Deck 2: The Data of Macroeconomics

Question 1

All of the following are measures of GDP except the total:

A)expenditures of all businesses in the economy.
B)income from all production in the economy.
C)expenditures on all final goods and services produced.
D)value of all final production.

Answer 1

A

Question 2

The statistic used by economists to measure the value of economic output is:

A)the CPI.
B)GDP.
C)the GDP deflator.
D)the unemployment rate.

Answer 2

B

Question 3

Which of the following is a flow variable?

A)wealth
B)the number unemployed
C)government debt
D)income

Answer 3

C

Question 4

Imputed values included in GDP are the:

A)market prices of goods and services.
B)estimated value of goods and services that are not sold in the marketplace.
C)price of goods and services measured in constant prices.
D)price of goods and services measured in current prices.

Question 5

All of the following are a flow except:

A)the number of new automobile purchases.
B)the number of people losing their jobs.
C)business expenditures on plant and equipment.
D)the government debt.

Question 6

When a firm sells a product out of inventory, GDP:

A)increases.
B)decreases.
C)is not changed.
D)increases or decreases, depending on the year the product was produced.

Question 7

Assume that a bakery hires more workers and pays them wages and that the workers produce more bread. GDP increases in all of the following cases except when the bread:

Question 8

Which of the following is a stock variable?

A)wealth
B)consumption
C)investment
D)income

Question 9

It is a national income accounting rule that all expenditure on purchases of products is necessarily equal to:

A)profits of firms.
B)wages of employees.
C)income of the producers of the products.
D)income of employees.

Question 10

GDP is all of the following except the total:

A)expenditure of everyone in the economy.
B)income of everyone in the economy.
C)expenditure on the economy's output of goods and services.
D)output of the economy.

Question 11

In the circular flow model, the flow of dollars from firms to households is paid and the flow of dollars from households to firms is paid .

A)as wages and profits; for goods and services
B)for value added; as imputed values
C)in current dollars; in constant dollars
D)as interest and dividends; for depreciation and taxes

Question 12

All of the following are a stock except:

A)a consumer's wealth.
B)the government budget deficit.
C)the number of unemployed people.
D)the amount of capital in the economy.

Question 13

The amount of capital in an economy is a and the amount of investment is a .

A).flow; stock
B)stock; flow
C)final good; intermediate good
D)intermediate good; final good

Question 14

The total income of everyone in the economy is exactly equal to the total:

A)expenditure on the economy's output of goods and services.
B)consumption expenditures of everyone in the economy.
C)expenditures of all businesses in the economy.
D)government expenditures.

Question 15

The economic statistic used to measure the level of prices is:

A)GDP.
B)CPI.
C)GNP.
D)real GDP.

Question 16

GDP is the market value of all goods and services produced within an economy in a given period of time.

A)used
B)intermediate
C)consumer
D)final

Question 17

Assume that total output consists of 4 apples and 6 oranges and that apples cost $1 each and oranges cost $0.50 each. In this case, the value of GDP is:

A)10 pieces of fruit.
B)$7.
C)$8.
D)$10.

Question 18

The market value of all final goods and services produced within an economy in a given period of time is called:

A)industrial production.
B)gross domestic product.
C)the GDP deflator.
D)general durable purchases.

Question 19

To compute the value of GDP:

A)goods and services are valued at market
B)prices. the sale of used goods is included.
C)production for inventory is not included.
D)goods and services are valued by weight.

Question 20

When a firm sells a product out of inventory, investment expenditures and consumption expenditures .

A)increase; decrease
B)decrease; increase
C)decrease; remain unchanged
D)remain unchanged; increase

Question 21

Chain-weighted measures of real GDP make use of prices from:

A)an unchanging base year.
B)a continuously changing base year.
C)a base year that is changed approximately every 5 years.
D)a base year that is changed approximately every 10 years.

Question 22

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 5 in 2009, then the GDP deflator in 2009, using a base year of 2002, was approximately:

A)1.5.
B)1.7.
C)1.9.
D)2.0.

Question 23

If nominal GDP grew by 5 percent and real GDP grew by 3 percent, then the GDP deflator grew by approximately percent.

A)2
B)3
C)5
D)8

Question 24

Real GDP means the value of goods and services is measured in prices.

A)current
B)actual
C)constant
D)average

Question 25

If the GDP deflator in 2009 equals 1.25 and nominal GDP in 2009 equals $15 trillion, what is the value of real GDP in 2009?

A)$12 trillion
B)$12.5 trillion
C)$15 trillion
D)$18.75 trillion

Question 26

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and net exports are -$1,910, then government purchases are:

A)$2,977.
B)$1,910.
C)-$843.
D)$1,067.

Question 27

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and government purchases are $1,098, then net exports are:

A)$131.
B)-$131.
C)$31.
D)-$31.

Question 28

Real GDP is measured in dollars time.

A)current; at a point in
B)current; per unit of
C)constant; at a point in
D)constant; per unit of

Question 29

The underground economy:

A)is included in the latest GDP accounts.
B)includes only illegal activities.
C)includes domestic workers for whom Social Security tax is not collected.
D)excludes the illegal drug trade.

Question 30

The best measure of the economic satisfaction of the members of a society is:

A)nominal GDP.
B)real GDP.
C)the rate of inflation.
D)the value of corporate profits.

Question 31

Nominal GDP measures the value of goods and services in prices, while real GDP measures the value of goods and services in prices.

A)foreign; domestic
B)domestic; foreign
C)current; constant
D)constant; current

Question 32

In principle, the GDP accounts should-but do not-have an imputation for:

A)housing services enjoyed by homeowners.
B)rental services of automobiles driven by owners.
C)meals cooked in restaurants.
D)housing services enjoyed by renters.

Question 33

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 4 in 2009, then real GDP (in 2002 prices) in 2009 was:

A)$5.
B)$6.50.
C)$9.50.
D)$11.

Question 34

An example of an imputed value in the GDP is the:

A)value-added of meals cooked at home.
B)housing services enjoyed by homeowners.
C)services of automobiles to their owners.
D)value of illegal drugs sold.

Question 35

The GDP deflator is equal to:

A)the ratio of nominal GDP to real GDP.
B)the ratio of real GDP to nominal GDP.
C)real GDP minus national GDP.
D)nominal GDP minus real GDP.

Question 36

Real GDP is a better measure of economic well-being than nominal GDP, because real GDP:

A)excludes the value of goods and services exported aboard.
B)includes the value of government transfer payments.
C)measures changes in the quantity of goods and services produced by holding prices constant.
D)adjusts the value of goods and services produced for changes in the foreign exchange rate.

Question 37

If nominal GDP in 2009 equals $14 trillion and real GDP in 2009 equals $11 trillion, what is the value of the GDP deflator?

A)0.79
B)1.03
C)1.27
D)1.30

Question 38

The new chain-weighted measures of real GDP are an improvement over traditional measures because the prices used to compute real GDP are:

A)never far out of date.
B)always from the same base year.
C)imputed.
D)chained to the CPI.

Question 39

Nominal GDP is measured in dollars time.

A)current; at a point in
B)current; per unit of
C)constant; at a point in
D)constant; per unit of

Question 40

If nominal GDP increased by 5 percent and the GDP deflator increased by 3 percent, then real GDP by percent.

A)increased; 2
B)decreased; 2
C)increased; 8
D)decreased; 8

Question 41

In the national income accounts, goods bought for future use are classified as which type of expenditure?

A)services
B)investment
C)government purchases
D)net exports

Question 42

In 2010 in the United States, the approximate percentage of GDP that was spent on consumption was:

A)67 percent.
B)50 percent.
C)31 percent.
D)16 percent.

Question 43

In the national income accounts, consumption expenditures include all of the following except household purchases of:

A)durable goods.
B)nondurable goods.
C)new residential housing.
D)services.

Question 44

In the national income accounts, all of the following are classified as government purchases except:

A)payments made to Social Security recipients.
B)services provided by police officers.
C)purchases of military hardware.
D)services provided by U.S. senators.

Question 45

National income differs from net national product by an amount called:

A)depreciation.
B)indirect business taxes.
C)a statistical discrepancy.
D)net foreign factor income payments.

Question 46

If real GDP grew by 6 percent and population grew by 2 percent, then real GDP per person grew by approximately percent.

A)2
B)3
C)4
D)8

Question 47

If total investment (measured in billions of current dollars) equals $741, business fixed investment is $524, and residential fixed investment is $222, then inventory investment is:

A)$5.
B)-$5.
C)$15.
D)-$15.

Question 48

In 2010, American net borrowings from abroad, per person, in current dollars, amounted to approximately:

A)$100.
B)$220.
C)$1,675.
D)$10,000.

Question 49

The investment component of GDP includes all of the following except:

A)purchases of corporate stock.
B)spending on new plants and equipment.
C)purchases of new housing by households.
D)changes in business inventories.

Question 50

In the national income accounts, the purchase of durables, nondurables, and services by households are classified as:

A)consumption.
B)investment.
C)government purchases.
D)net exports.

Question 51

Net national product equals GDP:

A)plus net investment.
B)minus net investment.
C)plus depreciation.
D)minus depreciation.

Question 52

In 2010, GDP per person in the United States was approximately:

A)$7,000.
B)$27,000.
C)$47,000.
D)$74,000.

Question 53

In 2010, the GDP of the United States totaled about:

A)$14.5 billion.
B)$145 billion.
C)$14.5 trillion.
D)$145 trillion.

Question 54

According to the usual seasonal pattern of the U.S. economy, GDP is highest in the quarter of the year that includes:

A)January, February, and March.
B)April, May, and June.
C)July, August, and September.
D)October, November, and December.

Question 55

If GDP (measured in billions of current dollars) is $5,465 and the sum of consumption, investment, and government purchases is $5,496, while exports equal $673, imports are:

A)$673.
B)-$673.
C)$704.
D)-$704.

Question 56

In 2010 in the United States, total government purchases per person (in current dollars) amounted to approximately:

A)$1,900.
B)$9,700.
C)$13,500.
D)$25,600.

Question 57

If total consumption (measured in billions of current dollars) equals $3,657, consumption of durable goods is $480, and consumption of nondurable goods is $1,194, then consumption of services is:

A)$1,674.
B)$2,463.
C)$2,083.
D)$1,983.

Question 58

All of the following actions are investments in the sense of the term used by macroeconomists except:

A)IBM's building a new factory.
B)corner candy store's buying a new computer.
C)John Smith's buying a newly constructed home.
D)Sandra Santiago's buying 100 shares of IBM stock.

Question 59

Disposable personal income:

A)is computed by subtracting personal tax and nontax payments from personal income.
B)is generally greater than personal income.
C)includes corporate profits but not dividends.
D)does not include government transfers to individuals.

Question 60

GNP equals GDP income earned domestically by foreigners income that nationals earn abroad.

A)plus; plus
B)minus;minus
C)minus; plus
D)plus; minus

Question 61

An increase in the price of goods bought by firms and the government will show up in:

A)the CPI but not in the GDP deflator.
B)the GDP deflator but not in the CPI.
C)both the CPI and the GDP deflator.
D)neither the CPI nor the GDP deflator.

Question 62

Assume that the market basket of goods and services purchased in 2004 by the average family in the United States costs $14,000 in 2004 prices, whereas the same basket costs $21,000 in 2009 prices. However, the basket of goods and services actually purchased by the average family in 2009 costs $20,000 in 2009 prices, whereas this same basket would have cost $15,000 in 2004 prices. Given this data, a Laspeyres price index of 2009 prices using 2004 as the base year would be:

A)1.05.
B)approximately 1.07.
C)approximately 1.33.
D)1.50.

Question 63

According to the definition used by the U.S. Bureau of Labor Statistics, a person is not in the labor force if that person:

A)is going to school full time.
B)is temporarily absent from a job because of illness.
C)has been temporarily laid off.
D)is out of a job and looking for work during the previous four weeks.

Question 64

The CPI is determined by computing:

A)an average of prices of all goods and services.
B)the price of a basket of goods and services that changes every year, relative to the same basket in a base year.
C)the price of a fixed basket of goods and services, relative to the price of the same basket in a base year.
D)nominal GDP relative to real GDP.

Question 65

If 7 million workers are unemployed, 143 million workers are employed, and the adult population equals 200 million, then the unemployment rate equals approximately percent.

A)3.5
B)4.7
C)4.9
D)7

Question 66

The number of households interviewed in the monthly employment survey of the U.S. Bureau of Labor Statistics is approximately:

A)6,000.
B)60,000.
C)600,000.
D)6 million.

Question 67

Assume that the adult population of the United States is 191.6 million, total employment is 117.6 million, and 9.4 million are unemployed. Then the unemployment rate, as normally computed, is approximately percent.

A)4.9
B)7.4
C)7.9
D)9.4

Question 68

An increase in the price of imported goods will show up in:

A)the CPI but not in the GDP deflator.
B)the GDP deflator but not in the CPI.
C)both the CPI and the GDP deflator.
D)neither the CPI nor the GDP deflator.

Question 69

The core inflation rate:

A)measures the change in producer prices.
B)is measured using a Paasche index.
C)excludes food and energy prices.
D)includes the price of exports and includes the price of imports.

Question 70

The CPI is a:

A)Laspeyres price index.
B)Paasche price index.
C)Laspeyres quantity index.
D)Paasche quantity index.

Question 71

If the unemployment rate is 6 percent and the number of employed is 188 million, then the labor force equals million.

A)11.28
B)176.72
C)188
D)200

Question 72

When prices of different goods are increasing by different amounts, the price index that will rise the fastest is:

A)Fisher's ideal index.
B)the CPI.
C)the GDP deflator.
D)a Paasche index.

Question 73

The panel of economists appointed by the Senate Finance Committee estimated that the CPI inflation by approximately percentage point(s) per year.

A)overestimates; 1
B)overestimates; 10
C)underestimates; 1
D)underestimates; 10

Question 74

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $0.50 in 2009. If 10 apples and 5 oranges were purchased in 2002, and 5 apples and 10 oranges were purchased in 2009, the CPI for 2009, using 2002 as the base year, is:

A)0.75.
B)0.80.
C)1.
D)1.25.

Question 75

Assume that the market basket of goods and services purchased in 2004 by the average family in the United States costs $14,000 in 2004 prices, whereas the same basket costs $21,000 in 2009 prices. However, the basket of goods and services actually purchased by the average family in 2009 costs $20,000 in 2009 prices, whereas this same basket would have cost $15,000 in 2004 prices. Given these data, a Paasche index for 2009 using 2004 prices would be:

A) 1.05.
B)approximately 1.07.
C)approximately 1.33.
D)1.50.

Question 76

Unlike the GDP deflator, the CPI includes the prices of:

A)goods purchased by firms.
B)goods purchased by governments.
C)exported goods.
D)imported goods.

Question 77

Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure, called core inflation,

A)provides a real, rather than a nominal, rate of inflation.
B)gives a better measure of ongoing, sustained price changes.
C)is more consistent with measures of inflation used in other countries.
D)fluctuates more than measures of inflation that include food and energy prices.

Question 78

The labor-force participation rate is the percentage of the:

A)adult population that is employed.
B)adult population that is in the labor force.C.labor force that is employed.
D)labor force that is unemployed.

Question 79

The labor force equals the:

A)adult population.
B)number of employed individuals.
C)number of unemployed individuals.
D)number of employed and unemployed individuals.

Question 80

According to the definition used by the U.S. Bureau of Labor Statistics, people are considered to be unemployed if they:

A)are out of a job, but not looking for work.
B)retired from the labor force before age 65.
C)do not have a job, but have looked for work in the past 4 weeks.
D)are absent from work because of bad weather or illness.