Question 1

The phase of the business cycle where the economy is growing faster than usual is called

Accepted Answer

A)  an economic trough. 
B)  the long-run trend of gross domestic product GDP). 
C)  an economic expansion. 
D)  an economic contraction. 
E)  an economic peak.

Question 2

Consider the following figure to answer the next  questions:
 
-In which year was the economy growing at the long-run average growth rate?

Accepted Answer

A)  2001 
B)  2004 
C)  2005 
D)  2009 
E)  2013

Question 3

Company X sells sugar to company Y for $50,000. Company Y uses the sugar to make chocolate bars, selling them to consumers for $150,000. The total contribution to gross domestic product GDP) is

Accepted Answer

A)  $200,000. 
B)  $100,000. 
C)  $30,000. 
D)  $150,000. 
E)  $50,000.

Question 4

If over a period of time real gross domestic product GDP) increases while nominal GDP decreases, then this implies

Accepted Answer

A)  a significant rise in the price level. 
B)  a significant drop in the price level. 
C)  that real GDP is much less than nominal GDP. 
D)  that the given period occurs before the base period. 
E)  that the given period year occurs after the base period.

Question 5

A shortcoming of using real gross domestic product GDP) as a measure of economic well-being is that it does not measure changes in

Accepted Answer

A)  production. 
B)  environmental quality. 
C)  prices. 
D)  unemployment. 
E)  interest rates.

Question 6

Which of the following is a topic of microeconomics?

Accepted Answer

A)  the level of national income 
B)  the level of employment in the country 
C)  the prices of all goods in the country 
D)  the profit of firms in the banking industry 
E)  the level of national output

Question 7

A company produces a computer. It pays $100 for the keyboard and outer case, $200 for the internal hardware, and $100 for the software. It sells the computer to a consumer for $500. The contribution to gross domestic product GDP) is

Accepted Answer

A)  $400. 
B)  $500. 
C)  $100. 
D)  $900. 
E)  $800.

Question 8

In macroeconomics

Accepted Answer

A)  output and income are very different concepts. 
B)  output and income are essentially identical. 
C)  output is less than income. 
D)  output is greater than income. 
E)  income is measured in dollars but output is not.

Question 9

The business cycle measures

Accepted Answer

A)  fluctuations in the long-run trend growth rate of GDP. 
B)  fluctuations in the profit of businesses. 
C)  fluctuations in consumption. 
D)  short-run fluctuations in economic activity. 
E)  fluctuations in the average tax rate paid by businesses.

Question 10

The phase of the business cycle where economic activity is decreasing is called

Accepted Answer

A)  an economic trough. 
B)  the long-run trend of gross domestic product GDP). 
C)  an economic expansion. 
D)  an economic contraction. 
E)  an economic peak.

Question 11

Bob sells his car to Stan's Used Car Lot for $5,000. Stan's Used Car Lot sells the car to Bill for $5,500. This transaction contributes_______ to gross domestic product GDP).

Accepted Answer

A)  nothing 
B)  $500 
C)  $5,500 
D)  $5,000 
E)  $10,500

Question 12

Hollister Co. stocks up on T-shirts for the holiday season. This inventory is included in the _______ category of gross domestic product GDP).

Accepted Answer

A)  consumption 
B)  investment 
C)  government purchases 
D)  net exports 
E)  services

Question 13

When you buy a new car built by Ford, it is included in the _______ category of gross domestic product GDP).

Accepted Answer

A)  consumption 
B)  investment 
C)  government purchases 
D)  export 
E)  import

Question 14

For the next  questions, suppose a country has the following quarterly growth data for the last three years: $$\begin{array} { l l l l l } 
\hline \text { Year } & \text { Q1 } & \text { Q2 } &{ \mathrm { Q } 3 } & \mathrm { Q } 4 \
\hline 2010 & 3.1 \text { percent } & 3.2 \text { percent } & 2.2 \text { percent } & 1.2 \text { percent } \
2011 & 3.1 \text { percent } & - 4.1 \text { percent } & - 2.2 \text { percent } & 1.5 \text { percent } \
2012 & 1.3 \text { percent } & 1.2 \text { percent } & 3.2 \text { percent } & 3.3 \text { percent } \
\hline
\end{array}$$
-The country's long-run average growth rate is 3 percent. How many quarters were spent in recession?

Accepted Answer

A)  six 
B)  five 
C)  four 
D)  three 
E)  two

Question 15

Gross domestic product GDP) per capita is a good, but imperfect, measure of

Accepted Answer

A)  the percentage change in the overall level of prices. 
B)  income inequality. 
C)  changes in average living standards. 
D)  environmental quality. 
E)  the cost of living.

Question 16

Consider the following data, where gross domestic product (GDP) values are measured in millions of dollars, to answer the questions: $$\begin{array} { l l c l } 
\hline \text { Year } & \text { Nominal GDP } & \text { Real GDP } & \text { GDP Deflator } \
\hline 2009 &\underline{\quad\quad} & \$ 500 & 100 \
2010 & \$ 551.2 & \underline{\quad\quad}& 106 \
2011 & \$ 600.6 & \$ 546 &\underline{\quad\quad} \
2012 & & \$ 600.6 & 120 \ 
\hline
\end{array}$$
-What is the value of nominal gross domestic product GDP) in 2009?

Accepted Answer

A)  $50,000 million 
B)  $500 million 
C)  $400 million 
D)  $600 million 
E)  $100 million

Question 17

Consider the following data, where gross domestic product (GDP) values are measured in millions of dollars, to answer the questions: $$\begin{array} { l l c l } 
\hline \text { Year } & \text { Nominal GDP } & \text { Real GDP } & \text { GDP Deflator } \
\hline 2009 &\underline{\quad\quad} & \$ 500 & 100 \
2010 & \$ 551.2 & \underline{\quad\quad}& 106 \
2011 & \$ 600.6 & \$ 546 &\underline{\quad\quad} \
2012 & & \$ 600.6 & 120 \ 
\hline
\end{array}$$
-What was the growth rate of nominal gross domestic product GDP) from 2010 to 2011? Round to the nearest second decimal.

Accepted Answer

A)  4.94 percent 
B)  8.96 percent 
C)  8.23 percent 
D)  5.00 percent 
E)  10.00 percent

Question 18

Nominal gross domestic product GDP) increased from $15.62 trillion to $16.09 trillion, and the price level increased from 120.0 to 122.4. Rounding to the nearest first decimal, the rate of inflation was

Accepted Answer

A)  3.0 percent. 
B)  1.0 percent. 
C)  2.4 percent. 
D)  20.0 percent. 
E)  2.0 percent.

Question 19

Between two given years, if real gross domestic product GDP) and nominal GDP grow at the same rate, then

Accepted Answer

A)  the price level increased. 
B)  prices must have remained constant between the two years. 
C)  quantities must have remained constant between the two years. 
D)  prices and quantities must have remained constant between the two years. 
E)  prices and quantities must have grown at the same rate between the two years.

Question 20

Real gross domestic product GDP) increases if

Accepted Answer

A)  current prices increase. 
B)  current quantities increase. 
C)  current prices are constant. 
D)  nominal GDP increases. 
E)  nominal GDP decreases.

Exam 6: Introduction to Macroeconomics and Gross Domestic Product