Extra

Question 0

Which of the following will increase investment spending in the economy, holding everything else constant?
A) an increase in the federal government surplus
B) an increase in consumer dissavings
C) an increase in transfer payments
D) an increase in the budget deficit

Answer 0

A) an increase in the federal government surplus

Question 1

If government saving is negative, then 
A) T>TR
B) T-TR < G
C) Y+TR < C-T
D) G>T

Answer 1

B) T-TR < G

Question 2

The real interest rate equals the nominal interest rate \_\_\_ the inflation rate
A) divided by
B) minus
C) times
D) plus

Answer 2

B) minus

Question 3

Nominal GDP is GDP in a given year 
A) valued in the prices of that year
B) adjusted for inflation 
C) valued in the prices of the base year 
D) adjusted for anticipated inflation

Answer 3

A) valued in the prices of that year

Question 5

Real GDP is GDP in a given year
A) valued in the prices of that year
B) adjusted only for anticipated inflation
C) valued in the prices of the base year
D) adjusted only for unanticipated inflation

Answer 5

C) valued in the prices of the base year

Question 6

Real GDP will increase
A) only if the price level rises
B) only if the price level falls
C) if either the price level or the quantity of goods & services produced rises
D) only if the quantity of final goods & services produced rises

Answer 6

D) only if the quantity of final goods & services produced rises

Question 8

GDP understates the total production of final goods and services because of the omission of 
A) inflation 
B) the underground economy 
C) exports 
D) intermediate goods

Answer 8

B) the underground economy

Question 9

Presently, GDP is \_\_\_ to compensate for the costs of environmental damage 
A) adjusted on a chain-weight basis
B) not adjusted
C) fully adjusted 
D) partially adjusted

Answer 9

B) not adjusted

Question 11

Which of the following is included in both the US GDP & US GNP? The value of all cars produced by \_\_\_\_
A) General Motors in the US
B) Toyota in the US
C) Nissan in Japan & the US
D) Ford in Mexico

Answer 11

A) General Motors in the US

Question 12

Which of the following is included in both the Turkish GDP & Turkish GNP? The value of all cars produced by \_\_\_\_
A) Sabanci in Turkey
B) Toyota in Turkey
C) Nissan in Japan & Turkey
D) Ülker in Mexico

Answer 12

A) Sabanci in Turkey

Question 13

During a business cycle expansion, total production \_\_\_ & total employment \_\_\_
A) increases; increases
B) increases; decreases
C) decreases; decreases 
D) decreases; increases

Answer 13

A) increases; increases

Question 14

Product        Quantity   Price
Sweatshirts          50      35
Dental exam         40      75
Coffee drinks    1000        4
Coffee beans    2000      .50

Suppose that a simple economy produces only four goods and services: sweatshirts, dental exams, coffee drinks, & coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. Nominal GDP for this simple economy equals ___

A) $3090
B) $7250
C) $8750
D) $9750

Answer 14

C) $8750

Question 15

If the quantity of goods & services produced in the economy decreases
A) nominal GDP would certainly increase
B) real GDP would certainly increase
C) it may be possible for real GDP to increase
D) it may be possible for nominal GDP to increase

Answer 15

D) it may be possible for nominal GDP to increase

Question 16

If real GDP in a small country in 2010 is $8 billion & real GDP in the same country in 2011 is $8.3 billion, the growth rate of real GDP between 2010 & 2011 is ____
A) 3%
B) 3.6%
C) 3.75%
D) can’t be determined from the given information

Answer 16

C) 3.75%

Question 19

Nominal GDP will increase
A) only if the price level rises
B) only if the quantity of final goods & services produced rises
C) if either the price level or the quantity of goods & services produced rises
D) only if the price level falls

Answer 19

C) if either the price level or the quantity of goods & services produced rises

Question 20

National income $1000 billion
Retained earnings $50 billion
Transfer payments $40 billion
Interest on gov bonds $20 billion
Personal taxes $30 billion

The components for national income for an economy are represented above. What’s the level of personal income for this economy?

Answer 20

Personal income= natl income - retained earnings + transfer payments + interest on gov bonds

Personal income= $1000 - $50 + $40 + $20
= $1,010 billion

Question 21

National income $1000 billion
Retained earnings $50 billion
Transfer payments $40 billion
Interest on gov bonds $20 billion
Personal taxes $30 billion

The components for national income for an economy are represented above. Use the data to calculate the disposable income.

Answer 21

Disposable personal income = personal income - personal taxes
= $1010 - $30
= $980

Question 22

If prices are rising on average, then
A) Real GDP will be > nominal GDP in the years before the base year
B) Real GDP will always be = to nominal GDP
C) Real GDP will be > nominal GDP in the years after the base year
D) real GDP will be < nominal GDP in the years before the base year

Answer 22

A) Real GDP will be > nominal GDP in the years before the base year