Aps3 - Economics 102 Introductory Macroeconomics Spring 2005 Professor J Wissink Problem Set 3 ANSWERS Multiple Choice/True and False 1 Tom just

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Economics 102 Introductory Macroeconomics - Spring 2005, Professor J. Wissink Problem Set 3 – ANSWERS Multiple Choice/True and False 1. Tom just bought shares of Google stock for $2,000 and paid a $30 commission to his broker. How did this affect GDP? a) GDP increased by $2030. b) GDP increased by $2000. c) GDP increased by $1970. d) GDP increased by $30. The purchase of stock does not count for GDP because is just a paper transaction that doesn’t involve the 4 factors of production. The $30 commission though is a payment to labor (broker’s service), hence it counts for GDP. 2. An economy which is experiencing rising rates of unemployment and inflation would be said to be in a period of: a) inflation b) recession c) stagflation d) hyperinflation 3. Which of the following are examples of intermediate goods? (There is more than one in this list.) a) a book written by your favorite author purchased by you b) dough bought by a housewife to bake a cake for her daughter’s birthday c) dough bought by a chef to bake a cake at his restaurant d) a set of screwdrivers purchased by a small firm e) wood purchased by a professional carpenter These are the only two goods in the list that will be transformed in order to produce a final good. 4. True or False and EXPLAIN: The $15,000 spent by a furniture firm in replenishing their inventories is not counted in GDP since it is neither consumption, nor investment, nor government expenditures. False. Inventories is one of the 3 components of investment. 5.
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This note was uploaded on 03/10/2009 for the course ECON 102 taught by Professor Kyle during the Spring '08 term at Cornell University (Engineering School).

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Aps3 - Economics 102 Introductory Macroeconomics Spring 2005 Professor J Wissink Problem Set 3 ANSWERS Multiple Choice/True and False 1 Tom just

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