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ECO4223 FINAL EXAM REVIEW QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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ECO4223 FINAL EXAM REVIEW QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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ECO4223 FINAL EXAM REVIEWQUESTIONS AND ANSWERS WITH
SOLUTIONS 2024
Which of the following contributes to GDP?
A) The sales price of homes built 30 years ago.
B) Intermediate goods, which are used to produce final goods.
C) Both A and B
D) Value of all final goods and services. - ANSWER D) Value of all final goods and services.
Which of the following is true regarding GDP?
A) GDP does not include intermediate goods, which are used to produce other final goods. (Example:
Tires used to make a car)
B) GDP includes the purchases of goods and services in the past.
C) None of the above are true.
D) GDP includes the purchases of stocks and bonds. - ANSWER A) GDP does not include intermediate
goods, which are used to produce other final goods. (Example: Tires used to make a car)
If the CPI in 2004 is 200, and in 2005 the CPI is 180, the rate of inflation from 2004 to 2005 is
A) 20%.
B) 10%.
C) 0%.
D) -10%. - ANSWER D) -10%
If the Nominal GDP in 2001 is $9 trillion, and 2001 real GDP in 1996 price is $6 trillion, the GDP deflator
price index is
A) 200
B) 150
C) 7
D) 100 - ANSWER B) 150
,If the CPI is 120 in 1996 and 180 in 2002, then between 1996 and 2002, prices have increased by
A) 180%.
B) 80%.
C) 60%.
D) 50%. - ANSWER D) 50%
What is the inflation rate if the GDP deflator in 2012 was 112, and the GDP deflator in 2013 was 115?
A) 2.68%
B) 0.72%
C) 3.42%
D) 1.70% - ANSWER A) 2.68%
What is the nominal GDP in 2010, if real GDP in 2009 was $12 billion and the GDP deflator is 108?
A) $10.24 billion
B) $9.0 billion
C) $8.48 billion
D) $12.96 billion - ANSWER D) $12.96 billion
If the expected inflation decreases, the real cost of borrowing _____________ and the supply of bonds
decreases causing the supply curve to shift ____________.
A) Falls, shifts to the right
B) Rises, shifts to the left
C) Rises, shifts to the right
D) Falls, shifts to the left - ANSWER B) Rises, shifts to the left
If the nominal rate of interest is 2 percent, and the expected inflation rate is -10 percent, the real rate of
interest is
A) 2%
B) 8%
, C) 12%
D) 10% - ANSWER C) 12%
If you expect the inflation rate to be 12% and a 1-year bond has a yield to maturity of 7%, then the real
interest rate on this bond is
A) 12%
B) 2%
C) -5%
D) -2% - ANSWER C) -5%
If you expect the inflation rate to be 15% next year and a 1-year bond has a yield to maturity of 7%, then
the real interest rate on this bond is
A) 22%
B) -15%
C) -8%
D) 7% - ANSWER C) -8%
A zero coupon bond pays annual interest and has a future value of $1,000, matures in 4 years and has a
yield to maturity of 6.5%. What is the present value of this bond?
A) $902.65
B) $833.24
C) $1,072.33
D) $777.32 - ANSWER D) $777.32
The price of a zero coupon bond and the yield to maturity are ___________ related; that is, as the yield
to maturity ______________, the price of the bond ___________.
A) negatively, rises, falls
B) positively, rises, falls
C) positively, rises, rises
D) negatively, falls, falls - ANSWER A) negatively, rises, falls
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