Question 1

Explain how inflation can lead to distortions.

Accepted Answer

First, not all prices and wages adjust a...

Question 2

By 2011, capital income in Australia accounted for approximately what share of GDP?

Accepted Answer

A)   25%.
B)   45%.
C)   65%.
D)   35%.
E)   55%.F) A) and C)
G) All of the above

Question 3

Consider this current information in Australia: 200 million people are working, 30 million are not working but are looking for work, and 60 million are not working and have given up looking for work. The official unemployment rate for that month is:

Accepted Answer

A)   10.0%.
B)   30.0%.
C)   13.0%.
D)   7.0%.
E)   26.0%.F) B) and E)
G) C) and E)

Question 4

Which of the following expressions represents nominal GDP?

Accepted Answer

A)   $Yt/Pt
B)   Yt
C)   PtYt
D)   Yt + Pt
E)   Yt/PtF) A) and D)
G) A) and B)

Question 5

Which of the following factors is not believed to affect output in the long run?

Accepted Answer

A)   Monetary policy.
B)   The stock of capital.
C)   Technology.
D)   Education system.
E)   The saving rate.F) A) and D)
G) B) and E) A

Question 6

Assume that 2009 is the base year. Given macroeconomic conditions in Australia over the past several decades, we know that:

Accepted Answer

A)   real GDP is always larger than nominal GDP for the period 1960 to 2008.
B)   real GDP and nominal GDP would be equal for the entire period.
C)   real GDP is smaller than nominal GDP from 1998 to 2002.
D)   real GDP is larger than nominal GDP from 2006 to 2011.
E)   nominal GDP is always larger than real GDP during the past several decades.F) A) and B)
G) C) and D) A

Question 7

Briefly explain why the reported official unemployment rate in Spain in 1994 may have provided an over- estimate of unemployment in Spain.

Accepted Answer

The relatively high unemployment rate in...

Question 8

A deflation refers to a situation where:

Accepted Answer

A)   the inflation rate is increasing at a slower rate.
B)   both inflation and the unemployment rate are increasing.
C)   the inflation rate is falling.
D)   both inflation and the unemployment rate are falling.
E)   the inflation rate is negative.F) All of the above
G) A) and E)

Question 9

The prices for which of the following goods are included in both the GDP deflator and the consumer price index?

Accepted Answer

A)   Goods bought by domestic households.
B)   Goods bought by the foreign government.
C)   Goods bought by foreign households.
D)   Goods bought by the domestic government.
E)   Goods bought by firms.F) C) and D)
G) B) and E)

Question 10

Hedonic pricing is:

Accepted Answer

A)   the process of pricing individual characteristics of a good or service.
B)   the way that luxury goods are priced in a market economy.
C)   the tendency for the inflation rate to rise by greater and greater amounts.
D)   the tendency for nominal GDP to rise when the price level rises.
E)   the process of translating nominal GDP into real GDP.F) C) and D)
G) D) and E)

Question 11

Why are economists interested in unemployment in relation to output?

Accepted Answer

Given that the GDP data is only availabl...

Question 12

By 2011, labour income in Australia accounted for approximately what share of GDP?

Accepted Answer

A)   25%.
B)   65%.
C)   35%.
D)   45%.
E)   55%.F) None of the above
G) B) and C)

Question 13

GDP in current dollars is equivalent to which of the following?

Accepted Answer

A)   GDP in constant dollars.
B)   GDP in 2009 dollars.
C)   GDP in terms of goods.
D)   Real GDP.
E)   Nominal GDP.F) A) and E)
G) C) and E)

Question 14

Explain the three ways GDP can be measured.

Accepted Answer

GDP can be measured three ways. First, G...

Question 15

Do the CPI and GDP deflator always move together? Explain.

Accepted Answer

No, they do not. For example, if the pri...

Question 16

An individual is said to be a discouraged worker if he or she:

Accepted Answer

A)   wants to work, and is actively searching for a job.
B)   is working in jobs she/he is not suited for.
C)   is working part time, but would prefer a full time job.
D)   is working, but prefers not to work.
E)   wants to work, but has given up searching for a job.F) None of the above
G) A) and D)

Question 17

What is the impact of the commodity price increase in 2004- 11 on the GDP deflator and the CPI?

Accepted Answer

Given that Australia is a major commodity exporter, the Australian dollar (or the exchange rate) tends to appreciate when commodity prices rise. As the index measure of commodity prices doubled during 2004- 11 and pushed up the exchange rate, this implies that import prices would become cheaper and hence causing a smaller increase in the CPI compared with that in the GDP deflator.

Question 18

Fluctuations refer to:

Accepted Answer

A)   changes in stock prices.
B)   alternating periods of expansions and recessions.
C)   changes in bond prices.
D)   deviations of stock prices from their fundamental values.
E)   movements in prices.F) A) and E)
G) B) and E)

Question 19

If nominal GDP rises from $50 trillion to $58 trillion, while the GDP deflator rises from 3.0 to 3.5, the percentage change in real GDP is:

Accepted Answer

A)   - 10%.
B)   0%.
C)   20%.
D)   10%.
E)   9.1%.F) D) and E)
G) B) and C)

Question 20

The GDP deflator provides a measure of which of the following?

Accepted Answer

A)   Real GDP divided by the aggregate price level.
B)   The ratio of nominal GDP to real GDP.
C)   The ratio of GDP to the size of the population.
D)   The ratio of GDP to the number of workers employed.
E)   The price of a typical consumer's basket of goods.F) A) and B)
G) B) and E)

Exam 2: A Tour of the Book

Explain how inflation can lead to distortions.

Correct Answer
verified
First, not all prices and wages adjust a...
View Answer

By 2011, capital income in Australia accounted for approximately what share of GDP?

Correct Answer
verified

Consider this current information in Australia: 200 million people are working, 30 million are not working but are looking for work, and 60 million are not working and have given up looking for work. The official unemployment rate for that month is:

Correct Answer
verified

Which of the following expressions represents nominal GDP?

Correct Answer
verified

Which of the following factors is not believed to affect output in the long run?

Correct Answer
verified
A

Assume that 2009 is the base year. Given macroeconomic conditions in Australia over the past several decades, we know that:

Correct Answer
verified
A

Briefly explain why the reported official unemployment rate in Spain in 1994 may have provided an over- estimate of unemployment in Spain.

Correct Answer
verified
The relatively high unemployment rate in...
View Answer

A deflation refers to a situation where:

Correct Answer
verified

The prices for which of the following goods are included in both the GDP deflator and the consumer price index?

Correct Answer
verified

Hedonic pricing is:

Correct Answer
verified

Why are economists interested in unemployment in relation to output?

Correct Answer
verified
Given that the GDP data is only availabl...
View Answer

By 2011, labour income in Australia accounted for approximately what share of GDP?

Correct Answer
verified

GDP in current dollars is equivalent to which of the following?

Correct Answer
verified

Explain the three ways GDP can be measured.

Correct Answer
verified
GDP can be measured three ways. First, G...
View Answer

Do the CPI and GDP deflator always move together? Explain.

Correct Answer
verified
No, they do not. For example, if the pri...
View Answer

An individual is said to be a discouraged worker if he or she:

Correct Answer
verified

What is the impact of the commodity price increase in 2004- 11 on the GDP deflator and the CPI?

Fluctuations refer to:

Correct Answer
verified

If nominal GDP rises from $50 trillion to $58 trillion, while the GDP deflator rises from 3.0 to 3.5, the percentage change in real GDP is:

Correct Answer
verified

The GDP deflator provides a measure of which of the following?

Correct Answer
verified

Exam 2: A Tour of the Book

Explain how inflation can lead to distortions.

Correct AnswerverifiedFirst, not all prices and wages adjust a...View AnswerShow Answer

By 2011, capital income in Australia accounted for approximately what share of GDP?

Correct AnswerverifiedShow Answer

Consider this current information in Australia: 200 million people are working, 30 million are not working but are looking for work, and 60 million are not working and have given up looking for work. The official unemployment rate for that month is:

Correct AnswerverifiedShow Answer

Which of the following expressions represents nominal GDP?

Correct AnswerverifiedShow Answer

Which of the following factors is not believed to affect output in the long run?

Correct AnswerverifiedA

Assume that 2009 is the base year. Given macroeconomic conditions in Australia over the past several decades, we know that:

Correct AnswerverifiedA

Briefly explain why the reported official unemployment rate in Spain in 1994 may have provided an over- estimate of unemployment in Spain.

Correct AnswerverifiedThe relatively high unemployment rate in...View AnswerShow Answer

A deflation refers to a situation where:

Correct AnswerverifiedShow Answer

The prices for which of the following goods are included in both the GDP deflator and the consumer price index?

Correct AnswerverifiedShow Answer

Hedonic pricing is:

Correct AnswerverifiedShow Answer

Why are economists interested in unemployment in relation to output?

Correct AnswerverifiedGiven that the GDP data is only availabl...View AnswerShow Answer

By 2011, labour income in Australia accounted for approximately what share of GDP?

Correct AnswerverifiedShow Answer

GDP in current dollars is equivalent to which of the following?

Correct AnswerverifiedShow Answer

Explain the three ways GDP can be measured.

Correct AnswerverifiedGDP can be measured three ways. First, G...View AnswerShow Answer

Do the CPI and GDP deflator always move together? Explain.

Correct AnswerverifiedNo, they do not. For example, if the pri...View AnswerShow Answer

An individual is said to be a discouraged worker if he or she:

Correct AnswerverifiedShow Answer

What is the impact of the commodity price increase in 2004- 11 on the GDP deflator and the CPI?

Fluctuations refer to:

Correct AnswerverifiedShow Answer

If nominal GDP rises from $50 trillion to $58 trillion, while the GDP deflator rises from 3.0 to 3.5, the percentage change in real GDP is:

Correct AnswerverifiedShow Answer

The GDP deflator provides a measure of which of the following?

Correct AnswerverifiedShow Answer

Correct Answer
verified
First, not all prices and wages adjust a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified
A

Correct Answer
verified
The relatively high unemployment rate in...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Given that the GDP data is only availabl...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
GDP can be measured three ways. First, G...
View Answer

Correct Answer
verified
No, they do not. For example, if the pri...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified