Econ 102 - Principles of Macroeconomics » Spring 2020 » iVAT Chapter 7
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Question #1
Suppose that a government worker gets a paycheck from the government and spends the money on a meal at a restaurant. What category of GDP is the spending on the meal included in?
A.
Consumption
B.
Government
C.
Net Exports
D.
Government and Consumption
E.
Investment
Question #2
Suppose the U.S. ships soybeans to China that cost $50 billion, while the Chinese ship electronics that cost $150 billion. Based solely on these transactions what is the amount of net exports added to GDP?
A.
-$100 billion
B.
$200 billion
C.
-$50 billion
D.
$100 billion
E.
-$150 billion
Question #3
If a $10,000 tax refund is mailed to your mother how much has been added to GDP:
A.
12,000
B.
0
C.
1,000
D.
1,500
E.
1,000 to GNP
Question #4
An example of an intermediate good or service is:
A.
An Escalade sold at a dealership to a consumer.
B.
A social security payment by the government.
C.
Nike Shoes sold on Amazon.
D.
vegetables purchased by local restaurants to make soup
E.
an iphone purchased at a retail store by a consumer
Question #5
A firm buys $1,000 worth of steel and $20,000 worth of electronics and uses them to produce 2 rockets that sell for $60,000 each, for a total of $120,000. The firm's value added is:
A.
21,000
B.
99,000
C.
120,000
D.
81,000
E.
60,000
Question #6
Why is net investment not included in GDP, while gross investment is included in GDP?
A.
Net investment gives you a more subjective view of investment, thus it is included in gross investment and GDP.
B.
Depreciation is difficult to calculate, thus gross investment is included in GDP.
C.
None of the available answers
D.
Depreciation is already included in gross investment, thus there is no need to calculate net investment.
E.
Gross investment is difficult to calculate, thus net investment is the preferred way to calculate investment.
Question #7
Suppose that the total volume of nominal final sales in the economy grew by 40%, and someone states that the economy grew by 40%. What is wrong with this statement?
A.
Nominal sales information includes adjustments for inflation, so the 40% increase can be misleading.
B.
We are not given any information about the change in the prices. Thus we don't know what portion of the increase in nominal sales is due to price increases or quantity increases.
C.
Intermediate goods are removed from the final sales figure. Thus, it is an accurate description of the growth of the economy.
D.
We need to know if intermediate goods were removed before we can assess the validity of the 40% increase.
E.
Adjustments for depreciation need to be included to an accurate picture of economic growth.
Question #8
What is the GDP deflator used for?
A.
It is used to deflate nominal GDP and remove inflation to calculate the real GDP growth rate.
B.
It is used to deflate nominal GDP and increase inflation to calculate the nominal GDP growth rate.
C.
It is used to calculate the nominal GDP growth rate.
D.
It is used to increase nominal GDP and remove inflation to calculate the real GDP growth rate.
Question #9
Suppose have the following information concerning the Nominal GDP and GDP deflator for 2020: Nominal GDP: $25 trillion, GDP deflator: 110. What was real GDP in 2020?
A.
$21.56 trillion
B.
$20 trillion
C.
$22.73 trillion
D.
$23 trillion
E.
$25 trillion
Question #10
Suppose we have the following information: Real GDP 2019: $23 trillion, Nominal GDP 2020: $25 trillion, GDP deflator (2020): 105. What was the real GDP growth rate in 2020?
A.
8.70%
B.
-5.00%
C.
3.52%
D.
6.97%
E.
5.00%
Question #11
Nominal GDP (2025): 30 trillion, GDP Deflator (2025): 106, Nominal GDP (2026): 31.5 trillion, GDP Deflator (2026): 107.5. Based on the information above, what was the real GDP growth rate in 2026?
A.
5.65%
B.
5.00%
C.
4.78%
D.
3.53%
Question #12
Based on the information above, what is the value of the price index in Year 2?
A.
100
B.
125
C.
115.95
D.
124.34
Question #13
Based on the information above, what was the rate of inflation in year 2?
A.
3.40%
B.
15.95%
C.
100%
D.
16.67%
Question #14
Which category generally has the greatest weight in the CPI-U?
A.
Recreation
B.
Housing
C.
Medical Care
D.
Apparel
Question #15
Suppose that we have the following information about the value of the Consumer Price Index (CPI): CPI 2018: 100, CPI 2019: 113, CPI 2020: 126. What was the rate of inflation in 2019?
A.
39%
B.
11.50%
C.
26%
D.
13%
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