems Modify 1 Multiple Choice 2 points Modify Remove Gross domestic product is the total produced within a country in a given time period. Answer market value of all final and intermediate goods and services market value of all final and intermediate goods and services plus investment and depreciation amount of final and intermediate goods and services market value of all final goods and services 2 Multiple Choice 2 points Modify Remove In years with inflation, nominal GDP increases real GDP. Answer faster than slower than at the same rate as sometimes faster, sometimes slower, and sometimes at the same rate as 3 Multiple Choice 2 points Modify Remove Purchasing power parity prices are used to construct GDP data that Answer do not omit the underground economy. can be used to make more valid comparisons between one country and another. is a proper measure of economic welfare. adjust for differences in population. 4 Multiple Choice 2 points Modify Remove Intermediate goods and services. Answer are double counted in GDP are used to produce final goods and services include used goods are included in GDP

2 2 of 9 2/15/ :36 PM 5 Multiple Choice 2 points Modify Remove The expenditure approach measures GDP by adding Answer compensation of employees, rental income, corporate profits, net interest, and proprietors' income. compensation of employees, rental income, corporate profits, net interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and depreciation. compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracting subsidies paid by the government. consumption expenditure, gross private domestic investment, net exports of goods and services, and government purchases of goods and services. 6 Multiple Choice 2 points Modify Remove The largest component of GDP is (for this you need to go to the BEA website ( click on "Gross Domestic Product", then on "Interactive NIPA tables", finally, access Table "Gross domestic product") Answer gross private domestic investment. personal consumption expenditures. net exports of goods and services. government purchases of goods and services. 7 Multiple Choice 2 points Modify Remove From the data in the above table, GDP equals Answer $1,120. $1,280. $1,360. $1, Multiple Choice 2 points Modify Remove To study economic growth across countries, you should compare growth in across countries. Answer inflation rates real GDP per person

3 3 of 9 2/15/ :36 PM unemployment real GDP per person in PPP units 9 Multiple Choice 2 points Modify Remove Suppose that nominal GDP per person is $18,000 in 2004, the 1998 GDP deflator (a price index for GDP) is 1.00, and the 2004 GDP deflator is The approximate real per person GDP in 2004 is Answer $16,364. $16,634. $18,000. $19, Multiple Choice 2 points Modify Remove Which of the following is not a final good? Answer a new computer sold to an NYU student a new car sold to Avis for use in their fleet of rental cars a purse sold to a foreign visitor a hot dog sold to a spectator at a Chicago Bears football game 11 Multiple Choice 2 points Modify Remove Use the information in the table above to calculate the value of net exports. Answer $10 million $0 -$10 million $30 million 12 Multiple Choice 2 points Modify Remove Suppose that in a country named Crazy-high-inflation nominal wages went up by 200% over the last year. Based on this information, is it reasonable to say that workers experienced a definite increase in their purchasing power? Answer False. We do not know what happened to the price level. Hence we cannot tell whether wage's purchasing power increased or not. True. An increase in wages of 200% is guaranteed to result in higher purchasing power.

4 4 of 9 2/15/ :36 PM 13 Multiple Choice 2 points Modify Remove In the table above, what inflation rate belongs in space B? Answer 17.0 percent 6.8 percent 25 percent -4.0 percent 14 Multiple Choice 2 points Modify Remove In 2004, consumers in Dexter consumed only books and pens. The prices and quantities for 2004 and 2005 are listed in the table above. The reference base period for Dexter's CPI is What is the CPI in 2004? Answer Multiple Choice 2 points Modify Remove In 2004, consumers in Dexter consumed only books and pens. The prices and quantities for 2004 and 2005 are listed in the table above. The reference base period for Dexter's CPI is What is the cost of the CPI basket in 2005? Answer $430 $335 $320 $540

5 5 of 9 2/15/ :36 PM 16 Multiple Choice 2 points Modify Remove Average Labor productivity rises Answer if the amount of capital per worker increases. in the absence of technological progress. if firms invest in hiring more workers rather than buying more capital. if the amount of capital per worker decreases. 17 Multiple Choice 2 points Modify Remove The stock of knowledge of a worker is known as Answer monetary capital. human capital. physical capital. financial capital. 18 Multiple Choice 2 points Modify Remove The more education that workers have, the is their human capital and is their productivity. Answer larger; higher larger; smaller smaller; larger smaller; smaller 19 Multiple Choice 2 points Modify Remove Separating the sources of economic growth is the purpose behind Answer the national income accounts. the production possibilities curve. macroeconomics. growth accounting. 20 Multiple Choice 2 points Modify Remove The key tool of growth accounting is the aggregate Answer demand curve. supply curve. production function. expenditure function. 21 Multiple Choice 2 points Modify Remove The aggregate production function is based upon three main variables:

6 6 of 9 2/15/ :36 PM Answer labor, capital and technology. labor, technology and money. capital, technology and land. land, labor and laws. 22 Multiple Choice 2 points Modify Remove The equation Y = F(L, K, TFP) where Y = real GDP, L = labor, K = capital, and TFP = Efficiency Answer is known as the labor function. is known as the aggregate production function. shows that the faster technology grows, the faster real GDP grows. The following two answers are correct: - is known as the aggregate production function, and - shows that the faster technology grows, the faster real GDP grows. 23 Multiple Choice 2 points Modify Remove Labor productivity equals (Y denotes GDP, L the number of workers, and K the stock of capital) Answer Y/L. K/L. TFP/L. the percentage change in the labor input L. 24 Multiple Choice 2 points Modify Remove Labor productivity increases if Answer saving and investment cause an increase in the quantity of capital per worker. there is an increase in the accumulation of human capital. new technologies are continuously discovered. All of these answers are correct. 25 Multiple Choice 2 points Modify Remove The productivity curve is a relationship between Answer real GDP per hour of labor and capital per hour of labor, with technology held constant. nominal GDP per hour of labor and capital per hour of labor, with technology held constant. real GDP per hour of labor and capital per hour of labor whenever technological growth occurs. capital per hour of labor and technological growth. 26 Multiple Choice 2 points Modify Remove The productivity curve shows that an increase in technological progress (efficiency) results in

7 7 of 9 2/15/ :36 PM Answer an increase in the level of real GDP per hour of labor at any level of capital per hour of labor. no change in the level of real GDP per hour of labor at any level of capital per hour of labor. a decrease in the level of real GDP per hour of labor at any level of capital per hour of labor. an increase in the quantity of labor. 27 Multiple Choice 2 points Modify Remove In the above figure, an increase in the capital stock per hour of labor is represented by a movement such as from Answer point a to point c. point a to point b. point a to point e. point a to point d. 28 Multiple Choice 2 points Modify Remove

8 8 of 9 2/15/ :36 PM In the above figure, a technological innovation is represented by a movement such as from Answer point a to point e. point a to point b. point a to point c. point a to point d. 29 Multiple Choice 2 points Modify Remove The shape of a given productivity curve reflects the Answer effects of capital accumulation. effects of technological progress. law of diminishing returns. effects of population growth. 30 Multiple Choice 2 points Modify Remove The law of diminishing returns states that, as Answer the quantity of one input used in production increases, all else being the same, output increases. technology increases, all else being the same, output increases. the quantity of one input used in production increases, all else being the same, output increases by ever larger amounts. the quantity of one input used in production increases, all else being the same, output increases by ever smaller amounts. 31 Multiple Choice 2 points Modify Remove Suppose that capital per hour of labor has increased by 9 percent. Output per hour of labor has risen by 10 percent. According to the one-third rule, capital per hour of labor accounts for

9 9 of 9 2/15/ :36 PM Answer 7 percent of the growth rate in output per hour of labor, with technology accounting for the remaining 3 percent. 3 percent of the growth rate in output per hour of labor, with technology accounting for the remaining 7 percent. 2 percent of the growth rate in output per hour of labor, with technology accounting for the remaining 8 percent. The full 9 percent increase in output per hour of labor, technology plays no role. 32 Multiple Choice 2 points Modify Remove Suppose that real GDP grew by 6 percent last year and the capital per hour of labor grew 6 percent. Using the one-third rule, by how much did the increase in capital per hour of labor (exclusively) increase real GDP per hour of labor? Answer 6 percent 4 percent 3 percent 2 percent 33 Multiple Choice 2 points Modify Remove In 2006 the real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 2 percent a year. What is the first year in which the real GDP per person of Flip will become larger than in Flap? Answer by 2008 by 2010 by 2016 never 34 Multiple Choice 2 points Modify Remove The capital stock in the economy is the Answer quantity of plant, equipment, and inventories. total financial assets of the public. financial assets held by firms. quantity of plant and equipment owned by governments. 35 Multiple Choice 2 points Modify Remove If investment during year 2006 is positive then it must be the case that the capital stock of 2007 will be higher than that of 2006 Answer True false We do not have enough information to answer