Macroeconomics HW 2

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of

A) employment in a specific industry.

B) output of a specific firm.

C) output of a specific industry.

D) employment in the economy.

Suppose in 2014, you purchase a house built in 2003. Which of the following would be included in the gross domestic product for 2014?

A) the value of the house in 2014

B) the value of the house in 2014 minus depreciation

C) the value of the house in 2003

D) the value of the services of the real estate agent

Which of the following goods is directly counted in GDP?

A.) the plastic bags that Subway purchases to wrap its sandwiches

B) a 12-inch Subway sandwich purchased by a student

C) the lettuce that Subway purchases for its sandwiches

D) the bread that Subway purchases for its sandwiches

Which of the following is not a durable good?

A) clothing

B) refrigerator

C) furniture

D) automobile

Investment, as defined by economists, would include the purchase of a

A) computer by an accounting firm.

B) corporate bond.

C) share of stock in ExxonMobil.

D) government bond.

The purchase of a new house is included in

A) consumption expenditures.

B) net exports.

C) government purchases.

D) investment expenditures.

In 2012, which component of GDP had a negative value?

A) investment

B) government spending

C) net exports

D) consumption

Gross domestic product understates the total production of final goods and services because of the omission of

A) inflation.

B) exports.

C) household production.

D) intermediate goods.

Legalizing all forms of illegal activities

A) increases GDP and reduces the size of the underground economy.

B) increases GDP and increases the size of the underground economy.

C) reduces GDP and increases the size of the underground economy.

D) reduces GDP and the size of the underground economy.

The U.S. work week has declined from 60 hours in 1890 to 40 hours today. The impact of the decline in working hours

A) increases U.S. GDP and decreases the well-being of a typical working person in the U.S.

B) decreases U.S. GDP and decreases the well-being of a typical working person in the U.S.

C) increases U.S. GDP and increases the well-being of a typical working person in the U.S.

D) decreases U.S. GDP and increases the well-being of a typical working person in the U.S.

Increases in real GDP would understate the well-being of a country over time if, over that time period, the

A) percentage of people addicted to illegal drugs increased.

B) crime rate increased.

C) amount of pollution decreased.

D) average hours worked per week decreased.

Which of the following transactions would take place in the “underground economy”?

A) Paul buys 15 gallons of gasoline for $3.29 a gallon, not realizing that $1.50 per gallon of that price goes to the government as tax revenue.

B) John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes.

C) Matt bought an iPad for $499 but decided to sell it on eBay instead of keeping it.

D) Elizabeth tells her mother she’s going to work but really goes to see a movie.

Which of the following could cause nominal GDP to increase, but real GDP to decrease?

A) The price level rises and the quantity of final goods and services produced rises.

B) The price level falls and the quantity of final goods and services produced rises.

C) The price level rises and the quantity of final goods and services produced falls.

D) The price level falls and the quantity of final goods and services produced falls.

The GDP deflator is the

A) difference between nominal GDP and real GDP divided by 100.

B) ratio of real GDP to nominal GDP multiplied by 100.

C) difference between real GDP and nominal GDP multiplied by 100.

D) ratio of nominal GDP to real GDP multiplied by 100.

The output of Mexican citizens who work in Texas would be included in the

A) gross national product of the United States.

B) net national product of the United States.

C) gross national product of Mexico.

D) gross domestic product of Mexico.

The study of how households and firms make choices, how they interact in markets, how the government attempts to influence their choices.

The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.

The percentage increase in the price level from one year to the next.

the market value of all final goods and services produced in a country during a period of time, typically one year.

What are the 4 major categories of GDP?

What is the equation to calculate GDP?

Is the value of leisure included in GDP?

What is nominal GDP?

What is real GDP?

What is price level?