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EXAM 1 - REVIEW

1.

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002

and $0.50 in 2009. If 10 apples and 5 oranges were purchased in 2002, and 5 apples and

10 oranges were purchased in 2009, the CPI for 2009, using 2002 as the base year, is:

A) 0.75.

B) 0.80. 2002

C) 1.

D) 1.25.

2.

The national income accounts identity, for an open economy, is:

A) Y = C + I + G NX.

B) Y = C + I + G + NX.

C) Y = C + I + G.

D) Y = C + I G.

3.

Consumption depends ______ on disposable income, and investment depends ______

on the real interest rate.

A) positively; positively

B) positively; negatively

4.

If income is 4,800, consumption is 3,500, government spending is 1,000, and tax

revenues are 800, private saving is:

A) 300.

B) 500.

C) 1,000.

D) 1,300. 4800- 3500:1300 is what he got

Saving(Y-C-G) =Private saving (Y-C-T) + Public saving (T-G) Private

saving=4800-3500-800=500

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5.

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657,

investment is $741, and government purchases are $1,098, then net exports are:

A) $131.

B)$131. 5465: 3657+741+1098+N

5405:5496+ N

C) $31.

D)$31.

6.

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002

and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges

were produced in 2002 and 4 in 2009, then real GDP (in 2002 prices) in 2009 was:

A) $5.

B) $6.50.

C) $9.50.

D) $11.

7.

If the consumption function is given by C = 500 + (6000 1400), and Y is 6,000 and T is

given by T = 200 + 0.2Y, then C equals:

A) 2,500.

B) 2,800. Plug 6000 in to y

C) 3,500.

D) 4,200.

8.

The production function feature called constant returns to scale means that if we:

A) multiply capital by z1 and labor by z2, we multiply output by z3.

B) increase capital and labor by 10 percent each, we increase output by 10 percent.

C) increase capital and labor by 5 percent each, we increase output by 10 percent.

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D) increase capital by 10 percent and increase labor by 5 percent, we increase output

by 7.5 percent.

9.

Macroeconomics does not try to answer the question of:

A) why do some countries experience rapid growth.

B) what is the rate of return on education.

C) why do some countries have high rates of inflation.

D) what causes recessions and depressions.

10.

If nominal GDP in 2009 equals $14 trillion and real GDP in 2009 equals $11 trillion,

what is the value of the GDP deflator?

A) 0.79

B) 1.03

C) 1.27

D) 1.30

11.

If the adult population equals 250 million, of which 145 million are employed and 5

million are unemployed, the labor force participation rate equals ______ percent.

A) 50

B) 58

C) 60

D) 67

He got 145/250