Question 1

Personal consumption expenditures consist of:

Accepted Answer

A) household and individual purchases of services and durable and nondurable goods. 
B) foreign investments in the United States. 
C) foreign plus domestic investments. 
D) domestic investments. 
A) household and individual purchases of services and durable and nondurable goods. 
B) foreign investments in the United States. 
C) foreign plus domestic investments. 
D) domestic investments.

Question 2

If the nominal interest rate is 5 percent and inflation is 3 percent, the real interest rate is:

Accepted Answer

A) 0 percent. 
B) 2 percent. 
C) 8 percent. 
D) 15 percent. 
A) 0 percent. 
B) 2 percent. 
C) 8 percent. 
D) 15 percent.

Question 3

Which of the following equations is the correct equation for GDP?

Accepted Answer

A) GDP = C + I + G 
B) GDP = C + I + G + X + M 
C) GDP = C + I + G - X - M 
D) GDP = C + I + G + X - M 
A) GDP = C + I + G 
B) GDP = C + I + G + X + M 
C) GDP = C + I + G - X - M 
D) GDP = C + I + G + X - M

Question 4

If an economy produces 50 oranges sold at $1 each and 100 bananas at $0.50 each, using GDP as the measure of output:

Accepted Answer

A) oranges are weighted as being 2 times more important than bananas. 
B) oranges are weighted as being 1/2 as important as bananas. 
C) bananas are weighted as being 2 times more important than oranges. 
D) bananas are weighted as being 1/2 as important as oranges. 
A) oranges are weighted as being 2 times more important than bananas. 
B) oranges are weighted as being 1/2 as important as bananas. 
C) bananas are weighted as being 2 times more important than oranges. 
D) bananas are weighted as being 1/2 as important as oranges.

Question 5

GDP is $7 trillion. If consumption is $3.5 trillion, investment is $1.4 trillion, and government purchases are $2.1 trillion, then:

Accepted Answer

A) exports are equal to imports. 
B) exports exceed imports. 
C) imports exceed exports. 
D) net exports cannot be determined from the available information. 
A) exports are equal to imports. 
B) exports exceed imports. 
C) imports exceed exports. 
D) net exports cannot be determined from the available information.

Question 6

If the price of housing (which accounts for 40 percent of total expenditures in the CPI basket), rises by 10 percent in one year while the prices of all other goods rises by 27 percent, by how much will the CPI rise?

Accepted Answer

A) 10 percent 
B) 20 percent 
C) 234 percent 
D) 27 percent 
A) 10 percent 
B) 20 percent 
C) 234 percent 
D) 27 percent

Question 7

Refer to the following table. $\begin{array}{| l | c | } 
\hline &\text { In billims of dollars }\
\hline \text { GDP } & 5.0 \
\hline \text { Government Purchases } & 1.0 \
\hline \text { Transfer payments } & 0.2 \
\hline \text { Exports } & 0.4 \
\hline \text { Irnports } & 0.5 \
\hline \text { Net foreipri factor income } & 0.4 \
\hline
\end{array}$ The sum of investment and consumption in this economy is:

Accepted Answer

A) $3.6 trillion. 
B) $3.9 trillion. 
C) $4.1 trillion. 
D) $6.0 trillion. 
A) $3.6 trillion. 
B) $3.9 trillion. 
C) $4.1 trillion. 
D) $6.0 trillion.

Question 8

If gross investment is $2,593 billion and net investment is $873 billion, depreciation is:

Accepted Answer

A) $873 billion. 
B) $1,720 billion. 
C) $2,593 billion. 
D) $3,466 billion. 
A) $873 billion. 
B) $1,720 billion. 
C) $2,593 billion. 
D) $3,466 billion.

Question 9

The value of the productive capacity of the assets of an economy, measured by the goods and services it can produce both now and in the future rather than by the money prices of the assets, is called:

Accepted Answer

A) gross private domestic investment. 
B) net investment. 
C) real wealth. 
D) nominal wealth. 
A) gross private domestic investment. 
B) net investment. 
C) real wealth. 
D) nominal wealth.

Exam 25: Measuring and Describing the Aggregate Economy

Personal consumption expenditures consist of:

If the nominal interest rate is 5 percent and inflation is 3 percent, the real interest rate is:

Which of the following equations is the correct equation for GDP?

If an economy produces 50 oranges sold at $1 each and 100 bananas at $0.50 each, using GDP as the measure of output:

GDP is $7 trillion. If consumption is $3.5 trillion, investment is $1.4 trillion, and government purchases are $2.1 trillion, then:

If the price of housing (which accounts for 40 percent of total expenditures in the CPI basket), rises by 10 percent in one year while the prices of all other goods rises by 27 percent, by how much will the CPI rise?

Refer to the following table. In billims of dollars GDP 5.0 Government Purchases 1.0 Transfer payments 0.2 Exports 0.4 Irnports 0.5 Net foreipri factor income 0.4 The sum of investment and consumption in this economy is:

If gross investment is $2,593 billion and net investment is $873 billion, depreciation is:

The value of the productive capacity of the assets of an economy, measured by the goods and services it can produce both now and in the future rather than by the money prices of the assets, is called:

Economics and Economic Reasoning

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