Quiz 1 with answers and hints_edited DK_

Quiz 1 with answers and hints_edited DK_ - 1 When using GDP...

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1. When using GDP growth as a measure of change in welfare we do not need to adjust for: a. Changes in population b. Changes in product quality c. Environmental externalities d. Value added by intermediate producers e. Changes in hours worked [Hint: This is already included in the final value of all goods] 2. Which of the following is not considered a goal of macroeconomic policy? a. Low unemployment b. Low interest rates c. Sustainable growth in GDP d. Price stability e. Balancing present and future consumption [Hint: Interest rates are a policy tool rather than a policy goal] 3. If taxation is $200 million, GDP is $800 million, consumption is $300 million, and government expenditure is $100 million, then: a. Public saving is $100 million, total saving is $400 million. b. Public saving is $200 million, private saving is $400 million. c. Public saving is $100 million, private saving is $300 million. d. Public saving is -$100 million, private saving is $400 million. e. We need more information to be able to tell. NB: Both (a) and (c) were awarded a point. [Hint: BOF pp. 116] 4. If prices in the economy are falling by 5% a year, the nominal interest rate is 10%, the marginal tax rate is 10% and rate of GDP growth is 5% then the real interest rate is: a. 15%. b. 10%. c. 5%. d. 0%. e. -10%. [Hint: BOF pp. 92] 5. There are 10.2 million employed in an economy with a total civilian population of 15.4 million. If 4.2 million people are out of the labour force from the working age population, what is the unemployment rate? a. 7.14 percent b. 8.23 percent c. 8.93 percent
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d. 21.43 percent e. 27.5 percent [Hint: Labour force is 15.4 – 4.2, and the unemployment rate is the unemployed workers divided by the labour force] 6. In year 1 Australia produces 200 cars at $2500 each and 50 computers at $1000 each. In year 2 Australia produces 210 cars at $3000 each and 50 computers at $800 each. What is the growth in real GDP between year 1 and year 2?
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Quiz 1 with answers and hints_edited DK_ - 1 When using GDP...

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