Question

Instructions: Please answer all y The following are all final goods except Four used by the baker to make cupcakes. b. Bread eaten by a family for lunch. c. Pencils used by a student in class. d. Adidas shoes used by a basketball player. in one year, a firm increases its production of computers by $9 million and it increases its sales by $8 million. Everything else remaining constant in the economy, which of the following statements is true a. GDP increases by $8 million and inventory investment decreases by $1 million. 6 GDP increases by $9 million and inventory investment increases by $1 million. C. Inventory investment decreases by $1 million. d. GDP increases by $8 million and investment increases by $1 million. If nominal GDP increases, then real GDP a. Must decrease. b. Must increase. c. Must not change. Could increase, decrease or not change. of the following who is cyclically unemployed? a. Casey, who lost his job because the technology changed so that he was longer needed. b. Katrina, an assistant manager who quit her job to search for a better close to home. Kathy, a steelworker who was laid off but has stopped looking for a yob because she cannot find a new job. David, a new car salesman, who lost his job because of a recession. (d. Suppose a basket of consumer goods and services costs $180 using the base prices, and the same basket of goods and services costs $300 using the period prices. The CPI for the current period equals a. 166.7 b. 66.7 C. 160.0 d. 60.0

Answer 1

1.

Answer: a

Flour is the input of cupcake; therefore, flour is an intermediary good but not a final good.

All the others are final goods, since these are used by end-users or consumers.

2.

Answer: b

GDP is the value of all final goods produced by an economy during a period; this is not necessary that all those products must be sold out; unsold amount is also to be recorded as GDP. Therefore, $9 million is GDP.

The excess of production (9 million – 8 million =) $1 million is the increase in inventory.

3.

Answer: d

There may be an increase, a decrease, or no change.

Nominal GDP = Real GDP + Inflation

                        (OR)

Nominal GDP = Real GDP – Deflation

Therefore, nominal GDP depends on real GDP, inflation, and deflation. If inflation or deflation changes, there would be no necessary to change in real GDP; otherwise, real GDP may change if inflation or deflation remains constant.

4.

Answer: d

The loosing of job because of recession is a cyclical unemployment, since this is a phase of economy when all sorts of economic activities slow down.

Other options are not true:

Option a: this is structural unemployment.

Option b: this is frictional unemployment.

Option c: she is not unemployed, since she is not searching a job currently; moreover, she is not in the labor force.

5.

Answer: a

CPI (current year) = (Cost of basket in the current year / Cost of basket in the base year) × 100

                              = ($300 / $180) × 100

                              = 166.7