Economics
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
