Test Bank and Solutions For Macroeconomics 11 Edition Part 1

Answer Key - The Data of Microeconomics 1. B 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. B A A D D A D A B D B B D B B C B C D C A D B D A B B C A C B C A A B A A C B B 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. D A C C A B B A D B C D C C D C B A D C C C B B A D B A B B A A C D B B D B C B D C B 85. 86. 87. 88. 89. 90. B B A B B D 1. The economic statistic used to measure the level of prices is: A) GDP. B) CPI. C) GNP. D) real GDP. 2. The statistic economists use to measure the value of economic output is: A) the CPI. B) GDP. C) the GDP deflator. D) the unemployment rate. 3. GDP is all of the following except: A) the total expenditure of everyone in the economy. B) the total income of everyone in the economy. C) the overall expenditure on the economy's output of goods and services. D) the total output of the economy. 4. 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. 5. An economy's equals its . A) consumption; income B) consumption; expenditure on goods and services C) expenditure on goods; expenditures on services D) total income; total expenditure on goods and services 6. Two equivalent ways to view GDP are as the: A) total payments made to all workers in the economy or the total profits of all firms and businesses in the economy. B) total expenditures on all goods produced in the economy or the total income earned from producing all services in the economy. C) total profits of all firms and businesses in the economy or the total consumption of goods and services by all households in the economy. D) total income of everyone in the economy or the total expenditure on the economy's output of goods and services. 7. In the circular flow model, the flow of dollars from firms to households is paid the flow of dollars from households to firms is paid . A) as wages, capital income, 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 8. Which of the following is a flow variable? A) wealth B) the number unemployed C) government debt D) income 9. Which of the following is a stock variable? A) wealth B) consumption C) investment D) income 10. All of the following are stocks variables 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. , and 11. All of the following are flows variables 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. 12. The amount of capital in an economy is a(n) . A) flow; stock B) stock; flow C) final good; intermediate good D) intermediate good; final good , and the amount of investment is a(n) 13. 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. 14. GDP is the market value of all a given period of time. A) used B) intermediate C) consumer D) final goods and services produced within an economy in 15. 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 B $7. C $8. D $10. ) 16. All of the following transactions that took place in 2009 would be included in GDP for 2009 except the purchase of a: A) book titled The Year 3000 that was printed in 2009. B) 2001 Jeep Cherokee. C) year 2010 calendar printed in 2009. D) ticket to see the movie 2001. 17. 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. 18. When a firm sells a product out of inventory, investment expenditures consumption expenditures . A) increase; decrease B) decrease; increase C) decrease; remain unchanged D) remain unchanged; increase , and 19. 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: A) is sold to households. B) is stored away for later sale. C) grows stale and is thrown away. D) is sold to other firms. 20. When bread is baked but put away for later sale, this is called: A) waste. B) saving. C) fixed investment. D) investment in inventory. 21. Assume that a rancher sells McDonald's a quarter-pound of meat for $1 and that McDonald's sells you a hamburger made from that meat for $2. In this case, GDP increases by: A $0.5 B $1. C $2. D $3. ) 22. Assume that a tire company sells four tires to an automobile company for $400, another company sells a compact disc player for $500, and the automobile company puts all of these items in or on a car that it sells for $20,000. In this case, the amount from these transactions that should be counted in GDP is: A) $20,000. B) $20,000 less the automobile company's profit on the car. C) $20,900. D) $20,900 less the profits of all three companies on the items that they sold. 23. The value added of an item produced refers to: A) a firm's profits on the item sold. B) the value of the labor inputs in the production of an item. C) the value of a firm's output less the value of its costs. D) the value of a firm's output less the value of the intermediate goods that the firm purchases. 24. Assume that a firm buys all the parts that it puts into an automobile for $10,000, pays its workers $10,000 to fabricate the automobile, and sells the automobile for $22,000. In this case, the value added by the automobile company is: A $10,00 B $12,00 C $20,00 D $22,00 ) 0 25. In computing GDP: A) expenditures on used goods are included. B) production added to inventories is excluded. C) the amount of production in the underground economy is imputed. D) the value of intermediate goods is included in the market price of the final goods. 26. To avoid double counting in the computation of GDP, GDP includes only the value of goods. A) final B) used C) intermediate D) investment 27. 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) rental services of automobiles to their owners. D) value of illegal drugs sold. 28. 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. 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. 30. Nominal GDP means the value of goods and services is measured in A) current B) real C) constant D) average 31. Real GDP means the value of goods and services is measured in A) current B) actual C) constant D) average prices. prices. 32. 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 $6.5 C $9.5 D $11. ) 33. 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) 3.2 34. 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 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. 36. 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.