macroeconomics-Test2

ECON2803Spring2010Test2MultipleChoiceIdentifytheletterofthechoicethatbestcompletesthestatementoranswersthequestion.____1.Overtime,peoplehavecometorelymoreonmarket-producedgoodsandlessongoodsthattheyproduceforthemselves.Forexample,busypeoplewithhighincomes,ratherthancleaningtheirownhouses,hirepeopletocleantheirhouses.Byitself,thischangehasa.causedmeasuredGDPtofall.b.notcausedanychangeinmeasuredGDP.c.causedmeasuredGDPtorise.d.probablychangedmeasuredGDP,butinanuncertaindirection;thedirectionofthechangedependsonthedifferenceinthequalityofthecleaningthathasresulted.____2.Transactionsinvolvingitemsproducedinthepast,suchasthesaleofa5-year-oldautomobilebyausedcardealershiporthepurchaseofanantiquerockingchairbyapersonatayardsale,area.includedincurrentGDPbecauseGDPmeasuresthevalueofallgoodsandservicessoldinthecurrentyear.b.includedincurrentGDPbutvaluedattheiroriginalprices.c.notincludedincurrentGDPbecauseGDPonlymeasuresthevalueofgoodsandservicesproducedinthecurrentyear.d.notincludedincurrentGDPbecausetheseitemshavenocurrentvalue.____3.Transferpaymentsarea.includedinGDPbecausetheyrepresentincometoindividuals.b.includedinGDPbecausetheyeventuallywillbespentonconsumption.c.notincludedinGDPbecausetheyarenotpaymentsforcurrentlyproducedgoodsorservices.d.notincludedinGDPbecausetaxeswillhavetoberaisedtopayforthem.____4.RealGDPistheyearlyproductionoffinalgoodsandservicesvaluedata.currentprices.b.constantprices.c.expectedfutureprices.d.theratioofcurrentpricestoconstantprices.____5.ChangesinnominalGDPreflecta.onlychangesinprices.b.onlychangesintheamountsbeingproduced.c.bothchangesinpricesandchangesintheamountsbeingproduced.d.neitherchangesinpricesnorchangesintheamountsbeingproduced.Table23-4ThetablebelowcontainsdataforthecountryofDachsland,whichproducesonlypretzelsandbooks.Thebaseyearis2005.YearPriceofPretzelsQuantityofPretzelsPriceofBooksQuantityofBooks2005$4.0090$1.501502006$4.00100$2.001802007$5.00120$2.502002008$6.00150$3.50200____6.RefertoTable23-4.In2005,Dachsland’sa.nominalGDPwasgreaterthanrealGDP,andtheGDPdeflatorwasgreaterthan100.b.nominalGDPwasequaltorealGDP,andtheGDPdeflatorwasequalto1.c.nominalGDPwaslessthanrealGDP,andtheGDPdeflatorwaslessthan100.d.nominalGDPwasequaltorealGDP,andtheGDPdeflatorwasequalto100.____7.RefertoTable23-4.In2006,Dachsland’sa.nominalGDPwas$585,realGDPwas$660,andtheGDPdeflatorwas88.6.b.nominalGDPwas$585,realGDPwas$670,andtheGDPdeflatorwas87.3.c.nominalGDPwas$760,realGDPwas$660,andtheGDPdeflatorwas115.2.d.nominalGDPwas$760,realGDPwas$670,andtheGDPdeflatorwas113.4.____8.GDPdoesnotreflecta.thevalueofleisure.b.thevalueofgoodsandservicesproducedathome.c.thequalityoftheenvironment.d.Alloftheabovearecorrect.____9.TheCPIismorecommonlyusedasagaugeofinflationthantheGDPdeflatorisbecausea.theCPIiseasiertomeasure.b.theCPIiscalculatedmoreoftenthantheGDPdeflatoris.c.theCPIbetterreflectsthegoodsandservicesboughtbyconsumers.d.theGDPdeflatorcannotbeusedtogaugeinflation.____10.Whencomputingthecostofthebasketofgoodsandservicespurchasedbyatypicalconsumer,whichofthefollowingchangesfromyeartoyear?a.thequantitiesofthegoodsandservicespurchasedb.thepricesofthegoodsandservicesc.thegoodsandservicesmakingupthebasketd.Alloftheabovearecorrect.____11.Thepriceindexwas120in2006and127.2in2007.Whatwastheinflationrate?a.5.7percentb.6.0percentc.7.2percentd.27.2percentTable24-2ThetablebelowpertainstoIowan,aneconomyinwhichthetypicalconsumer’sbasketconsistsof3poundsofporkand4bushelsofcorn.YearPriceofPorkPriceofCorn2008$20perpound$12perbushel2009$25perpound$18perbushel____12.RefertoTable24-2.If2008isthebaseyear,thentheCPIfor2008wasa.73.5.b.100.c.108.d.136.1.____13.RefertoTable24-2.If2008isthebaseyear,thentheCPIfor2009wasa.73.5.b.100.c.136.1.d.147.____14.Oneproblemwiththeconsumerpriceindexstemsfromthefactthat,overtime,consumerstendtobuylargerquantitiesofgoodsthathavebecomerelativelylessexpensiveandsmallerquantitiesofgoodsthathavebecomerelativelymoreexpensive.Thisproblemiscalleda.price-changeneglect.b.unmeasuredqualitychange.c.substitutionbias.d.relativebias.____15.TheCPIdiffersfromtheGDPdeflatorinthata.theCPIisaninflationindex,whiletheGDPdeflatorisapriceindex.b.substitutionbiasisnotaproblemwiththeCPI,butitisaproblemwiththeGDPdeflator.c.increasesinthepricesofforeignproducedgoodsthataresoldtoU.S.consumersshowupintheGDPdeflatorbutnotintheCPI.d.increasesinthepricesofdomesticallyproducedgoodsthataresoldtotheU.S.governmentshowupintheGDPdeflatorbutnotintheCPI.____16.IftheCPIwas95in1955andis475today,then$100todaypurchasesthesameamountofgoodsandservicesasa.$4.75purchasedin1955.b.$20.00purchasedin1955.c.$95.00purchasedin1955.d.$500purchasedin1955.____17.Theequipmentandstructuresavailabletoproducegoodsandservicesarecalleda.physicalcapital.b.humancapital.c.theproductionfunction.d.technology.____18.Anunderstandingofthebestwaystoproducegoodsandservicesiscalleda.humancapital.b.physicalcapital.c.technology.d.productivity.____19.“Whenworkershavearelativelysmallquantityofcapitaltouseinproducinggoodsandservices,givingthemanadditionalunitofcapitalincreasest