ECON2105 Chapter 12 quiz UGA

What is Uganda's real GDP if its nominal GDP is $27.5 billion (in current US$), and the GDP deflator is 163.4? $44.9 billion $12.4 billion $27.5 billion $16.8 billion

$16.8 billion

In 1995, when the consumer price index was 152.38, women earned a median income of $12,130 per year. If the consumer price index in 2015 was 236.99, how much was $12,130 in 2015 dollars? $16,259 $7,799 $18,865 $12,130

$18,865

In 1971, the cost of a four-year college degree from a public university was about $1,410. The consumer price index was 40.48 in January 1971. If the current consumer price index is 251.1, what is the approximate cost of the four-year degree in current dollars? $227 $8,746 $9,422 $1,410

$8,746

You purchase a certificate of deposit that earns an advertised rate of 1.75% interest per year. What is your real rate of return if the actual inflation rate is 1.9%? 3.65% -0.15% 1.75% 0.15%

-0.15%

You purchase a certificate of deposit and expect an inflation rate of 1.25% over the next year. Your nominal rate of interest is 2.1%. What is your expected real rate of return? 0.85% 1.25% -0.85% -2.1%

0.85%

Consider the following basket of goods: 50 bottles of milk, 100 avocadoes, 50 apples, and eight pineapples. Suppose that last year, each bottle of milk was $2.50, each avocado was $1.50, each apple was $0.75, and each pineapple was $4. This year, each bottle of milk is $2.50, each avocado is $1.80, each apple is $0.80, and each pineapple is $4.30. What is the inflation rate between last year and this year? -10% 8.99% 10.13% -9.09%

10.13%

What is Sri Lanka's GDP deflator if its nominal GDP is $88.9 billion (in current US$) and the real GDP is $59.34 billion? 149.8 100 66.7 136.5

149.8

Which of the following shows the medium of exchange function of money? Darius goes window shopping. Wilma wants to sell her old car, and she values it at $2,400. Mena saves his money in a certificate of deposit at the bank. Daniela goes to the store and purchases roses with U.S. dollars.

Daniela goes to the store and purchases roses with U.S. dollars.

Which of the following correctly shows the steps needed to calculate the inflation rate? Collect prices from the stores where people shop, assess the substitution that people make from low inflation to high inflation products, and calculate the difference in the prices that people pay. Find the total value of the basket of goods and services, assess quality changes from one period to the next, and measure the inflation rate. Tally up the cost of the basket of goods and services, subtract the value of goods and services that are no longer counted in the basket, and then calculate the inflation rate. Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate.

Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate.

Hyperinflation is: a period of high money growth in an economy. inflation that occurs when the economy is in a recession. very high rates of economic growth. extremely high rates of inflation.

extremely high rates of inflation.

Menu costs are the: variety of costs that cause producers to change their prices. costs of producing restaurant meals. marginal costs of adjusting prices. total costs of producing goods and services.

marginal costs of adjusting prices.

Which of the following lists the functions of money? medium of exchange, store of value, and unit of account store of value, store of interest, and buffer against inflation medium of exchange, measure of inflation, and benchmark of quality carrier of exchange, unit of account, and measure of inflation

medium of exchange, store of value, and unit of account

The real interest rate is the: percentage of the nominal interest that is inflation. nominal interest rate minus the rate of inflation. economic growth rate adjusted for the effects of inflation. nominal interest rate plus the rate of inflation.

nominal interest rate minus the rate of inflation.

If you see that the consumer price index this year is lower than the consumer price index last year, this means that: the consumer price index is lower than the producer price index. on average, prices went down across the economy. the prices of each and every good and service went down. economic growth also decreased.

on average, prices went down across the economy.

If you see that inflation between last year and this year is 3%, this means that: on average, prices went up across the economy by 3%. the prices of each and every good and service went up by 3%. economic growth is also 3%. the consumer price index rose by 3% more than the producer price index.

on average, prices went up across the economy by 3%.

The GDP deflator is an index that tracks the: highest prices consumers pay over time for imported goods and services. price of all goods and services produced domestically. price that businesses pay over time for the inputs used in the production process. average price that consumers pay over time for a representative basket of goods and services.

price of all goods and services produced domestically.

Money illusion is the: tendency to focus on nominal values instead of inflation-adjusted values. inability to understand that prices always rise. illusion that one's earnings this year are higher than they were last year. increase in the amount of money that it takes to purchase goods and services when prices rise.

tendency to focus on nominal values instead of inflation-adjusted values.