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ECO 3203 Midterm 1 Practice Questions & Answers.
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ECO 3203 Midterm 1 Practice Questions& Answers.
All of the following are measures of GDP except the total:
A) Expenditures of all businesses in the economy.
B) Income from all production in the economy.
C) Expenditures on all final goods produced.
D) Value of all final production. - Correct answer A) expenditures of all businesses in the
economy.
Two equivalent ways to view GDP are as the:
A) Total payments made to all workers in the economy or the total profits of all firms and
businesses in the economy.
B) Total expenditures on all goods produced in the economy or the total income earned
from producing all services in the economy.
C) Total profits of all firms and businesses in the economy or the total consumption of
goods and services by all households in the economy.
D) Total income of everyone in the economy or the total expenditure on the economy's
output of goods and services. - Correct answer D) total income of everyone in the
economy or the total expenditure on the economy's output of goods and services.
GDP is the market value of all ______ goods and services produced within an economy
in a given period of time.
A) Used
B) Intermediate
C) Consumer
D) Final - Correct answer D) final
All of the following transactions that took place in 2009 would be included in GDP for
2009 except the purchase of a:
A) book printed in 2009, entitled The Year 3000.
B) 2001 Jeep Cherokee.
C) Year 2010 calendar printed in 2009.
D) Ticket to see the movie 2001. - Correct answer B) 2001 Jeep Cherokee.
When a firm sells a product out of inventory, GDP:
A) Increases.
B) Decreases.
C) Is not changed.
D) Increases or decreases, depending on the year the product was produced. - Correct
answer C) is not changed.
,Assume that a bakery hires more workers and pays them wages and that the workers
produce more bread. GDP increases in all of the following cases except when the
bread:
A) Is sold to households.
B) is stored away for later sale.
C) Grows stale and is thrown away.
D) Is sold to other firms. - Correct answer C) grows stale and is thrown away.
Assume a rancher sells a quarter-pound of meat to McDonald's for $1 and that
McDonald's sells you a hamburger made from that meat for $2. In this case, the value
included in GDP should be:
A) $0.50.
B) $1.
C) $2.
D) $3. - Correct answer C) $2.
Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in
2002 and $1.50 in 2009. If four apples were produced in 2002 and five in 2009, whereas
three oranges were produced in 2002 and four in 2009, then real GDP (in 2002 prices)
in 2009 was:
A) $5.
B) $6.50.
C) $9.50.
D) $11. - Correct answer B) $6.50.
If nominal GDP in 2009 equals $14 trillion and real GDP in 2009 equals $11 trillion,
what is the value of the GDP deflator?
A) 0.79
B) 1.03
C) 1.27
D) 1.30 - Correct answer C) 1.27
Real GDP is a better measure of economic well-being than nominal GDP, because real
GDP:
A) Excludes the value of goods and services exported abroad.
B) Includes the value of government transfer payments.
C) Measures changes in the quantity of goods and services produced by holding prices
constant.
D) Adjusts the value of goods and services produced for changes in the foreign
exchange rate. - Correct answer C) measures changes in the quantity of goods and
services produced by holding prices constant.
If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657,
investment is $741, and net exports are -$1,910, then government purchases are:
A) $2,977.
B) $1,910.
, C) -$843.
D) $1,067. - Correct answer A) $2,977.
The investment component of GDP includes all of the following except:
A) Purchases of corporate stock.
B) Spending on new plants and equipment.
C) Purchases of new housing by households.
D) Changes in business inventories. - Correct answer A) purchases of corporate stock.
GNP equals GDP ______ income earned domestically by foreigner’s ______ income
that nationals earn abroad.
A) Plus; plus
B) Minus; minus
C) Minus; plus
D) Plus; minus - Correct answer C) minus; plus
Prices of items included in the CPI are:
A) Averaged with the price of every item weighted equally.
B) Weighted according to amount of the item produced in GDP.
C) Weighted according to quantity of the item purchased by the typical household.
D) Chained to the base year by the year-to-year growth rate of the item. - Correct
answer C) weighted according to quantity of the item purchased by the typical
household.
Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in
2002 and $0.50 in 2009. If ten apples and five oranges were purchased in 2002, and
five apples and ten oranges were purchased in 2009, the CPI for 2009, using 2002 as
the base year, is:
A) 0.75.
B) 0.80.
C) 1.
D) 1.25. - Correct answer D) 1.25.
An increase in the price of imported goods will show up in:
A) The CPI but not in the GDP deflator.
B) The GDP deflator but not in the CPI.
C) Both the CPI and the GDP deflator.
D) Neither the CPI nor the GDP deflator. - Correct answer A) the CPI but not in the GDP
deflator.
Assume that the adult population of the United States is 191.6 million, total employment
is 117.6 million, and 9.4 million are unemployed. Then the unemployment rate, as
normally computed, is approximately ______ percent.
A) 4.9
B) 7.4
C) 7.9
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