Quiz
Intermediate Macro Economics Exam 1 Study Guide
Questions in this quiz (32)
1What is the business cycle?
- AThe short-run movements (inflations and deflations) of prices
- BThe relationship between political activity and economic activity
- CThe short-run movements (expansions and recessions) of economic activity
- DThe long-run growth trend of the economy
2The definition of inflation is:
- Aa one-time increase in the price level
- Ba period in which average prices are rising over time
- Ca period in which average prices are falling over time
- Da one-time decrease in the price level
3From 1900 to 1970, the United States had a trade deficit.
- ATrue
- BFalse
4Economist could agree about the effects of a particular economic policy but disagree about the desirability of implementing the policy. This would occur if they ____ about the positive analysis and _____ about the normative analysis of the policy
- AAgree;Disagree
- BDisagree;Disagree
- CAgree;Agree
- DDisagree;Agree
5Which of the following questions are positive in nature? (as opposed to normative in anaylsis)
- AA tax cut will raise interest rates.
- BA reduction in the payroll tax would primarily benefit poor and middle-class workers.
- CPayroll taxes are too high.
- DA cut in the payroll tax would improve the President's popularity ratings.
- EPayroll taxes should not be cut unless capital gains taxes are cut also.
6The components of total spending are
- Ainvestment, intermediate Goods, and Factors of Production
- BConsumption, Imports, Investment, and Money Supply
- CConsumption, Investment, Government Spending, and Net Exports
- DConsumption, Investment, Government Spending, Exports, and Imports
7Why are imports subtracted when GDP is calculated in the expenditure approach?
- AThey do not do so in formal markets and thus cannot be calculated through GDP.
- BThey are valued in currencies other than domestic currency.
- CThey are produced abroad and GDP only counts domestic production.
- DThey are not a part of consumption in the domestic economy.
8It is discovered that consumers bought $6 Billion more furniture than previously thought. This furniture was manufactured in North Carolina during the current year. What effects would this have on the United States national income and product accounts?
- AConsumption increases by $ 6 Billion, Imports increase by $6 Billion, and GDP does not change.
- BInvestment increases by $6 Billion, and GDP increases by $6 Billion.
- CConsumption increases by $6 Billion, and GDP increases by $6 Billion.
- DInvestment Increases by $ 6 Billion, imports increase by $ 6 Billion, GDP does not change.
- ENone of the above is correct.
9It is discovered that consumers bought $ 6 Billion more furniture than previously thought. This furniture was manufactured in Sweden during the current year.
- AConsumption increases by $ 6 Billion, imports increase by $ 6 Billion, and GDP does not change.
- BConsumption increases by $6 Billion, and GDP increases by $ 6 Billion.
- CInvestment increases by $ 6 Billion, and GDP increases by $6 Billion.
- DInvestment increases by $ 6 Billion, imports increase by $6 Billion, and GDP does not change.
- ENone of the above answers is correct.
10How does GDP differ from GNP?
- AGDP and GNP both measure production, there is no difference between them.
- BGDP measures production, but GNP measures income.
- CGDP measures national productivity, while GDP measures both national and international productivity.
- DGDP measures the output of factors of production in a nation, while GNP measures both national and international productivity.
11If a country employs many foreign workers, GDP is likely to be ________GNP
- AHigher than
- BLower than
- CEqual to
- DNot Enough Information
12Colonel Hogwash purchases a Civil War-era mansion for $1,000,000. The broker's fee is 6%, which the colonel also pays, for a total expenditure of $1,060,000. Using the expenditure approach, this transaction would be recorded as:
- A$60,000 increase in residential investment.
- B$1,060,000 increase in domestic value added, for the value of the house.
- C$60,000 increase in domestic value added by the brokerage sector.
- D$1,060,000 increase in consumption.
- E$60,000 increase in income received by the real estate broker.
13Colonel Hogwash purchases a Civil War-era mansion for $1,000,000. The broker's fee is 6% , which the colony also pays, for a total expenditure of $1,060,000.
- A$1,060,000 increase in residential investment.
- B$60,000 increase in residential investment.
- C$1,060,000 increase in domestic value added, for the value of the house.
- D$60,000 increase in domestic value added by the brokerage sector.
- E$60,000 increase in income received by the real estate broker.
14What is a flow variable?
- AVariable that are measured per unit of time.
- BVariable that are defined at a point of time.
15What is a stock variable?
- AVariable that are measured per unit of time.
- BVariables that are defined at a point of time.
16Which of the following best describes the relationship between savings and wealth?
- ASaving is a flow into the stock of wealth.
- BSaving is a flow out of current income, but wealth is a flow into current into current income.
- CWealth is a flow into the stock of saving.
- DSaving and wealth are unrelated variables.
17Since United States investment is generally higher than United States national saving:
- Athe US current account balance is generally postive
- BUS national saving will rise in the future
- CUS investment will fall in the future.
- Dthe US current account balance is generally negative.
18Private savings is equal to:
- AGovernment spending minus taxes.
- BDisposable income minus consumption.
- CIncome minus consumption.
- DIncome minus consumption minus taxes
19National saving is equal to:
- AThe same as government saving
- BGovernment saving plus private saving plus capital
- CThe same as private saving.
- DGovernment saving plus private saving.
20Real GDP
- AUnder chain weighting equals real consumption + real investment + real government purchases + real net exports.
- BGrowth rates under chain weighting change when the base year changes.
- CEquals nominal GDP divided by CPI
- Dand nominal GDP are equal in the base year because current prices and base-year prices are the same in the base year.
21Real GDP is a better measure of economic growth than nominal GDP because
- Aan increase in nominal GDP does not correctly measure market values of production in the economy.
- Ban increase in nominal GDP may show an increase in prices rather than an increase in output.
- Can increase in nominal GDP only shows increases in prices.
- Dan increase in nominal GDP only shows output.
22The correct interest rate for studying most economic decision is
- Athe expected interest rate
- Bthe nominal interest rate
- Cthe real interest rate
23A problem with using the expected real interest rate is that:
- AInterest rates are important to banks and businesses but not to be consumers
- BPeople do not generally make informed economic decision.
- CIt is difficult to determine what the public's expected rate of inflation is.
- DInterest rates change frequently, so the public cannot form stable expectations.
24The base year is a point where
- Anominal and real GDP collide
- Bpoint were the GDP deflator= 100
- Call of the above
- Dnone of the above
25A technological breakthrough raises a country's total factor productivity, A, by 10%.
How does this change affect the production function relating output to capital and the production function relating output to labor?- AThe production function relating to capital to output will shift upward, the production function relating labor to output will shift downwards.
- BBoth production functions will shift upwards.
- CThe production function relating capital to output will shift downward, the production function relating labor to output will shift upward.
- DBoth production functions will shift downward.
26What is the marginal product of labor?
- Athe additional amount of output produced when one unit of labor is added.
- Bthe additional amount of output produced when one unit of capital and one unit of labor is added
- Cthe total amount of output produced when an additional unit of labor is added
- Dthe additional amount of output produced when one unit of capital is added.
27How is the MPN curve related to the labor demand curve?
- AThe MPN curve divided by the price level is the labor demand curve.
- BThe MPN curve is not related to the labor demand curve.
- CThe MPN curve is identical to the labor demand curve.
- DThe MPN curve multiplied by price level is the labor demand curve.
28 A large number of immigrants entering the country would have which of the following impacts on the economy
- AIncrease the Labor Force
- BDecrease the Labor Force
- CNot Impact the Labor Force
- DIncrease Full Employment Output
- EDecrease Full Employment Output
- FNot Impact Full Employment Output
29Energy Supplies become depleted. Which of the following answers would describe the impact on the economy? (mark more than one response if more than one response is true)
- AIncreases Factors of production
- BDecreases Factors of Production
- CIncreases the capital stock
- DDecreases the Capital Stock
- EIncreases Full Employment Output
- FDecreases Full Employment output
- GDoes not impact full employment output
30Shutting down unsafe forms of capital would have which of the following effects on the economy. Mark all that apply
- AIncrease Capital Stock
- BDecrease Capital Stock
- CIncrease Other Factors of production
- DDecrease other factors of production
- EDecrease Full Employment Output
- FIncrease Full Employment Output
- GDoes not impact full employment output
31How does full-employment output affected by a decrease in the labor supply?
- AFull-employment output will decrease.
- BFull-employment output will not change
- CFull -employment output will increase.
- DThe effect on full-employment output cannot be determined.
32How is full-employment output affected by a beneficial supply shock ?
- AFull-employment will increase
- BFull-employment will not change
- CFull-employment output will decrease
- DThe effect on full-employment output cannot be determined
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- Quiz on Intermediate Macro Economics Exam 1 Study Guide, created by mehmehmehdino on 27/09/2014.
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