GDP
What is the largest component of GDP in the US
(C, I, G, or Net Exports)?
+100 points if you can give me an answer +/-5% away from the actual % of GDP
C= 66% of GDP
The official unemployment rate:
A.)includes marginally attached workers and underemployed workers.
B.) does not include marginally attached workers or underemployed workers
C.) counts part-time workers as unemployed.
B.) does not include marginally attached workers or underemployed workers
If deflation is occurring, then
A.)both real and nominal interest rates are above zero.
B.)both real and nominal interest rates are below zero.
C.) the real rate of interest exceeds the nominal rate of interest.
C.)the real rate of interest exceeds the nominal rate of interest.
In financial markets, firms and governments in search of funds to pay for their daily operations would be the
Loaners or sellers (they sell stocks and bonds)
The sellers (or lenders) in financial markets are
A.) financial intermediaries.
B.)savers looking for opportunities to earn a return on their savings.
C.)firms and governments in search of funds to undertake their daily operations.
B.)savers looking for opportunities to earn a return on their savings.
Bob sells his car to Jane’s Used Car Lot for $7,500. Jane’s Used Car Lot sells the car to Damien for $8,500. This transaction contributes ________ to gross domestic product (GDP).
$1,000
The term “officially unemployed” would apply when a worker
A.) who is not currently employed stops searching for a job for any reason
B.) Leaves his or her job to attend school full time
C.) who is not currently employed is searching for a job unsuccessfully
C.) who is not currently employed is searching for a job unsuccessfully
If your real wage rose but your nominal wage fell, this would imply that
A.)The overall price level has fallen more than your nominal wage.
B.) Inflation is positive but less than the rate of increase in your wage.
C.)housing prices have fallen and, because you own a house, the value of your real wage is reduced
A.)The overall price level has fallen more than your nominal wage.
(Nominal = Real + Inflation)
The par value of a bond is the_______________
The Face value of a bond is_________________
Value of the bond at the time you can cash it in
&
Value of the bond today
Entrepreneur Sarah just graduated from college and is about to open her own company. Which of the statements below best represents a main concern Sarah might have?
A.)She is most likely to be a lender concerned mostly about the real interest rate she will earn.
B.)She is most likely to be a borrower concerned mostly about the relationship between the rate of interest and the expected return on investment.
C.)She would be concerned only with whether inflation was greater than or less than the nominal rate of interest based on the Fisher equation.
B.)She is most likely to be a borrower concerned mostly about the relationship between the rate of interest and the expected return on investment.
You bought a popular video game last year for $75 and sold it to a store this year for $20. The store sells the used game to a consumer for $40. When you sell your game to the store, how is this included in gross domestic product (GDP)?
Trick Question- it is not counted. Only that first $75 purchase would count. Any re-selling would be counting the same thing 2x and we do not do that in GDP calculations
During normal economic times, unemployment in Europe tends to be ________ than in the United States mainly because of ________.
A.)higher; cyclical unemployment
B.) lower; labor market regulations
C.)higher; labor market regulations
C.)higher; labor market regulations
Suppose real gross domestic product (GDP) shrinks by 2% and inflation is equal to 3%, but there is no change in the velocity of money. Based on the equation of exchange, by how much does the quantity of money change?
1%
Why does increased productivity of capital shift the demand for loanable funds?
A.)More productive capital generates more profits, reducing the need for firms to borrow money.
B.)More productive capital means greater consumption of raw materials, which must be paid for with borrowed money.
C.)More productive capital earns more money, which justifies a higher interest rate on money borrowed to buy the capital.
D.)More productive capital reduces workers’ incentive to work, which leads to greater demand for loans in order to pay workers more.
C.)More productive capital earns more money, which justifies a higher interest rate on money borrowed to buy the capital.
2008 recession time- What is the difference between a mortgage and a mortgage-backed security?
A mortgage is a loan, whereas a mortgage-backed security is a pool of mortgages.
Kyle is a part-time adjunct chemistry professor and also does tutoring on the weekends but does not report the tutoring income to the government. You pay Kyle $500 to help your high schooler prepare for an AP chemistry examination. Does the payment to Kyle count toward the value of gross domestic product (GDP)?
No, because this income is not reported to the government.
When an unemployed worker receives a payment from the government as a result of being unemployed, it is:
A.)Included in the consumption category of gross domestic product (GDP).
B.) included in the investment category of GDP.
C.)included in the government purchases category of GDP.
D.)not included in any of the expenditure categories.
D.)not included in any of the expenditure categories.
Instead what they buy/ invest in with that government money will count in GDP
If everyone buys the same goods every year and the price of housing rises by 38%, it is
A.) certain the consumer price index (CPI) has increased, and if your nominal wage has risen by less than 38%, your real wage has fallen.
B.) possible that the CPI has increased; however, it is certain your real wage has risen if, and only if, your nominal wage increased by more than 19% because housing accounts for exactly 50% of the CPI.
C.) not possible to tell what happened to the CPI because, other than for housing, we do not know what happened to the prices of any of the other goods.
C.) not possible to tell what happened to the CPI because, other than for housing, we do not know what happened to the prices of any of the other goods.
The demand for loanable funds increases while the supply of loanable funds simultaneously decreases. This would cause the
A.)equilibrium quantity of loanable funds to decrease and the equilibrium interest rate to increase.
B.)equilibrium quantity of loanable funds to increase and the equilibrium interest rate to decrease.
C.)quantity of loanable funds to increase, but the effect on the equilibrium interest rate would be uncertain.
D.)equilibrium interest rate to increase, but the new equilibrium quantity would be uncertain.
D.)equilibrium interest rate to increase, but the new equilibrium quantity would be uncertain.
Consider the equation %ΔM + %ΔV ≈ %ΔP + %ΔY. If the velocity of money does not change (%ΔV = 0), and the percentage change in real gross domestic product (GDP). is equal and opposite to the percentage change in the price level (%ΔP = –%ΔY), what will happen to the money supply (M)?
It will stay the same, %ΔM = 0.
Stevie’s Sweetener Co. sells a cactus-based sugar substitute to Cracker Jill’s Caramel Popcorn Co. for $5 a packet. Other ingredients worth a total of $12 combine to make 10 bags of caramel popcorn, which are sold to the public at $2 a bag. These transactions contribute ________ to gross domestic product (GDP).
$20
The costs of inputs are red herrings because we do not count inputs so that we do not double count things in GDP
The government has decided to give governmental grants to community colleges that offer job training for individuals who have recently been laid off due to their outdated skills. The government is trying to reduce the level of
A.)structural unemployment.
B.)frictional unemployment.
C.)cyclical unemployment.
A.) Structural Unemployment
Tuition at a large university cost $10,000 per semester in 2004 and $12,000 in 2012. If the consumer price index (CPI) was 184 in 2004 and 226 in 2012, then we could say tuition has
increased more slowly than inflation.
In the Supply and Demand For Loanable Funds Model
What would be the effect on the market for the bonds of Company X if the default risk increases for Company X?
The demand curve will shift to the left, resulting in a lower price
What will happen in the market for U.S. Treasury securities if the U.S. government eases the inflow of foreign savings in the United States?
A.) The demand curve will shift to the right, causing the price of U.S. Treasury securities to increase.
B.) The demand and supply curves will shift to the left, causing the price of Treasury securities to decrease.
C.) The demand and supply curves will shift to the right, causing the price of Treasury securities to increase.
A.) The demand curve will shift to the right, causing the price of U.S. Treasury securities to increase.
ONLY US TREASURY NOTES WILL INCREASE IN PRICE