曼昆宏观经济学英语课后题答案

CHAPTER23:MEASURINGANATION'SINCOME

True/FalseIndicatewhetherthestatementistrueorfalse.

?1.?Thecircularflowdiagramdescribesalltransactionsbetweenhouseholdsandfirmsinasimple

economyandshowstheequalityofexpendituresandincome.

ANSWER:T

?

POINTS:?0/1

?2.?Grossdomesticproductincludesmostitemsproducedandsoldillicitly.

ANSWER:F

?

POINTS:?0/1

?3.?Netnationalproductisthetotalincomeofanation'sresidentsminuslossesfromdepreciation.

ANSWER:T

?

POINTS:?0/1

?4.?Disposablepersonalincomeistheincomethathouseholdsandunincorporatedbusinesshave

leftaftersatisfyingalltheirobligationstothegovernment.Itequalspersonalincomeminus

personaltaxesandcertainnon-taxpaymentstogovernment.

ANSWER:T

?

POINTS:?0/1

?5.?Thepurchaseofnewhousesbyhouseholdsisincludedinthecalculationofpersonal

consumptionexpendituresofGDP.

ANSWER:F

?

POINTS:?0/1

MultipleChoiceIdentifythechoicethatbestcompletesthestatementoranswersthequestion.

?1.?WhenGDPfalls,

a.incomeandexpendituremustbothfall.

b.incomeandexpenditurecanbothrise.

c.incomemustfall,butexpendituremayriseorfall.

d.expendituremustfall,butincomemayriseorfall.

ANSWER:A

?

POINTS:?0/1

?2.?lncomeequalsexpenditurebecause

a.firmsalwayspayoutalltheirrevenueasincometosomeone.

b.eachtimeasaleismade,thereisabuyerandaseller.

c.householdsownthefactorsofproductionusedtogenerateincomes.

d.Alloftheabovearecorrect.

ANSWER:B

?

POINTS:?0/1

?3.?lfaprovincemakestheproductionandsaleofillicitdrugslegal,thenGDP

a.mustincrease.

b.mustdecrease.

c.wouldn'tchange.

d.mayincreaseordecrease.

ANSWER:A

?

POINTS:?0/1

?4.?Whenagovernmentprovidessubsidiestoencouragegrowthofsmallbusinesses,thesubsidies

would

a.beincludedinGDPbecausetheyareinvestedbybusinesses.

b.beincludedinGDPbecausetheyareaformofgovernmentspending.

c.notbeincludedinGDPbecausetheyaretransferpayments.

d.mayormaynotbeincludedinGDP,dependingonhowthefundsareused.

ANSWER:C

?

POINTS:?0/1

?5.?Dieselfuelis

a.alwaysconsideredafinalgood.

b.countedasanintermediategoodifacompanyusesittoprovidetransportationservices.

c.countedasafinalgoodifafarmerusesittorunatractortogrowcrops.

d.Bothbandcarecorrect.

ANSWER:B

?

POINTS:?0/1

?6.?Grossdomesticproduct

a.isthemarketvalueofallfinalgoodsandservicesproducedwithinacountryinagiven

period(usuallyayear)

b.istheincomeinthehandsofindividualsafterdeductingincometaxes;incomeavailable

tohouseholdstospendandsave

c.isthevalueofgoodsandservicespurchasedbyalllevelsofgovernment—federal,

provincial,andlocal-inagivenperiod

d.isthemarketvalueofallfinalgoodsandservicesproducedbypermanentresidentsofa

nationinagiventimeperiod

ANSWER:A

?

POINTS:?0/1

?7.?Macroeconomicsisthatbranchofeconomicsthatstudies

a.theconditionsofindividualmarkets

b.theinfluenceofgovernmentsonindividualmarkets

c.economy-widephenomena

d.onlytheprivatesectoroftheeconomy

ANSWER:C

?

POINTS:?0/1

?8.?SupposethatnominalGDPis$6,000billionandrealGDPis$3,000.WhatistheGDPprice

deflator?

a.125

b.150

c.200

d.250

ANSWER:C

?

POINTS:?0/1

?9.?Thepurchaseoffinalgoodsandservicesbyhouseholdsiscalled

a.investment

b.publicsectorexpenditure

c.consumption

d.netexports

ANSWER:C

?

POINTS:?0/1

?10.Investmentisthepurchaseofcapitalequipment,inventories,and

?a.structures

b.non-durablegoods

c.depreciation

d.importinvestment

ANSWER:A

?

POINTS:?0/1

?11.Transferpayments

?a.areincludedinGDPbecausetheyareformsofincome

b.areincludedinGDPbecausegoodsandserviceshavebeenproducedinthetransfer

c.areNOTincludedintheGDPbecausegoodsandserviceshavenotbeenproducedin

thetransfer

d.areincludedinGDPbecausetheyrepresenttheproductionoftransfersofgoodsand

servicestoforeigncountries

ANSWER:C

?

POINTS:?0/1

?12.Whichofthefollowingwouldbeconsideredconsumptionexpenditure?

?a.TheSmithsbuyahomebuiltin1990.

b.ThefederalgovernmentpaysthesalaryofacaptainintheArmedForces.

c.TheHostlersbuyanewcarthatwasmanufacturedinGermany.

d.Thegovernmentbuysfoodforitsarmedforces.

ANSWER:C

?

POINTS:?0/1

?13.ThemethodthatmeasuresGDPinrelationshiptothesizeofthepopulationiscalled

?a.GNP

b.workerGDP

c.GDPperperson

d.capitalGDP

ANSWER:C

?

POINTS:?0/1

?14.ThecomponentsofGDPare

?a.C+I+G

b.NX+G+C

c.C+G+NX

d.C+I+G+NX

ANSWER:D

?

POINTS:?0/1

?15.SupposenominalGDPis$7700andtheGDPdeflatoris110.RealGDPis

?a.$7700

b.$7000

c.$847,000

d.$8470

ANSWER:B

?

POINTS:?0/1

ShortAnswer

?1.?Whatarethecomponentsofgrossdomesticproduct(GDP)?

RESPONSE:

?

ANSWER:?ThecomponentsofGDPare:(1)consumptionspendingbyhouseholdsongoods

andservices,withtheexceptionofpurchasesofnewhousing;(2)Investment

spendingoncapitalequipment,inventories,andstructures,includinghousehold

purchasesofnewhousing;(3)governmentpurchasesorspendingongoodsand

servicesbythelocal,provincial,andfederallevelsgovernments;and(4)net

exportswhichisspendingondomesticallyproducedgoodsandservicesby

foreigners(exports)minusspendingonforeigngoodsandservicesbydomestic

resident(imports).

POINTS:?—/1

?2.?Differentiatebetweengrossdomesticproduct(GDP)andgrossnationalproduct(GNP).

RESPONSE:

?

ANSWER:?GDPisthevalueofallfinalgoodsandservicesproducedwithinacountryinagiven

year;whileGNPisthetotalincomeearnedbyanation'spermanentresidentsor

nationals(thatis,Canadians).GNPdiffersfromGDPbyincludingincomethat

citizensofthenation(Canada)earnedaboard,andexcludingincomethat

foreignersearnintheparticularcountry(E.g.inCanada).

POINTS:?—/1

?3.?DifferentiatebetweenrealGDPandnominalGDP.

RESPONSE:

?CHAP

ANSWER:?NominalGDPisthevalueofallfinalgoodsandservicesproducedwithinacountryTER

inayearandvaluedatcurrentprices;andrealGDPistheGDPvaluedatconstant24:

baseyearprices.?RealGDPisnotaffectedbychangesinthelevelofprices,soitMEAS

reflectsonlychangesintheamountsbeingproduced.URIN

POINTS:?—/1G

?4.?ExplainwhyGDPisnotconsideredaperfectmeasureofwell-being?THE

RESPONSE:COST

?OF

ANSWER:?GDPisnotconsideredaperfectmeasureofwell-beingbecausesomeoftheLIVIN

factorsthatcontributetoagoodlifeareomitted.?Thesewouldinclude:leisureG

time,thequalityoftheenvironment,thedistributionofincome,andtheproduction

ofgoodsandservicesthatdidnotpasthroughthemarket(forexample,housework

donebythehomemaker,andvolunteerwork)

POINTS:?~/1

?5.?Howdoeconomistsmeasureeconomicgrowth?

RESPONSE:

?

ANSWER:?EconomistsmeasureeconomicgrowthasthepercentagechangeinrealGDPfrom

oneperiodtoanother.ThisisbecausechangesinrealGDPreflectonlychangesin

theamountsbeingproduced.

POINTS:?—/1

True/FalseIndicatewhetherthestatementistrueorfalse.

?1.?TheGDPdeflatorreflectsthepricesofgoodsandservicesboughtbyconsumers,?andthe

consumerpriceindexreflectsthepriceofallfinalgoodsandservicesproduceddomestically.

ANSWER:F

?

POINTS:?0/1

?2.?Theconsumerpriceindexcomparesthepriceofafixedbasketofgoodsandservicestothepriceof

thebasketinthebaseyear.Ontheotherhand,theGDPdeflatorcomparesthepriceofcurrently

producedgoodsandservicestothepriceofthesamegoodsandservicesinthebaseyears.

ANSWER:T

?

POINTS:?0/1

?3.?lndexationreferstotheautomaticcorrectionofadollaramountfortheeffectsofinflationbylawor

contract.

ANSWER:T

?

POINTS:?0/1

?4.?Longtermcontractsbetweenfirmsandunionswillsometimesincludepartialorcompleteindexation

ofthewagetotheconsumerpriceindex.Thisiscalledacost-of-livingallowanceclause.

ANSWER:T

?

POINTS:?0/1

?5.?Thecoreinflationrateistheconsumerpriceindexwiththeexclusionofthemostvolatile

componentssuchasenergyandfood.

ANSWER:T

?

d.howmuchisspentontheminthenationalincomeaccounts.

ANSWER:A

?

POINTS:?0/1

?2.?Bynottakingintoaccountthepossibilityofconsumersubstitution,theCPI

a.understatesthestandardofliving.

b.overstatesthecostofliving.

c.neitheroverstatesnorunderstatesthecostofliving.

d.doesn'taccuratelyreflectthecostofliving,butitisunclearifitoverstatesorunderstatesthe

costofliving.

ANSWER:B

?

POINTS:?0/1

?3.?lfthepricesofBrazilian-madeshoesimportedintoCanadaincreases,then

a.bothCanada'sGDPdeflatorandifsconsumerpriceindexwillincrease.

b.neitherCanada'sGDPdeflatornorifsconsumerpriceindexwillincrease.

c.Canada'sGDPdeflatorwillincreasebutitsCPIwillnotincrease.

d.Canada'sconsumerpriceindexw川increase,butitsGDPdeflatorwon'tchange.

ANSWER:D

?

POINTS:?0/1

?4.?lfincreasesinthepricesofCanadiancarinsurancecausestheCPItoincreaseby3percent,the

GDPdeflatorwilllikelyincreaseby

a.morethan3percent.

b.3percent.

c.lessthan3percent.

d.Alloftheabovearecorrect.

ANSWER:C

?

POINTS:?0/1

?5.?Therealinterestratetellsyou

a.howquicklyyoursavingsaccountwillgrow.

b.howquicklythepurchasingpowerofyoursavingsaccountwillgrow.

c.thesizeofyoursavingsaccount.

d.thepurchasingpowerofyoursavingsaccount.

ANSWER:B

?

POINTS:?0/1

?6.?lnflationrefersto

a.atemporaryincreaseinthepricelevelduetohighertaxrates

b.alargeincreaseinfoodandgasolineprices

c.asituationinwhichtheeconomy'soverallpricelevelisrising

d.anincreaseinthepurchasingpowerofthedollar

ANSWER:C

?

POINTS:?0/1

?7.?lfnominalinterestratesincreasefrom8percentto10percentwhileinflationincreasesfrom3

percentto12percent

a.therealinterestratefallsfrom5percentto-2percent

b.therealinterestraterisesfrom-2percentto5percent

c.therealinterestratefallsfrom8percentto12percent

d.therealinterestraterisesfrom8percentto12percent

ANSWER:A

?

POINTS:?0/1

?8.?lfthenominalrateofinterestis10percentandtherateofinflationis3percent,whatistherealrate

ofinterest?

a.13percent

b.7percent

c.3percent

d.-7percent

ANSWER:B

?

POINTS:?0/1

?9.?Theconsumerpriceindex:

a.measurespricechangesofrawmaterials

b.adjustsallpricesofgoodsandservicesforfive-yearperiods

c.measuresthecostofgoodsandservicesboughtbyatypicalconsumer

d.cannotmeasurepricechangesofintangibleproductionsuchasservices

ANSWER:C

?

POINTS:?0/1

?10.lftheconsumerpriceindex(CPI)attheendof1996was125andtheCPIattheendof1997was

?131,thentherateofinflationduring1997was

a.zero-priceswerestableduring1997

b.4.8percent

c.6.0percent

d.125percent

ANSWER:B

?

POINTS:?0/1

?11.Frank'snominalincomein1998is$45,000.SupposetheCPIin1998is150.WhatisFrank'sreal

?income?

a.$51,750

b.$45,000

c.$38,250

d.$30,000

ANSWER:D

?

POINTS:?0/1

?12.Achangeinthepriceofimportsboughtbyconsumerswillbe

?a.reflectedintheGDPdeflator

b.reflectedinGDP

c.reflectedintheCPI

d.reflectedinnetnationalincome

ANSWER:C

?

POINTS:?0/1

713.AIIofthefollowingbutoneareproblemsassociatedwiththeCPI

?a.substitutionbias

b.theintroductionofnewgoodsandservices

c.unmeasuredqualitychanges

d.TheCPIisnotbasedonafixedbasketofgoodsandservices

ANSWER:D

?

POINTS:?0/1

?14.Whichofthefollowingiscorrect?

?a.TheCPIisnotbasedonafixedbasketofgoodsandservices.

b.TheGDPdeflatorreflectsthepricesofalldomesticallyproducedgoodsandservices.

c.TheGDPdeflatorisbasedonafixedbasketofgoodsandservices.

d.TheGDPdeflatorissubjecttosubstitutionbias.

ANSWER:B

?

POINTS:?0/1

?15.Theinflationrate

?a.isameasureofthecostofabasketofgoodsandservicesboughtbyfirms

b.istheabsolutechangeinpricesbetweenyears

c.isthepercentagechangeinthepriceindexfromtheprecedingperiod

d.measureschangesinincomesfromoneyeartothenext

ANSWER:C

?

POINTS:?0/1

ShortAnswer

?1.?Whatistheconsumerpriceindex(CPI)?WhatarethethreemajoritemsincludedintheCPI?

RESPONSE:

?

ANSWER:?TheCPIisameasureoftheoverallcostofthegoodsandservicesboughtbyatypical

consumer.ThethreemajoritemsincludedintheCPIareshelter,transportationand

food.

POINTS:?—/1

?2.?HowistheCPIcomputed?

RESPONSE:

?

ANSWER:?Firstthebasketofgoodsandservicesmustbedeterminedandalsotherelative

importanceofthevariousitemstobeincludedinthebasket.Thenthepricesofthe

variousitemsinthebasketaredetermined.ThecostofthebasketisthendeterminedCHAP

usingthedataonpricesandquantity.Thebaseyearischosen,andtheindexfortheTER

baseyeariscomputedusingthequantitiesinthebasketandthebaseyearprices.25:

TheindexiscalculatedbytakingthepriceofthebasketintheeachyearanddividingPROD

thisbythepriceofthebasketinthebaseyear.Thisratioisthenmultipliedby100.UCTI

POINTS:?—/1ON

?3.?Differentiatebetweenthenominalrateofinterestandtherealrateofinterest.AND

RESPONSE:GRO

?WTH

ANSWER:?Thenominalinterestrateistheinterestrateasusuallyreportedwithoutacorrection

fortheeffectsofinflation.Therealinterestrateistheinterestratecorrectedforthe

effectsofinflation.Therealinterestrate=nominalinterestrateminustheinflation

rate.

POINTS:?—/1

?4.?Whatismeantbytheinflationrate??IftheCPIin1996was107.6andin1995was105.9,calculate

theinflationratefor1996.

RESPONSE:

?

ANSWER:?Theinflationrateisthepercentagechangeinthepriceindexfromthepreceding

period.?Theinflationratefor1996wouldbe:

POINTS:?—/1

?5.?Whataretheproblemsassociatedwithusingtheconsumerpriceindextomeasurethecostof

living?

RESPONSE:

?

ANSWER:?Theproblemsare:(1)Pricesdonotchangeproportionately.Consumersrespondby

buyinglessofthegoodswhosepriceshaverisenbylargeamountsandbybuying

moreofthegoodswhosepricehaverisenbyless,orevenfallen.Theindexis

computedusingafixedbasketofitems,sotheseschangesinquantitywouldnotbe

reflectedinthebasket.Thisisreferredtoasthesubstitutionbias.(2)TheCPIis

developedusingafixedbasketofgoodsandservices,whennewproductsare

introducedduringthetimeperiodthataparticularfixedbasketisbeingused,these

newproductswillnotbeincludedincalculationoftheindex.(3)TheCPIdoesnot

measurequalitychanges.Ifthequalityofagooddeterioratesfromoneyeartothe

next,thevalueofthedollarfalls,evenifthepriceofthegoodstaysthesame.

Likewise,ifthequalityofthegoodincreasesfromoneyeartothenext,thevalueofa

dollaralsorises.StatisticsCanadawilltrytoadjustthepriceofthegoodtoaccountfor

thequalitychange,butitisverydifficulttomeasurequality.

POINTS:?—/1

True/FalseIndicatewhetherthestatementistrueorfalse.

?1.?Onewaytoraisefutureproductivityistoinvestlesscurrentresourcesintheproductionofcapital.

ANSWER:F

?

POINTS:?0/1

?2.?Diminishingreturnsoccurwhenthebenefitsfromanextraunitofoutputdeclinesasthequantity

ofoutputdeclines.

ANSWER:F

?

POINTS:?0/1

c.15percent.

d.25percent.

ANSWER:B

?

POINTS:?0/1

?3.?TheprimaryreasonthatCanadianlivingstandardsarehighertodaythantheywereacenturyago

isthat

a.moreproductivenaturalresourceshavebeendiscovered.

b.physicalcapitalperworkerhasincreased.

c.technologicalknowledgehasincreased.

d.humancapitalhasincreased.

ANSWER:C

?

POINTS:?0/1

?4.?ManycountriesinAfricahavelowgrowthrates.Thisispartlydueto

a.fewnaturalresources

b.hightradebarriers.

c.lowincomes,makingitverydifficultforthemtogrow.

d.Alloftheabovearecorrect.

ANSWER:B

?

POINTS:?0/1

?5.?Agovernmentcanencouragegrowthand,inthelongrun,raisetheeconomy'sstandardofliving

byencouraging

a.populationgrowth.

b.consumptionspending.

c.savingandinvestment.

d.traderestrictions.

ANSWER:C

?

POINTS:?0/1

?6.?Diminishingreturnsisthenotionthat

a.asthestockofcapitalages,theextraoutputproduceddecreases

b.asthestockofcapitalisincreased,theextraoutputproducedfromanadditionalunitof

capitalfalls

c.asresourcesareusedtoproducecapitalgoods,feweradditionalcapitalgoodscanbe

produced

d.youalwaysgetwhatyoupayfor

ANSWER:B

?

POINTS:?0/1

?7.?Comparedwithrichercountries,poorercountriesaregenerallycharacterizedby

a.highrealGDPperperson

b.politicalstability

c.rapidpopulationgrowth

d.stronglyenforcedpropertyrights

ANSWER:C

?

POINTS:?0/1

?8.?Whichoneofthefollowingcountrieswouldmostlikelybeconsideredapoorernation,usingreal

GDP/person?

a.Canada

b.Germany

c.Japan

d.India

ANSWER:D

?

POINTS:?0/1

?9.?Whichofthefollowingfactorswouldbemostlikelytoencouragecapitalformationinapoorer

nation?

a.theexpectationofsustainedhighratesofinflationinthefuture

b.theexpectationthatpropertyrightswillremainsecure

c.theexpectationthatastrugglebetweencapitalistandsocialistforceswillleadtomajor

structuralchangeintheeconomy

d.anincreaseincorporatetaxesinordertofinanceanexpandedgovernmentwelfare

program

ANSWER:B

?

POINTS:?0/1

?10.Whichofthefollowingismostlikelytocausetheproductivityoflabourtoincrease?

?a.highermoneywagerates

b.ahigherrateofinvestmentinhumanandphysicalcapital

c.moreflexibleworkinghoursandimprovedretirementplans

d.noneoftheabove

ANSWER:B

?

POINTS:?0/1

?11.Supposethatfactoryoutputrosefrom50,000unitsto55,000unitswhilelabourhoursrosefrom

?1100to1200.Whichofthefollowingistrue?

a.Labourproductivityremainedunchanged.

b.Labourproductivityincreasedslightly.

c.Labourproductivitydecreasedslightly.

d.Labourproductivityincreasedsharply.

ANSWER:B

?

POINTS:?0/1

?12.Whichofthefollowingwouldbemostlikelytocausetherealincomeperpersonofpoorer

?countriestorise?

a.amorerapidpopulationgrowth

b.arapidrateofinflation

c.aninternationalminimum-wagelaw

d.anincreaseinforeigninvestmentthatenhancedtheproductivityofthelabourforce

ANSWER:D

?

POINTS:?0/1

?13.lfaproductionfunctionhasconstantreturnstoscale,then:

?a.doublinginputswilldoubleoutput.

b.doublinginputswilltripleoutput.

c.doublinginputswillcauseoutputtoincrease,buttheincreaseinoutputwillbelessthan

theincreaseininputs.

d.doublinginputswilldecreaseoutput.

ANSWER:A

?

POINTS:?0/1

?14.Themostimportantsourceofrisinglivingstandardsovertimeis:

?a.theincreaseinthesizeofthelabourforce.

b.theincreaseinthelabourforceparticipationrate.

c.theincreaseinproductivity.

d.theincreaseinhumancapital—thesk川sembodiedintheworkforce.

ANSWER:C

?

POINTS:?0/1

ShortAnswer

?1.?Whatisproductivityandwhyisitimportant?

RESPONSE:

?

ANSWER:?Productivityistheamountofgoodsandservicesproducedfromeachhourofa

worker'stime.Itisthemajordeterminantofthestandardoflivingofacountry.

POINTS:?—/1

?2.?Howisproductivitydetermined?

RESPONSE:

?

ANSWER:?Productivityisdeterminedbyacountry'sphysicalcapital,humancapital,natural

resourcesandtechnologicalknowledge.

POINTS:?—/1

?3.?WhatistheWorldBankandwhatareitsfunctions?

RESPONSE:

?

ANSWER:?TheWorldBankisaninternationalorganizationthatamongotherthings

encouragestheflowofcapitaltopoorcountries.Itobtainsfundsfromtheworld*s

advancecountiesandloansthemtolessdevelopedcountriessothattheycan

investincapitalinfrastructure.?TheWorldBankoffersadvicetodeveloping

countriesonhowthefundsmightbestbeused.

POINTS:?—/1

?4.?Whatarepropertyrights?Whatroledoespropertyrightsplayineconomicgrowth?

RESPONSE:CHAP

?TER

ANSWER:?Propertyrightsrefertotheabilityofpeopletoexerciseauthorityovertheresources26:

theyown.Theremustbeaneconomy-widerespectforpropertyrightsforthepriceSAVI

systemorthefreemarkettowork.LackofrespectforpropertyrightsortheNG,

enforcementofpropertyrightswouldnotonlycausepoliticalinstabilitybutwouldINVE

alsodiscouragesavingsandinvestment.ThesearenecessaryforeconomicSTME

growth.NT,

POINTS:?~/1AND

?5.?Differentiatebetweeninward-orientedpoliciesandoutward-orientedpolicies.THE

RESPONSE:FINA

?NCIA

ANSWER:?Inward-orientedpoliciesareaimedatraisingproductivityandlivingstandardswithinL

acountybyavoidinginteractionwiththerestoftheworld.ThisapproachinvolvesSYST

theprotectionofdomesticindustriestoallowthemtodevelopandgrowwithoutEM

competitionfromforeignfirms.Outward-orientedpoliciesaredesignedtointegrate

countriesintotheworldeconomyasinternationaltradeisconsideredtobeafactor

ingeneratingeconomicgrowth.

POINTS:?~/1

True/FalseIndicatewhetherthestatementistrueorfalse.

?1.?Privatesavingsarethetaxrevenuethatthegovernmenthasleftafterpayingforitsspending;and

publicsavingsistheincomethathouseholdshaveleftafter