1. The XYZ Corporation is an American corporation. This year, it spent $2,000,00
ID: 1177706 • Letter: 1
Question
1. The XYZ Corporation is an American corporation. This year, it spent $2,000,000 to buy new, state-of-the-art machinery so that it could produce its goods more cheaply. This spending would be counted in the GDP statistics for the U.S. as
consumption.
investment.
exports.
2. Last year, a small country spent $5,100 million on consumption, $1,200 million on government goods and services, $1,400 million on taxes, $800 on imports, $1,400 million on investment goods, and $1,000 million on shares of corporate stock. Also, foreigners spent $1,600 million on this country's exports. What was the size of the country's GDP last year?
.
$6,100 million
$6,400 million
$8,500 million
$12,500 million
3. Which of the following activities would be included in the official GDP figure?
the value of methamphetamine which is illegally produced and illegally sold in North Carolina
the value of vegetables that a homeowner grows in his own garden for his own consumption
the value of the interest that a bank earns on a car loan
the value of the services that a housewife performs for her family
4. Which of the following would cause the country's aggregate demand curve to shift to the right?
a.
Interest rates rise.
b.
A major technological advance reduces the amount of electricity that is used by machines. This technique uses the equipment that businesses already have.
c.
Consumers become more optimistic about their job security and their future incomes.
d.
Oil prices rise.
5. An increase in the short-run aggregate supply will cause the price level to _____ and the level of the real GDP to _______ .
a.
fall . . . decrease
b.
fall . . . increase
c.
rise . . . increase
d.
rise . . . decrease
6. According to the interest-rate effect, an increase in the price level ______ interest rates, which in turn causes the level of desired spending on GDP to ___________ .
a.
raises . . . increase
b.
raises . . . decrease
c.
reduces . . . decrease
d.
reduces . . . increase
7. In the 1970s, when OPEC raised world oil prices, this caused a shift in the __________ curve of the United States and caused the equilibrium level of the real GDP in the United States to _______ .
a.
long-run aggregate supply . . . decrease
b.
aggregate demand . . . decrease
c.
long-run aggregate supply . . . increase
d.
aggregate demand . . . increase
8. Kristin was laid off from her last job two years ago when the economy went into a recession. She last looked for work two months ago %u2013 unsuccessfully. Kristin would be officially classified as
a.
underemployed.
b.
employed.
c.
not in the labor force.
d.
unemployed.
9. Using the diagram from the previous problem, after the economy's self-correcting mechanism brings the economy to a long-run equilibrium, the price level will be
a.
160
b.
180
c.
210
d.
230
10. Suppose the full-employment level of income is $2.0 billion but the current short-run equilibrium level of income is $1.7 billion. These data imply that wage rates should _______ , which will cause the short-run aggregate supply curve to shift to the ______ .
a.
fall . . . right
b.
rise . . . right
c.
fall . . . left
d.
rise . . . left
11. "The United States should have a law that requires businesses to give a worker six month's salary as a separation payment when they layoff a worker."
Such a policy would probably _________ the unemployment rate in the U.S.
a.
increase
b.
decrease
c.
have no effect on
d.
none of the above
Explanation / Answer
1) INVESTMENT
2) 6100
3) the value of the interest that a bank earns on a car loan
6)raises . . . decrease
7)long-run aggregate supply . . . increase
8)UNEMPLOYED
9) 210
10) rise . . . right
11) have no effect on
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