Question 1

What does economics research have to say about the old adage that money can't buy happiness? Be specific.

Accepted Answer

The answer of What does economics research have to say...

Question 2

Consider the following data that gives the quantity produced and unit price for three different goodsacross two different years to answer the next  questions. Assume that the base year is 2012
$$\begin{array} { l l c l l } 
\hline \text { Good } & \text { 2012 Price } & \text { 2012 Quantity } & \text { 2013 Price } & \text { 2013 Quantity } \
\hline \text { A } & \$ 2.00 & 500 & \$ 2.50 & 600 \
\text { B } & \$ 4.00 & 1,000 & \$ 5.00 & 900 \
\text { C } & \$ 2.00 & 200 & \$ 1.00 & 300 \
\hline
\end{array}$$

-What was the gross domestic product GDP) deflator in 2012?

Accepted Answer

A)  100 
B)  108 
C)  103 $\begin{array} { l l l } \text { ANS: A } & \text { DIF: Difficult } & \text { REF: Real GDP: Adjusting GDP for Price Changes } \ \text { OBJ: } 6.3 & \text { MSC: Analyzing } & \end{array}$
What was the gross domestic product (GDP) deflator in 2013 ?
a. 116.67$\quad$d. 119.44
b. 108.57$\quad$c. 100
e. 102.38
$\begin{array} { l l l } \text { ANS: A } & \text { DIF: Difficult } & \text { REF: Real GDP: Adjusting GDP for Price Changes } \ \text { OBJ: } 6.3 & \text { MSC: Analyzing } & \end{array}$ 
D)  109 
E)  106

Question 3

$$\begin{array} { l l l l l } 
\hline \text { Good } & \text { 2015 Price } & \text { 2015 Quantity } & \text { 2016 Price } & \text { 2016 Quantity } \
\hline \text { A } & \$ 2 & 250 & \$ 3 & 200 \
\text { B } & \$ 3 & 300 & \$ 2 & 400 \
\text { C } & \$ 4 & 400 & \$ 5 & 500 \
\hline
\end{array}$$
-What was the growth rate of real gross domestic product (GDP) between the two years?

Accepted Answer

A)  30 percent 
B)  3 percent 
C)  2 percent 
D)  20 percent 
E)  8.3 percent

Question 4

Consider the following data, which shows the quantities and prices of two goods produced in theeconomy, to answer the next  questions:
$$\begin{array} { l c l } 
\hline & \text { Quantity produced } & \text { Price } \
\hline \text { Cell phones } & 5 \text { million } & \$ 100 / \text { cell phone } \
\text { Pizza } & 25 \text { million } & \$ 10 / \text { pizza } \
\hline
\end{array}$$

-Assuming these are the only two goods produced in the economy, what is the value of the gross domestic product GDP)?

Accepted Answer

A)  $110 million 
B)  $750 million 
C)  $2 million 
D)  $250 million 
E)  $500 million

Question 5

Describe three different uses of gross domestic product GDP), or give three different reasons to explain why it might be useful to calculate GDP.

Accepted Answer

The answer of Describe three different uses of gross domestic...

Question 6

You bought a popular video game last year for $75 and sold it to a store this year for $20. The store sells the used game to a consumer for $40. When you sell your game to the store, how is this included in gross domestic product GDP)?

Accepted Answer

A)  as consumption 
B)  as investment 
C)  as government purchases 
D)  as net exports 
E)  This does not count in GDP.

Question 7

Farmer John produces oranges. He sells half of his inventory to people at his roadside stand for $20,000 and sells the other half to Tropicali for $15,000. Tropicali uses the oranges to make orange juice, which it sells to consumers for $25,000. The impact of these transactions on gross domestic product GDP) is

Accepted Answer

A)  $20,000. 
B)  $45,000. 
C)  $60,000. 
D)  $30,000. 
E)  $25,000.

Question 8

A computer company builds a new factory. This is included in the _____category of gross domestic product (GDP).

Accepted Answer

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

Question 9

You bought stock in 2010 for $100 and you sold it in 2012 for $200. You used a broker to sell the stock for you, and he charged you $20. This transaction contributed_______ to gross domestic product GDP).

Accepted Answer

A)  $200 
B)  $20 
C)  $220 
D)  $100 
E)  $120

Question 10

If gross domestic product GDP) is increasing, is the country necessarily producing a larger quantity of goods and services? Explain.

Accepted Answer

The answer of If gross domestic product GDP) is increasing,...

Question 11

If gross domestic product GDP) is supposed to measure quantity of goods produced, why is GDP given as an amount of money rather than a quantity of goods produced?

Accepted Answer

The answer of If gross domestic product GDP) is supposed...

Question 12

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 13

The four major expenditure categories of gross domestic product GDP) are

Accepted Answer

A)  consumption, imports, exports, and government purchases. 
B)  consumption, government purchases, taxes, and investment. 
C)  consumption, investment, government purchases, and net exports. 
D)  consumption, investment, government purchases, and stocks. 
E)  consumption, investment, taxes, and net exports.

Question 14

The best measure of the average living standards of people in the country is the

Accepted Answer

A)  dollar value of final goods and services produced. 
B)  dollar value of final goods and services produced per person. 
C)  amount of final goods and services produced. 
D)  amount of final goods and services produced per person. 
E)  average price of final goods and services produced.

Question 15

You bought a popular video game last year for $75 and sold it to a store this year for $20. The store sells the used game to a consumer for $50. This adds______ to gross domestic product GDP) when the store sells the game to the consumer.

Accepted Answer

A)  nothing 
B)  $30 
C)  $50 
D)  $20 
E)  $25

Question 16

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 17

$$\begin{array} { l l l l l } 
\hline \text { Good } & \text { 2015 Price } & \text { 2015 Quantity } & \text { 2016 Price } & \text { 2016 Quantity } \
\hline \text { A } & \$ 2 & 250 & \$ 3 & 200 \
\text { B } & \$ 3 & 300 & \$ 2 & 400 \
\text { C } & \$ 4 & 400 & \$ 5 & 500 \
\hline
\end{array}$$
-What was the inflation rate between the two years?

Accepted Answer

A)  1 percent 
B)  3.2 percent 
C)  2 percent 
D)  3.8 percent 
E)  8.3 percent

Question 18

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 19

The investment spending category of gross domestic product GDP) does NOT include

Accepted Answer

A)  purchases of new equipment. 
B)  purchases of stocks and bonds. 
C)  purchases of new homes. 
D)  the value of changes to business inventory. 
E)  purchases of computer software.

Question 20

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.

Exam 6: Introduction to Macroeconomics and Gross Domestic Product