Economics Module 10

Question 1

A share of stock purchased from another individual on the New York Stock Exchange is __________.

Answer 1

not included

Question 2

A share of IBM stock purchased from IBM is ____________.

Answer 2

not included

Question 3

A BMW made in Germany sold to an individual in the U.S. is ___________. Select all that apply.

Answer 3

a
consumption
d
net exports
e
does not affect total GDP of the U.S.

Question 4

A Toyota made in Tennessee and sold in the U.S. is _________.

Answer 4

consumption

Question 5

A Social Security payment is _________.

Answer 5

not included

Question 6

A new school building paid for with state and federal money is ________.

Answer 6

government

Question 7

A new baseball glove that is not sold is __________.

Answer 7

investment

Question 8

A house purchased from another family is ___________.

Answer 8

not included

Question 9

A new house purchased from the builder is ____________.

Answer 9

investment

Question 10

A Chevrolet produced in Detroit sold to an Argentine company is _________.

Answer 10

net exports

Question 11

A college education purchased by an individual is ________.

Answer 11

consumption

Question 12

A concert produced by a nonprofit corporation is __________.

Answer 12

consumption

Question 13

The monthly apartment rent is _____________.

Answer 13

consumption

Question 14

The value of plumbing an individual does herself in her house is __________.

Answer 14

not included

Question 15

The value of plumbing an individual does in her neighbor’s house for which she is paid is ___________.

Answer 15

consumption

Question 16

The cost of pollution produced by automobiles is ____________.

Answer 16

not included

Question 17

Pollution of a river by a factory which results in the company saving money is ____________.

Answer 17

not included

Question 18

A policeman’s salary is ________.

Answer 18

government

Question 19

A new automobile which is produced in the U.S. and purchased by an individual in the U.S.?
Purchased by a company in the U.S.?
By a government in the U.S.?

Answer 19

a
Consumption
b
Investment
c
Government

Question 20

What is the unemployment rate in your country?

Answer 20

4%

Question 21

The natural rate of unemployment in your country is:

Answer 21

2%

Question 22

What can the unemployment rate you found above tell you about the economy? It is:

Answer 22

In a bust

Question 23

There are 100,000 citizens able to participate in the workforce in the land of Productivia. If 75,000 people are working, what is the unemployment rate in Productivia?

Answer 23

unable to determine

Question 24

When new workers join the labor force, and most of them find jobs, the unemployment rate will still rise. True or False?

Answer 24

True

Question 25

Which one of the following is the largest part of national income?

Answer 25

Wages

Question 26

Indicate the effects of the following on the components of real GDP. An increase in the U.S. consumption of foreign-grown bananas as substitutes for U.S. grown oranges will cause:

Answer 26

No change in consumption and an increase in imports

Question 27

i. Adam (who lives in England) shears wool from his sheep and sells it to Karl (who lives in Germany) for $1400 ii. Karl uses the wool purchased from Adam to weave into woollen cloth that he then sells to Leon (who also lives in Germany) for $1600. iii. Leon sells the woollen cloth to Alfred (who lives in England) for $2000. iv. Alfred then tailors a bespoke suit for John (who lives in England) for $5000. Suppose that these are the only transactions in the two countries, and that they all take place in the year 2017. The GDPs of the United Kingdom and Germany (measured in dollars), respectively, are:

Answer 27

$4400 and $600

Question 28

i. Adam (who lives in England) shears wool from his sheep and sells it to Karl (who lives in Germany) for $1400 ii. Karl uses the wool purchased from Adam to weave into woollen cloth that he then sells to Leon (who also lives in Germany) for $1600. iii. Leon sells the woollen cloth to Alfred (who lives in England) for $2000. iv. Alfred then tailors a bespoke suit for John (who lives in England) for $5000. Suppose that transactions 1) and 2) occurred in 2016 and transactions 3) and 4) occurred in 2017. GDP in the United Kingdom in 2016 and 2017, respectively, are:

Answer 28

$1400 and $3000

Question 29

i. Adam (who lives in England) shears wool from his sheep and sells it to Karl (who lives in Germany) for $1400 ii. Karl uses the wool purchased from Adam to weave into woollen cloth that he then sells to Leon (who also lives in Germany) for $1600. iii. Leon sells the woollen cloth to Alfred (who lives in England) for $2000. iv. Alfred then tailors a bespoke suit for John (who lives in England) for $5000. Given these transactions, what is the growth rate in GDP in the United Kingdom between 2016 and 2017?

Answer 29

114%

Question 30

Indicate what category the purchase of services of a U.S. lawyer in the U.S. by a Japanese citizen in Japan would fall under in regards to the U.S. GDP.

Answer 30

Exports

Question 31

Consider Jolly Old England in which there are just three new, domestically produced goods and services: Soused Hog's Face, Porter and Suet Pudding. Listed below are the prices and quantities of these goods in the base year and the current year in dollars rather than pounds. The price index in the base year is:

Answer 31

100

Question 32

Consider Jolly Old England in which there are just three new, domestically produced goods and services: Soused Hog's Face, Porter and Suet Pudding. Listed below are the prices and quantities of these goods in the base year and the current year in dollars rather than pounds. The price index in the current year is:

Answer 32

115

Question 33

Consider Jolly Old England in which there are just three new, domestically produced goods and services: Soused Hog's Face, Porter and Suet Pudding. Listed below are the prices and quantities of these goods in the base year and the current year in dollars rather than pounds. The growth rate in England’s price level is:

Answer 33

15% which is inflation

Question 34

Consider Jolly Old England in which there are just three new, domestically produced goods and services: Soused Hog's Face, Porter and Suet Pudding. Listed below are the prices and quantities of these goods in the base year and the current year in dollars rather than pounds. Real GDP in the current year for England is (to the nearest dollar):

Answer 34

$2500

Question 35

Consider Jolly Old England in which there are just three new, domestically produced goods and services: Soused Hog's Face, Porter and Suet Pudding. Listed below are the prices and quantities of these goods in the base year and the current year in dollars rather than pounds. Real GDP growth in England is:

Answer 35

25%

Question 36

We have reached full employment when which of the following is true?

Answer 36

Cyclical unemployment is zero, but frictional and structural unemployment are positive.

Question 37

Which of the following would be counted as unemployed?

Answer 37

A lawyer who just resigned from her firm, and is looking for a new position

Question 38

Given an announcement of increased numbers of unemployed individuals, what must be happening to the unemployment rate? The unemployment rate:

Answer 38

will decrease if employment rises more rapidly than unemployment

Question 39

The Bureau of Labor Statistics released November’s employment statistics on the morning of December 4th. The information in the table was given. What is the unemployment rate?

Answer 39

4.85%

Question 40

The Bureau of Labor Statistics released November’s employment statistics on the morning of December 4th. The information in the table was given. What is the labor force participation rate?

Answer 40

64.91%

Question 41

The Bureau of Labor Statistics released November’s employment statistics on the morning of December 4th. The information in the table was given. If the natural rate of unemployment is estimated to be 4.50%, what is cyclical unemployment for the US?

Answer 41

0.35%

Question 42

If the rate of inflation is 5% and the nominal rate of interest is 9%, what is the real rate of interest?

Answer 42

4%

Question 43

If the rate of inflation is 6 percent and the current nominal interest rate is 10 percent, the real interest rate is:

Answer 43

4%

Question 44

You are given the following data. The average price level from one year to the next has increased by 3%. The average level of income has increased by 5%. Real income has:

Answer 44

Increased by 2%.

Question 45

Which of the following is true in an economy with a high and rising rate of inflation?

Answer 45

Lenders are hurt

Question 46

A price index that is used to measure inflation will do which of the following?

Answer 46

Hold quantities constant

Question 47

If the Consumer Price Index for one year was 124.0 and for the next year was 130.7, what was the approximate rate of inflation?

Answer 47

5.4%

Question 48

If the Consumer Price Index for one year was 150.0 and the rate of inflation from that year to the next was 10 percent, what would be the Consumer Price Index in the second year?

Answer 48

165.0

Question 49

Suppose that last year, the GDP of this economy was $215 million. We are interested in how much of the increase since last year was due to actual increases in production rather than just increases in prices. Which of the following measures would not be influenced by an increase in prices? Choose all that apply.

Answer 49

c Real GDP d Real GDP per capita

Question 50

Which of the following would you use to find the inflation rate for the period between 1980 and 2020?

Answer 50

Sum of 2020 prices multiplied by 1980 quantities, divided by sum of 1980 prices multiplied by 1980 quantities, multiplied by 100

Question 51

The inflation rate for 2020 is slightly greater than the inflation rate for 2019.

Answer 51

True.

Question 52

How would these changes to wages and interest rates, influenced by the rate of inflation, impact the GDP?

Answer 52

a The change in wages leads to higher consumption. This would increase the nominal GDP if all else remained equal. b The change in nominal GDP would be dependant on how large an effect the change in both wages and interest rates have. d The change in interest rates discourages consumption. This would decrease real GDP if all else remained equal.

Question 53

If Gross Domestic Product was reported to be $19,246.7 Billion. If Consumption is $13,308.6 Billion, Investment is $3,174.1 Billion, Government Expenditures is $3,330.9, and Imports are 2,883.3, how much did the US export that year?

Answer 53

$2,316.4 Billion

Question 54

Suppose that the size of the population eligible to participate in the labor force is 255,357 thousand, the number of employed individuals is 153,439, and the number of unemployed individuals is 7,132. What is the unemployment rate?

Answer 54

4.44%

Question 55

Suppose rea1 GDP rises by 3.2 percent. What is the rate of change in nominal GDP?

Answer 55

3.2 percent plus the rate of inflation.

Question 56

Which component of real GDP accounts for the largest portion of GDP?

Answer 56

Consumption

Question 57

If imports decrease in a quarter, what happens to real GDP?

Answer 57

increases

Question 58

If price levels increase by 3% and total spending in the economy has increased by 5%, what has happened to real GDP?

Answer 58

Increase of 2%

Question 59

In calculating GDP in a country, do we add or subtract imports?

Answer 59

Subtract imports

Question 60

If real consumption spending increases by 5 percent, what is likely to happen to overall GDP?

Answer 60

Increase by a little over 3%.