ECON 202 - Exam 1 Review B

ECON 202 - Exam 1 Review B - Name: Exam 1 Class: Date: ID:...

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Unformatted text preview: Name: Exam 1 Class: Date: ID: A Multiple Choice Identifit the choice that best completes the Statement or answers the question. 1. The largest component of GDP is a. private investment spending b. government purchases of goods and services c. the nation's capital stock d. tax revenue e. private consumption expenditures In order to build a table, a furniture company buys $50 worth of wood from a lumber company and $20 worth of hardware from a metal products firm. If the value added by the furniture company is $200, what price would the table sell for according to the value added approach to GDP? a. $200 b. $150 C. $130 (1. $270 e. $180 Some of the inaccuracies in measuring GDP are attributable to a. short—term changes in spending b. the underground economy and quality changes 0. tax evasion and inflation d. ignoring production by U.S.-owned plants abroad 6. monopolization This year, Tom sold his 1998 minivan to Honest John's Used Car Emporium for $5,000, Honest John then sold the van to Bob for $7,000. How much would be recorded in GDP this year from these transactions? a. $2,000 b. $12,000 0. $5,000 (1. $0 e. $7,000 As a large number of students graduate from college, which category of unemployment would increase? a. Cyclical unemployment Structural unemployment Frictional unemployment Seasonal unemployment They will have no effect on unemployment 99.037 Name: 6. Which of the following four elements contribute to GDP in the expenditure approach? a Consumption of services, private investment, government consumption, exports Consumption spending, business investment, government purchases, imports Consumption spending, private investment, government purchases, net exports Consumption of goods, private investment, government investment, government consumption e. Consumption of durable goods, private investment, government purchases, net exports b c d 7. If the price level is falling, the economy is experiencing a. creeping inflation b. deflation c. disinflation d. inflation e. stagflation 8. The real wage rate measures a. what workers are paid in terms of purchasing power b. what workers are paid in terms of this year’s dollars c. nominal wages after taxes (1. what workers have available for spending after paying their bills e. the number of dollars earned by workers 9. Economists began carefully calculating GDP a. to make sure that firms were being productive b. to determine the contribution of specific firms to the economy 0. as a result ofthe problems during the Great Depression (1. to gain insight into the causes of unemployment e. simply because the data was available 10. Inflation will general redistribute purchasing power when it is greater than 10 percent it is greater than 3 percent it is fully expected it is greater than 5 percent it is completely unexpected 9.93-9.57?” 11. Periodic fluctuations in real GDP are called a. recessions b. peaks 0. troughs d. expansions e. business cycles 12. The formula for determining a real variable is real variable = a. (nominal variable + 100) >< CPI (nominal variable + price index) + 100 (nominal variable x CPI) + NO (nominal variable + price index) + 100 (nominal variable + price index) x 100 {DP-.09" ID: A Name: l3. l4. l5. 16. 17. 18. IDzA Suppose the nominal interest rate charged is 5 percent and the expected inflation rate is 2 percent. Which of the following is the expected real interest rate? a. —3 percent b 2 percent 0. 3 percent d 5 percent e 7 percent The Consumer Price Index (CPI) measures the prices of all goods produced in the economy includes only the prices of domestically produced consumer goods includes the prices of some used consumer goods includes prices of raw materials is found by averaging the prices of all goods consumed in the economy 0.9.0.65» The country that suffered an extreme inflation rate of 89,700,000,000,000,000,000,000 percent in November 2008 was a. Egypt b. Zimbabwe 0. Germany d. England e. the former Soviet Union The precise definition of GDP is the total value of all a. final goods and services produced within a nation's borders and by this nation’s citizens abroad during a given period b. final goods and services produced for the marketplace during a given period, within a nation's borders 0. goods and services produced for the marketplace during a given period d. goods and services produced by a nation, minus household labor 6. goods and services produced by a nation, minus depreciation How many times in the last 80 years has the official unemployment rate in the United States reached 0 percent? a. 2 b. 3 c. 4 d. 0 e. 1 The largest component of private investment expenditure is government investment in private industries the capital stock new home construction purchases of newly-produced plant and equipment inventories 99.0.6.» Name: ID: A 19. Which of the following would be classified as consumption spending? A family's purchase of a used car A family's purchase of Microsoft stock A family's payment for a child's hospitalization A family‘s purchase of a swing set for their home day—care business 'A family's purchase of a new home 99.057?” Figure ? -'1 Rate of Inflation (2%) 20. Refer to Figure 7-1. Based on the figure, a. the price level has not fallen since 1965 the price level has fallen since 1965 the price level in 1985 was lower than in 1980 the base year is 1965 the price level fell from 1980 to 1990 99.057 21. In macroeconomics, a. we aggregate all national economies into a world economy b. we focus on large, important products and ignore the rest 0. we study one market at a time d. we try to understand how the entire economy behaves e. we study one nation's economy only 22. Assume that Ernesto earned a nominal wage rate of $15 per hour in 2001, the base year for the CPI. If the CPI in 2002 was 102.6 and his nominal wage rate was $16 per hour, what was his real wage rate in 2001 ? a. $14.62 b. $15.59 c. $16.00 d. $15 .00 e. His real wage for 2001 cannot be determined with the information given. Name: ID: A 23. Over the past 90 years or so, the inflation rate has a. dramatically increased b. generally increased C. stayed low d. been negative in most years e. been positive in most years 24. Real GDP is nominal GDP minus taxes minus depreciation plus depreciation adjusted for changes in the price level minus inflation 99.037?” 25. Which group of people would be characterized as unemployed? a. Those who are unable to find work b. Those who are too young to work 0. Those who are unable to work d. Those who did not search for work e. Those who are unwilling to work 26. Inflation is harmful to society because it often causes nominal wages to fall causes sellers‘ costs to increase causes purchasing power to be redistributed in haphazard ways causes consumers‘ purchasing power to decline has no effect at all on anyone's purchasing power .099?!» 27. If the full-employment rate of unemployment is 5 percent, and the economy is experiencing a 7 percent unemployment rate, what is the rate of cyclical unemployment? a. 2 percent b. 7 percent c. -2 percent d 5 percent e 12 percent 28. The price of a typical basket of goods and services in one period divided by the price of the same basket in a different year is a(n) TV—violence index output index employment index price index unemployment index {DP-99‘.” 29. Which of the following is the most volatile component of private investment? a. Consumption of nondurables New home construction Plant and equipment purchases Changes in business inventories Purchases of services 99.0.6 Name: ID: A 30. John Maynard Keynes, author of The General Theory of Employment, Interest, and Money, argued that a. instead of focusing on money, the government should control interest rates the economy does not always perform well in the absence of government guidance the government should follow a policy of laissezfaire the critiques of classical economics were flawed classical economic theory was correct 99.057 31. What are the three important macroeconomic goals about which most economists, and society at large, agree? economic growth, full employment, and stable prices economic growth, a balanced budget, and balanced international trade economic growth, low unemployment, and a balanced budget economic growth, zero unemployment, and falling prices economic growth, full employment, and low interest rates 99.0.57.” 32. The index used to translate nominal GDP into real GDP is the a. GDP Price Index Wholesale Price Index Manufacturer's Input Price Index Consumer Price Index Producer Price Index 99.0.6 33. Which ofthe following is the best example of an intermediate good? a. a new saw purchased by a carpenter b. a new fighter jet purchased by the federal government c. tires purchased by an automobile manufacturer for installation on new cars (1. screwdrivers purchased by a homeowner for home repairs e. aprons purchased by restaurant chefs 34. Rapid economic growth has increased the economic well-bein g ofU.S. citizens because a. the output of goods and services has risen faster than the population b. the population is now living and working longer c. people are now earning higher incomes while goods and services are cheaper d. the population has increased while production has decreased e. the dollar is worth now more than in the past 35. If the base year for an index is 2005 and the value of the index in 2008 is 165.1, by what percent has the measure grown over those 3 years? a. 65.1 percent b. 100.0 percent 0. 6.51 percent d 0 percent e. 165.1 percent ...
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ECON 202 - Exam 1 Review B - Name: Exam 1 Class: Date: ID:...

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