Reference no: EM133206146

Assignment:

Question 1. Private disposable income equals

• national income - taxes + transfers + interest.
• NNP - taxes + transfers + interest.
• GNP - taxes + transfers + interest.
• national income - taxes - transfers + interest.

 Question 2. Which of the statements below is primarily normative in nature?

• The distribution of income is more unequal in the United States than it is in Japan.
• The distribution of income in the United States should be more equal than it is.
• There is an unequal distribution of income in the United States.
• The inequality of income that exists in the United States is partly caused by an unequal distribution of wealth.

 Question 3 The main reason that the United States has such a high standard of living is

• high government budget deficits.
• low inflation.
• low unemployment.
• high average labor productivity.

Question 4 If a local government collects taxes of $500,000, has $350,000 of government consumption expenditures, makes transfer payments of $100,000, and has no interest payments or investment, its budget would

• show a surplus of $150,000.
• show a surplus of $50,000.
• show a deficit of $50,000
• be in balance with neither a surplus nor a deficit.

 Question 5 In the United States, monetary policy is determined by

• the president.
• the Treasury Department.
• private citizens.
• the Federal Reserve.

 Question 6 A country is said to be experiencing deflation when

• total output is falling over time.
• prices of most goods and services are rising over time.
• prices of most goods and services are falling over time.
• total output is rising over time.

 Question 7 Consumer spending is spending by ________ households on final goods and services produced ________.

• domestic; domestically
• domestic and foreign; domestically
• domestic and foreign; domestically and abroad
• domestic; domestically and abroad

 Question 8 The two major reasons for the tremendous growth in output in the U.S. economy over the last 125 years are

• population growth and low inflation.
• low inflation and low trade deficits.
• population growth and increased productivity.
• low unemployment and low inflation.

Question 9 In a given year, a country's GDP = $9841, net factor payments from abroad = $889, taxes = $869, transfers received from the government = $296, interest payments on the government's debt = $103, consumption = $8148, and government purchases = $185. The country had private saving equal to

• $2112.
• $285.
• $2397.
• $3850.

Question 10 The country of Old Jersey produces milk and butter, and it has published the following macroeconomic data, where quantities are in gallons and prices are dollars per gallon.

Between Year 1 and Year 2, nominal GDP grew by

• 65.5%.
• 190.0%.
• 83.3%.
• 60.0%.

Question 11 How did Keynes propose to solve the problem of high unemployment?

• Increase the growth rate of the money supply.
• Allow wages to decline, so that firms will want to hire more workers.
• Have the government increase its demand for goods and services.
• Put on wage and price controls, so wages won't rise and firms won't have to lay people off to cut costs.

Question 12 If the price index was 100 in 2000 and 120 in 2010, and nominal GDP was $360 billion in 2000 and $480 billion in 2010, then the value of 2010 GDP in terms of 2000 dollars would be

• $384 billion.
• $424 billion.
• $400 billion.
• $300 billion.

Question 13 By Marks buys a one-year German government bond (called a bund) for $400. He receives principal and interest totaling $436 one year later. During the year the CPI rose from 150 to 162. The nominal interest rate on the bond was ________, and the real interest rate was ________.

• 36%; 24%
• 36%; 12%
• 9%; -1%
• 9%; 1%

Question 14 Equilibrium in the economy means

• unemployment is zero.
• prices are not changing over time.
• tax revenues equal government spending, so the government has no budget deficit.
• quantities demanded and supplied are equal in all markets.

Question 15 An economy that doesn't interact economically with the rest of the world is called ________ economy.

• an authoritarian
• a surplus
• an open
• a closed

Question 16 The country of Old Jersey produces milk and butter, and it has published the following macroeconomic data, where quantities are in gallons and prices are dollars per gallon.

Between Year 1 and Year 2, the percent change in real GDP (based on Year 1 as a base year) was

• 190%.
• 60%.
• 58%.
• 130%.

Question 17 If C = $500, I = $150, G = $100, NX = $40, and GNP = $800, how much is NFP?

• -$5
• $10
• -$10
• $5

 Question 18 The uses-of-saving identity shows that if the government budget deficit rises, then one of the following must happen.

• Private saving must rise, investment must rise, and/or the current account must fall.
• Private saving must rise, investment must fall, and/or the current account must rise.
• Private saving must fall, investment must rise, and/or the current account must rise.
• Private saving must rise, investment must fall, and/or the current account must fall.

Question 19 The unemployment rate is the

• number of unemployed divided by the number of employed.
• labor force divided by the number of unemployed.
• number of unemployed divided by the labor force.
• number of employed divided by the number of unemployed.

Question 20 Fred the farmer purchased five new tractors at $20,000 each. Fred sold his old tractors to other farmers for $50,000. The net increase in GDP of these transactions was

• $50,000.
• $100,000.
• $150,000.
• $125,000.

Question 21 If the price index last year was 1.0 and today it is 1.4, what is the inflation rate over this period?

• 1.4%
• -4%
• 4%
• 40%

Question 22 The Bigdrill company drills for oil, which it sells for $200 million to the Bigoil company to be made into gas. The Bigoil company's gas is sold for a total of $600 million. What is the total contribution to the country's GDP from companies Bigdrill and Bigoil?

• $600 million
• $800 million
• $400 million
• $200 million

Question 23 Short-run contractions and expansions in economic activity are called

• deficits.
• the business cycle.
• recessions.
• expansions.

Question 24 The Compagnie Naturelle sells mounted butterflies, using butterfly bait it buys from another firm for $20,000. It pays its workers $35,000, pays $1,000 in taxes, and has profits of $3,000. What is its value added?

• $59,000
• $3,000
• $39,000
• $19,000

Question 25 If an American construction company built a road in Kuwait, this activity would be

• included in U.S. GDP but not in U.S. GNP.
• fully included in U.S. GDP.
• included in U.S. GNP only for that portion that was attributable to American capital and labor.
• excluded from U.S. GNP.