宏观经济学习题练习

Exercise and answerNote: These are based on Principle of Macroeconomics, helping tounderstand basic concepts. Some contents such as those of Chap 7, 8, 10, may not be covered here.For your final review, please aid also with questions and problemsof the Macroeconomics textbook.Multiple ChoiceIdentify the choice that best completes the statement or answers the question.____ 1. Suppose that an apartment complex converts to a condominium where the renters are now owners of their former apartments. Suppose that an estimate of the value of the condominium owners' housing services isnow the same as their former rent.a. GDP necessarily increases.b. GDP necessarily decreases.c. GDP is unaffected because neither the rent nor the estimate of the value of housingservices is included in GDP.d. GDP is unaffected because previously rent was included in GDP, and now it is replaced bythe estimate of the value of housing services.____ 2. GDPa. includes the value of intermediate goods so we can get a measure of sales.b. excludes the value of intermediate goods because they are too difficult to measure.c. excludes the value of intermediate goods because their value is already counted in thevalue of final goods.d. None of the above are correct.____ 3. Which of the following is included in U.S. GDP?a. goods produced by foreign citizens working in the United Statesb. the difference in the price of the sale of an existing home and its original purchase pricec. known illegal activitiesd. None of the above are correct.____ 4. A firm produces consumer goods and adds some to inventory in the third quarter. In the fourth quarter the firm sells the goods at a retail outlet which leaves their inventory diminished. As a result of these actions,what component(s) of real GDP change in the fourth quarter?a. only investment and it decreases.b. only consumption and it increases.c. Investment decreases and consumption increases.d. None of the above is correct.____ 5. Which of the following is included in the investment component of GDP?a. purchases of newly constructed homesb. purchases of foreign capital goods such as industrial equipmentc. changes in inventoryd. All of the above are correct.____ 6. Which of these things would NOT be included in the components listed after them?a. Ruth buys a motorcycle made in Japan to ride on her weekends off-U.S. consumption andU.S. import.b. Shirley owns her own home which has an estimated rental value-U.S. consumption.c. Beverly buys a newly issued stock in a U.S. corporation-U.S. investment.d. Samantha produces some art work but doesn't sell them all in the current quarter and soadds them to her inventory-investment.____ 7. If in a given year an economy has consumption of $3000, investment of $2000, government purchases of $1500, exports of $500, imports of $600, taxes of $1200, transfer payments of $400, and depreciation of $300, then GDP will equala. $6400.b. $7000.c. $7600.d. $8900.e. $9500.____ 8. Which statement represents most correctly the relationship between nominal GDP and real GDP?a. Nominal GDP measures base-year production using base-year prices, while real GDPmeasures current production using current prices.b. Nominal GDP measures current production using base-year prices, while real GDPmeasures current production using current prices.c. Nominal GDP measures current production using current prices, while real GDP measurescurrent production using base-year prices.d. Nominal GDP measures current production using current prices, while real GDP measuresbase-year production using base-year prices.____ 9. The GDP deflator can be used to identify thea. increase in nominal GDP that is due to an increase in prices rather than an increase inproduction.b. increase in real GDP that is due to an increase in prices rather than an increase inproduction.c. increase in the cost of living for typical U.S. consumers.d. reduction in government spending required to balance the federal budget.____ 10. The information below was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest?a. Japan, Switzerland, United Statesb. Japan, United States, Switzerlandc. United States, Switzerland, Japand. United States, Japan, Switzerland____ 11. Suppose that over the last twenty-five years a country's nominal GDP grew to three times its former size. In the meantime population grew 50 percent and prices rose 100 percent. What happened to real GDP perperson?a. It more than doubled.b. It rose, but less than doubled.c. It was unchanged.d. It fell.____ 12. The inflation rate is defined as thea. price level.b. change in the price level.c. price level divided by the price level in the previous period.d. percentage change in the price level from the previous period.____ 13. The market basket used to calculate the CPI in Aquilonia is 4 loaves of bread, 6 gallons of milk, 2 shirts and 2 pants. In 2001 bread cost $1.00 per loaf, milk cost $1.50 per gallon, shirts cost $6.00 each and pants cost$10.00 per pair. In 2002 bread cost $1.50 per loaf, milk cost $2.00 per gallon, shirts cost $7.00 each and pantscost $12.00 per pair. What was the inflation rate, as measured by the CPI, for Aquilonia between 2001 and2002?a. 30 percentb. 24.4 percentc. 21.6 percentd. It is impossible to determine without knowing the base year.____ 14. The price index is 180 in one year and 210 in the next. What was the inflation rate?a. 16.7 percentb. 14.3 percentc. 11.1 percentd. None of the above are correct.____ 15. By far the largest category of goods and services in the CPI basket isa. housing.b. recreation.c. transportation.d. food and beverages.____ 16. Which of the following is not a widely acknowledged problem with the CPI as a measure of the cost of living?a. substitution biasb. introduction of new goodsc. unmeasured quality changed. unmeasured price change____ 17. Which of the following is the most accurate statement about the effects of quality change on the CPI?a. Even though the BLS adjusts prices of products in the CPI basket when the quality of theproducts change, changes in quality are still a problem, because quality is so hard tomeasure.b. Because the BLS adjusts prices of products in the CPI basket when the quality of theproducts change, changes in quality are no longer a problem for the CPI.c. the BLS does not adjust the CPI for quality changes.d. Most economists believe that changes in the quality of goods included in the CPI basketdo not bias the CPI as a measure of the cost of living.____ 18. Suppose that lawn mowers are part of the market basket used to compute the CPI. Then suppose that the quality of lawn mowers improves while the price of lawn mowers stays the same. If the Bureau of LaborStatistics precisely adjusts the CPI for the improvement in quality, then, other things equal,a. the CPI will rise.b. the CPI will fall.c. the CPI will stay the same.d. lawn mowers will no longer be included in the market basket.____ 19. In 1931, President Herbert Hoover was paid a salary of $75,000. The price index for 1931 is 15.2, and the price index for 2001 is 177. The President's salary today is $400,000.a. President Hoover's salary equivalent in 2001 dollars is much smaller than that of thecurrent U.S. president.b. President Hoover's salary equivalent in 2001 dollars is about the same as that of thecurrent U.S. president.c. President Hoover's salary equivalent in 2001 dollars is much larger than that of the currentU.S. president.d. One cannot make a meaningful comparison of 2001 salaries and 1931 salaries.The following questions are based on the following information:Scenario 11-1Grant Smith was a doctor in 1944 and made about $12,000 a year. His daughter Lisa Smith also is a doctorand last year she made about $175,000 in 2001. The price index in 1950 was 17.6 and the price index was 177 in 2001.____ 20. Refer to Scenario 11-1. What is Lisa's income in 1945 dollars?a. $15,667b. $17,401c. $19,322d. None of the above are correct.____ 21. Ingrid takes a university teaching job as an assistant professor in 1974 at a salary of $10,000. By 2003, she has been promoted to full professor, with a salary of $50,000. If the price index in 1974 is 50, and the priceindex in 2003 is 180, what is Ingrid's 2003 salary in 1974 dollars?a. $13,889b. $18,000c. $26,000d. $36,000____ 22. Which is the most accurate statement about the relationship between inflation and interest rates?a. There is no relationship between inflation and interest rates.b. The interest rate is determined by the rate of inflation.c. In order to fully understand inflation, we need to know how to correct for the effects ofinterest rates.d. In order to fully understand interest rates, we need to know how to correct for the effectsof inflation.____ 23. In the United States, as measured by real GDP per person, average income is about how many times as high as average income a century ago?a. 2b. 4c. 6d. 8____ 24. Which of the following is true?a. Although levels of real GDP per person vary substantially from country to country, thegrowth rate of real GDP per person is similar across countries.b. Productivity is not closely linked to government policies.c. The level of real GDP per person is a good gauge of economic prosperity, and the growthrate of real GDP per person is a good gauge of economic progress.d. Productivity may be measured by the growth rate of real GDP per person.____ 25. Which of the following does the level of real GDP measure?a. total real incomeb. productivityc. the standard of livingd. All of the above are correct.____ 26. In 2002 real GDP per person in Olympus was 4,500. In 2001 it was 4,250. What was the growth rate of real GDP per person?a. 5.6 percentb. 5.9 percentc. 6.5 percentd. None of the above are correct to the nearest tenth.____ 27. In 2002 real GDP in Oceania was 561.0 billion and the population was 2.2 million. In 2001 real GDP was 500.0 billion and the population was 2.0 million. What was the approximate growth rate of real GDP perperson?a. 12 percentb. 10 percentc. 4 percentd. 2 percent____ 28. Which of the following is NOT correct?a. Countries that have had higher output growth per person have typically not done so withhigher productivity growth.b. A country's standard of living and its productivity are closely related.c. Productivity refers to output produced per hour of work.d. Increases in productivity can be used to increase output or leisure.____ 29. Human capital is thea. knowledge and skills that workers acquire through education, training, and experience.b. stock of equipment and structures that is used to produce goods and services.c. total number of hours worked in an economy.d. same thing as technological knowledge.____ 30. Your company discovers a better way to produce mousetraps, but your better methods are not apparent from the mousetraps themselves. Your knowledge of how to more efficiently produce mousetraps isa. common technological knowledge.b. common, but not technological, knowledge.c. proprietary technological knowledge.d. proprietary, but not technological, knowledge.____ 31. If your firm has constant returns to scale, then if you doubled all your inputs your firm's output woulda. not change.b. increase, but by less than double.c. double.d. more than double.____ 32. Other things equal, relatively poor countries tend to growa. slower than relatively rich countries; this is called the poverty trap.b. slower than relatively rich countries; this is called the Malthus effect.c. faster than relatively rich countries; this is called the catch-up effect.d. faster than relatively rich countries; this is called the constant-returns-to-scale effect.____ 33. The logic behind the catch-up effect is thata. workers in countries with low incomes will work more hours than workers in countrieswith high incomes.b. the capital stock in rich countries deteriorates at a higher rate because it already has a lotof capital.c. new capital adds more to production in a country that doesn't have much capital than in acountry that already has much capital.d. None of the above are correct.____ 34. An organization that tries to encourage the flow of investment to poor countries is thea. World Bank.b. Organization of Less Developed Countries.c. Alliance of Developing Countries.d. International Development Alliance.____ 35. Which of the following is generally an opportunity cost of investment in human capital?a. future job securityb. forgone wages at presentc. increased earning potentiald. All of the above are correct.____ 36. Gary Becker has proposed programs like Mexico's Progressa to reduce child labor and increase educational levels.a. If successful, these programs will raise productivity by increasing human capital.b. In Mexico these programs have decreased differences in the level of education obtained bygirls and boys.c. Such programs might be funded by reducing money spent on universities and education ofthe elite.d. All of the above are correct.____ 37. Which of the following statements is FALSE?a. The catch-up effect is based on the assumption of diminishing returns to capital.b. Investment in poor countries from rich countries is one way poor countries can learn newtechnologies.c. Malthus argued that charity and government aid was an effective way to reduce poverty.d. Adam Smith argued that peace, light taxes and a tolerable administration of justice are thekeys to growth.____ 38. Which of the following is an observation made by Kremer?a. World growth rates increased as the population increased.b. Technological progress allows for increasing population because of advances inagriculture.c. World population is growing so rapidly that soon it will outstrip natural resources and ourstandard of living will decline.d. All of the above are correct.____ 39. Typically, countries in Africaa. have high tax rates.b. have laws and geography that encourage trade.c. had low but positive growth of real GDP per person between 1978 and 1994.d. All of the above are correct.____ 40. If the government's expenditures exceeded its receipts, it would likelya. lend money to a bank or other financial intermediary.b. borrow money from a bank or other financial intermediary.c. directly buy bonds from the public.d. directly sell bonds to the public.____ 41. Compared to long-term bonds, other things the same, short-term bonds generally havea. more risk and so pay higher interest.b. less risk and so pay lower interest.c. less risk and so pay higher interest.d. about the same risk and so pay about the same interest.____ 42. Papa Mario's Pizza Company sells common stock.a. They are using equity financing and the return shareholders earn is fixed.b. They are using equity financing and the return shareholders earn depends on howprofitable the company is.c. They are using debt financing and the return shareholders earn is fixed.d. They are using debt financing and the return shareholders earn depends on how profitablethe company is.____ 43. Compared to bonds, stocks offer the holdera. lower risk.b. partial ownership.c. the likelihood of a lower return.d. All of the above are correct.____ 44. Which of the following is not an important stock exchange in the United States?a. New York Stock Exchangeb. American Stock Exchangec. Chicago Mercantile Exchanged. NASDAQ____ 45. Stock indexes area. the average of a group of stock prices.b. the average of a group of stock yields.c. reports in the newspaper that report on the price of the stock and earnings of thecorporation.d. measures of the risk relative to the profitability of corporations.____ 46. The Dow Jones Industrial Average is now based on the prices of the stocks ofa. 30 major U.S. corporations.b. 100 major U.S. corporations.c. 500 representative U.S. corporations.d. 1000 representative U.S. corporations.____ 47. Stock in Synergyistic Corporation is selling at $25 per share. It had earnings of $5 a share and a dividend yield of 5 percent. What is the dividend and the price-earnings ratio?a. $.25, 5b. $.25, 6.7c. $1.25, 5d. $1.25, 6.7____ 48. A mutual funda. is a financial market where small firms mutually agree to sell stocks and bonds to raisefunds.b. is funds set aside by local governments to lend to small firms who want to invest inprojects that are mutually beneficial to the firm and community.c. sells stocks and bonds on behalf of small and less known firms who would otherwise haveto pay high interest to obtain credit.d. is an institution that sells shares to the public and uses the proceeds to buy a selection ofvarious types of stocks, bonds, or both stocks and bonds.____ 49. Which of the following equations will always represent GDP in an open economy?a. S = I - Gb. I = Y - C + Gc. Y = C + I + Gd. Y = C + I + G + NX____ 50. If the nominal interest rate is 10 percent and the inflation rate is 4 percent, then the real interest rate isa. 14 percent.b. 6 percent.c. 2.5 percent.d. 4/10 percent.____ 51. If Congress reduced the tax rate on interest income, investmenta. would increase and saving would decrease.b. would decrease and saving would increase.c. and saving would increase.d. and saving would decrease.____ 52. Suppose the U.S. government allowed taxpayers to earn their first $5,000 of interest income tax free. This would shift thea. supply for loanable funds right making interest rates fall.b. supply of loanable funds left making interest rates rise.c. demand for loanable funds right making the interest rate rise.d. demand for loanable funds left making the interest rate fall.____ 53. Interest rates fall and investment falls. Which of the following could explain these changes?a. the government goes from a surplus to a deficitb. the government repeals an investment tax creditc. the government replaces a consumption tax with an income taxd. None of the above are correct.____ 54. From 2000 to 2002 the U.S. national debt has been abouta. 10 percent of GDP.b. 35 percent of GDP.c. 50 percent of GDP.d. 75 percent of GDP.____ 55. A few years ago, based on concepts similar to those used to estimate U.S. employment figures, the Canadian adult non-institutionalized population was 24 million, the labor force was 16 million, and the number ofpeople employed was 14 million. According to these numbers, the Canadian labor-force participation rate andunemployment rate were abouta. 67 percent and 8.3 percent.b. 67 percent and 12.5 percent.c. 58 percent and 8.3 percent.d. 58 percent and 12.5 percent.____ 56. An increase in the minimum wage woulda. increase both the quantity demanded and the quantity supplied of labor.b. decrease both the quantity demanded and the quantity supplied of labor.c. increase the quantity of labor demanded while decreasing the quantity supplied.d. decrease the quantity of labor demanded while increasing the quantity supplied.____ 57. If the minimum wage was currently above the equilibrium wage, than a decrease in the minimum wage woulda. increase both the quantity demanded and the quantity supplied of labor.b. decrease both the quantity demanded and the quantity supplied of labor.c. increase the quantity of labor demanded and decrease the quantity supplied.d. decrease the quantity of labor demanded and increase the quantity supplied.____ 58. Samantha, the CEO of a corporation operating in Uganda, decides to raise the wages of her workers even though she faces an excess supply of labor. Her decisiona. might increase profits if it means that the wage is high enough for her workers to eat anutritious diet that makes them more productive.b. will help eliminate the excess supply of labor if she raises it sufficiently.c. will cause unemployment to fall.d. All of the above are correct.____ 59. When the Federal Reserve conducts open market transactions, ita. issues Federal Reserve notes.b. buys or sells government bonds from the public.c. lowers the discount rate.d. increases its lending to member banks.____ 60. Suppose a bank has $10,000 in deposits and $8,000 in loans. It has a reserve ratio ofa. 2 percent.b. 12.5 percent.c. 20 percent.d. 80 percent.____ 61. If you deposit $3,000 into First Hawkeye Bank, thea. bank's required reserves increase by the reserve ratio times $3,000.b. bank will be able to lend out $3,000 times the reserve ratio.c. bank initially sees reserves increase by $0.d. All of the above are correct.____ 62. If a bank uses $100 of reserves to make a new loan when the reserve ratio is 20 percent, this action by itself initially makes the money supplya. and wealth increase by $100.b. and wealth decrease by $100.c. increase by $100 while wealth does not change.d. decrease by $100 while wealth decreases by $100.____ 63. If the reserve ratio is 10 percent, the money multiplier isa. 100.b. 10.c. 9/10.d. 1/10.____ 64. If the reserve ratio is 15 percent, an additional $1,000 of reserves will increase the money supply, to the nearest dollar, bya. $1176.b. $1275.c. $5667.d. $6667.____ 65. Which list contains only actions that decrease the money supply?a. raise the discount rate, make open market purchasesb. raise the discount rate, make open market salesc. lower the discount rate, make open market purchasesd. lower the discount rate, make open market sales____ 66. Which list contains only actions that decrease the money supply?a. make open market purchases, raise the reserve requirement ratiob. make open market purchases, lower the reserve requirement ratioc. make open market sales, raise the reserve requirement ratiod. make open market sales, lower the reserve requirement ratio____ 67. If reserve requirements are decreased, the reserve ratioa. decreases, the money multiplier increases, and the money supply decreases.b. increases, the money multiplier increases, and the money supply increases.c. decreases, the money multiplier increases, and the money supply increases.d. increases, the money multiplier increases, and the money supply decreases.____ 68. Which of the following statements about U.S. inflation is false?a. Low inflation was viewed as a triumph of President Carter's economic policy.b. There were long periods in the nineteenth century during which prices fell.c. The U.S. public has viewed inflation of even 7 percent as a major economic problem.d. The U.S. inflation rate has varied over time, but international data shows even morevariation.____ 69. When the value of money rises, the number of dollars needed to buy a representative basket of goodsa. increases, and so the price level rises.b. increases, and so the price level falls.c. decreases, and so the price level rises.d. decreases, and so the price level falls.____ 70. When the money market is drawn with the value of money on the vertical axis, an increase in the price level causes aa. shift to the right of the money demand curve.b. shift to the left of the money demand curve.c. movement to the left along the money demand curve.d. movement to the right along the money demand curve.____ 71. When the money market is drawn with the value of money on the vertical axis, an increase in the money supply shifts the money supply curve to thea. right, lowering the price level.b. right, raising the price level.c. left, raising the price level.d. left, lowering the price level.____ 72. The price level is aa. relative variable.b. actual variable.c. real variable.d. nominal variable.____ 73. Which of the following is not implied by the quantity equation?a. If velocity is stable, an increase in the money supply creates a proportional increase innominal output.b. If velocity is stable and money is neutral, an increase in the money supply creates aproportional increase in the price level.c. With constant money supply and output, an increase in velocity creates an increase in theprice level.d. With constant money supply and velocity, an increase in output creates a proportionalincrease in the price level.____ 74. Suppose that velocity and output are constant, and that the quantity theory and Fisher effect are both correct.If nominal interest rates are 6 percent and inflation is 2.5 percent, it follows that thea. money supply growth rate is 2.5 percent.b. real interest rate is 8.5 percent.c. real interest rate is 2.5 percent.d. money supply growth rate is 6 percent.____ 75. High and unexpected inflation has a greater costa. for those who borrow than those who save.b. for those who hold a little money than for those who hold a lot of money.c. for those whose wages increase by as much as inflation, than those who are paid a fixednominal wage.d. for savers in high income tax brackets than for savers in low income tax brackets.____ 76. Which of the following would be U.S. foreign direct investment?a. Your U.S. based mutual fund buys stock in Eastern European companies.b. A U.S. citizen opens a guitar store in Hong Kong.c. A Swiss bank buys a U.S. government bond.d. A German tractor factory opens a plant in Peoria.____ 77. The U.S. sells machinery to a South African country that pays them with South African currency (the rand).a. This increases U.S. net capital outflow because the U.S. acquires foreign assets.b. This decreases U.S. net capital outflow because the U.S. acquires foreign assets.c. This increases U.S. net capital outflow because the U.S. sells capital goods.d. This decreases U.S. net capital outflow because the U.S. sells capital goods.____ 78. Suppose the real exchange rate is 4/5 pounds of Chilean beef per pound of U.S. beef, a pound of U.S. beef costs $2 and the nominal exchange rate is 600 Chilean pesos per dollar. It follows that Chilean beef costsa. 960 pesos per pound.b. 1,200 pesos per pound.c. 1,500 pesos per pound.d. None of the above is correct.____ 79. If the nominal exchange rate e is foreign currency per dollar, the domestic price is P, and the foreign price is P*, the real exchange rate is defined asa. e(P*/P).b. e(P/P*).c. e + P/P.d. e - P/P*.____ 80. The introduction of the euro hasa. eliminated the possibility of arbitrage within Europe.b. eliminated the possibility of arbitrage based on exchange-rate differences within Europe.c. increased the possibilities for arbitrage within Europe.d. not affected the possibilities for arbitrage within Europe.Use the (hypothetical) information in the following table to answer the following questions.____ 81. Refer to Table 18-1. In real terms, U.S. goods are less expensive than goods in which country(ies)?a. Brazil and Mexicob. Japan, Sweden, and Thailandc. Japan and Swedend. Thailand____ 82. Which of the following events would be consistent with purchasing-power parity?a. The price level in the United States rises more rapidly than that in Ireland and the realexchange rate defined as Irish goods per unit of U.S. goods stays the same.b. The money supply in the United States rises more rapidly than in Egypt and the nominalexchange rate defined as Egyptian pounds per dollar falls.c. Earl, a worldwide traveler, looks at exchange rates and worldwide breakfast prices onemorning and finds that whatever country he decides to go to he can convert $5 into enoughlocal currency to buy the same breakfast.。