Question 1

When a U.S. consumer buys a Battenberg cake made in London, this is:

Accepted Answer

A) a transfer payment. 
B) an export. 
C) an import. 
D) a government purchase. 
A) a transfer payment. 
B) an export. 
C) an import. 
D) a government purchase.

Question 2

According to the rule of 70, if GDP per person is growing at a rate of roughly 10.1%, approximately how many years will it take for average income to double?

Accepted Answer

The answer of According to the rule of 70, if...

Question 3

Which of the following is an example of a durable good?

Accepted Answer

A) fresh flowers from the florist 
B) your haircut 
C) your new car 
D) a soft drink 
A) fresh flowers from the florist 
B) your haircut 
C) your new car 
D) a soft drink

Question 4

Refer to the diagram of the circular flow of income. Based on the diagram, box 3 must be:

Accepted Answer

A) businesses. 
B) households. 
C) the market for resources. 
D) the market for outputs. 
A) businesses. 
B) households. 
C) the market for resources. 
D) the market for outputs.

Question 5

Refer to the diagram of the circular flow of income. Based on the diagram, the arrow going FROM box 2 to box 3 must be:

Accepted Answer

A) payments for inputs used by businesses. 
B) incomes earned by resources. 
C) spending by households. 
D) earnings by businesses. 
A) payments for inputs used by businesses. 
B) incomes earned by resources. 
C) spending by households. 
D) earnings by businesses.

Question 6

(Table: Price and Output Data) Use Table: Price and Output Data. Between years 2 and 3, nominal GDP increased by: $$\begin{array} { | l | l | l | } 
\hline \text { Year } & \text { Output } & \text { Price per Unit } \
\hline 1 & 2 & \$ 2 \
\hline 2 & 3 & 4 \
\hline 3 = \text { base period } & 4 & 5 \
\hline 4 & 6 & 6 \
\hline 5 & 7 & 9 \
\hline
\end{array}$$

Accepted Answer

A) 33%. 
B) 33% 
C) 25% 
D) 25%. 
E) 67%
F)67%.
G)8%
H)8%. 
A) 33%. 
B) 33% 
C) 25% 
D) 25%. 
E) 67%
F)67%.
G)8%
H)8%.

Question 7

A single woman attorney hires a local firm to mow the grass, rake the leaves, and trim the rose bushes at her suburban house. After several years, she and the owner of the lawn service fall madly in love and get married. After the honeymoon, her new husband takes care of the yard maintenance, and she no longer pays his company the monthly fee. What has happened to GDP, holding everything else constant?

Accepted Answer

The answer of A single woman attorney hires a local...

Question 8

If Lithuania's nominal GDP falls by 1%, does this mean that Lithuania has had negative economic growth of 1%? Explain.

Accepted Answer

The answer of If Lithuania's nominal GDP falls by 1%,...

Question 9

If Turkey's GDP is approximately $851 billion, and its population is 81 million, what is its approximate GDP per person?

Accepted Answer

A) $1,051 
B) $81,000 
C) $105,062 
D) $10,500 
A) $1,051 
B) $81,000 
C) $105,062 
D) $10,500

Question 10

If inflation in the United States was 1.9% in 2014, and the growth rate of real GDP was 2.5%, what was the nominal GDP growth rate?

Accepted Answer

A) 0.6% 
B) 4.4% 
C) 1.9% 
D) 2.5% 
A) 0.6% 
B) 4.4% 
C) 1.9% 
D) 2.5%

Question 11

(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. Assuming 2018 is the base year, the growth rate of real GDP from 2018 to 2019 is _____. $$\begin{array} { | l | l | l | l | l | } 
\hline & \text { 2018 Output } & \text { 2018 Prices } & \text { 2019 Output } & \text { 2019 Prices } \
\hline \text { Lemonade } & 200 \text { glasses } & \text { \$1 per glass } & 220 \text { glasses } & \text { \$1 per glass } \
\hline \text { Cookies } & 100 \text { cookies } & \text { \$2 per cookie } & 100 \text { cookies } & \text { \$2.25 per cookie } \
\hline
\end{array}$$

Accepted Answer

A) 5% 
B) 5%. 
C) 10% 
D) 10%. 
E) 11.25%.
F)11.25%
G)20%.
H)20% 
A) 5% 
B) 5%. 
C) 10% 
D) 10%. 
E) 11.25%.
F)11.25%
G)20%.
H)20%

Question 12

(Table: Per Capita GDP) Use Table: Per Capita GDP. The growth rate of per capita real GDP from 2016 to 2019 was: $$\begin{array} { | l | l | l | l | } 
\hline \text { Year } & \text { Nominal GDP } & \text { Price Level } & \text { Population } \
\hline \mathbf { 2 0 1 6 } & \$ 3,000 & 100 & 5 \
\hline \mathbf { 2 0 1 9 } & 8,000 & 200 & 10 \
\hline
\end{array}$$

Accepted Answer

A) 200% 
B) 200%. 
C) 50% 
D) 50%. 
E) ?50%
F)?50%.
G)?33%
H)?33%. 
A) 200% 
B) 200%. 
C) 50% 
D) 50%. 
E) ?50%
F)?50%.
G)?33%
H)?33%.

Question 13

In the market for outputs:

Accepted Answer

A) households supply goods and services. 
B) households supply goods and services 
C) households supply resources 
D) households supply resources. 
E) firms demand goods and services
F)firms demand goods and services.
G)firms supply goods and services
H)firms supply goods and services. 
A) households supply goods and services. 
B) households supply goods and services 
C) households supply resources 
D) households supply resources. 
E) firms demand goods and services
F)firms demand goods and services.
G)firms supply goods and services
H)firms supply goods and services.

Question 14

(Table: Price and Output Data) Use Table: Price and Output Data. The value of year 3's output in real dollars is: $$\begin{array} { | l | l | l | } 
\hline \text { Year } & \text { Output } & \text { Price per Unit } \
\hline 1 & 2 & \$ 2 \
\hline 2 & 3 & 4 \
\hline 3 = \text { base period } & 4 & 5 \
\hline 4 & 6 & 6 \
\hline 5 & 7 & 9 \
\hline
\end{array}$$

Accepted Answer

A) $5 
B) $5. 
C) $20. 
D) $20 
E) $27
F)$27.
G)$36
H)$36. 
A) $5 
B) $5. 
C) $20. 
D) $20 
E) $27
F)$27.
G)$36
H)$36.

Question 15

In 2007, the United States recorded real GDP growth of approximately -2.6% and nominal GDP growth of -1.8%. What was the inflation rate in 2007?

Accepted Answer

A) -4.4% 
B) 0.8% 
C) 4.4% 
D) -0.8% 
A) -4.4% 
B) 0.8% 
C) 4.4% 
D) -0.8%

Question 16

Consider the following data. Assume that the economy produces only T-shirts.
Calculate the growth rate of real GDP.
 $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { T-Shirts } \
\text { Sold }
\end{array} & \begin{array} { c } 
\text { Actual } \
\text { Price }
\end{array} \
\hline \text { Last year } & 40,000 & \$ 10 \
\hline \text { This year } & 41,500 & \$ 10.50 \
\hline
\end{array}$$

Accepted Answer

The answer of Consider the following data. Assume that the...

Question 17

A recent World Bank study found that in South Africa, the top 1% of the population have about 71% of the wealth in the economy, and the lowest 60% of the population have about 7% of the wealth in the economy. What shortcoming of GDP measurement does this finding reflect?

Accepted Answer

A) Nonmarket activities are excluded. 
B) GDP ignores income distribution. 
C) The shadow economy is missing. 
D) Leisure does not count. 
A) Nonmarket activities are excluded. 
B) GDP ignores income distribution. 
C) The shadow economy is missing. 
D) Leisure does not count.

Question 18

When a U.S. consumer buys Canadian maple syrup at the grocery store, this purchase is:

Accepted Answer

A) an import. 
B) an export. 
C) gross domestic product. 
D) a transfer payment. 
A) an import. 
B) an export. 
C) gross domestic product. 
D) a transfer payment.

Question 19

Define gross domestic product (GDP), and explain each part of the definition.

Accepted Answer

The answer of Define gross domestic product (GDP), and explain...

Question 20

The "market value" of a good or service refers to the:

Accepted Answer

A) current dollar value of that good or service. 
B) units of that good or service that are purchased by consumers. 
C) units of that good or service that are produced in the current period. 
D) total market demand for that good or service. 
A) current dollar value of that good or service. 
B) units of that good or service that are purchased by consumers. 
C) units of that good or service that are produced in the current period. 
D) total market demand for that good or service.

Exam 21: Sizing up the Economy Using Gdp

When a U.S. consumer buys a Battenberg cake made in London, this is:

According to the rule of 70, if GDP per person is growing at a rate of roughly 10.1%, approximately how many years will it take for average income to double?

Which of the following is an example of a durable good?

Refer to the diagram of the circular flow of income. Based on the diagram, box 3 must be:

Refer to the diagram of the circular flow of income. Based on the diagram, the arrow going FROM box 2 to box 3 must be:

(Table: Price and Output Data) Use Table: Price and Output Data. Between years 2 and 3, nominal GDP increased by: Year Output Price per Unit 1 2 \ 2 2 3 4 3= base period 4 5 4 6 6 5 7 9

If Lithuania's nominal GDP falls by 1%, does this mean that Lithuania has had negative economic growth of 1%? Explain.

If Turkey's GDP is approximately $851 billion, and its population is 81 million, what is its approximate GDP per person?

If inflation in the United States was 1.9% in 2014, and the growth rate of real GDP was 2.5%, what was the nominal GDP growth rate?

(Table: Per Capita GDP) Use Table: Per Capita GDP. The growth rate of per capita real GDP from 2016 to 2019 was: Year Nominal GDP Price Level Population \ 3,000 100 5 8,000 200 10

In the market for outputs:

(Table: Price and Output Data) Use Table: Price and Output Data. The value of year 3's output in real dollars is: Year Output Price per Unit 1 2 \ 2 2 3 4 3= base period 4 5 4 6 6 5 7 9

In 2007, the United States recorded real GDP growth of approximately -2.6% and nominal GDP growth of -1.8%. What was the inflation rate in 2007?

Consider the following data. Assume that the economy produces only T-shirts. Calculate the growth rate of real GDP. T-Shirts Sold Actual Price Last year 40,000 \ 10 This year 41,500 \ 10.50

A recent World Bank study found that in South Africa, the top 1% of the population have about 71% of the wealth in the economy, and the lowest 60% of the population have about 7% of the wealth in the economy. What shortcoming of GDP measurement does this finding reflect?

When a U.S. consumer buys Canadian maple syrup at the grocery store, this purchase is:

Define gross domestic product (GDP), and explain each part of the definition.

The "market value" of a good or service refers to the:

The Core Principles of Economics

Demand: Thinking Like a Buyer

Supply: Thinking Like a Seller

Equilibrium: Where Supply Meets Demand

Elasticity: Measuring Responsiveness

When Governments Intervene in Markets

Welfare and Efficiency

Gains From Trade

International Trade

Externalities and Public Goods

Labor Demand and Supply

Wages, Workers, and Management

Inequality, Social Insurance, and Redistribution

Market Structure and Market Power

Entry, Exit, and Long-Run Profitability

Business Strategy

Sophisticated Pricing Strategies

Game Theory and Strategic Choices

Decisions Involving Uncertainty

Decisions With Private Information

Economic Growth

Unemployment

Inflation and Money

Consumption and Saving

Investment

The Financial Sector

International Finance and the Exchange Rate

Business Cycles

IS-MP Analysis: Interest Rates and Output

Phillips Curve

The Fed Model: Linking Interest Rates, Output, and Inflation

Aggregate Demand and Aggregate Supply

Monetary Policy

Government Spending, Taxes, and Fiscal Policy

Appendix: Aggregate Expenditure and the Multiplier

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