Economics352
Fall 2009
Saunders
Name
Examl
VçV
Pleaseanswereachquestion.For short answer questions,show the formulasand calculationsneededwhere appropriate.
You have one hour and fifteenminutes (1:15).Good luck!
Multiple Choice.(13 questions,4 points each,52 points total)
1) For the study of economicgrowth, it is most helpful to examinemovementsin
for the study of businesscycles,it is most helpful to examinemovements
in -.
$ deviationsfrom trend in GNP; trend GNP
/GÞ".ra GNP; deviationsfrom trend in GNP
GNP; trend GNP
Vtre.ra
D) deviationsfrom trend in GNP; deviationsfrom trend in GNP
2) In the secondhalf of the twentieth century,the U,S.inflation rate was at its highest
in the period from
mid-1970sto the early 1980s.
B) 1960to the early 1970s.
@ir"
L) the mid-1980sto the early 1990s.
D) 1990-2000.
3) Year-to-year fluctuationsin the unemploymentrate are primarily explainedby
A) structuralshifts.
in government intervention.
Achanges
(C)Ìhanges in the level of economicactivity.
D) changesin the structureof the population.
4) Additions to inventory are
A) countedas an intermediateinput.
subtractedfrom salesrevenuein calculatingprofit income.
jt !)
(C[ounted as a componentof investmentspending.
v
D) not countedas an expenditurein GDP accounting.
5) GDP and GNP mav differ
incomegeneratedby domesticproduction may be receivedas
@U".uur".ro^ã
incomeby foreign residents.
B) whenevertariff ratesbecomeexcessivelyhigh.
C) becausesomeworkers are illegal aliens,
D) becausesomeintermediategood inputs are imported.
6) When thereis rapid inflation,
(R¡ro*th
in nominal GDP exceedsgrowth in real GDP.
Yfthu." can never be any growth in nominal GDP.
C) growth in real GDP exceedsgrowth in nominal GDP.
D) growth in real GDP and nominal GDP are roughly equal.
7) A price index canbe computedby
A) subtractingthe nominal variablefrom its real counterpart.
B) subtractingthe real variablefrom its nominal counterpart.
Qdividingarealvariablebyitsrealcounterpart.
a nominal variableby its real counterpart
@iuiain!
8) An exampleof a stockwould be
A) savines.
,lÍ\,
(B[he
amount of money in circulation.
\t
Ll lnvestment.
Direal GDP.
9) Problemswith interpreting the unemploymentrate as a measureof labor market
tightnessinclude
A) variationsin how intensivelythe unemployedsearchfor work and biasesin
the CPI.
!) biasesin the CPI and dissatisfiedworkers.
Æ\..
(Cliscouraged workers and variationsin how intensivelythe unemployed search
vfor work.
D) dissatisfiedworkers and discouragedworkers.
10) Additions to the nation'scapital stockare brought about through
A) the current accountsurplus.
Ð investmentand the current accountsurplus,
a\
Li)ìnvestment.
D) investmentand the governmentbudget surplus.
11) Who among the following is consideredto be ir^rthe labor force?
A) tull-time students
fE)rn"-ptoyed workers
workers
C) retirees
fair.o,r.aied
12) If. a macroeconomic variable tends to aic in predicting the future path of real GDP, it
is said to be a
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B) lagging variable.
( Aleading variable.
!t
t)
coincident variable.
D) convenientvariable.
13) Realconsumptiontendsto be
A) countercyclicaland lessvariablethan real GDP.
B) countercvclicaland more variablethan real GDP.
and lessvariablethan real GDP.
fõro.u.lical
\f
procyclical
and more variablethan real GDP.
þ
Short Answer. (3 questions,1-6points each,48 points total)
14) Supposean economyproducesonly food and clothing,and that price and quantity
data for two yearsare given in the tablebelow.
Year L
Good
Food
Clothing
Quantity
20
10
Price
6e
$8
Good
Food
Clothing
Year2
Quantity
25
20
Price
$10
$7
TakeYear 1 as the baseyear in calculatingthe following
(i) Year2 real GDP.
(ii) The consumerprice index (CPI) for Year2.
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15) You are a baker.You paid $150Kin wages,$50Kfor dough, $20Kfor power/ $5K in
interestfor a businessloan,$25Kin taxes,and made a profit of $10K.How much did
you contributeto GDP using the product approach?
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16) There are five major categories of expenditure that go into the calculation of GDP
(by the expenditure approach). Name these components, and state whether each is
roughly pro-cyclical, acyclical, or counter-cyclical. (To get five categories, "NX"
must be broken up into two parts.)
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