Economics chapter 23-25 multiple choice

What is the percentage increase in real GDP from 2012 to 2013? A. 0% B. 7% C. 22% D. 27% E. 32%

A. 0%

If your grandparents buy a new retirement home, this transaction would affect A. Consumption B. Investment C. Government purchases D. Net exports E. None of the above

B. Investment

The table shows that the 2012 inflation rate is biased upward because of A. Bias due to the introduction of new goods B. Bias due to unmeasured quality change C. Substitution bias D. Base-year bias E. None of the above

C. Substitution bias

An example of a transfer payment is A. Wages B. Profit C. Rent D. Government purchases E. Unemployment benefits

E. Unemployment benefits

Which of the following would be excluded from 2013 GDP? The sale of A. A 2013 Honda made in Tennessee B. A haircut C. A realtors services D. A home built in 2012 and first sold in 2013

D. A home built in 2012 and first sold in 2013,

Which of the following would likely cause the CPU to rise more thank the GDP deflator? A. An increase in the price of Fords B. An increase in the price of tanks purchased by the military C. An increase in the price of domestically produced fighter planes sold exclusively to Israel D. An increase in the price of Honda's produced in Japan and sold in the United States E. An increase in the price of John Deere tractors

D. An increase in the price of Honda's produced in Japan and sold in the United States

GDP would include which of the following? A. Housework B. Illegal drug sales C. Intermediate sales D. Consulting services E. The value of taking a day off from work

D. Consulting services

What is the value of the basket in the base year? A. $300 B. $333 C. $418.75 D. $459.25 E. None of the above

A. $300

Suppose the base year is changed in the table from 2011 to 2013. Also, suppose that the typical consumption basket was now determined in 2013 (now use the 2013 consumption basket). What is the new value of the CPI in 2012? A. 90.6 B. 100.0 C. 114.7 D. 134.3 E. None of the above

A. 90.6

Gross domestic product can be measured as the sum of A. Consumption, investment, government purchases, and net exports B. Consumption, transfer payments, wages, and profits C. Investment, wages, profits, and intermediate production D. Final goods and services, intermediate goods, transfer payments, and rent E. Net national product, gross national product, and disposable personal income.

A. Consumption, investment, government purchases, and net exports

If workers and firms agree on an increase in wages based on their expectations of inflation and inflation turns out to be more than they expected. A. Firms will gain at the expense of workers B. Workers will gain at the expense of firms C. Neither workers nor firms will gain because the increase in wages is fixed in the labor agreement D. None of the above is true

A. Firms will gain at the expense of workers

If US GDP exceeds US. GNP, then A. Foreigners are producing more in the US than Americans are producing in foreign countries B. Americans are producing more in foreign countries than foreigners are producing in the US C. Real GDP exceeds nominal GDP D. real GNP exceeds nominal GNP E. intermediate production exceeds final production

A. Foreigners are producing more in the US than Americans are producing in foreign countries

The CPI will be most influenced by a ten percent increase in the price of which of the following consumption categories A. Housing B. Transportation C. Medical care D. Food and beverages E. All of the above would produce the same impact

A. Housing

If there is an increase in the price of apples that causes consumers to purchase fewer pounds of apples and more pounds of oranges, the COI will suffer from A. Substitution bias B. Bias due to the introduction of new goods C. Bias due to unmeasured quality change D. Base-year bias E. None of the above

A. Substitution bias

Under which of the following conditions would you prefer to be the borrower? A. The nominal rate of interest is 20% and the inflation rate is 25% B. The nominal rate of interest is 15% and the inflation rate is 14% C. The nominal rate of interest is 12% and the inflation rate is 9% D. The nominal rate of interest is 5% and the inflation is 9%

A. The nominal rate of interest is 20% and the inflation rate is 25%

What is the value of real GDP for 2012? A. $800 B. $1060 C. $1200 D. $1460 E. none of the above

B. $1060

What is the inflation rate for 2013? A. 0% B. 10.3% C. 11% D. 13.3% E. None of the above

B. 10.3%

What is the value of the GDP deflator in 2012? A. 100 B. 113 C. 116 D. 119 E. 138

B. 113

What is the percentage increase in prices from 2011 to 2012? A. 0% B. 13% C. 16% D. 22% E. 38%

B. 13%

In 1989 the CPI was 124.0. In 1990 it was 130.7. What was the rate of inflation over this period? A. 5.1% B. 5.4% C. 6.7% D. 30.7% E. You can't tell without knowing the base year

B. 5.4%

Real GDP is measured in ______ prices; nominal GDP is measured in ______ prices. A. Current year; base year B. Base year; current year C. Intermediate; final D. Domestic; foreign E. Foreign; domestic

B. Base year; current year

How is your purchase of a $40000 BMW automobile that was produced entirely in Germany recorded in the US GDP accounts? A. Investment increases by $40000 and net exports increase by $40000 B. Consumption increases by $40000 and net exports decrease by $40000 C. Net exports decrease by $40000 D. Net exports increase by $40000 E. There is no impact because this transaction does not involve domestic production

B. Consumption increases by $40000 and net exports decrease by $400000

The value of plant and equipment worn out in the process of manufacturing goods and services is measured by A. Consumption B. Depreciation C. Bet national product D. Investment E. Intermediate production

B. Depreciation

If borrowers and lenders agree on a nominal interest rate and inflation turns out to be less than they had expected A. Borrowers will gain at the expense of lenders B. Lenders will gain at the expense of borrowers C. Neither borrowers nor lenders will gain because the nominal interest rate has been fixed by contract D. None of the above is true

B. Lenders will gain at the expense of borrowers

US gross domestic product (in contrast to gross national product) measures the production and income of A. Americans and their factories no matter where they are located in the world B. People and factories located within the borders of the United States C. The domestic service sector only D. The domestic manufacturing sector only E. None of the above

B. People and factories located within the borders of the United States

Suppose your income rises from $19000 to $31000 while the CPI rises from 122 to 169. Your standard of living has likely A. Fallen B. Risen C. Stayed the same D. You can't tell without knowing the base year

B. Risen

Which of the following statements is correct? A. The real interest rate is the sum of the nominal interest rate and the inflation rate. B. The real interest rate is the nominal interest rate minus the inflation rate C. The nominal interest rate is the inflation rate minus the real interest rate D. The nominal interest rate is the real interest rate minus the inflation rate E. None of the above

B. The real interest rate is the nominal interest rate minus the inflation rate

What is the inflation rate for 2012? A. 0% B. 9.2% C. 11% D. 13.3% E. None of the above

D. 13.3%

What is the value of nominal GDP for 2012? A. $800 B. $1060 C. $1200 D. $1460 E. none of the above

C. $1200

If a cobbler buys leather for $100 and thread for $50 and uses them to produce and sell $500 worth of shoes to consumers, the contribution to GDP is A. $50 B. $100 C. $500 D. $600 E. $650

C. $500

What are the values of the CPI in 2011, 2012, and 2013, respectively? A. 100, 111, 139.6 B. 100, 109.2, 116 C. 100, 113.3, 125 D. 83.5, 94.2, 100 E. None of the above

C. 100, 113.3, 125

If inflation is 8% and the real interest rate is 3% then the nominal interest rate should be A. 3/8% B. 5% C. 11% D. 24% E. -5%

C. 11%

If the nominal interest rate is 7% and the inflation rate is 3%, then the real interest rate is A. -4% B. 3% C. 4% D. 10% E. 21%

C. 4%

The "basket" on which the CPI is based is composed of A. Raw materials purchased by firms B. Total current production C. Products purchased by the typical consumer D. Consumer production E. None of the above

C. Products purchased by the typical consumer

What is the approximate percentage increase in prices from 2012 to 2013? A. 0% B. 13% C. 16% D. 22% E. 38%

D. 22%

U.S. GDP would exclude which of the following? A. lawyer services purchased by a home buyer B. Lawn care services purchased by a homeowner C. A new bridge purchased by the state of Texas D. Cotton purchased by Lee Jeans E. The purchase of a new Mazda produced in Illinois

D. Cotton purchased by Lee Jeans

Inflation can be measured by all of the following except the A. GDP deflator B. Consumer price index C. Producer price index D. Finished goods price index E. All of the above are used to measure inflation

D. Finished goods price index

If nominal GDP in 2013 exceeds nominal GDP in 2012, then the production of output must have A. Risen B. Fallen C. Stayed the sane D. Risen or fallen because there is not enough information to determine what happened to real output

D. Risen it fallen because there is not enough information to determine what happened to real output

Under which if the following conditions would you prefer to be the lender? A. The nominal rate of interest is 20% and the inflation rate is 25% B. The nominal rate of interest is 15% and the inflation rate is 14% C. The nominal rate of interest is 12% and the inflation rate is 9% D. The nominal rate of interest is 5% and the inflation is 9%

D. The nominal rate of interest is 5% and the inflation is 9%

Gross domestic product is the market value of the A. Intermediate goods B. Manufactured goods C. Normal goods and services D. Inferior goods and services E. Final goods and services

E. Final goods and services