Introduction to Macroeconomics Allen R. Sanderson

Economics 19900 Winter 2017

FIRST HOUR EXAMINATION

Name (Please Print): ______________________________________________ [50 Points Possible]

Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 25 points total.

1. Which of the following is considered by most economists to be the single best measure of a society’s

current economic well-being?

a. the unemployment rate

b. the inflation rate

c. GDP

d. the rate of real economic growth

e. the literacy rate and life expectancy

2. If you add together the total number of officially unemployed plus marginally attached workers plus those

employed part time for economic reasons and divide by the civilian labor force you would get:

a. the natural rate of unemployment.

b. the structural rate of unemployment.

c. U-1; d. U-3; e. U-6; f. U-10.

3. The U.S. federal personal income tax could be categorized as all of the following except:

a. direct.

b. progressive.

c. fair.

d. based on the ability-to-pay principle.

e. has a lower “highest” or top marginal rate than that in most of our peer nations.

4. If consumption is $7 trillion, investment is $1.5 trillion, depreciation is $0.5 trillion, government

expenditures on goods and services are $2 trillion, government transfer payments are $1 trillion, taxes are

$0.5 trillion, exports are $1.5 trillion and imports are $1.25 trillion, what is GDP in that case?

a. $14.25 tril; b. $10.75 tril; c. $11.25 tril; d. $12.50 tril; e. $13.25 tril

5. What basket of products (as opposed to the basket of deplorables) is used to construct the CPI?

a. a random sample of all goods and services produced by our economy in the preceding twelve months

b. basic necessities purchased by households in the base year

c. a changing or moving mix of commodities purchased by households each year

d. the goods and services bought by the average consumer as determined by government surveys

e. all final goods and services produced in the economy that year

6. Which of the following statements is correct?

a. Most economists agree that our tax system would raise more revenue if tax rates were lowered.

b. An efficient tax system is one that is perceived as fair by the majority of the population.

c. Taxes create deadweight losses because they distort incentives.

d. Under a regressive tax system, the poor would pay more in taxes than the rich.

e. Horizontal equity means that people should pay taxes according to how much they receive in

government transfer payments and other benefits.

7. According to Mankiw, efficiency wages may increase (or contribute to or improve):

a. productivity.

b. structural unemployment.

c. workers’ health.

d. a labor surplus.

e. All of the above are correct.

Partial preview of the text

Download Exam Winter 2017 Econ 199 and more Exams Economics in PDF only on Docsity!

Introduction to Macroeconomics Allen R. Sanderson Economics 19900 Winter 2017 FIRST HOUR EXAMINATION Name (Please Print): ______________________________________________ [50 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 2 5 points total.

Which of the following is considered by most economists to be the single best measure of a society’s current economic well-being? a. the unemployment rate b. the inflation rate c. GDP d. the rate of real economic growth e. the literacy rate and life expectancy
If you add together the total number of officially unemployed plus marginally attached workers plus those employed part time for economic reasons and divide by the civilian labor force you would get: a. the natural rate of unemployment. b. the structural rate of unemployment. c. U-1; d. U-3; e. U-6; f. U-10.
The U.S. federal personal income tax could be categorized as all of the following except: a. direct. b. progressive. c. fair. d. based on the ability-to-pay principle. e. has a lower “highest” or top marginal rate than that in most of our peer nations.
If consumption is $7 trillion, investment is $1.5 trillion, depreciation is $0.5 trillion, government expenditures on goods and services are $2 trillion, government transfer payments are $1 trillion, taxes are $0.5 trillion, exports are $1.5 trillion and imports are $1.25 trillion, what is GDP in that case? a. $14.25 tril; b. $10.75 tril; c. $11.25 tril; d. $12.50 tril; e. $13.25 tril
What basket of products (as opposed to the basket of deplorables) is used to construct the CPI? a. a random sample of all goods and services produced by our economy in the preceding twelve months b. basic necessities purchased by households in the base year c. a changing or moving mix of commodities purchased by households each year d. the goods and services bought by the average consumer as determined by government surveys e. all final goods and services produced in the economy that year
Which of the following statements is correct? a. Most economists agree that our tax system would raise more revenue if tax rates were lowered. b. An efficient tax system is one that is perceived as fair by the majority of the population. c. Taxes create deadweight losses because they distort incentives. d. Under a regressive tax system, the poor would pay more in taxes than the rich. e. Horizontal equity means that people should pay taxes according to how much they receive in government transfer payments and other benefits.
According to Mankiw, efficiency wages may increase (or contribute to or improve): a. productivity. b. structural unemployment. c. workers’ health. d. a labor surplus. e. All of the above are correct.

Estimates of which of following non-market production is/are included in GDP? a. the value of unpaid housework done by the wife, husband, partners, or children in that household b. the value of appliances, furniture, sports equipment and other goods purchased in an earlier year c. the estimated rental value of owner-occupied homes d. the estimated value of prostitution, drug sales, gambling revenues, and babysitting e. the estimated value of fruits and vegetables grown in backyard gardens and consumed by the family
Minimum wage laws, and increases in minimum wage rates: a. create structural unemployment. b. are the predominant source of unemployment in the U.S. c. akin to efficiency wages and unions, are seen by the vast majority of economists as positive factors. d. explain the presence of frictional, structural, cyclical, and natural unemployment. e. I prefer not to answer this question because I’m an anthropology major and this is all quite upsetting.
A painter – that is, a professional or commercial house painter, not Picasso – buys paint for $500, which he uses to paint a family’s house per their agreement or contract; he charges them $1,200 for the job. How much do these transactions add to GDP? a. $0 if the paint he bought was made in China and then shipped to the U.S. on a Chinese vessel; b. $500; c. $700; d. $1,200; e. $1,
The natural rate of unemployment: a. is constant over time and cannot be affected by public-policy actions. b. is the sum of frictional unemployment and structural unemployment. c. refers to short-term fluctuations in unemployment over a business cycle. d. will be zero in the long run (or at least once a business cycle has run its course). e. is higher for the U.S. than it is in most EU countries.
Suppose the typical household spends $3,000 on goods and services this month. In February it spends $3,600 on the exact same things. Using January as the base period, what is the CPI for February? a. $600; b. .20; c. 20%; d. 136; e. 120; f. 240
At the present time, for the United States the lowest component of its unemployment rate is: a. seasonal; b. cyclical; c. natural; d. structural; e. frictional.
Your parents write out a check to the University of Chicago for your tuition. That amount: a. does not count in GDP because it’s considered an intermediate good. b. enters GDP as an investment – in human capital. c. is considered (your) consumption of a durable good (that is, your future earning stream). d. counts in GDP as the consumption of a service. e. depends on whether your parents are Americans (if they are, it counts; if they aren’t, it doesn’t).
Which of the following is included in U.S. GDP? a. your purchase of $1,000 of Coca-Cola stock b. your purchase of a used copy of Mankiw’s 6th^ edition to be used in hopes of passing this course c. an appendectomy performed on you last week by a surgeon at the U of Chicago Hospitals d. your monthly Social Security stipend paid by the U.S. government because you qualify as poor e. your financial aid award from the University
You graduate from the College in June 2017 and immediately begin looking for a job. Which of the following does not increase? a. the employment rate b the labor force participation rate c. the labor force d. cyclical unemployment e. structural unemployment

Part II. Short Answer, Problem, Graphing and Essay Questions. 25 Points Total. Note : Illegible handwriting will not be read and the full point deduction will be assessed.

What problems would one run into trying to compare the U.S. economy today with it 50 years ago? The U.S. economy in 2017 with the Indian economy in 2017? What adjustments would you want to make? (2 points)
All politicians promise to eliminate waste, fraud and corruption in the government. A year ago a federal audit showed that last year the Social Security Administration paid almost $47 million in benefits to people who were dead. How would an economist think about the optimal amount of such errors? (2 points)
What are the options available to President Trump to “Make America Great Again” by doubling U.S. GDP during the eight years of his presidency? (2 points)
Being as “granular” or specific as possible, what category or group or person has the lowest rate of unemployment in the U.S.? Explain. (2 points)

How would one attempt to explain the presence of unemployment in the long run? (2 points)
Complete each of the following sentences. (1/2 point each, 2 points total) The CPI measures... The PPI measures... The GDP Deflator measures... The PPP measures...
Your instructor began working at the University of Chicago in 1984. How much would his nominal salary have had to increase between his arrival and 2017 to leave his standard of living the same? What if he were the typical American; approximately how much larger would his nominal salary be today than it was 33 years ago? Explain. (2 points)
Angus, a sheep farmer, sells wool to Barnaby, a knitter, for $20. Barnaby makes two hand-made sweaters. He sells one to Collette for $40, the current retail price, and is still holding one that he fully anticipates he will sell soon. So what’s the GDP from all this? What would it be if Angus were a knitter as well as a sheep rancher and did everything “in house” as opposed to selling the wool to Barnaby? And how much did Barnaby add to GDP? (2 points)

Exam Winter 2017 Econ 199, Exams of Economics

Related documents

Partial preview of the text

Download Exam Winter 2017 Econ 199 and more Exams Economics in PDF only on Docsity!