QUESTION 12 If waitresses and taxi drivers do not report all of their income to the government, GDP will be understated. This is because unreported income O a. is part of the underground economy. 0 b. involves the introduction of new goods. 0 c. is an example of nonmarket production. 0 d. represents an increase in leisure time. QUESTION 13 Nominal GDP can rise as a result of a rise in , while Real GDP can rise as a result of a rise in O a. prices or output; prices only. 0 b. prices only; prices or output. 0 c. prices or output; output only 0 d. prices or output; prices or output, as well. QUESTION 14 Suppose your annual income went up from $60,000 to $63,000 during the past year. During the same time, inflation rate was 5%. This means your real income 0 a. went up. 0 b. went down. 0 c. did not change. 0 d. was the same as your nominal income. QUESTION 15 If the CPI is 251.01 in year 1 and 279.61 in year 2, what is the approximate ination rate between the two years? 0 a. 1.59% O b. Negative 4% O c. 4.88% Q d. 11.39% QUESTION 16 To macroeconomists, investment is mainly when firms 0 a. sell stocks and bonds to the public 0 b. buy stocks and bonds from other rms 0 c. to hold wealth such as large cash account and gold deposits 0 d. buy capital such as buildings. tools. and equipmants. QUESTION 17 The expenditure approach to measuring GDP sums O a. consumption, investment, government purchases, and net exports. O b. sales, revenues, income. and wages. O c. prots, compensation of employees, consumption, and investment. 0 d. net exports, consumption, wages, and salaries. QUESTION 18 Look at the following data: GDP = $7,920 billion; Investment = $2,100 billion; Exports = $300 billion; Government purchases = $1,450 billion; Consumption = $4,500 billion. What does import spending equal to? O a. $430 billion 0 b. 374 billion 0 c. $200 billion 0 d.$274 billion QUESTION 19 Which of the following would not be included in the measurement of GDP? 0 a. a bill from a car mechanic 0 b. wages of a card dealer working in a Las Vegas casino 0 c. commissions of a stockbroker Q d. the increased value of shares of stock QUESTION 20 The base year is the year 0 a. in which prices are unstable. 0 b. in which prices are lowest. 0 c. in which prices are highest. 0 d. that serves as a reference point or benchmark. QUESTION 21 At the time of Carol's 10 year high school reunion she was making $30,000 and the CPI was 90. Now that it is time for her to attend her 20 year high school reunion, Carol's income has risen to $65,000 and the CPI is 200. At her 20 year reunion, can Carol rightfully brag that her real income has risen since the last time she saw her former classmates ten years ago? 0 a. Yes, Carol's real income rose during that 10 year period. 0 b. No, Carol's real income fell during that 10 year period. 0 c. No, Carol's real income remained constant during that 10 year period. 0 d. It is impossible to determine what happened to Carol's real income. QUESTION 22 The movie "Return of the Jedi" earned $264 million in 1983 when it was released. The CPI in 1983 was 97.8 and the CPI in 2010 was 218.34. Approximately how much did the movie earn in 2010 dollars after indexing the 1983 earning to 2010 dollar value? 0 a, $290 million 0 b. $589 million 0 c. $2.12million O d.$123 million QUESTION 23 Higher the opportunity cost of a choice, more likely one will make it, 0 True 0 False QUESTION 24 6 points Save Answer A market basket is made up of three goods, 90X, 130Y, and 200Z. The prices in year one are $1, $2, and $3.50, respectively. The prices in year two are $1.20, $2.30, and $4. Assume year one to be the base year: Calculate the CPls for each year. (Make sure you show your calculation and round up to the nearest hundredth) Base year: Year 2 rices Year 1 prices p Good X: 95 units $1.00 $1.25 Good Y: 140 units $2.00 $2.42 Good 2:210 units $3.50 $4.15 For the toolbar, press ALT+F10 (PC) or ALT+FN+F1O (Mac). QUESTION 25 8 points Suppose there are 3 goods in the economy, A, B, and C. The year one quantity of each is 11A, 25B, 280. year one prices are $1.20 for each unit ofA, $2.10 for each unit of B, $3.30 for each unit of C. The year two quantity of each is 10A, 21 B, 270. year two prices are $1.80 for each unit ofA, $2.90 for each unit of B, $4.10 for each unit of C. Year number one is the Base-year. Nominal GDP in year one equals and in year two equals Real GDP in year one equals and in year two equals (Make sure you show your calculation and round up to the nearest hundredth) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)