Question 1

If nominal GDP increases by 2 percent and the price level drops by 1 percent, real GDP:

Accepted Answer

A) increases by 1 percent. 
B) decreases by 1 percent. 
C) increases by 3 percent. 
D) decreases by 3 percent. 
A) increases by 1 percent. 
B) decreases by 1 percent. 
C) increases by 3 percent. 
D) decreases by 3 percent.

Question 2

The size of underground economies differs across countries. In Greece it has been estimated to be as big as 30 percent of GDP, in Spain 25 percent, in Italy 20 percent, and in the United States, about 7 percent. Given this information, official GDP measures understate true economic activity the most in:

Accepted Answer

A) Greece. 
B) United States. 
C) Italy. 
D) Spain. 
A) Greece. 
B) United States. 
C) Italy. 
D) Spain.

Question 3

What is the difference between GDP and GNP? How are they related?

Accepted Answer

GDP or gross domestic product is the tot

Question 4

The total annual market value of a nation's final output of goods and services computed at existing prices is called:

Accepted Answer

A) net national product. 
B) aggregate income. 
C) nominal GDP. 
D) real GDP. 
A) net national product. 
B) aggregate income. 
C) nominal GDP. 
D) real GDP.

Question 5

If nominal GDP is $15 trillion and real GDP is $12 trillion, the GDP deflator is:

Accepted Answer

A) 75. 
B) 120. 
C) 125. 
D) 150. 
A) 75. 
B) 120. 
C) 125. 
D) 150.

Question 6

In economics it is important to know the distinction between flow concepts and stock concepts.Explain this distinction,and give examples of each.

Accepted Answer

A stock represents a quantity of somethi

Question 7

Describe in your own words the difference between a stock and a flow.For each of the following activities,determine whether it is a stock concept or a flow concept:
(a)Sue earns $5.75 per hour working at the Burger Barn.
(b)On his way home from work,Sam finds a ten-dollar bill.
(c)Upon graduation,John accepts a job with a salary of $2000.
(d)Jennifer saves 10% of her monthly income.
(e)Alex saves $1,000 a year.
(f)Japan has a capital to labor ratio of 10 where China has a capital to labor ratio of 2.

Accepted Answer

A stock concept is a measure of somethin

Question 8

Which of the following is not included in GDP but is included in GNP?

Accepted Answer

A) A foreign company's production in the United States 
B) Income of a citizen of Germany working in the United States 
C) Economic activity of U.S. citizens working abroad 
D) Sales of a good by one firm to another firm 
A) A foreign company's production in the United States 
B) Income of a citizen of Germany working in the United States 
C) Economic activity of U.S. citizens working abroad 
D) Sales of a good by one firm to another firm

Question 9

Suppose there is a stock market bubble (asset price inflation)that bursts (rapid asset deflation).People see the value of their investments fall rapidly.Has their real wealth changed? Explain.

Accepted Answer

If the initial increase in the value of

Question 10

Net exports are defined as:

Accepted Answer

A) GDP minus exports. 
B) exports less imports. 
C) imports less exports. 
D) exports plus imports. 
A) GDP minus exports. 
B) exports less imports. 
C) imports less exports. 
D) exports plus imports.

Question 11

If the percent change in nominal GDP is 6 percent and the percent change in real GDP is 2 percent, inflation is:

Accepted Answer

A) 0 percent. 
B) 2 percent. 
C) 4 percent. 
D) 6 percent. 
A) 0 percent. 
B) 2 percent. 
C) 4 percent. 
D) 6 percent.

Question 12

Fill in the blanks of the following table and answer the following questions.
Year Real GDP Nominal GDP GDP Deflator
2018 8,144.8 __________ 101.9
2019 __________ 8,759.9 103.1
2020 8,848.2 9,256.1 __________
(a)Does the table indicate there is inflation? Explain your answer.
(b)What was the percentage change in nominal GDP in 2006 and 2007? Inflation? Real GDP?

Accepted Answer

Year Real GDP Nominal GDP GDP Deflator
2

Question 13

If an economy consists of two goods,and one good's price goes up by 5% and the other good's price goes down by 5%,what is the most precise answer we can give about the amount of inflation in the economy?

Accepted Answer

The amount of inflation in the economy d

Question 14

The sum of the value added by all of a nation's individuals and businesses in a year equals:

Accepted Answer

A) the value of intermediate products. 
B) the value of investment goods. 
C) total profits. 
D) GDP. 
A) the value of intermediate products. 
B) the value of investment goods. 
C) total profits. 
D) GDP.

Question 15

Without national income accounting there would not be any macroeconomics.Evaluate this statement.

Accepted Answer

This statement is valid.National income

Question 16

The base year is the year:

Accepted Answer

A) in which prices are unstable. 
B) in which prices are lowest. 
C) in which prices are highest. 
D) that serves as a reference point or benchmark. 
A) in which prices are unstable. 
B) in which prices are lowest. 
C) in which prices are highest. 
D) that serves as a reference point or benchmark.

Question 17

The relationship between real GDP and nominal GDP can be expressed by:

Accepted Answer

A) real GDP = nominal GDP + inflation. 
B) percent change in real GDP = percent change in nominal GDP - inflation. 
C) real GDP = nominal GDP - inflation. 
D) percent change in real GDP = percent change in nominal GDP + inflation. 
A) real GDP = nominal GDP + inflation. 
B) percent change in real GDP = percent change in nominal GDP - inflation. 
C) real GDP = nominal GDP - inflation. 
D) percent change in real GDP = percent change in nominal GDP + inflation.

Question 18

What are personal consumption expenditures?

Accepted Answer

Personal consumption

Question 19

If the PCE deflator increased from 88 to 99 in one year, the rate of consumer inflation is:

Accepted Answer

A) 10.0 percent. 
B) 11.0 percent. 
C) 12.5 percent. 
D) 13.4 percent. 
A) 10.0 percent. 
B) 11.0 percent. 
C) 12.5 percent. 
D) 13.4 percent.

Question 20

Why might per capita GDP comparisons of living standards between countries be misleading? What do economists do to avoid some of the problems?

Accepted Answer

Comparing per capita GDP between countri

Exam 25: Measuring and Describing the Aggregate Economy

If nominal GDP increases by 2 percent and the price level drops by 1 percent, real GDP:

What is the difference between GDP and GNP? How are they related?

The total annual market value of a nation's final output of goods and services computed at existing prices is called:

If nominal GDP is $15 trillion and real GDP is $12 trillion, the GDP deflator is:

In economics it is important to know the distinction between flow concepts and stock concepts.Explain this distinction,and give examples of each.

Which of the following is not included in GDP but is included in GNP?

Suppose there is a stock market bubble (asset price inflation)that bursts (rapid asset deflation).People see the value of their investments fall rapidly.Has their real wealth changed? Explain.

Net exports are defined as:

If the percent change in nominal GDP is 6 percent and the percent change in real GDP is 2 percent, inflation is:

If an economy consists of two goods,and one good's price goes up by 5% and the other good's price goes down by 5%,what is the most precise answer we can give about the amount of inflation in the economy?

The sum of the value added by all of a nation's individuals and businesses in a year equals:

Without national income accounting there would not be any macroeconomics.Evaluate this statement.

The base year is the year:

The relationship between real GDP and nominal GDP can be expressed by:

What are personal consumption expenditures?

If the PCE deflator increased from 88 to 99 in one year, the rate of consumer inflation is:

Why might per capita GDP comparisons of living standards between countries be misleading? What do economists do to avoid some of the problems?

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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