Question 1

For the year 2005, nominal GDP is $10 billion and real GDP is $11 billion, so the GDP deflator is 110.

Accepted Answer

A) True 
 B)False

Question 2

If the total GDP in 2011 was $1302 billion, where consumption expenditure equals $713 million, investment = $285 million, government = $308, the net exports would:

Accepted Answer

A)  be 0.4% of the total GDP 
B)  equal $5 million 
C)  both a and b 
D)  have been negative as import spending is greater than export receipts 
A)  be 0.4% of the total GDP 
B)  equal $5 million 
C)  both a and b 
D)  have been negative as import spending is greater than export receipts

Question 3

If a household buys a new car, the purchase is included as consumption in GDP, but if a pizza delivery shop buys a new car to make deliveries, the purchase is an investment.

Accepted Answer

A) True 
 B)False

Question 4

The government reports that GDP increased at an annual rate of four per cent for the third quarter of 1999. This means that GDP was 4 per cent higher at the end of the third quarter than at the beginning of the quarter.

Accepted Answer

A) True 
 B)False

Question 5

Suppose an economy produces two products: meat pies and hamburgers. In 2011, 20 meat pies are sold at $5 each, and eight hamburgers are sold at $50 each. In 2010, the base year, the price of meat pies was $10 each, and the price of kebabs was $75 each. Therefore:

Accepted Answer

A)  the real 2005 GDP is $800, and the GDP deflator is 62.5 
B)  the real 2005 GDP is $800, and the GDP deflator is 160 
C)  the real 2005 GDP is $500, and the GDP deflator is 62.5 
D)  the real 2005 GDP is $500, and the GDP deflator is 160 
A)  the real 2005 GDP is $800, and the GDP deflator is 62.5 
B)  the real 2005 GDP is $800, and the GDP deflator is 160 
C)  the real 2005 GDP is $500, and the GDP deflator is 62.5 
D)  the real 2005 GDP is $500, and the GDP deflator is 160

Question 6

If nominal GDP increased by 11 per cent while real GDP increased by only 5 per cent, then:

Accepted Answer

A)  the price level must have increased by around 6 per cent 
B)  the price level must have increased by around 16 per cent 
C)  the price level remained steady but real output fell by around 6 per cent 
D)  the unemployment rate must have fallen during the year 
A)  the price level must have increased by around 6 per cent 
B)  the price level must have increased by around 16 per cent 
C)  the price level remained steady but real output fell by around 6 per cent 
D)  the unemployment rate must have fallen during the year

Question 7

The country's nominal GDP for 2010 is:

Accepted Answer

A)  too difficult to measure 
B)  $880 
C)  $1450 
D)  $1800 
A)  too difficult to measure 
B)  $880 
C)  $1450 
D)  $1800

Question 8

Out of the following list, choose the item that would be included in the expenditure approach to calculating GDP:

Accepted Answer

A)  An unemployment cheque from the government to R. Smith 
B) 
The cost of the second hand mountain bike you bought from your flatmate 
C) 
A $200 cheque from your Uncle Arthur 
D) 
The purchase of 60 litres of petrol at $142 cents per litre for your car 
A)  An unemployment cheque from the government to R. Smith 
B) 
The cost of the second hand mountain bike you bought from your flatmate 
C) 
A $200 cheque from your Uncle Arthur 
D) 
The purchase of 60 litres of petrol at $142 cents per litre for your car

Question 9

The country's real GDP for 2011, using 2010 as the base year, is:

Accepted Answer

A)  $1320 
B)  $1000 
C)  $1450 
D)  $1800 
A)  $1320 
B)  $1000 
C)  $1450 
D)  $1800

Question 10

Suppose GDP consists of wheat and rice. In 2011, 200 kg of wheat are sold at $4 per kg, and 100 kg of rice are sold at $2 per kg. If in 2012, the base year, the price of wheat was $1 per kg and the price of rice was $2 per kg, then for year 2011:

Accepted Answer

A)  nominal GDP is $1000, real GDP is $250 
B)  nominal GDP is $400, real GDP is $1000 
C)  nominal GDP is $400, real GDP is $250 
D)  nominal GDP is $1000, real GDP is $400 
A)  nominal GDP is $1000, real GDP is $250 
B)  nominal GDP is $400, real GDP is $1000 
C)  nominal GDP is $400, real GDP is $250 
D)  nominal GDP is $1000, real GDP is $400

Question 11

Define GDP and explain why some products are excluded.

Accepted Answer

GDP is the market value of all final goo

Question 12

Macroeconomics is the study of economy-wide phenomena including inflation, unemployment and economic growth.

Accepted Answer

A) True 
 B)False

Question 13

The value-added approach to measuring GDP is where the value of each stage of the production process is calculated.

Accepted Answer

A) True 
 B)False

Question 14

GDP measures an economy's total expenditure on second hand goods and services produced within a country in a given period of time.

Accepted Answer

A) True 
 B)False

Question 15

The goal of macroeconomics is:

Accepted Answer

A)  to explain the workings of the stock market 
B)  to explain the changes in the overall economy that affect many households, firms and markets 
C)  to explain decision-making within the business environment 
D)  to eliminate the fluctuations in the business cycle 
A)  to explain the workings of the stock market 
B)  to explain the changes in the overall economy that affect many households, firms and markets 
C)  to explain decision-making within the business environment 
D)  to eliminate the fluctuations in the business cycle

Question 16

Sandra decides to hire her neighbour's son to water her lawn and feed her dog this year instead of doing those tasks herself as she did last year. Since the same work is done in either case, GDP is unaffected by the change.

Accepted Answer

A) True 
 B)False

Question 17

If the GDP deflator is $98 billion and the nominal GDP is $1960 billion, then the real GDP is:

Accepted Answer

A)  $2000 billion 
B)  $20 billion 
C)  $5 billion 
D)  $192 080 billion 
A)  $2000 billion 
B)  $20 billion 
C)  $5 billion 
D)  $192 080 billion

Question 18

Real GDP is the production of goods and services valued at a price compared to a certain year.

Accepted Answer

A) True 
 B)False

Question 19

Consider a car manufacturer producing three types of cars: a luxury convertible worth $60 000, a family sedan worth $35 000 and a hatchback worth $23 000. Assume that the shares of input costs for all types are the same. Rank the contribution to GDP for each from highest to lowest and explain why.

Accepted Answer

1. Luxury convertibl

Question 20

The value of the housing service provided to individuals who live in housing they own themselves is included in GDP by:

Accepted Answer

A)  estimating the rental value of the housing 
B)  using the monthly mortgage payment 
C)  using the purchase price of the house 
D)  none of the above. Because the value cannot be measured directly, it is excluded 
A)  estimating the rental value of the housing 
B)  using the monthly mortgage payment 
C)  using the purchase price of the house 
D)  none of the above. Because the value cannot be measured directly, it is excluded

Exam 24: Measuring a Nations Income

For the year 2005, nominal GDP is $10 billion and real GDP is $11 billion, so the GDP deflator is 110.

If the total GDP in 2011 was $1302 billion, where consumption expenditure equals $713 million, investment = $285 million, government = $308, the net exports would:

If a household buys a new car, the purchase is included as consumption in GDP, but if a pizza delivery shop buys a new car to make deliveries, the purchase is an investment.

The government reports that GDP increased at an annual rate of four per cent for the third quarter of 1999. This means that GDP was 4 per cent higher at the end of the third quarter than at the beginning of the quarter.

Suppose an economy produces two products: meat pies and hamburgers. In 2011, 20 meat pies are sold at $5 each, and eight hamburgers are sold at $50 each. In 2010, the base year, the price of meat pies was $10 each, and the price of kebabs was $75 each. Therefore:

If nominal GDP increased by 11 per cent while real GDP increased by only 5 per cent, then:

The country's nominal GDP for 2010 is:

Out of the following list, choose the item that would be included in the expenditure approach to calculating GDP:

The country's real GDP for 2011, using 2010 as the base year, is:

Suppose GDP consists of wheat and rice. In 2011, 200 kg of wheat are sold at $4 per kg, and 100 kg of rice are sold at $2 per kg. If in 2012, the base year, the price of wheat was $1 per kg and the price of rice was $2 per kg, then for year 2011:

Define GDP and explain why some products are excluded.

Macroeconomics is the study of economy-wide phenomena including inflation, unemployment and economic growth.

The value-added approach to measuring GDP is where the value of each stage of the production process is calculated.

GDP measures an economy's total expenditure on second hand goods and services produced within a country in a given period of time.

The goal of macroeconomics is:

Sandra decides to hire her neighbour's son to water her lawn and feed her dog this year instead of doing those tasks herself as she did last year. Since the same work is done in either case, GDP is unaffected by the change.

If the GDP deflator is $98 billion and the nominal GDP is $1960 billion, then the real GDP is:

Real GDP is the production of goods and services valued at a price compared to a certain year.

Consider a car manufacturer producing three types of cars: a luxury convertible worth $60 000, a family sedan worth $35 000 and a hatchback worth $23 000. Assume that the shares of input costs for all types are the same. Rank the contribution to GDP for each from highest to lowest and explain why.

The value of the housing service provided to individuals who live in housing they own themselves is included in GDP by:

Ten Lessons From Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand and Government Policies

Consumers, Producers and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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