Question 1

If both the real GDP and nominal GDP increase by 10 percent, then we can conclude that the price level _____ and the output:

Accepted Answer

A)  remains unchanged; decreases. 
B)  remains unchanged; increases. 
C)  increases; remains unchanged. 
D)  decreases; remains unchanged. 
A)  remains unchanged; decreases. 
B)  remains unchanged; increases. 
C)  increases; remains unchanged. 
D)  decreases; remains unchanged.

Question 2

Which of the following statements is true?

Accepted Answer

A)  If a country's nominal GDP is rising, then its production must also be rising. 
B)  If a country's nominal GDP is constant, then its production must also be constant. 
C)  If a country's real GDP is constant, then the price level must also be constant. 
D)  If a country's real GDP is constant, then its production must also be constant. 
A)  If a country's nominal GDP is rising, then its production must also be rising. 
B)  If a country's nominal GDP is constant, then its production must also be constant. 
C)  If a country's real GDP is constant, then the price level must also be constant. 
D)  If a country's real GDP is constant, then its production must also be constant.

Question 3

If the Consumer Price Index (CPI) in 2016 was120, then compared to the base year the inflation rate has been ____ percent.

Accepted Answer

A)  5 
B)  10 
C)  15 
D)  20 
A)  5 
B)  10 
C)  15 
D)  20

Question 4

Which one of the following categories of expenditures is included in a country's GDP for a given year?

Accepted Answer

A)  spending by consumers on final goods and services produced in the country during that year 
B)  spending by consumers on used goods purchased during that year 
C)  spending by firms on intermediate goods and services during that year 
D)  spending on imported goods and services during that year 
A)  spending by consumers on final goods and services produced in the country during that year 
B)  spending by consumers on used goods purchased during that year 
C)  spending by firms on intermediate goods and services during that year 
D)  spending on imported goods and services during that year

Question 5

The _____ is responsible for collecting monthly data on prices and publishing the data on Consumer Price Index (CPI).

Accepted Answer

A)  Federal Reserve 
B)  Congressional Budget Office 
C)  U.S Treasury 
D)  Bureau of Labor Statistics 
A)  Federal Reserve 
B)  Congressional Budget Office 
C)  U.S Treasury 
D)  Bureau of Labor Statistics

Question 6

If both real GDP and nominal GDP remain constant between two years, then it can be concluded that:

Accepted Answer

A)  neither price level nor output changed. 
B)  both output and price level increased by the same percentage. 
C)  both output and price level decreased by the same percentage. 
D)  output increased and price level decreased by the same percentage. 
A)  neither price level nor output changed. 
B)  both output and price level increased by the same percentage. 
C)  both output and price level decreased by the same percentage. 
D)  output increased and price level decreased by the same percentage.

Question 7

Suppose that the Consumer Price Index (CPI) in the country of Stewarton on May 2015 was 110 and on May 2016 was 115. The rate of inflation in Stewarton between May 2015 and May 2016 was _____ percent.

Accepted Answer

A)  5.5 
B)  5 
C)  4.5 
D)  4 
A)  5.5 
B)  5 
C)  4.5 
D)  4

Question 8

The wage of a worker in 2018 is $3,000 per month. It is anticipated that the inflation rate over the next five years is going to be 10 percent. Suppose that the Consumer Price Index (CPI) in 2018 is 123.
a. What will be the CPI in 2023?
b. What should be the wage of the worker in 2023 so that her purchasing power remains at the same level as 2018?

Accepted Answer

a. The CPI in 2023 will be 123 × (1.10)

Question 9

Suppose that Lisa lends Alex $1,000, which Alex must repay after one year with an interest payment of 10 percent. When Lisa lends money to Alex, she expects that the inflation rate over the year will be 3 percent. However, after she lends the money, the actual inflation rate for the year turns out to be 5 percent. In this scenario, who gains from the higher than expected inflation rate? Justify your answer.

Accepted Answer

When the inflation rate increases by mor

Question 10

During a recession, an economy experiences an increase in the rate of _____ unemployment.

Accepted Answer

A)  frictional 
B)  structural 
C)  cyclical 
D)  seasonal 
A)  frictional 
B)  structural 
C)  cyclical 
D)  seasonal

Question 11

Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) is $500 in the base year 2000. Further, suppose that the cost of the same basket is $525 in 2017. The CPI for 2017 is _____, and the inflation rate between 2000 and 2017 is _____ percent.

Accepted Answer

A)  100; 5 
B)  105; 5 
C)  125; 25 
D)  100; 25 
A)  100; 5 
B)  105; 5 
C)  125; 25 
D)  100; 25

Question 12

A worker had a nominal income of $10,000 in the year 2000, and the Consumer Price Index (CPI) for the year 2000 was 100. If there was inflation of 10 percent between 2000 and 2017 and the worker's nominal income did not change, then the real income of the worker in 2017 dollars was:

Accepted Answer

A)  $9,000.90. 
B)  $9,050.90. 
C)  $9,090.90. 
D)  $10,000. 
A)  $9,000.90. 
B)  $9,050.90. 
C)  $9,090.90. 
D)  $10,000.

Question 13

Suppose that a can of soda cost 30 cents in 1970 and the Consumer Price Index (CPI) in 1970 was 36. If the CPI in 2016 was 240, then the price of the can of soda in 2016 was:

Accepted Answer

A)  $1.70. 
B)  $2.00. 
C)  $2.25. 
D)  $2.50. 
A)  $1.70. 
B)  $2.00. 
C)  $2.25. 
D)  $2.50.

Question 14

The costs associated with constantly revising the prices of goods and services as a result of inflation are known as _____ costs.

Accepted Answer

A)  shoe-leather 
B)  variable 
C)  menu 
D)  fixed 
A)  shoe-leather 
B)  variable 
C)  menu 
D)  fixed

Question 15

Which of the following statements is NOT true?

Accepted Answer

A)  Discouraged workers are a part of the labor force. 
B)  Part-time workers who want to work full-time are part of the labor force. 
C)  To be considered a part of the labor force, an individual must be 16 years or older. 
D)  The unemployment rate is the percentage of the labor force that is unemployed. 
A)  Discouraged workers are a part of the labor force. 
B)  Part-time workers who want to work full-time are part of the labor force. 
C)  To be considered a part of the labor force, an individual must be 16 years or older. 
D)  The unemployment rate is the percentage of the labor force that is unemployed.

Question 16

For the following transactions, explain why each should or should not be included in the calculation of a U.S GDP for the year 2017.
a. a car that is manufactured in Detroit in 2017 but is exported to Canada
b. the income in 2017 of an Indian professor who teaches at a university in Texas
c. a student who purchases a used car in 2017
d. a car manufacturer that buys aluminum from a firm to use it to manufacture cars
e. the amount that the federal government spends in 2017 to aid the recovery efforts after a hurricane in Florida

Accepted Answer

a. The car that is manufactured in Detro

Question 17

If a country has a GDP of $10,000, consumer spending of $6,000, investment spending of $1,000, and government spending of $4,000, then the country's exports are _____ than the imports.

Accepted Answer

A)  $1,000 more 
B)  $1,000 less 
C)  $2,000 more 
D)  $2,000 less 
A)  $1,000 more 
B)  $1,000 less 
C)  $2,000 more 
D)  $2,000 less

Question 18

Carlos is a fresh college graduate who is looking to find employment in advertising. He is currently interviewing with three firms but does not yet have an offer. Carlos will be counted in the category of _____ unemployment.

Accepted Answer

A)  structural 
B)  frictional 
C)  cyclical 
D)  seasonal 
A)  structural 
B)  frictional 
C)  cyclical 
D)  seasonal

Question 19

An economy has 1,050 employed, 150 unemployed, and 150 discouraged workers. The unemployment rate for the economy is _____ percent.

Accepted Answer

A)  10 
B)  12.5 
C)  15 
D)  17.5 
A)  10 
B)  12.5 
C)  15 
D)  17.5

Question 20

If the net exports of a country are zero, then we can conclude that exports:

Accepted Answer

A)  and imports are zero. 
B)  are greater than imports. 
C)  are less than imports. 
D)  are equal to imports. 
A)  and imports are zero. 
B)  are greater than imports. 
C)  are less than imports. 
D)  are equal to imports.

If both the real GDP and nominal GDP increase by 10 percent, then we can conclude that the price level _____ and the output:

Which of the following statements is true?

If the Consumer Price Index (CPI) in 2016 was120, then compared to the base year the inflation rate has been ____ percent.

Which one of the following categories of expenditures is included in a country's GDP for a given year?

The _____ is responsible for collecting monthly data on prices and publishing the data on Consumer Price Index (CPI).

If both real GDP and nominal GDP remain constant between two years, then it can be concluded that:

Suppose that the Consumer Price Index (CPI) in the country of Stewarton on May 2015 was 110 and on May 2016 was 115. The rate of inflation in Stewarton between May 2015 and May 2016 was _____ percent.

During a recession, an economy experiences an increase in the rate of _____ unemployment.

Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) is $500 in the base year 2000. Further, suppose that the cost of the same basket is $525 in 2017. The CPI for 2017 is _, and the inflation rate between 2000 and 2017 is _ percent.

A worker had a nominal income of $10,000 in the year 2000, and the Consumer Price Index (CPI) for the year 2000 was 100. If there was inflation of 10 percent between 2000 and 2017 and the worker's nominal income did not change, then the real income of the worker in 2017 dollars was:

Suppose that a can of soda cost 30 cents in 1970 and the Consumer Price Index (CPI) in 1970 was 36. If the CPI in 2016 was 240, then the price of the can of soda in 2016 was:

The costs associated with constantly revising the prices of goods and services as a result of inflation are known as _____ costs.

Which of the following statements is NOT true?

If a country has a GDP of $10,000, consumer spending of $6,000, investment spending of $1,000, and government spending of $4,000, then the country's exports are _____ than the imports.

Carlos is a fresh college graduate who is looking to find employment in advertising. He is currently interviewing with three firms but does not yet have an offer. Carlos will be counted in the category of _____ unemployment.

An economy has 1,050 employed, 150 unemployed, and 150 discouraged workers. The unemployment rate for the economy is _____ percent.

If the net exports of a country are zero, then we can conclude that exports:

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Market Equilibrium

Elasticity

Consumer Behavior

Production Costs

Perfect Competition

Market Power

Factor Markets

Market Failure and Government Failure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Exam 13: Measuring an Economys Performance

If both the real GDP and nominal GDP increase by 10 percent, then we can conclude that the price level _____ and the output:

Which of the following statements is true?

If the Consumer Price Index (CPI) in 2016 was120, then compared to the base year the inflation rate has been ____ percent.

Which one of the following categories of expenditures is included in a country's GDP for a given year?

The _____ is responsible for collecting monthly data on prices and publishing the data on Consumer Price Index (CPI).

If both real GDP and nominal GDP remain constant between two years, then it can be concluded that:

Suppose that the Consumer Price Index (CPI) in the country of Stewarton on May 2015 was 110 and on May 2016 was 115. The rate of inflation in Stewarton between May 2015 and May 2016 was _____ percent.

During a recession, an economy experiences an increase in the rate of _____ unemployment.

Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) is $500 in the base year 2000. Further, suppose that the cost of the same basket is $525 in 2017. The CPI for 2017 is _____, and the inflation rate between 2000 and 2017 is _____ percent.

A worker had a nominal income of $10,000 in the year 2000, and the Consumer Price Index (CPI) for the year 2000 was 100. If there was inflation of 10 percent between 2000 and 2017 and the worker's nominal income did not change, then the real income of the worker in 2017 dollars was:

Suppose that a can of soda cost 30 cents in 1970 and the Consumer Price Index (CPI) in 1970 was 36. If the CPI in 2016 was 240, then the price of the can of soda in 2016 was:

The costs associated with constantly revising the prices of goods and services as a result of inflation are known as _____ costs.

Which of the following statements is NOT true?

If a country has a GDP of $10,000, consumer spending of $6,000, investment spending of $1,000, and government spending of $4,000, then the country's exports are _____ than the imports.

Carlos is a fresh college graduate who is looking to find employment in advertising. He is currently interviewing with three firms but does not yet have an offer. Carlos will be counted in the category of _____ unemployment.

An economy has 1,050 employed, 150 unemployed, and 150 discouraged workers. The unemployment rate for the economy is _____ percent.

If the net exports of a country are zero, then we can conclude that exports:

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Market Equilibrium

Elasticity

Consumer Behavior

Production Costs

Perfect Competition

Market Power

Factor Markets

Market Failure and Government Failure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) is $500 in the base year 2000. Further, suppose that the cost of the same basket is $525 in 2017. The CPI for 2017 is _, and the inflation rate between 2000 and 2017 is _ percent.