Assignment 2: Gross Domestic Product - Principles of Macroeconomics | EC 202, Assignments of Introduction to Macroeconomics

Download Assignment 2: Gross Domestic Product - Principles of Macroeconomics | EC 202 and more Assignments Introduction to Macroeconomics in PDF only on Docsity! NCSU Name: _________________________________________________ Department of Economics EC-202 Homework 2. Answer all questions. Your answers must be handed in to me in class on Monday, July 21st. Part A. Identify the letter of the choice that best completes the statement or answers the question. Each question is worth 1 point. 1. Which of the following would not be included in government purchases when using Expenditure method to find GDP? a. the purchase of a computer by a government agency b. welfare payments c. wages of government employees d. the purchase of a police car e. spending on a new missile program 2. A Texas oil company extracts petroleum and sells it to a refinery for $1,000. After processing, the refinery sells the gasoline to a wholesaler for $1,500, who then sells it to a gas station for $1,700. The gas station sells it to customers for $2,500. In these transactions, how much has been added to GDP? a. $1,000 b. $1,500 c. $1,700 d. $2,500 e. $6,700 3. This year, Tom sold his 1998 minivan to Honest John's Used Car Emporium for $5,000. Honest John then sold the van to Bob for $7,000. How much would be recorded in GDP this year from these transactions? a. $0 b. $2,000 c. $5,000 d. $7,000 e. $12,000 4. Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP? a. GDP will increase. b. GDP will not change. c. GDP will decrease. d. GDP may increase or may decrease depending on inflation. 5. If a Chinese firm opens a plant in the United States, the total value of the production will be included in the a. gross domestic product of China. b. net domestic product of China. c. gross domestic product of the United States. d. gross national income of the United States. 6. Jake recently completed his college degree and is entering the labor market for the first time. He has been submitting applications and has been interviewed twice in the last two weeks, but so far has not found a job. Jake would be classified as a. frictionally unemployed b. structurally unemployed c. cyclically unemployed d. not yet in the labor force 7. People who lost their jobs as hand-drawn animators because of the popularity of computer generated 3D animation are examples of persons who are suffering a. unnatural unemployment. b. frictional unemployment. c. cyclical unemployment. d. structural unemployment. 8. What fraction of the labor force is cyclically unemployed when structural unemployment is 2 percent, frictional unemployment is 4 percent, and the overall unemployment rate is 8 percent? a. 2 percent b. 4 percent c. 6 percent d. 8 percent e. 0 percent 9. The U.S. unemployment insurance program a. increases the level of frictional unemployment. b. pays the unemployed a benefit equal to about half the average wage. c. helps the unemployed maintain their income and spending. d. increases the amount of time the unemployed spend searching for a job. e. all of the above 10. If the economy is operating at an unemployment rate above the full employment rate, a. actual output is above potential output b. actual output is below potential output c. frictional unemployment has been eliminated d. structural unemployment has been eliminated e. actual output equals potential output 11. If the base year for an index is 1999 and the value of the index in 2002 is 165.1, by what percent has the measure grown over those 3 years? a. 165.1 percent b. 100 percent c. 6.51 percent d. 0 percent e. 65.1 percent 12. The consumer price index (CPI) excludes all of the following goods and services except one. Which type of good is included in the CPI? a. raw materials b. imported goods purchased by consumers c. machinery purchased by firms d. goods purchased by the government e. intermediate goods 13. Use the table below to find the real wage in 2006. Year Nominal Wage ($/hour) CPI 2005 $11.00 100 2006 $12.00 120 a. $1.00 b. $10.00 c. $11.00 d. $11.50 e. $12.00 14. If your nominal wage rises faster than the price level then we can say your real wage has _______ and the purchasing power of your income has ________. a. fallen; fallen b. fallen; risen c. risen; fallen d. risen; risen 15. If the real interest rate is 6% and the inflation rate is 2% then the nominal interest rate is a. 8% b. 4% c. 3% d. 2% e. -4%