Macro Chapter 5 Quiz

(T or F) If nominal GDP in 2017 was $17.3 trillion and rose to $18.3 trillion in the following year , then the economy must be producing a larger output of goods and services.

False

(T or F) The GDP deflator is a better inflation measure than the CPI.

True

The biggest component of GDP is----- a. Consumption spending b. Investment spending c. Government expenditutes d. Net Exports

a. Consumption spending

In the economy of Lexington in 2008, consumption was $6000, exports were $1000, GDP was $10,000, government purchases were $2000, and imports were $600. What was Lexington's investment in 2008? a. $1400 b. $1600 c. $2400 d. $3600

b. $1600

A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute a. $150 to GDP b. $250 to GDP c. $400 to GDP d. between $200-$400 to GDP depending on the profits earned by the bicycle company

b. $250 to GDP

If Kim bought last year's computer model for $1000 to use in her office, then; a. Investment and GDP will rise by $1000 b. Consumption and GDP will rise by $1000 c. Current GDP will not be affected d. none of the above

c. Current GDP will not be affected

If the US government pays $2.2 million in unemployment insurance benefits, US GDP will; a. increase by $2.2 million b. decrease by $2.2 milllion c. remain unchanged d. None of the above

c. remain unchanged

GDP values all of the following except: a. the market value of final goods and services b. currently produced goods and services c. intangible goods d. an equitable distribution of income.

d. an equitable distribution of income.

If the nominal GDP was $50 billion in one year and the GDP deflator was 125 in the same year, it follows that real GDP is------- a. $100 billion b. $125 billion c. $2.5 billion d. none of the above

d. none of the above

Your mortgage payments on a house that you recently bought is part of GDP's------ a. Consumption spending b. Inventory investment spending c. capital investment spending d. none of the above

d. none of the above