Economics

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A country's real GDP rose from $500 to $530 while its nominal GDP rose form $600 to $700. What was this country's inflation rate?

10.0%

If the price index was 90 in year 1, 100 in year 2, and 95 in year 3, the economy experienced

11.1 percent inflation between years 1 and 2, and 5 percent inflation between years 2 and 3

Wilson is offered a job in Kansas City that pays $50,000 and a job in Dallas that pays $60,000. Which pair of CPIs would ensure that the two salaries have the same purchasing power?

125 in Kansas City and 150 in Dallas

If the consumer price index was 96 in 2012, 100 in 2013, and 102 in 2014, then the base year must be

2013

If the nominal interest rate is 8 percent and the rate of inflation is 3 percent , then the real interest rate is

5 percent

Babe Ruth's 1931 salary was $80,000. Government statistics show a consumer price index of 15.2 for 1931 and 229.6 for 2012. Ruth's 1931 salary was equivalent to a 2012 salary of about

$1,208,421

If 2010 is the base year, then the inflation rate in 2015 equals

CPI in 2015- CPI in 2014/ CPI in 2010 x 100

The steps involved in calculating the consumer price index and the inflation rate, in order, are as follows

Fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index and compute the inflation rate

GDP is not a perfect measure of well-being; for example,

GDP fails to account for the quality of the environment

GDP does not reflect

all of the above are correct

Changes in nominal GDP reflect

both changes in prices and changes in the amounts being produced

Which of the following is not included in GDP?

carrots grown in your garden and eaten by your family

Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included

in German GDP and U.S. GDP

The GDP deflator is the ratio of

nominal GDP to real GDP multiplied by 100

A recession has traditionally been defined as a period during which

real GDP declines for two consecutive quarters

Which of the following agencies calculates the CPI

the Bureau of Labor Statistics

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

the CPI better reflects the goods and services bought by consumers

If in some year nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP?

$15 billion

Suppose a country has government expenditures of $3,500, taxes of $2,200 consumption of $9,000, exports of $2,500, imports $2,700, transfer payments of $750 , capital depreciation of $800, and investments of $3,000. GDP equals

$15,300

Most goods and services produced at home

and most goods and services produced illegally are excluded from GDP

Which of the following is the correct formula for calculating the consumer price index?

price of basket of goods and services in current year/price of basket in base year x 100

With respect to the consumer price index, the substitution bias arises because

prices of goods and services do not change in the same proportion from year to year

When studying changes in the economy over time, economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services. In other words, economists want to study

real GDP

If net exports is a negative number for a particular year then

the value of foreign goods purchased exceeded the value of goods sold to foreigners during the year.

GDP is defined as

value of all final goods and services produced within a country in a given period of time

In the base year, the GDP deflator is always

100

Suppose the typical household spends $3,500 on goods and services during the month of January, and $4,300 on the same goods and services in February. Using January as the base period, what is the consumer price index for February?

122.9

From 2013 to 2014, the CPI for medical care increased from 150 to 159. What was the inflation rate for medical care?

6.0 percent

If real GDP is 5,100 and nominal GDP is 4,900, then the GDP deflator is

96.1 so prices are lower than in the base year.

GDP is equal to

All of the above are correct

In a simple circular-flow diagram, firms use the money they get from a sale to

All of the above are correct

Which of the following is a way to compute GDP?

All of the above are correct

For an economy as a whole

income must equal expenditure

The inflation is calculated

by determining the percentage in the price index from the preceding period

The term economist use to describe a situation in which the economy's overall price level is rising is

inflation

Macroeconomists study

economy-wide phenomena

If the price of a dress is three times the price of a pair of shoes, then a pair of shoes contributes

exactly one-third as much to GDP as does a dress

A macroeconomist is interested in

explaining why the unemployment rate is higher.

Net exports equal

exports minus imports

Which of the following statistics is usually regarded as the best single measure of a society's economic well-being

gross domestic product

When the consumer price index rises, the typical family

has to spend more dollars to maintain the same standard of living

Countries with low GDP per person tend to have

higher rates of infant mortality

An increase in the price of imported coffee shows up

in the consumer price index, but not in the GDP deflator

Gross domestic product measures

income and expenditures

For the purpose of calculating the consumer price index, the basket of goods

is kept the same from year to year so that the effect of price changes are isolated from the effect of any quantity changes that might be occurring at the same time

The consumer price index is used to

monitor changes in the cost of living over time

Changes in the GDP deflator reflect

only changes in prices

Economists use the terms inflation to describe a situation in which

the economy's overall price level is rising

What basket of goods and services is used to construct the CPI

the goods and services that are typically bought by consumers as determined by government surveys

For an economy as a whole

the market value of production must equal expenditure


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