Macroeconomics Test bank
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1. only three goods are produced in an economy in the following amounts: A
= 10, B = 30, C = 5. the current year per unit prices of these three goods are
A = $2, B = $3, and C = $1. If the per unit prices of the three goods each were
$1 in a base year used to construct a GDP price index, then real GDP in the
current year: Nominal GDP of current year = (10x2) + (30x3) + (5x1) = 115
for base year all prices = $1
so real GDP of current year = (10x1) + (30x1) + (5x1) = 45
= $45
2. If nominal GDP in some year is $280 and real GDP is $160 the GDP price
index for that year is:: (280/160) = 1.75
1.75 x 100 = 175
price index = 175
3. the view that the market system will ensure full employment is associated
with: classical economics
4. Which of the following equations represents the saving schedule implicit in
the data below
Disposable income (Yd) Consumption (C)
$0 $40
100 100
200 160
300 220
400 280: S = - 40 + 0.4Yd
change in C / change in Yd = = 0.4
-0.4 x 100 = -40
5. if aggregate expenditure exceed the domestic output in a private closed
economy: planned investment will exceed saving
6. assume a manufacturer of stereo speakers purchases $40 worth of compo-
nents for each speaker. The completed speaker sells for $70. the value added
by the manufacturer for each speaker is:: $70 - 40 = 30
value added = $30
7. the sequence of events by which the inflation can reduce the output is: as
prices rise, the quantity of goods and services demanded falls, the firms therefore,
produce less output which causes the unemployment to increase
8. the consumption schedule is drawn on the assumption that as disposable
income increases consumption will: increase absolutely, but decline as a per-
centage of income
1/8
, Macroeconomics Test bank
Study online at https://quizlet.com/_ejfzav
9. in what circumstance would lenders most benefit: when there is an unantici-
pated increase in inflation
10. other things equal, if a change in the tastes of Canadian consumers causes
them to purchase more foreign goods at each level of Canadian GDP: Canadian
GDP will fall
11. suppose the nominal annual interest rate on a two year loan is 16% and
lenders expect inflation to be 10% in each of the two years. the annual real
rate of interest: real interest rate = 16% - 10% = 6%
12. the effect of imposing a lump-sum tax is to: reduce the absolute levels of
customization and saving at each level of GDP, but to not change the size of the
multiplier
13. the Value of Canadian imports is: added to exports when calculating GDP
because imports reflect spending by Canadians
14. what does research indicate about the effect of changes in stock price
averages on stability in the macroeconomy: the consumption effects of stock
prices changes are a major cause of macroeconomic instability; the investment
effects are not a major cause of instability
15. taxes represent: an injection of purchasing power, like government spending
16. in calculating GDP by expenditure approach, we sum up: investment, gov-
ernment purchases, consumption and net exports
17. GDP tends to underestimate the productive activity in the economy be-
cause it excludes: the personal labor time homeowners spend on home repairs
18. a distinguishing characteristic of public transfer payments is that: the
recipients make no contribution to current production in return for them
19. inflation reduces the purchasing power of the dollar and necessarily re-
duces one's real income: TRUE
20. dissaving occurs where: consumption exceeds income
21. Real GDP was $4,719billion in Year 1 and $4,848 billion in Year 2. in contrast,
real GDP per capita in Year 1 was $19,261, but in year 2 it was only $19,162.
why did one measure increase while the other measure decreased: population
increased during this time period so real GDP per capita data reflect this change
22. a decline in disposable income: decreases consumption by moving downward
along a specific consumption schedule
23. cyclical unemployment is a consequence of: a decline in aggregate spending
24. you know that a chocolate bar cost 5cents in 1962. you also know the
CPI for 1962 and the CPI for today. which of the following would you use to
compare the price of the candy bar in today's price: 5cents x (today's CPI / 1962
CPI)
2/8
Study online at https://quizlet.com/_ejfzav
1. only three goods are produced in an economy in the following amounts: A
= 10, B = 30, C = 5. the current year per unit prices of these three goods are
A = $2, B = $3, and C = $1. If the per unit prices of the three goods each were
$1 in a base year used to construct a GDP price index, then real GDP in the
current year: Nominal GDP of current year = (10x2) + (30x3) + (5x1) = 115
for base year all prices = $1
so real GDP of current year = (10x1) + (30x1) + (5x1) = 45
= $45
2. If nominal GDP in some year is $280 and real GDP is $160 the GDP price
index for that year is:: (280/160) = 1.75
1.75 x 100 = 175
price index = 175
3. the view that the market system will ensure full employment is associated
with: classical economics
4. Which of the following equations represents the saving schedule implicit in
the data below
Disposable income (Yd) Consumption (C)
$0 $40
100 100
200 160
300 220
400 280: S = - 40 + 0.4Yd
change in C / change in Yd = = 0.4
-0.4 x 100 = -40
5. if aggregate expenditure exceed the domestic output in a private closed
economy: planned investment will exceed saving
6. assume a manufacturer of stereo speakers purchases $40 worth of compo-
nents for each speaker. The completed speaker sells for $70. the value added
by the manufacturer for each speaker is:: $70 - 40 = 30
value added = $30
7. the sequence of events by which the inflation can reduce the output is: as
prices rise, the quantity of goods and services demanded falls, the firms therefore,
produce less output which causes the unemployment to increase
8. the consumption schedule is drawn on the assumption that as disposable
income increases consumption will: increase absolutely, but decline as a per-
centage of income
1/8
, Macroeconomics Test bank
Study online at https://quizlet.com/_ejfzav
9. in what circumstance would lenders most benefit: when there is an unantici-
pated increase in inflation
10. other things equal, if a change in the tastes of Canadian consumers causes
them to purchase more foreign goods at each level of Canadian GDP: Canadian
GDP will fall
11. suppose the nominal annual interest rate on a two year loan is 16% and
lenders expect inflation to be 10% in each of the two years. the annual real
rate of interest: real interest rate = 16% - 10% = 6%
12. the effect of imposing a lump-sum tax is to: reduce the absolute levels of
customization and saving at each level of GDP, but to not change the size of the
multiplier
13. the Value of Canadian imports is: added to exports when calculating GDP
because imports reflect spending by Canadians
14. what does research indicate about the effect of changes in stock price
averages on stability in the macroeconomy: the consumption effects of stock
prices changes are a major cause of macroeconomic instability; the investment
effects are not a major cause of instability
15. taxes represent: an injection of purchasing power, like government spending
16. in calculating GDP by expenditure approach, we sum up: investment, gov-
ernment purchases, consumption and net exports
17. GDP tends to underestimate the productive activity in the economy be-
cause it excludes: the personal labor time homeowners spend on home repairs
18. a distinguishing characteristic of public transfer payments is that: the
recipients make no contribution to current production in return for them
19. inflation reduces the purchasing power of the dollar and necessarily re-
duces one's real income: TRUE
20. dissaving occurs where: consumption exceeds income
21. Real GDP was $4,719billion in Year 1 and $4,848 billion in Year 2. in contrast,
real GDP per capita in Year 1 was $19,261, but in year 2 it was only $19,162.
why did one measure increase while the other measure decreased: population
increased during this time period so real GDP per capita data reflect this change
22. a decline in disposable income: decreases consumption by moving downward
along a specific consumption schedule
23. cyclical unemployment is a consequence of: a decline in aggregate spending
24. you know that a chocolate bar cost 5cents in 1962. you also know the
CPI for 1962 and the CPI for today. which of the following would you use to
compare the price of the candy bar in today's price: 5cents x (today's CPI / 1962
CPI)
2/8
