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Econ Practice Exam 1.3 - 1 A labor contract provides for a...

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1) A labor contract provides for a first-year wage of $15 per hour, and specifies that the real wage will rise by 4 percent in the second year of the contract. The CPI is 150 in the first year and 180 in the second year. What dollar wage must be paid in the second year? A) $15.60 B) $28.08 C) $18.60 D) $18.72 E) $18.00 2) The typical family on the Planet Econ consumed 10 pizzas and 20 gallons of milk in 2002, the base year, at which time pizzas cost $16 each and milk cost $2 per gallon. In 2003, the typical family consumed 16 pizzas and 30 gallons of milk at which time the price of pizzas went down to $15 each, while the price of milk increased to $3 per gallon. The consumer price index for 2003 equaled ______ . A) 165 B) 105 C) 117 D) 135 E) 158 3) In Econland, population increased from 100 to 108, the number of employed workers increased from 50 to 60, but average labor productivity decreased from $2,000 per worker per year to $1,800 per worker per year. Total output in Econland _____ and the average standard of living _____. A) increased; decreased B) decreased; decreased C) increased; increased D) increased; remained constant E) decreased; increased 4) Because Congress fixes the minimum wage in nominal terms, when there is inflation, the nominal minimum wage _____ and the real minimum wage _____. 5) An economy produces 700 tables valued at $100 each. Households purchase 100 domestically produced tables. Businesses purchase 200 tables of which 50 are imported.. The government purchases 100 domestically produced tables and 150 domestically produced tables are sold abroad. The unsold tables at the end of the year are held in inventory by the table manufacturers. What is value of the investment component of GDP? A) $35,000 B) $70,000 C) $25,000 D) $40,000 E) $15,000
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