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Which of the following is not an approach to measure GDP?
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........................... is the market value of the product minus the cost of inputs purchased from other firms.
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ECON 1040 Exam2
| Question | Answer |
|---|---|
| Which of the following is not an approach to measure GDP? | Intermediate approach |
| ........................... is the market value of the product minus the cost of inputs purchased from other firms. | Value added |
| The prices are $1 and $2 per unit, respectively. You learn that the quantity produced of A is 2 units and Athenland’s GDP is $4. Then it must be true that the quantity produced of B is | 1 |
| The prices are $1 and $2 per unit, respectively. You learn that the quantity produced of A is 2 units and Athenland’s GDP is $4. Then it must be true that the contribution of B to Athenland’s GDP is | 2 |
| The statement: “Money is not a capital good.” is | True |
| The value of unpaid work by a homemaker ______ included in GDP and the value of housekeeping services sold in a market ______ included in GDP. | is not; is |
| A drawback of using market values to aggregate the quantities of goods and services produced in an economy is that | not all economically valuable goods and services are bought and sold in markets |
| The following table: (Prices in order) $ 1,000 600 700 500 600 500 200 300 500 600 300 Given the data, compute the government purchases component of GDP. | $700 |
| Involuntary part-time workers are | not counted as unemployed |
| The accuracy of the unemployment rate is criticized because | people who would like to work but have given up trying to find work are not included in the number of unemployed people |
| A person 16 years or older who does not work and does not look for work is officially classified as | out of the labor force |
| Who from among the following would be classified as unemployed? | Jack Little, a 21-year-old new college graduate actively looking for his first job |
| All of the following are costs of unemployment except | lost leisure time |
| The duration of unemployment _____ during a recession. | increases |
| People who say that they would like to have a job but have not made an effort to find a job in the past four weeks, are called ______ workers. | discouraged |
| A(n) ............................ measured in terms of its current dollar value. | nominal |
| ........................... increases a nominal quantity each period by the percentage increase in a specified price index. | Indexing |
| The CPI in year 1 equaled 1.55. The CPI in year 2 equaled 1.64. The rate of inflation between years 1 and 2 was ______ percent. | 5.8 |
| 2019:(Price, Quantity) 2020: (Price,Quantity) Fish ($5,$5) ($7, $7) Chicken ($3,$10) ($4, $12) Beef ($6, $7) ($5,$10) Using 2019 as the base year, by how much does a "cost of protein" index increase between 2019 and 2020? | 13.4 percent |
| A college graduate in 1972 found a job paying $7,200. The CPI was 0.418 then. A college graduate in 2019 found a job paying $60,000. The CPI was 2.40 in 2019. The 1st graduate's job paid(?) in nominal terms and (?) in real terms than the 2nd job. | less; less |
| If workers received a 5 percent wage increase and the rate of inflation was 5 percent, then their real wage | remained constant |
| Product improvements make it difficult for the statisticians who construct the CPI to distinguish between ______ changes and ______ changes. | price; quality |
| If all prices, including the price of beef, increase by 3 percent, then the relative price of beef has ______ and inflation _____. | remained constant; has occurred |
| Suppose a borrower and lender agree to an interest rate on a loan when inflation is expected to be 2 percent. The borrower would suffer the most if which of the following inflation rates actually occurred? | 1 percent |
| If the nominal interest rate is 10 percent and the inflation rate is 3 percent, then the real interest rate equals | 7 percent |
| The ......................... effect is the tendency for nominal interest rates to be high when inflation is high and low when inflation is low. | Fisher |
| Which of the following statements about the real interest rate is incorrect? | The real interest rate cannot be negative. |
| Inflation-protected bonds guarantee investors | no real wealth loss in the event of unexpectedly high inflation. |
| For a given nominal interest rate, an unexpectedly low inflation rate ______ the real interest rate. | increases |
| The CPI is a measure of the | average level of prices relative to prices in the base year. |
| If real GDP per person were equal to $100 in 1950 and grew at a 1 percent annual rate, what would be the value of real GDP per person 50 years later? | $164 |
| If 35 percent of the population in a country is employed and average labor productivity equals $20,000, then real GDP per person equals | $7,000 |
| Assume the share of population employed, all countries is 50 percent. Which country has the smallest real GDP per capita? Country, Population(millions), Avg Labor Productivity ($) A 100 1,000 B 150 5,000 C 75 20,000 D 250 40,000 E 95 50,000 | Country A |
| Based on ..... then total packages wrapped when a fourth machine is installed must be ______ packages. Number of (Identical) l Machines Total Packages Wrapped 1 l 5,000 2 l 10,000 3 l 13,000 | less than 16,000 |
| Providing a fixed number of workers with additional capital will ______ average labor productivity at a(n) ______ rate. | increase; decreasing |
| Diminishing returns to capital is a consequence of firms' incentives to use each piece of capital as productively as possible and illustrates the | principle of increasing opportunity costs |
| Because of diminishing returns to capital, there is a limit to the increases in average labor productivity that can be gained from additional or improved | physical capital |
| Usually an abundance of natural resources ______ average labor productivity. | increases |
| The discovery and utilization of vast, previously unknown oil and mineral deposits in a country will increase | average labor productivity |
| Most economists agree that ______ are the single most important source of productivity improvements. | technological advances |
| Each worker paints 200 sq.ft. per hour using a roller or 80 sq.ft. per hour using a brush. If a technological advance provides a paint that only requires one coat, their average labor productivity per hour as a team | increases |
| The introduction of new technologies that allow producers to specialize in those activities in which they are relatively more efficient is an example of how overall productivity increases because of the | principle of comparative advantage |
| Entrepreneurs are people who | create new economic enterprises |
| Average labor productivity is determined by | the quantity and quality of human capital, physical capital, technology, natural resources, entrepreneurship, and the legal and political environment. |
| Governments contribute to increased average labor productivity in each of the following ways except by | imposing taxes on wages |
| In the twentieth century, average real wages rose substantially | in industrial countries including the United States. |
| The rate of real .................... growth has stagnated since ........................ | wage; 1973 |
| In the United States there is evidence of | increasing wage inequality |
| Compared to the United States, over the last three decades unemployment in Western Europe is _____ and the rate of job creation is ______. | higher; slower |
| All of the accompanying describe trends in U.S. labor markets except | substantial growth in the level of employment in the United States since 2000 |
| In the market for labor, the price of labor is the | real wage |
| According to the principle of diminishing returns to labor, if the amount of capital and other inputs is held constant, employing additional workers | increases output at a decreasing rate |
| he accompanying table provides information about production at the XYZ-TV Company. (with values) How many workers will XYZ-TV Company hire if the going wage for TV production workers is $30,000? | 3 |
| High Tech, Incorported produces plastic chairs that sell for $10 each. (w/ values) For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $30? | 4 |
| The introduction of a new technology that increases the productivity of labor will | increase the demand for labor |
| If the price of tables sold by All-Oak Table Co. increases from $400 to $500, then the | demand for labor by All-Oak Table Co. increases. |
| The minimum payment you are willing to accept to do a job is your | reservation wage |
| Holding other factors constant, if computers allow factory workers to manufacture more products per hour, then the real wages of factory workers will ______ and employment of factory workers will _____. | increase; increase |
| Real wages increased in industrialized countries in the 20th century because the demand for labor | increased more rapidly than the supply of labor increased. |
| Slower growth in labor demand in combination with increases in labor supply explains ____________ accompanied by __________. | a slowdown in real wage growth; rapid employment growth |
| Which of the following is not a component of aggregate demand? | Money Supply |
| The purchase of the following is considered an intermediate good and thus NOT included in GDP? | Steel purchased by a construction company |
| Which of the following is considered as an economic investment and NOT financial investment? | Machinery equipment |
| Why might CPI overstate inflation? | The substitution bias: people switch to cheaper goods when prices rise |
| A state when a household is moved into a higher tax bracket due to increases in nominal, but not real income is: | Bracket creep |
| Which statement about indexing is wrong? | It is one of the costs of holding cash |
| Costs of managing cash holding are called: | Shoe-leather costs |
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