ECON312N
Principles of Economics
Week 6 Quiz
Question 1
In 2010, the GDP price index was 101.2 and real
GDP was $14.8 trillion.
In 2011, nominal GDP was $15.5 trillion and real GDP was $15.0 trillion.
Calculate the increase
in nominal GDP and the increase in the GDP price index in 2011.
The percentage increase
in nominal GDP in 2011 is
The percentage
increase in the GDP price index in 2011 is
Question 2
The change in
potential real GDP and aggregate supply shown in the graph above can be a
result of
a decrease in the money wage rate.
a decrease in the money price of oil.
an increase in the quantity of capital.
a fall in the price level.
an increase in the real wage rate.
Question 3
Marla is an associate
at JCPenney who wants to work 40 hours week but works 25 hours a week because
sales at JC Penney are slow. Marla works part time for _______ reasons.
Joe is a server at
Olive Garden who wants to work 40 hours a week but works 15 hours a week
because the number of patrons at Olive Garden has decreased. Joe works part
time for _______ reasons.
?economic; noneconomic
?economic; economic
?noneconomic; noneconomic
?noneconomic; economic
Question 4
Which of the following
is true?
To be classified as employed, you must be a full-time
worker at a paid job.
To be classified as employed, you must work
at least 1 hour per week at a paid job or 15 hours or more as an unpaid worker
in your family business.
To be classified as employed, you must work
at least 20 hours per week at a paid job.
If you are not working and turn down a job offer
in the previous week, you are no longer classified as unemployed.
Part-time workers are all those who work less
than 40 hours per week.
Question 5
Based on the figure
above, in which quarter or quarters did a recession occur?
between 2013, 2nd quarter to 2014, 2nd
quarter
between 2014, 1st quarter to 2014 2nd quarter
after 2013, 2nd quarter
in 2013, 2nd quarter
between 2012, 2nd quarter to 2013, 2nd
quarter and also between 2014, 2nd quarter to the end of the figure
Question 6
The table above has
information about the CPI, nominal wage rate, and nominal interest rate for the
country of Syldavia for the years 2010 to 2012. The reference base year is
2010. The real interest rate in Syldavia during 2012 was
0.6 percent.
9.0 percent.
2.8 percent.
5.2 percent.
8.4 percent.
Question 7
When an American
college student in Davis, California spends $200 on a pair of Louis Vuitton
jeans (a famous French brand), U.S. consumption ________, U.S. net exports ________,
and U.S. GDP ________.
increases by $200; decreases by $200; does
not change
does not change; increases by $200; increases
by $200
increases by $200; does not change; increases
by $200
does not change; does not change; does not
change
does not change; decreases by $200; decreases
by $200
Question 8
If the GDP price index
is 125 and nominal GDP is $130 billion, then real GDP equals ________ billion.
$162.50
$9.6
$104.00
$1.04
$96
Question 9
Data for 2009 Data for
2010
The table above gives
the production and prices for a small nation that produces only bread and soda.
The base year is 2009. What is nominal GDP in 2009?
$410
$450
$900
$460
$550
Question 10
The government passes
a law which doubles the wages of all workers. Aggregate supply will ________,
and real GDP will ________, and the price level will ________.
increase; increase; remain the same.
remain the same; increase; increase.
decrease; increase; increase.
decrease; decrease; increase.
increase; remain the same; increase.
Question 11
The following are
groups of individuals in the population:
1. Individuals who are
under 16
2. Individuals in
institutional care
3. Individual in the
armed forces
4. Individuals working
for pay at a fulltime job
5. Individuals who are
employed
6. Individuals not
employed but were available for work and were looking for work
7. Individuals not
employed and looking for work
Using the table above,
the Current Population Survey classifies the group of individuals obtained by adding
groups 5 and 6 as
unemployed.
the labor force.
the working age population.
employed.
discouraged workers.
Question 12
An increase in the
price of oil ________ aggregate supply, shifting the aggregate supply curve
________ and potentially bringing the ________ phase of the business cycle.
decreases; rightward; recession
decreases; rightward; expansion
increases; rightward; expansion
decreases; leftward; recession
increases; rightward; recession
Question 13
Phillip is a 22-year
old who has no job and is available for work, but has not actively looked for a
job in the last month. The Current Population Survey identifies Phillip as
________, ________ the labor force, and ________ the working-age population.
not unemployed; not part of; not part of
not unemployed; not part of; part of
not unemployed; part of; part of
unemployed; part of; part of
unemployed; part of; not part of
Question 14
An increase in
investment ________ aggregate demand, the aggregate demand curve shifts
________ and the economy is in the ________ phase of the business cycle.
decreases; rightward; expansion
increases; rightward; recession
increases; rightward; expansion
decreases; leftward; recession
increases; leftward; recession
Question 15
Using the information
in the table above, what does GDP equal?
$650 billion
$350 billion
$380 billion
$365 billion
GDP cannot be calculated without information
on the amount of investment.
Question 16
The tables show the quantities
of the goods that Harry bought and the prices he paid during two consecutive
weeks.
|
Week 1
|
|
Item
|
Quantity
|
Price
(per unit)
|
|
Coffee
|
5 cups
|
$3.00
|
|
iTunes songs
|
5
|
$1.00
|
|
Gasoline
|
10 gallons
|
$2.00
|
|
Week 2
|
|
Item
|
Quantity
|
Price
(per unit)
|
|
Coffee
|
4 cups
|
$3.25
|
|
iTunes songs
|
10
|
$1.00
|
|
Gasoline
|
10 gallons
|
$3.00
|
Harry's CPI market
basket contains the goods he bought in Week 1.
Calculate Harry's CPI in Week 2. What was his inflation
rate in Week 2?
Question 17
Using the table above,
the working-age population is
170 million.
195 million.
155 million.
220 million.
250 million.
Question 18
If a wealthy woman
marries her butler, quits paying him and does not hire a new butler, then
GDP definitely decreases.
GDP either does not change or increases.
GDP definitely does not change.
GDP definitely increases.
There is not enough information given to
reach a conclusion.
Question 19
Negative interest
rates
The Federal Reserve
has held interest rates close to zero percent for the past seven years. Even
with low inflation, "real" interest rates have been negative.
Source: San Diego
Union Tribune, February 5, 2016
Explain why with a
zero interest rate, even low inflation makes the real interest rate negative.
Can the real interest
rate exceed the nominal interest rate?
When the nominal
interest rate equals zero, the real interest rate equals _______.
the inflation rate minus 1 percent
the negative of the inflation rate
the negative of the CPI
the CPI minus 1 percent
the inflation rate minus 1 percent
Question 20
Economists look to
expand GDP to include the quality of life
Robert Kennedy, when seeking the Democratic
presidential nomination in 1968,
remarked that GDP measures everything except that which makes life worthwhile.
Source: The New York
Times, September 1, 2008
Which items did Robert
Kennedy probably think were missing?
Robert Kennedy
probably thought that? _______ were missing from the measure of GDP.
the production of Americans who were
discriminated against
the labor and capital required to campaign
for President
policing and Secret Service protection
political freedom and social justice
Question 21
A rise in the price
level brings a ________ in the buying power of money that ________ consumption
expenditures and causes the quantity of real GDP demanded to ________.
fall; decreases; decrease
rise; increases; increase
fall; increases; increase
rise; decreases; decrease
fall; decreases; increase
Question 22
The main sources of
bias in the CPI are? ______.
new goods? bias, quality change? bias,
commodity substitution? bias, and outlet substitution bias
new goods? bias, commodity substitution?
bias, and lifestyle bias
designer name bias and generic product bias
big box store? bias, corner store? bias,
mall? bias, and brand name bias
Question 23
The table shows some
data for an economy.
|
In 2015
|
|
|
Item
|
Quantity
|
Price
|
|
Apples
|
60
|
|
$0.50
|
|
|
Oranges
|
80
|
|
$0.25
|
|
|
In 2016
|
|
|
Item
|
Quantity
|
Price
|
|
Apples
|
160
|
|
$1.00
|
|
|
Oranges
|
220
|
|
$2.00
|
|
|
|
|
|
|
|
|
|
|
If the base year
is 2015, calculate the economy's nominal
GDP and real GDP in 2016.
Nominal GDP in 2016 is
$
Real GDP in 2016 is $
Question 24
Item Quantity (2013) Price (2013) Quantity
(2014) Price (2014)
Magazines 400 $5.00 450 $4.50
Movie tickets 50 $6.00 200 $8.00
Pizzas 100 $10.00 120 $10.50
The data in the table
above shows the consumption by families in an economy. The year 2013 is the
reference base period.
Based on the table
above, the CPI for 2014 is
102.5 percent.
5.0 percent.
100 percent.
105.1 percent.
98.5 percent.
Question 25
Item Quantity (2013) Price (2013) Quantity
(2014) Price (2014)
Magazines 400 $5.00 450 $4.50
Movie tickets 50 $6.00 200 $8.00
Pizzas 100 $10.00 120 $10.50
The data in the table
above shows the consumption by families in an economy. The year 2013 is the reference
base period.
Based on the table
above, the cost of the base period market basket in 2013 is
$4,650.
$3,300.
None of the above answers is correct.
$4,885.
$3,885.
Question 26
Potential GDP is
the amount of real GDP that the economy would
produce if the unemployment rate was zero.
the amount of real GDP that the economy would
produce if all unemployment was cyclical unemployment.
the amount of real GDP that the economy would
produce if it were at full employment of all resources.
the value of the maximum amount of output
that can be produced at any given time.
another name for real GDP.
Question 27
A new technology is
discovered which results in all new cars producing 50 percent less pollution.
Which of the following is true?
GDP will decrease.
GDP increases anytime pollution is reduced.
GDP will increase to reflect the fact that
the air we breathe is cleaner.
GDP will increase if there is an increase in
the production cost and price of the car.
Real GDP increases because the air is
cleaner, but nominal GDP does not change since air is free.
Question 28
Production by Honda, a
Japanese firm, in the United States is included in ________ GDP and production
by Nike Corporation, a U.S. firm, in Vietnam is included in ________ GDP.
U.S. and Japanese; U.S. and Vietnamese
U.S.; Vietnamese
Japanese; U.S.
Japanese; Vietnamese
U.S.; U.S.
Question 29
The expenditure
approach to measuring GDP is done by using data on only
consumption expenditure, investment,
government expenditure on goods and services, and net exports of goods and
services.
consumption expenditure and investment.
wages, rent, interest, and profit.
consumption expenditure, investment, and
government expenditures.
consumption expenditure.
Question 30
In the figure above,
the economy is at an equilibrium with real GDP of $16 trillion and a price
level of 110. At this point there is
a full-employment equilibrium.
price stability.
an inflationary gap.
an above full-employment equilibrium.
a recessionary gap.
Question 31
If average annual
tuition at public 4-year colleges was $1,908 in 1990, when the CPI was 130.7,
and $8,655 in 2012 when the CPI was 229.6, then the real cost of annual tuition
rose by 75.7 percent during that period.
fell by 354 percent during that period.
rose by 354 percent during that period.
rose by 158 percent during that period.
fell by 158 percent during that period.
Question 32
The table above gives
data for the nation of Pearl, a small island in the South Pacific. The economy
is at full employment when real GDP is
$25 billion.
$31 billion.
$34 billion.
$28 billion.
$22 billion.
Question 33
Using the table above,
the unemployment rate is
5.13 percent.
6.45 percent.
5.88 percent.
6.90 percent.
5.71 percent.
Question 34
If European economies
enter a recession,
U.S. aggregate demand decreases and the U.S.
AD curve shifts leftward.
U.S. aggregate demand increases and the U.S.
AD curve shifts rightward.
U.S. aggregate demand decreases and the U.S.
AD curve shifts rightward.
the quantity of real GDP demanded in the
United States decreases and there is a movement down along the U.S. AD curve.
the quantity of real GDP demanded in the
United States increases and there is a movement up along the U.S. AD curve.
Question 35
House GOP changes
course on infrastructure
House Republicans
abandoned plans to slash U.S. infrastructure spending and now say they are
trying to find ways to pay for a multiyear highway-construction program, which
will exceed $300 billion.
Source:
The Wall Street
Journal, September 30, 2011
Explain the effect of
the government's increased expenditure on infrastructure on U.S. aggregate
demand and aggregate supply.
The government's
increased expenditure on infrastructure
______ in the short run and
______ in the long run.
increases aggregate demand and aggregate? supply;
increases potential GDP
increases aggregate demand with no change in
aggregatein ? supply; increases potential GDP and aggregate supply
increases aggregate demand with no change in
aggregatein ? supply; does not impact the U.S. economy
does not impact the U.S.? economy; does not
impact the U.S. economy
does not impact the U.S.do ? economy;
increases potential GDP and aggregate supply
Question 36
Facebook is the reason
for the productivity slowdown, no,
really
Facebook's WhatsApp is
free and it sells no advertising. So
WhatsApp's value of production in GDP is zero. Assume that WhatsApp's services are produced by 300
people all of whom earn $100,000 a year.
By this measure, WhatsApp's value of production in GDP is $30 million.
Source: Forbes,
February 13, 2016
What are the two
approaches to measuring GDP described in the news clip?
Why is one of these
measures of the contribution of WhatsApp to GDP
wrong?
The two approaches to
measuring GDP described in the news clip are the? _______.
production approach and the wage approach
expenditure approach and the income approach
expenditure approach and the production
approach
advertising approach and the income approach
Question 37
Because of the
existence of the aggregate demand multiplier, a $10 billion change in
expenditure
changes the slope of the aggregate demand
curve so it is steeper.
shifts the aggregate demand curve by less
than $10 billion.
shifts the aggregate demand curve by more
than $10 billion.
changes the slope of the aggregate demand
curve so it is less steep.
shifts the aggregate demand curve by $10
billion.
Question 38
The table shows some
of the items in Northland's National
Income and Product Accounts in 2016.
em
Amount
(billions of dollars)
Consumption
expenditure
885
Wages
815
Government expenditure
350
Interest, rent, and
profit
400
Indirect taxes less
subsidies
165
Depreciation
200
Investment
300
Net exports
35
What was Northland's GDP as measured by the income
approach in 2016?
Northland's GDP as
measured by the income approach in 2016 is
$
1580
billion.
Answer 1:
1580
Question 39
Sherri lives in Canada
and is considering buying a new sofa. If the price level in Canada falls and
the price level in the United States does not change, Canadian manufactured
sofas are relatively
less expensive, so Sherri will likely
purchase a Canadian manufactured sofa.
more expensive, so Sherri will likely
purchase a U.S. manufactured sofa.
Both answers B and D could be correct
depending on whether U.S. manufactured sofas were initially more expensive or
less expensive than Canadian sofas.
more expensive, so Sherri will likely
purchase a Canadian manufactured sofa.
less
expensive, so Sherri will likely purchase a U.S. manufactured sofa.
Question 40
John has been laid off
from his job because of a general downturn in the economy. John's unemployment
is best classified as
full.
structural.
avoidable.
frictional.
cyclical.
