1. Last year, John had rented a house in Chicago at $3,000 per month, which was the going market rate at the time. The rental rates in Chicago this year have not changed from last year and John wanted to renew his lease. But, the owner of the house decided to sell it. John liked the house and ended up buying it. So, this year instead of a rent, he is making a monthly payment of $3,500 on his mortgage. For simplicity, assume that the cost of the real estate transaction was $0. As a result of this change in ownership, the monthly contribution of the house to the real GDP of the United States has

a.

declined by $3,000.

b.

declined by $500.

c.

not changed.

d.

increased by $500.

e.

increased by $3,000.

f.

increased by $3,500.

1. In the above question (Question 1), if the market rental rate of the house this year had gone up to $3,500, then the constant-price measure of the US GDP with base year 2020 would have

a.

declined by $3,000.

b.

declined by $500.

c.

not changed.

d.

increased by $500.

e.

increased by $3,000.

f.

increased by $3,500.

1.According to the US Bureau of Labor Statistics (BLS), in November 2020 the U.S. labor force declined by 400,000, when compared to the situation in October 2020. At the same time, the number of people unemployed decreased by 326,000. How much did the total employment in the US change in November 2020 compared to October 2020?

a.

-326,000

b.

-74,000

c.

+245,000

d.

+326,000

e.

+726,000

1. The Central Statistics Office of India has calculated the annual constant-price and chain-rule GDP values for 2020 using 2019 as the base year. As was the case for many other economies, India had suffered from a Covid-related recession in 2020. From what you know about the constant price and chain rule calculations, you expect that for 2020 the constant-price GDP figure

a.

to be lower than the chain-rule GDP figure.

b.

to be the same as the chain-rule GDP figure.

c.

to be higher than the chain-rule GDP figure.

d.

to be lower than the chain-rule figure since 2020 was a recession year.

e.

to be higher than the chain-rule figure since 2020 was a recession year.

1. During the outbreak of COVID-19 in 2020, most households in the United States had decided to cook as many of their meals as possible at home. Each day they purchased the ingredients needed for 900 million meals at an average cost of $7 per meal at stores. They also purchased 100 million meals from restaurants at an average price of $15 per meal.

With the vaccination rates growing in 2021, households are expected to increase their restaurant use by 150 million meals to 250 million meals, thus reducing meals prepared at home by the same number of meals to 750 million meals per day. Assume that the cost of groceries and food preparation per meal at home and the price of restaurant meals in 2021 are the same as in 2020. How much will this shift in food consumption pattern increase the US GDP per day compared to the situation in 2020?

a.

$0 million per day

b.

$500 million per day

c.

$700 million per day

d.

$1,200 million per day

e.

$2,250 million per day

1. In spring 2020, American households started preparing more meals at home due to the COVID-19 outbreak. This meant that a larger share of their expenditures was spent on food items for use at home. In May 2020, the average price of such items rose by 4.5 percent relative to the corresponding price in May 2019. For all other consumer items, the average price during the same period remained unchanged. When calculating the overall consumer price index (CPI) for May 2020, the Bureau of Labor Statistics used the expenditure shares of food-at-home and all other items that it had calculated based on a household expenditure survey carried out in 2019. The inflation rate derived from the CPI calculated in this way

a.

is an accurate measure of the true cost of living increase for households in May 2020.

b.

underestimates the true cost of living increase for households in May 2020.

c.

overestimates of the true cost of living increase for households in May 2020.

d.

may underestimate or overestimate the true cost of living increase for households in May 2020.