ECO 120 - RGDP & NGDP Problems

Suppose that in year 1 an economy produces 100 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year the economy produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each. Using year 1 as the base year, the growth rate of real GDP from year 1 to year 2 is:

$970

If real GDP falls while nominal GDP rises, then prices on average have: A. risen B. fallen C. stayed the same D. real GDP cannot rise when nominal GDP falls

A. risen

Consider an economy that produced only DVDs and DVD players. If 10 DVDs are sold at $20 each and 5 DVD players are sold at $100 each, then nominal GDP is: A. $100 B. $700 C. $1,100 D. $900

B. $700

Real GDP is nominal GDP adjusted for: A. double counting B. changes in prices C. population D. imports

B. changes in prices

Economists frequently use GDP per capita to reflect: A. the impact of prices on GDP B. differences in living standards across countries C. people who are employed D. both people who are employed and those who are unemployed

B. differences in living standards across countries.

If real GDP rises while nominal GDP falls, then prices on average have: A. risen B. fallen C. stayed the same D. decreased and then been offset by an equal increase

B. fallen

Real GDP per capita is: A. a perfect measure of a country's standard of living B. the only way to measure living standards among different countries C. an incomplete measure of a country's standard of living D. used only by the United Nations to compare nations based on measures of welfare

C. an incomplete measure of a country's standard of living

The Venezuela Example illustrates: A. that the difference between nominal and real GDP is negligible in most cases B. that there is no difference between nominal and real GDP in the real world C. the importance of distinguishing between nominal and real GDP D. that GNP, rather than GDP, is a better measure of country's economic activity

C. the importance of distinguishing between nominal and real GDP

Aggregate output is: A. equal to consumer spending on goods and services B. the value of new construction, changes in inventories, and the purchase of physical capital by businesses. C. the total quantity of intermediate goods produced by an economy D. the total quantity of final goods and services produced by an economy

D. the total quantity of final goods and services produced by an economy.