Homework 3 ECON 101 Principles of Economics Due Date June 5th 2012 1 Macroeconomists study a the decisions of individual households and firms b the interaction between households and firms c economy wide phenomena d regulations imposed on firms and unions 2 Which of the following newspaper headlines is more closely related to what microeconomists study than to what macroeconomists study a Unemployment rate rises from 5 percent to 5 5 percent b Real GDP grows by 3 1 percent in the third quarter c Retail sales at stores show large gains d The price of oranges rises after an early frost 3 Gross domestic product measures a income and expenditures b income but not expenditures c expenditures but not income d neither income nor expenditures 4 For an economy as a whole income must equal expenditure because a the number of firms is equal to the number of households in an economy b individuals can only spend what they earn each period c every dollar of spending by some buyer is a dollar of income for some seller d every dollar of saving by some consumer is a dollar of spending by some other consumer 5 In the actual economy goods and services are purchased by a households but not firms or the government b households and firms but not the government c households and the government but not firms d households firms and the government 6 GDP is defined as the a value of all goods and services produced within a country in a given period of time b value of all goods and services produced by the citizens of a country regardless of where they are living in a given period of time c value of all final goods and services produced within a country in a given period of time d value of all final goods and services produced by the citizens of a country regardless of where they are living in a given period of time 7 In order to include many different goods and services in an aggregate measure GDP is computed using primarily a values of goods and services based on surveys of consumers b market prices c quantities purchased by a typical urban household d profits from producing goods and services 8 If the price of a Blu Ray Disc player is three times the price of an MP3 player then a BlueRay Disc player contributes a more than three times as much to GDP as does a MP3 player b less than three times as much to GDP as does a MP3 player c exactly three times as much to GDP as does a MP3 player d None of the above is necessarily correct 9 Over the last few decades Americans have chosen to cook less at home and eat more at restaurants This change in behavior by itself has a reduced measured GDP b not affected measured GDP c increased measured GDP by the value of the restaurant meals d increased measured GDP by the value added by the restaurant s preparation and serving of the meals 10 A professional gambler moves from a state where gambling is illegal to a state where gambling is legal Most of his income was and continues to be from gambling His move a raises GDP b decreases GDP c doesn t change GDP because gambling is never included in GDP d doesn t change GDP because in either case his income is included 11 Gasoline is considered a final good if it is sold by a a gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles b pipeline operator to a gasoline station in San Francisco c gasoline station to a motorist in Los Angeles d All of the above are correct 12 Grapes are considered intermediate goods a whether the purchaser uses them to make wine to sell or eats them b if the purchaser uses them to make wine to sell others but not if the purchaser eats them c if the purchaser eats them but not if the purchaser uses to them to make wine to sell d None of the above is correct 13 Martin a U S citizen travels to Mexico and buys a newly manufactured motorcycle made there His purchase is included in a both Mexican GDP and U S GDP b Mexican GDP but it is not included in U S GDP c U S GDP but it is not included in Mexican GDP d neither Mexican GDP nor U S GDP 14 Which of the following items is included in U S GDP a final goods and services that are purchased by the U S federal government b intermediate goods that are produced in the U S but that are unsold at the end of the GDP accounting period c goods and services produced by foreign citizens working in the U S d All of the above are included in U S GDP 15 The consumption component of GDP includes spending on a durable goods and nondurable goods but not spending on services b durable goods and services but not spending on nondurable goods c nondurable goods and services but not spending on durable goods d durable goods nondurable goods and services 16 Which of the following is an example of a durable good a a refrigerator b a quart of motor oil c a business suit d a can of soup 17 Which of the following is included in the investment component of GDP a spending on new residential construction and spending on stocks and bonds b spending on new residential construction but not spending on stocks and bonds c spending on stocks and bonds but not spending on new residential construction d neither spending on stocks and bonds nor spending on new residential construction 18 A U S citizen buys a tea kettle manufactured in China by a company that is owned and operated by U S citizens In which of the following components of U S GDP is this transaction accounted for a consumption and imports b consumption but not imports c imports but not consumption d neither consumption nor imports 19 The city of Ann Arbor Michigan buys a police car manufactured in Germany In the GDP accounts this transaction is included in a in government expenditures and exports b government expenditures and imports c exports but not government expenditures d imports but not government expenditures 20 The U S Air Force pays a Turkish citizen 30 000 to work on a U S base in Turkey As a result a U S government purchases increase by 30 000 U S net exports decrease by 30 000 and U S GDP is unaffected b U S government purchases increase by 30 000 U S net exports are unaffected and U S GDP increases by 30 000 c U S government purchases net exports and GDP are unaffected d U S government purchases are unaffected U S net exports decrease by 30 000 and U S GDP decreases by 30 000 21 In the economy of Ukzten in 2010 consumption was 1000 exports were …