Econ 2123 Problem Set - Multiple Choices

Econ 2123 Problem Set 1

Instructor: Wenwen Zhang

TA: Perter (L3)/Lawrence (L4)

Lecture: L3, L4

Due date & Homework Submission Location: Before Thu, Sep 17 at 5 p.m. Dropbox on the LSK 6th floor (Econ Department)

Multiple Choices

1. Which of the following is not one of the macroeconomics goals?

1. Full employment
2. Money supply growth
3. Economics growth
4. Price level stability

1. If the CPI was 113.6 in 1987 and was 118.3 in 1988, what was the rate of inflation for 1988?

1. 4.1%
2. 4.7%
3. 16.1%
4. 18.3%

1. If the natural unemployment rate is 5.1% and the structural unemployment rate is 2.4%, what is the frictional unemployment rate?

1. 2.7%
2. 5.1%
3. 7.5%
4. Cannot be determined

1. The natural unemployment rate is:

1. The sum of frication and structural unemployment
2. The lowest unemployment rate that can be sustained without causing increasing inflation
3. The rate associated with full employment
4. All of the above

1. Suppose nominal GDP increased in a given year. Based on this information, we know with certainty that

1. Real output has increased.
2. The price level (GDP deflator) has increased.
3. Real output and the price level (GDP deflator) have both increased.
4. Either real output or the price level (GDP deflator) have increased.
5. Real output has increased and the price level has decreased.

1. In a given year, suppose a company spends $100 million on intermediate goods and $200 million on wages, with no other expenses. Also assume that its total sales are $800 million. The value added by this company equals

1. $200 million.
2. $300 million.
3. $500 million.
4. $700 million.
5. $800 million.

1. Which of the following calculations will yield the correct measure of real GDP?

1. Divide nominal GDP by the consumer price index
2. Divide the GDP deflator by the consumer price index
3. Multiply nominal GDP by the consumer price index
4. Multiply nominal GDP by the GDP deflator
5. None of the above

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

1. Goods bought by households
2. Goods bought by firms
3. Good bought by governments
4. Goods bought by foreign households (i.e., exports)
5. All of the above

1. Which of the following does NOT represent real GDP?

1. GDP in current dollars
2. GDP in terms of goods
3. GDP in base year dollars
4. GDP in constant dollars

1. Fill in the blank for the following: GDP is the value of all ________ produced in a given period.

1. Final and intermediate goods and services produced by the private sector only
2. Final goods and services
3. Final and intermediate goods and services, plus raw materials
4. All of the above
5. None of the above

1. A firm's value added equals

1. Its revenue minus all of its costs.
2. Its revenue minus its wages.
3. Its revenue minus its wages and profit.
4. Its revenue minus its cost of intermediate goods.
5. None of the above

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

1. The ratio of GDP to the size of the population
2. The ratio of GDP to the number of workers employed
3. The ratio of nominal GDP to real GDP
4. The price of a typical consumer's basket of goods
5. Real GDP divided by the aggregate price level

Short Questions

1. Out of 226 Million persons aged 16 and older, 143.5 million has paying jobs, 8.5 million were without jobs but were actively seeking employment, and 2.5 million wanted jobs but had given up looking for employment.

1. Calculate the size of the labor force
2. Calculate the unemployment rate
3. Calculate the size of out of labor force
4. Calculate the participation rate

Table 1

Refer to Table 1. Suppose that a very simple economy produces three goods: Pizzas, Haircuts, and Backpacks. Suppose the quantities produced and their corresponding prices for 2002 and 2006 are showed in the table above. Use the information to compute real GDP in the year 2002 and 2006. Calculate real GDP in 2006 assuming the base year is 2002. Do the same calculation assuming the base year is 2006. Are the calculations different? Why?