08 Jun Question 1. If C = consumption, G = gove
Question
1. If C = consumption, G = government expenditures, and I = gross private investment expenditures, the mathematical representation of Gross Domestic Product (GDP) using the expenditure approach is
Select one:
a. Gross Domestic Product (GDP) = C + I + G + Net exports. b. Gross Domestic Product (GDP) = C + Imports. c. Gross Domestic Product (GDP) = C + I + G + Transfers. d. Gross Domestic Product (GDP) = C + I + G + Imports
2.Adjusting nominal Gross Domestic Product (GDP) for price changes from a base year yields
Select one:
a. current Gross Domestic Product (GDP). b. constant disposable income. c. real Gross Domestic Product (GDP). d. Gross Domestic Product (GDP) net of relative price changes.
3.Between two years, GDP at constant prices increased by 5 percent while GDP at current prices increased by 8 percent. Based on this information, the price level
Select one:
a. increased by 3 percent. b. increased by 13 percent. c. decreased by 13 percent. d. decreased by 3 percent.
4.Suppose that the following occurred in two countries during the past decade. Country A, real Gross Domestic Product (GDP) rose 40 percent and population rose 46 percent; Country B, real Gross Domestic Product (GDP) increased 80 percent and population increased 75 percent. Based on this information, which is true?
Select one:
a. Only Country B has experienced growth in its per capita real Gross Domestic Product (GDP). b. Chances for an improved standard of living are greater in Country A. c. Neither country has experienced growth in per capita real Gross Domestic Product (GDP). d. Both countries have experienced growth in per capita real Gross Domestic Product (GDP).
5.If nominal Gross Domestic Product (GDP) in 2001 was $1 trillion, nominal Gross Domestic Product (GDP) in 2013 was $2 trillion, and the 2001 and 2013 price indexes were 100 and 250 respectively,
Select one:
a. real Gross Domestic Product (GDP) decreased between 2001 and 2013. b. real Gross Domestic Product (GDP) increased between 2001 and 2013. c. we cannot draw any conclusions about changes in real Gross Domestic Product (GDP). d. real Gross Domestic Product (GDP) remained constant.
6.When one converts nominal GDP to real GDP, one takes into account which of the following?
Select one:
a. changes in the distribution of income b. changes in the population c. changes in the quality of goods d. None of these
7.Which one of the following is a durable consumer good?
Select one:
a. Gasoline b. Office supplies that will be used up this year c. Furniture d. Food
8.According to the above table, net domestic product is
Select one:
a. $12,603 billion. b. $13,750 billion. c. $8,813 billion. d. $13,092 billion.
9.A durable good
Select one:
a. is an intangible commodity. b. is used up within 3 years. c. has a life span of more than 3 years. d. applies only to services.
10.What is the proper formula for computing the GDP using the expenditure approach?
Select one:
a. C + I + G + X b. S + I + G + X c. 0.5(w + r) + k d. C + O + G + S
11.One method of calculating Gross Domestic Product (GDP) is to add together
Select one:
a. consumption, wages, interest, rental income, and exports. b. investment, consumption, gross profits, and net exports. c. consumption, investment, government spending, and net exports. d. wages, gross profits, net investment, and net exports.
12.Which of the following is included when measuring Gross Domestic Product (GDP)?
Select one:
a. The value of services provided by homemakers b. The value of leisure time c. The value of services of durable goods purchased in previous years d. The rental income received by a landlord
13.Net exports for the United States
Select one:
a. may be negative. b. are always positive numbers. c. are a result of decreasing domestic consumption. d. are a result of decreasing investment in the manufacturing industries.
14.The two main approaches to measuring GDP are the
Select one:
a. flow approach and the stock approach. b. concept approach and the reality approach. c. income approach and the expenditure approach. d. government approach and the consumer approach.
15.When using the income approach to estimate Gross Domestic Product (GDP), which of the following would NOT be included?
Select one:
a. The implicit rental value of owneroccupied housing b. Personal consumption expenditures c. Net interest received by households d. Proprietors’ income
16.The foreign exchange rate
Select one:
a. is not relevant when comparing the GDPs of various countries. b. is the price of one good or service as compared to a similar good or service. c. is the price of one currency in terms of another. d. is the same as the price of a product in U.S. dollars.
17.The adjustment in exchange rate conversions that takes into account differences in the true cost of living across countries is called
Select one:
a. purchasing power parity. b. currencyadjusted purchasing power. c. nominal purchasing power. d. raw purchasing power.
18.The foreign exchange rate is
Select one:
a. an adjustment that takes into account differences in the true cost of living across countries. b. another name for purchasing power parity. c. the price of one currency in terms of another. d. part of the circular flow diagram.
19.Assume that a GM car sells for $20,000 in the United States and that the exchange rate is $1 = 1.3 euros. For purchasing power parity to hold, the same car in Italy should sell for
Select one:
a. 26,000 euros. b. 16,542 euros. c. 20,000 euros. d. 15,385 euros.
20. the following, which country has the highest annual real GDP per capita according to the International Monetary Fund and World Bank?
Select one:
a. Brazil b. Italy c. United States d. China
21.Which of the following allows us to compare average levels of real production per person in different nations in a way that adjusts for differences in true costs of living?
Select one:
a. real GDP based on foreign exchange rates b. nominal GDP based on purchasing power parity c. per capita nominal GDP based on foreign exchange rates
22.Purchasing power parity exists when domestic currency
Select one:
a. is not convertible to a foreign currency. b. buys as many goods abroad as at home. c. maintains a fixed exchange rate with a foreign currency. d. buys more goods at home than abroad.
23.The problem with using foreign exchange rates to convert one country’s GDP into dollars is that
Select one:
a. the values of currencies are not comparable. b. the dollar has been losing value over the last twenty years. c. not all goods and services are sold on world markets. d. exchange rates do not reflect differences in inflation rates.
24.Suppose you know that a certain country with a growing population has experienced steady growth in real per capita GDP. What do you then also know to be true?
Select one:
a. The distribution of income in this country has become relatively more equal. b. This country exports more than it imports. c. The growth in goods and services produced and exchanged in the marketplace has outpaced the growth in population. d. This country imports more than it exports.
25.The most accurate way to compare standards of living throughout the world is to look at
Select one:
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