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| 1 | |
Assume the government changed welfare to workfare, that is, everyone receiving government transfer payments now had to work for the government and therefore receive a salary. How would |
| | A) | GDP be affected? |
| | B) | GDP would increase |
| | C) | GDP would decrease |
| | D) | The change in GDP would depend on whether the salary is greater or less than the transfer
GDP would not change if the payment is the same in both cases |
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| 2 | |
What is the difference between GDP and GNP? |
| | A) | GNP does not account for depreciation (capital consumption allowances) |
| | B) | GNP includes payments to domestically owned factors of production abroad |
| | C) | GNP includes indirect taxes but GDP does not |
| | D) | GNP does not include government transfer payments but GDP does |
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| 3 | |
Which of the following transactions has no direct effect on this year’s GDP? |
| | A) | You sell your holdings of Microsoft stocks |
| | B) | An unemployed worker gets his unemployment benefits |
| | C) | You buy a two year old car from your neighbor |
| | D) | None of the above directly affects GDP |
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| 4 | |
Assume a German tourist buys a Mexican beer in a pub in Houston, Texas. How will the U.S. GDP be affected? |
| | A) | U.S. GDP will be unaffected, since a foreigner buys a foreign product. |
| | B) | U.S. GDP will decrease since the beer has to be imported from Mexico |
| | C) | U.S. GDP will increase by the value added at the Houston pub |
| | D) | U.S. GDP will increase, but only by the sales tax assessed on the beer |
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| 5 | |
Which of the following is not included in private domestic investment (I) as defined in our text? |
| | A) | the construction of a new residential home |
| | B) | the increase in the number of new cars in the inventory of a car dealer |
| | C) | the buying of new equipment for an existing factory |
| | D) | investment in IBM stocks by financial investors |
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| 6 | |
Real GDP per capita is defined as |
| | A) | nominal GDP per capita minus depreciation |
| | B) | real GDP minus capital consumption allowances |
| | C) | real GDP divided by the population |
| | D) | the fraction of real GDP devoted to capital investment |
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| 7 | |
Over the last three decades, the U.S. federal debt as a percentage of GNP |
| | A) | never has been less than 50 percent |
| | B) | has decreased steadily |
| | C) | has increased steadily |
| | D) | was at its lowest in the 1970s but increased sharply in the 1980s |
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| 8 | |
If GDP is $10,400, NDP is $9,100, and gross private domestic investment is $1,600 (all numbers are in billions of dollars), then we can conclude that |
| | A) | net private domestic investment is $1,400 |
| | B) | the GDP-deflator is roughly 114 |
| | C) | the addition to the capital stock is $1,600 billion |
| | D) | all of the above |
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| 9 | |
Depreciation is |
| | A) | the difference between private domestic saving and private domestic investment |
| | B) | the difference between real and nominal GDP |
| | C) | the difference between GNP and GDP |
| | D) | another word for capital consumption allowances |
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| 10 | |
Which of the following national income accounting identities is WRONG? |
| | A) | S – I ≡ (G + TR – TA) + NX |
| | B) | YD ≡ Y - TA - TR |
| | C) | BS ≡ TA - TR - G |
| | D) | I + G + NX ≡ S + TA - TR |
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| 11 | |
Assume that GDP = 9,400, consumption = 6,500, government purchases = 1,600, private domestic saving = 1,100, and net exports = -200. Which of the following is true? |
| | A) | gross private domestic investment = 1,500 |
| | B) | disposable income = 7,600 |
| | C) | the budget surplus = 200 |
| | D) | all of the above |
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| 12 | |
If national income is Y = 9,300, disposable income is YD = 7,500, consumption is C = 6,600, net exports is NX = -180, and the budget surplus is BS = 230, what is the level of private domestic investment (I)? |
| | A) | 850 |
| | B) | 900 |
| | C) | 950 |
| | D) | 1,310 |
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| 13 | |
Core inflation measures |
| | A) | only the price changes in food and energy |
| | B) | inflation excluding food and energy price changes |
| | C) | price changes of only those goods whose prices are highly volatile |
| | D) | price changes at an early stage of the distribution system |
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| 14 | |
If the government succeeds in turning a budget deficit into a budget surplus, which of the following can happen? |
| | A) | private domestic saving can decrease |
| | B) | private domestic investment can increase |
| | C) | net exports can increase |
| | D) | all of the above |
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| 15 | |
If nominal GDP is $10,406 billion and the GDP-deflator is 110, then real GDP is about |
| | A) | $11,450 billion |
| | B) | $10,516 billion |
| | C) | $10,296 billion |
| | D) | $9,460 billion |
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| 16 | |
The GDP-deflator and the CPI differ from each other since |
| | A) | the GDP-deflator does not include services but the CPI does |
| | B) | the GDP-deflator includes imported goods but the CPI doesn't |
| | C) | the CPI measures a fixed market basket but the GDP-deflator doesn't |
| | D) | the CPI includes more goods than the GDP-deflator does |
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| 17 | |
Which of the following is NOT true? |
| | A) | the GDP-deflator is a lagging indicator |
| | B) | the PPI measures the cost of a given market basket of goods |
| | C) | biases in the CPI can affect the Social Security system |
| | D) | the CPI does not include imported goods |
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| 18 | |
The unemployment rate is defined as |
| | A) | the number of people out of work but actively looking for work divided by the total population |
| | B) | the fraction of the labor force who are out of work and looking for work or expecting a recall from a layoff |
| | C) | the number of people out of work but actively looking plus the number of discouraged workers divided by the total work force |
| | D) | the fraction of the labor force who are unemployed minus those who are just waiting to be recalled from a temporary layoff |
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| 19 | |
Assume you desire a real rate of return of 4% on an investment and you expect the annual average inflation rate to be 3.2%. What should the nominal interest rate be on this investment? |
| | A) | 0.8% |
| | B) | 3.0% |
| | C) | 4.0% |
| | D) | 7.2% |
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| 20 | |
Assume the British pound is worth $1.56 in U.S. dollars and the Hong Kong dollar is worth $0.13 in U.S. dollars. What does this imply? |
| | A) | everything in Hong Kong is 12 times cheaper than in Great Britain |
| | B) | everything in Hong Kong is 12 times more expensive than in Great Britain |
| | C) | you can get 12 Hong Kong dollars for one British pound |
| | D) | none of the above |
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