review_questions_I - ECON 204 Review Sheet I 1. Assume that...

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ECON 204 Review Sheet I 1. Assume that a tire company sells 4 tires to an automobile company for $400, another company sells a compact disc player for $500, and the automobile company puts all of these items in or on a car that it sells for $20,000. In this case, the amount from these transactions that should be counted in GDP is: A) $20,000. B) $20,000 less the automobile company's profit on the car. C) $20,900. D) $20,900 less the profits of all three companies on the items that they sold. 2. If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and government purchases are $1,098, then net exports are: A) $131. B) -$131. C) $31. D) -$31. 3. If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and net exports are -$1,910, then government purchases are: A) $2,977. B) $1,910. C) -$843. D) $1,067. 4. If the unemployment rate is 6 percent and the number of employed is 188 million, then the labor force equals ______ million. A) 11.28 B) 176.72 C) 188 D) 200 5. If the consumption function is given by the equation C = 500 + 0.5 Y , the production function is Y = 50 K 0.5 L 0.5 , where K = 100 and L = 100, then C equals: A) 1,000. B) 2,500. C) 3,000. D) 5,000. 6. If the consumption function is given by C = 150 + 0.85 Y and Y increases by 1 unit, then C increases by: A) 0.15 unit. B) 0.5 unit. C) 0.85 unit. D) 1 unit. Page 1
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7. If the consumption function is given by C = 150 + 0.85 Y and Y increases by 1 unit, then savings: A) decreases by 0.85 unit. B) decreases by 0.15 unit.
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This note was uploaded on 10/25/2010 for the course ECON 220 taught by Professor Sadiq during the Spring '10 term at University of Massachusetts Boston.

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review_questions_I - ECON 204 Review Sheet I 1. Assume that...

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