Econ 2105 Exam 1 Review

Suppose an economy has historically grown at a rate of 1.25%. Economic activity decreased every quarter over the past year, but the decline stopped this quarter. The economy is expected to grow at a rate of 1.4% in the near future, but monetary authorities are concerned that inflation may increase. Currently, this economy is probably in the _____ stage of the business
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Suppose an economy has historically grown at a rate of 1.25%. Economic activity decreased every quarter over the past year, but the decline stopped this quarter. The economy is expected to grow at a rate of 1.4% in the near future, but monetary authorities are concerned that inflation may increase. Currently, this economy is probably in the _____ stage of the business
Trough
What are the 4 phases of the business Cycle?
expansion (recovery), peak, contraction (recession), trough
What phase of the business cycle does the headline "Consumer Confidence at Highest Level in Three Years" suggest?
recovery
In the circular flow diagram __________
Total expenditures are equal to total receipts (payments)
A Japanese automaker produces $2 million worth of automobiles in its factory in the United States. How much of that is added to the GNP of the United States?
$0.00
Which of the following transactions should not be included in the calculation of GDP?
Sharon receives $100 in food stamp
Which of these is NOT used to calculate GDP as part of the income approach?
Government Consumption
GDP also can be calculated as the compensation to factors of production
Compensation of employees
Proprietor's income
Corporate profits
Rental income
Net interest
Indirect taxes minus subsidies
Net business transfer payments
Surplus of government enterprise
If GNP is $625 billion, receipts of factor income from the rest of the world are $25 billion, and payments of factor income to the rest of the world are $50 billion, then GDP is
$650 Billion
Suppose that anticipated inflation is 5 % for the coming year. The loan contracts are set at 9% with the expectation of a 4% return after inflation. If the actual inflation rate at the end of the year is 6%:
Debtors (borrowers); Creditors (lenders)
Debtors gain at the expense of creditors
Suppose that anticipated inflation is 6% for the coming year. The loan contracts are set at 10% with the expectation of a 4% return after inflation. If the actual inflation rate at the end of the year is 7% Debtors (borrowers); Creditors (lenders) Think about real interest rate (return) and who will benefit from it.debtors gain at the expense of creditorsSuppose that anticipated inflation is 5% for the coming year. The loan contracts are set at 8% with the expectation of a 3% return after inflation. If the actual inflation rate at the end of the year is 4%creditors gain at the expense of debtors.What is a person's classification if he or she has given up actively looking for work?a discouraged worker/discouraged job seekerTaylor resigned from the job and decided to stay at home for a while. What is the impact of Taylor's decision on the labor-force participation rate? Labor force participation rate=Labor force/Populationit decreasesIf the consumer price index (CPI) was 97 in 2017, 100 in 2018, 102 in 2019, then the base year must be:2018If the consumer price index (CPI) in 2015 was 114.7 and the CPI in 2016 was 124.5, then the rate of inflation between 2015 and 2016 was8.5%.Which of the following is not considered capital? a tractor produced by John Deere factory a company builds to produce other output 10,000 U.S. dollars the knowledge an individual acquires through education10,000 us dollars_______ unemployment is the result of changes in the business cycle.CyclicalIf planned investment falls by $2,000 and the MPC is 0.8, the total effect on the economy is a decrease of _____ in income or output *∆𝑌 =∆𝐼𝑥 1/1−𝑀𝑃𝐶10,000Find the equilibrium level of output (Y) for the economy, where the consumption function is given as C=200+0.8Y and the Planned Investment= 40? *Use formula Y=C+I$1,200If income rises from $9,000 to $12,000 and investment increases from $8,000 to $9,200, then MPS is ____ and MPC is _______. *∆𝑌 =∆𝐼𝑥 1/𝑀𝑃𝑆 MPC=∆𝑪/∆𝒀; MPS=∆S/∆𝒀 MPC+MPS=10.4; 0.6Assume there is no government or foreign sector. If the MPS is 0.40, the multiplier is *1/1-MPC or 1/MPS2.5The unemployment rate is equal toUnemployment rate= 𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑/𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑑+𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑=𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑/𝐿𝑎𝑏𝑜𝑟𝑓𝑜𝑟𝑐eLabor force participation rate is equal to𝐿𝑎𝑏𝑜𝑟𝑓𝑜𝑟𝑐𝑒𝑝𝑎𝑟𝑡𝑖𝑐𝑖𝑝𝑎𝑡𝑖𝑜𝑛𝑟𝑎𝑡𝑒 =𝐿𝑎𝑏𝑜𝑟𝑓𝑜𝑟𝑐𝑒/Population