HOMEWORK#2MACROECONOMICPRINCIPLES

ECN211,SECTION1004,LEC71306FALLSEMESTER,2012
Dr.Filer
Due:Attheendofclass,Monday,October22,2012.
MultipleChoice:Answereachofthesequestionsbydarkeningthebubbleonyourscantronsheet,asifyou
weretakinganexaminclass.Handinonlythescantronsheet.Makesureyouhavedarkenedinyournameand
10digitASUAffiliateIDnumberonthescantronsheet.YOUMUSTUSETHE(81/2INCHBY11INCH)
SCANTRONFORM229633BYEXAMSYSTEMII,AVAILABLEINTHEASUBOOKSTORE.NOOTHER
TYPEOFSCANTRONFORMWILLBEACCEPTABLE.
Usethefollowingtoanswerquestions14:

Production
Computers
Calculators

ProductionData
PricesperUnit
1995
2003
$2,000
$1,600
$60
$70

Quantity
1995
100
900

2003
130
1100

1. Refertothetableabove.WhatistheconstantdollarrealGDPgrowthfrom1995to2003using
1995asthebaseyear?
A) 27.8percent.
B) 28.3percent.
C) 0(zero).
D) 75percent.
E) 18.3percent.
2. Refertothetableabove.WhatisnominalGDPfor1995?
A) $520,000.
B) $448,000.
C) $110,000.
D) $254,000.
E) $223,000.
3. Refertothetableabove.WhatistheconstantdollarrealGDPgrowthfrom1995to2003using
2003asthebaseyear?
A) 28.3percent.
B) 27.8percent.
C) 75percent.
D) 0(zero).
E) 18.3percent.
4. Refertothetableabove.WhatisthenominalGDPfor2003?
A) $254,000.
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B)
C)
D)
E)

$520,000.
$285,000.
$223,000.
$376,000.

Usethefollowingtoanswerquestions56:

1PairofJeans
1PairofShoes

PriceData
1999
$29
45

2003
$35
49

5. Inthetableabove,whatwastheapproximateinflationratebetween1999and2003?
A) 17.4percent.
B) 83percent.
C) 8percent.
D) 13.5percent.
E) 66percent.
6. Whichofthefollowingistruewithrespecttothetableabove?
A) Theabsolutepriceofshoesdeclinedfrom1999to2003.
B) Therelativepriceofshoesintermsofjeanswas2/3in1999.
C) Therelativepriceofshoesintermsofjeanswas1.68in1999.
D) Therelativepriceofjeansfellbetween1999and2003.
E) Therelativepriceofshoesfellfrom1999to2003.
Usethefollowingtoanswerquestions78:
DisposableIncome(Yd)
$0million
$50million
$100million
$150million
$200million
$250million
$300million
$350million

Consumption(C)
$10million
$55million
$100million
$145million
$190million
$235million
$280million
$325million

Yd=C+S
S=YdC
7. Refertothetableabove.Thesavingsfunctionisequalto
A) S=50+0.1Yd.
B) S=10+0.1Yd.
C) S=10+0.1Yd.
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D)
E)

S=0.9Yd.
S=325+Yd.

8. Refertothetableabove.TheMPCisequalto
A) 0.90.
B) 0.09.
C) 1.00.
D) 0.01.
E) 0.10.
9. Whenweconsideranupwardslopingaggregatesupplycurveandadownwardsloping
aggregatedemandcurve,anincreaseinaggregateexpendituresatallpricelevelsisreflectedas
A) aleftwardshiftintheADcurve,whichincreasestheequilibriumpricelevelanddecreases
equilibriumrealGDP.
B) aleftwardshiftintheAScurve,whichincreasestheequilibriumpricelevelanddecreases
equilibriumrealGDP.
C) arightwardshiftintheAScurve,whichincreasesboththeequilibriumpriceleveland
equilibriumrealGDP.
D) arightwardshiftintheADcurve,whichincreasesboththeequilibriumpriceleveland
equilibriumrealGDP.
E) aleftwardshiftintheADcurve,whichdecreasesboththeequilibriumpricelevelandreal
GDP.
10. Assumethatatthecurrentmarketpriceof$4perunitofagood,youarewillingandabletobuy
20units.Lastyearatapriceof$4perunit,youwouldhavepurchased30units.Whatismost
likelytohavehappenedoverthelastyear?
A) Supplyhasincreased.
B) Supplyhasdecreased.
C) Demandhasdecreased.
D) Quantitysuppliedhasdecreased.
E) Demandhasincreased.
11. Accordingtothelawofdemand,ifthepriceofmovierentalsdecreased,ceterisparibus,
A) thequantitydemandedofmovierentalswoulddecrease.
B) thequantitydemandedofmovierentalswouldnotchange.
C) thedemandformovierentalswouldincrease.
D) thequantitydemandedofmovierentalswouldincrease.
E) thedemandformovierentalswoulddecrease.
12. Since1920,theNBER(NationalBureauofEconomicResearch)hastrackedthebusinesscycles
intheU.S.economythatoccurredbetween1854andthepresenttime.Approximatelyhow
many(complete)businesscyclesoccurredintheU.S.duringtheperiod18542012?
A) 32.
B) Morethan50.
C) 12.
D) 33.
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E)

43.

Usethefollowingtoanswerquestions1316:

Production
Vegetables
Meat

ProductionData
PricesperUnit
Output
1995
2003
1995
2003
$2
$4
250
400
$8
$12
500
650

13. Refertothetableabove.WhatisnominalGDPfor1995?
A) $500.
B) $4,500.
C) $750.
D) $5,400.
E) $10.
14. Refertothetableabove.WhatistherealGDPgrowthfrom1995to2003using1995asthebase
year?
A) 34.3percent.
B) 73.3percent.
C) 11.1percent.
D) 13.6percent.
E) 33.3percent.
15. Refertothetableabove.WhatistherealGDPgrowthfrom1995to2003using2003asthebase
year?
A) 34.3percent.
B) 11.0percent.
C) 11.4percent.
D) 13.6percent.
E) 33.3percent.
16. Refertothetableabove.WhatisnominalGDPfor2003?
A) $4,500.
B) $750.
C) $9,400.
D) $1600.
E) $7,800.

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17.Inacapitalistic,freemarketsystem,whodecideswhatisproduced?
A)FinancialIntermediaries,suchasGoldmanSachsandMorganStanley.
B)TheFederalGovernment.
C)Corporations.
D)StateandLocalGovernmentAuthorities.
E)Consumers.
Usethefollowingtoanswerquestion18:

P ric eL ev el(dollars)

AS
A ssum e the distan ce
be tw e e nA D 1 and A D 2 is
eq ua lto the dista nce
be tw e e nA D 2 a ndA D 3 .

P3

P2
P1

B
A
AD1

AD2

AD3

Y 1 Y 2 Y 3
0

R e a lG D P (d ollars)

18.Refertothefigureabove.WhatwouldcausetheeconomytomovefromequilibriumpointAtoequilibrium
pointB?
A)LowernationalincomelevelsinGermany,Canada,andMexico.
B)AsignificantdeclineintheU.S.commonequitymarket(a"stockmarketcrash").
C)LowerFederaltaxratesonindividualsandbusinessesintheU.S.
D)Asignificanttechnologicalimprovementintheelectricitygenerationindustry.
E)NoneoftheabovewouldcausetheeconomytomovefrompointAtopointB.

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Forquestions19through23below,assumethefollowingannualvaluesforeachofthemacroeconomicvariable
given.Numbersare$billionsperyear.
Ig=GrossInvestment=250
RE=RetainedEarningsofCorporations=20
G=GovernmentGoods=500
BusTr=NetBusinessTransferPayments=22
M=Imports=300
RFRW=ReceiptsFromtheRestoftheWorld=30
PayTax=PayrollTaxes=60
SSI=SocialSecurityIncome=35
CCA=CapitalConsumptionAllowance(Depreciation)=145
C=ConsumerGoods=2,200
IBT=IndirectBusinessTaxes=30
PTRW=PaymentsTotheRestoftheWorld=20
CIT=CorporateIncomeTaxes=40
X=Exports=200
S.D.=StatisticalDiscrepancy=30
19.HowmuchisGrossDomesticProduct(GDP)fortheeconomy?GDP=500+(200300)+2,200+250
A)2,650.
B)2,850.
C)2,800.
D)2,600.
E)2,050.
20.HowmuchisGrossNationalProduct(GNP)fortheeconomy?GNP=GDP+RFRWPTRW
2850+3020
A)2,654.
B)2,860.
C)2,604.
D)2,840.
E)2,616.
21.HowmuchisNetNationalProduct(NNP)fortheeconomy?
A)2,715.
B)2,559.2860145
C)2,574.
D)2,769.
E)2,571.
22.HowmuchisNationalIncome(NI)fortheeconomy?
A)2,685.
B)2,739.
C)2,544.
D)2,729.
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E)2,529.

23.HowmuchisPersonalIncome(PI)fortheeconomy?
A)2,447.
B)2,476.PI=2685+93
C)2,403.
D)2,676.
E)2,592.
Usethefollowingtabletoanswerquestions24and25.

PRICEINDEX
YEARNOMINALFORGDP
GDP(2000=100)
1970
$1,500B 25

1977$3,000B50
24.WhatisrealGDPin1977using2000asthebaseyear?
A)6,000.
B)4,000.
C)100.
D)5,000.
E)10,000.

25.ByhowmuchdidrealGDPincreasebetween1970and1977?
A)1,000.
B)2,000.
C)zero.
D)4,000.
E)5,000.

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