Deck 2: Measuring the Macroeconomy

Question 1

According to the expenditure approach, if Y is GDP, C is consumption, I is investment, G is government purchases, and NX is net exports, the national income identity can be written as:

A) $Y = C + I + G$
B) $Y = C + I + G - N X$
C) $Y + C = I + G + N X$
D) $Y = ( C + I + G ) / N X$
E) $Y = C + I + G + N X$

Answer 1

$Y = C + I + G + N X$

Question 2

In 2012, U.S. national output was equal to about:

A) $15.7 billion
B) $15.7 trillion
C) $50,000
D) $10 trillion
E) $13.1 million

Answer 2

B

Question 3

The difference between economic profits and normal profits is that:

A) normal profits are earnings based on the normal competitive return to one's own labor; economic profits are the above-normal returns associated with prices that exceed competitive prices
B) economic profits are earnings based on the normal competitive return to one's own labor; normal profits are the above-normal returns associated with prices that exceed competitive prices
C) normal profits are earnings based on the normal competitive return to one's own labor; economic profits are the above-normal returns associated with prices that exceed monopolistic prices
D) economic profits are earnings based on the noncompetitive return to one's own labor; normal profits are the above-normal returns associated with prices that exceed competitive prices
E) None of these answers are correct.

Answer 3

A

Question 4

The National Income and Product Accounts provides a system for:

A) aggregating the production of all goods and services into a single measure of economic activity
B) aggregating the production of all goods into a single measure of economic activity
C) aggregating the production of all services into a single measure of economic activity
D) aggregating the production of most goods and services into a single measure of economic activity
E) aggregating the production of all goods and services into two measures of economic activity

Question 5

In 2012, U.S. national output per person was equal to about:

A) $15.7 billion
B) $43,000
C) $50,000
D) $12,000
E) $80,000

Question 6

Refer to the following table when answering
Table 2.1: U.S. 2011-2012 Expenditures ($ billions)
$$\begin{array} { l | c c } \hline & 2011 & 2012 \\\hline \text { Personal consumption expenditures } & 10,729 & 11,120 \\\text { Goods } & 3,625 & 3,783 \\\text { Services } & 7,104 & 7,337 \\\text { Gross private domestic investment } & 1,855 & 2,062 \\\text { Fixed investment } & 1,818 & 2,004 \\\text { Change in private inventories } & 37 & 58 \\\text { Net exports of goods and services } & - 568 & - 560 \\\text { Exports } & 2,094 & 2,184 \\\text { Imports } & 2,662 & 2,744 \\\text { Government expenditures } & 3,060 & 3,063 \\\text { Federal } & 1,222 & 1,214 \\\text { State and local } & 1,838 & 1,849 \\\hline\end{array}$$

-Consider Table 2.1, which tabulates GDP for 2011-2012. The federal government's share of total GDP in 2011 was about:

A) 19.5 percent
B) 7.7 percent
C) 12.2 percent
D) 20.3 percent
E) 8.1 percent

Question 7

The National Income and Product Accounts identity states:

A) $\text { Expenditure = Production } + \text { Income }$
B) $\text { Production } = \text { Expenditure } - \text { Income }$
C) $\text { Production = Expenditure + Income }$
D) $\text { Expenditure = Production } - \text { Income }$
E) $\text { Production } = \text { Expenditure } = \text { Income }$

Question 8

Goods that are produced in a different year than they are sold are called:

A) inventory
B) output adjustment
C) capital depreciation
D) a loss
E) net national product

Question 9

An economy's ________ is equal to its ________.

A) consumption; income
B) expenditure on goods and services; output
C) expenditure on goods; expenditure on services
D) investment; government expenditures
E) taxes; net exports

Question 10

According to the expenditure approach, if Y is GDP, C is consumption, I is investment, G is government purchases, and NX is net exports, which of the following is the national income identity?

A) $Y = C + I + G - N X$
B) $Y = C + I + G + N X$
C) $Y + C = I + G + N X$
D) $Y = ( C + I + G ) / N X$
E) $Y = C + I + G$

Question 11

The statistic used by economists to measure the value of economic output is:

A) the unemployment rate
B) GDP
C) the CPI
D) the GDP deflator
E) the federal funds rate

Question 12

Refer to the following table when answering
Table 2.1: U.S. 2011-2012 Expenditures ($ billions)
$$\begin{array} { l | c c } \hline & 2011 & 2012 \\\hline \text { Personal consumption expenditures } & 10,729 & 11,120 \\\text { Goods } & 3,625 & 3,783 \\\text { Services } & 7,104 & 7,337 \\\text { Gross private domestic investment } & 1,855 & 2,062 \\\text { Fixed investment } & 1,818 & 2,004 \\\text { Change in private inventories } & 37 & 58 \\\text { Net exports of goods and services } & - 568 & - 560 \\\text { Exports } & 2,094 & 2,184 \\\text { Imports } & 2,662 & 2,744 \\\text { Government expenditures } & 3,060 & 3,063 \\\text { Federal } & 1,222 & 1,214 \\\text { State and local } & 1,838 & 1,849 \\\hline\end{array}$$

-Consider Table 2.1, which tabulates GDP for 2011-2012. Total GDP in 2012 is:

A) $36,858 billion
B) $13,991 billion
C) $16,245 billion
D) $15,685 billion
E) $6,554 billion

Question 13

The National Income and Product Accounts allows us to relate ________ to ________ to ________.

A) household income; government income; firm income
B) total output; total spending; inflation
C) total output; inflation; total income
D) household income; household expenditure; total output
E) total output; total spending; total income

Question 14

In 2012, household expenditures accounted for about ________ of total GDP.

A) 50 percent
B) 71 percent
C) 45 percent
D) 76 percent
E) 13 percent

Question 15

Which measure of overall economic activity was not available in the 1930s?

A) Stock prices
B) GDP
C) Industrial production
D) Steel production
E) Gold prices

Question 16

In 2012, investment expenditures accounted for about ________ of total GDP.

A) 71 percent
B) -3.5 percent
C) 13 percent
D) 10 percent
E) 16 percent

Question 17

According to the expenditure approach, if Y is GDP, C is consumption, I is investment, G is government purchases, and NX is net exports, the national income identity can be written as:

A) $Y + C - G = I + N X$
B) $$Y - C = I + G - N X$$
C) $Y - C - G - I = N X$
D) $Y = ( C + I + G ) / N X$
E) $Y = C + I + G$

Question 18

Refer to the following table when answering
Table 2.1: U.S. 2011-2012 Expenditures ($ billions)
$$\begin{array} { l | c c } \hline & 2011 & 2012 \\\hline \text { Personal consumption expenditures } & 10,729 & 11,120 \\\text { Goods } & 3,625 & 3,783 \\\text { Services } & 7,104 & 7,337 \\\text { Gross private domestic investment } & 1,855 & 2,062 \\\text { Fixed investment } & 1,818 & 2,004 \\\text { Change in private inventories } & 37 & 58 \\\text { Net exports of goods and services } & - 568 & - 560 \\\text { Exports } & 2,094 & 2,184 \\\text { Imports } & 2,662 & 2,744 \\\text { Government expenditures } & 3,060 & 3,063 \\\text { Federal } & 1,222 & 1,214 \\\text { State and local } & 1,838 & 1,849 \\\hline\end{array}$$

-Consider Table 2.1, which tabulates GDP for 2011-2012. Household consumption as a share of GDP ________ and investment's share ________ over 2011-2012.

A) decreased; increased
B) increased; increased
C) decreased; stayed the same
D) increased; decreased
E) stayed the same; stayed the same

Question 19

Refer to the following table when answering
Table 2.1: U.S. 2011-2012 Expenditures ($ billions)
$$\begin{array} { l | c c } \hline & 2011 & 2012 \\\hline \text { Personal consumption expenditures } & 10,729 & 11,120 \\\text { Goods } & 3,625 & 3,783 \\\text { Services } & 7,104 & 7,337 \\\text { Gross private domestic investment } & 1,855 & 2,062 \\\text { Fixed investment } & 1,818 & 2,004 \\\text { Change in private inventories } & 37 & 58 \\\text { Net exports of goods and services } & - 568 & - 560 \\\text { Exports } & 2,094 & 2,184 \\\text { Imports } & 2,662 & 2,744 \\\text { Government expenditures } & 3,060 & 3,063 \\\text { Federal } & 1,222 & 1,214 \\\text { State and local } & 1,838 & 1,849 \\\hline\end{array}$$

-Consider Table 2.1, which tabulates GDP for 2011-2012. Total GDP in 2011 is:

A) $35,476 billion
B) $15,076 billion
C) $15,644 billion
D) $10,092 billion
E) $6,382 billion

Question 20

Who led the team that created the original National Income and Product Accounts in the 1930s?

A) John M. Keynes
B) Paul A. Samuelson
C) William D. Nordhaus
D) Simon Kuznets
E) Milton Friedman

Question 21

Refer to the following table when answering
Table 2.2: U.S. 2011-2012 Domestic Income ($ billions)
$$\begin{array} { l | r r } & { 2011 } & 2012 \\\hline \text { Compensation of employees, paid } & 8,303 & 8,600 \\\text { Wage and salary accruals } & 6,669 & 6,914 \\\text { Supplements to wages and salaries } & 1,634 & 1,687 \\\text { Taxes on production and imports } & 1,098 & 1,130 \\\text { Subsidies } & 62 & 61 \\\text { Net operating surplus } & 3,768 & 3,963 \\\text { Private enterprises } & 3,794 & 3,997 \\\text { Current surplus of government enterprises } & - 27 & - 34 \\\text { Depreciati on of fixed capital } & 1,937 & 2,012 \\\text { Private } & 1,587 & 1,648 \\\text { Government } & 349 & 364 \\\hline\end{array}$$

-Consider Table 2.2, National Income Accounts for 2011 and 2012. From this data, total GDP in 2012 was about ________ billion.

A) $15,644
B) $15,044
C) $34,339
D) $14,576
E) $17,201

Question 22

Refer to the following table when answering
Table 2.2: U.S. 2011-2012 Domestic Income ($ billions)
$$\begin{array} { l | r r } & { 2011 } & 2012 \\\hline \text { Compensation of employees, paid } & 8,303 & 8,600 \\\text { Wage and salary accruals } & 6,669 & 6,914 \\\text { Supplements to wages and salaries } & 1,634 & 1,687 \\\text { Taxes on production and imports } & 1,098 & 1,130 \\\text { Subsidies } & 62 & 61 \\\text { Net operating surplus } & 3,768 & 3,963 \\\text { Private enterprises } & 3,794 & 3,997 \\\text { Current surplus of government enterprises } & - 27 & - 34 \\\text { Depreciati on of fixed capital } & 1,937 & 2,012 \\\text { Private } & 1,587 & 1,648 \\\text { Government } & 349 & 364 \\\hline\end{array}$$

-Consider Table 2.2, National Income Accounts for 2011 and 2012. From this data, total GDP in 2011 was about ________ billion.

A) $16,606
B) $14,008
C) $32,969
D) $15,044
E) $15,645

Question 23

According to the text, the gains in GDP's consumption share has:

A) caused a rapid decline in inventories
B) driven investment below 10 percent
C) no impact on net exports
D) been at a cost to net exports and government spending
E) also pushed up the government expenditure share

Question 24

Which of the following is/are NOT included in the expenditure approach to national income accounting?

A) software
B) taxes
C) defense expenditures
D) All of these answers are correct.
E) None of these answers are correct.

Question 25

Prior to the late 1970s, the United States ________ about as much as it ________.

A) exported; consumed
B) exported; imported
C) imported; consumed
D) invested; exported
E) imported; invested

Question 26

Which of the following are NOT included in the expenditure approach to national income accounting?

A) defense expenditures
B) firm expenditures on equipment
C) residential expenditures
D) household service expenditures
E) All of these answers are correct.

Question 27

According to the income approach to GDP, the largest percentage of GDP comes from:

A) indirect business taxes
B) firm profits
C) compensation to employees
D) depreciation of fixed capital
E) None of these answers are correct.

Question 28

Using the expenditure approach, consumption expenditures include household purchases of:

A) durable and nondurable goods and services
B) durable and nondurable goods
C) durable and nondurable goods and taxes
D) durable and nondurable goods and residences
E) nondurable goods

Question 29

Refer to the following table when answering
Table 2.2: U.S. 2011-2012 Domestic Income ($ billions)
$$\begin{array} { l | r r } & { 2011 } & 2012 \\\hline \text { Compensation of employees, paid } & 8,303 & 8,600 \\\text { Wage and salary accruals } & 6,669 & 6,914 \\\text { Supplements to wages and salaries } & 1,634 & 1,687 \\\text { Taxes on production and imports } & 1,098 & 1,130 \\\text { Subsidies } & 62 & 61 \\\text { Net operating surplus } & 3,768 & 3,963 \\\text { Private enterprises } & 3,794 & 3,997 \\\text { Current surplus of government enterprises } & - 27 & - 34 \\\text { Depreciati on of fixed capital } & 1,937 & 2,012 \\\text { Private } & 1,587 & 1,648 \\\text { Government } & 349 & 364 \\\hline\end{array}$$

-Consider Table 2.2, National Income Accounts for 2011 and 2012. From this data, total net domestic product in 2012 was about ________ billion.

A) $13,632
B) $13,708
C) $15,645
D) $14,576
E) $11,743

Question 30

Which of the following is/are NOT included in the expenditure approach to national income accounting?

A) transfer payments
B) taxes
C) Social Security
D) changes in stock prices
E) None of these answers are correct.

Question 31

Since about 1970, ________ income share of GDP has been ________.

A) labor's; rising
B) labor's; the same
C) profits'; falling
D) indirect business taxes'; rising
E) the health sector's; falling

Question 32

U.S. expenditure shares by households, firms, and the government have been relatively ________ except during ________.

A) constant; the 1970s
B) variable; the Great Depression
C) constant; World War II
D) constant; the Vietnam War
E) variable; the 1990s

Question 33

In 2012, government transfer payments accounted for about ________ of government spending.

A) one-third
B) half
C) 74 percent
D) three-fifths
E) 100 percent

Question 34

In 2012, net exports accounted for about ________ of total GDP.

A) -4 percent
B) 13 percent
C) 20 percent
D) 100 percent
E) -14 percent

Question 35

Since about ________, U.S. expenditure shares by households, firms, and the government have been relatively ________.

A) 1939; constant
B) the Great Depression era; constant
C) 1950; variable
D) 1950; constant
E) 1929 until 1945; constant

Question 36

Using the expenditure approach, government expenditures include:

A) defense and nondefense federal, state, and local government expenditures
B) only nondefense federal government expenditures
C) federal government expenditures and transfer payments
D) only state and local government expenditures
E) residential investment and state and local government expenditures

Question 37

Using the expenditure approach, investment includes:

A) household residential expenditures
B) firm structures, equipment, and inventories
C) fixed firm and household structures, equipment, and inventories
D) government and firm equipment expenditures
E) government defense and firm equipment expenditures

Question 38

In 2012, the U.S. GDP was about ________, and ________ was the largest share.

A) $5 trillion; net exports
B) $22.5 billion; government expenditures
C) $10.5 trillion; investment
D) $13.6 billion; consumption
E) $15.7 trillion; consumption

Question 39

In 2012, government expenditures accounted for about ________ of total GDP.

A) 5 percent
B) -4 percent
C) 66 percent
D) 13 percent
E) 20 percent

Question 40

Net exports are also called:

A) capital outflows
B) the trade balance
C) the current account
D) foreign aid
E) government transfers

Question 41

In the past 60 years or so, labor's share of GDP in the United States ________.

A) is roughly two-thirds
B) is exactly 50 percent
C) is roughly one-third
D) is equal to capital's income share
E) has risen sharply

Question 42

If you own your own home, National Accounts uses ________ to measure the value of your home.

A) the geometric mean of the highest and lowest priced house in your neighborhood
B) the original purchase price
C) an estimate price of your house based on current market conditions
D) "rental equivalents"
E) the value of your home to your insurance carrier

Question 43

Which of the following does NOT count toward changes in the current GDP?

A) A student buys another year of tuition.
B) You buy a used car from your parents.
C) The local police station buys new squad cars.
D) The Pentagon buys gasoline.
E) None of these answers are correct.

Question 44

Refer to the following table when answering .
In this economy, only two goods are produced: video games and pistachios.

Table 2.3: National Income Accounting
$$\begin{array} { l | r r } \hline & 2017 & 2018 \\\hline \text { Quantity of pistachios } & 1,000 & 1,100 \\\text { Quantity of video games } & 500 & 500 \\\text { Price of pistachios } & \$ 1.00 & \$ 1.50 \\\text { Price of video games } & \$ 15.00 & \$ 14.75 \\\hline\end{array}$$

-Consider Table 2.3. Using the Laspeyres index, the real GDP in 2018 is:

A) $9,025
B) $8,500
C) $8,600
D) $9,150
E) $8,475

Question 45

Which of the following counts toward changes in the current GDP?

A) You find $10 on the sidewalk.
B) You purchase a used stereo from a friend.
C) The government builds a new highway.
D) You fix your own sink.
E) None of these answers are correct.

Question 46

Nominal GDP is the ________ of all goods and services produced in a period of time using ________ prices.

A) value; 1945
B) summation; current
C) value; a previous year's
D) value; current
E) summation; base year

Question 47

If the percent change in the price level is ________ than the percent change in ________, ________.

A) smaller; nominal GDP; real GDP shrinks
B) greater; nominal GDP; real GDP shrinks
C) greater; real GDP; nominal GDP shrinks
D) greater; real GDP; nominal GDP always stays the same
E) Not enough information is given.

Question 48

Real GDP is given by ________, where the price level is the ________.

A) Real GDP = Nominal GDP $\times$ Price level; CPI
B) Real GDP = Nominal GDP ÷ Price level; GDP deflator
C) Real GDP = Nominal GDP + Price level; GDP deflator
D) Real GDP = Nominal GDP - Price level; GDP deflator
E) Real GDP = Nominal GDP ÷ Price level; CPI

Question 49

Real GDP is the ________ of all goods and services produced in a period of time using ________ prices.

A) summation; current
B) value; base year
C) value; 1970
D) value; 1945
E) summation; base year

Question 50

Real gross domestic product is defined as:

A) the value of all goods and services produced by an economy, within its borders, over a period of time, at base-year prices
B) the value of all goods and services produced by an economy, within its borders, over a period of time, at current prices
C) the value of all goods produced by an economy, within its borders, over a period of time, at current prices
D) the value of all goods and services produced by an economy's citizens, regardless of where they live, over a period of time, at current prices
E) the value of all goods and services produced by an economy's citizens, regardless of where they live, over a period of time, at base-year prices

Question 51

Nominal gross domestic product is defined as:

A) the value of all goods and services produced by an economy, within its borders, over a period of time, at base-year prices
B) the value of all goods produced by an economy, within its borders, over a period of time, at current prices
C) the value of all goods and services produced by an economy, within its borders, over a period of time, at current prices
D) the value of all goods and services produced by an economy's citizens, regardless of where they live, over a period of time, at current prices
E) the value of all goods and services produced by an economy's citizens, regardless of where they live, over a period of time, at base-year prices

Question 52

When a state builds a new penitentiary, ________ rise(s), but that does not imply that ________ improve(s).

A) income; welfare
B) GDP; taxes
C) GDP; transfers
D) GDP; welfare
E) taxes; costs

Question 53

The percent change in the nominal GDP is given as:

A) percent change in the price level + percent change in real GDP
B) percent change in the price level - percent change in real GDP
C) percent change in the price level $\times$ percent change in real GDP
D) percent change in the price level ÷ percent change in real GDP
E) price level $\times$ percent change in real GDP

Question 54

By how much does the current GDP rise in the following scenario? A real estate agent sells a house for $250,000 that the previous owners had purchased 10 years earlier for $90,000. The real estate agent earns a commission of $10,000.

A) $160,000
B) $250,000
C) $10,000
D) $90,000
E) $260,000

Question 55

By how much does GDP change between 2010 and 2011 in the following scenario? In 2010, a rich woman has a chef and pays him $50,000 to cook for her. In 2010, she marries the chef and he continues to cook.

A) GDP rises by $50,000.
B) GDP is unchanged.
C) GDP falls by $50,000.
D) GDP rises by $25,000.
E) Not enough information is given.

Question 56

Which of the following is NOT discussed in Jones and Klenow's alternative measure of economic welfare?

A) inequality
B) leisure
C) life expectancy
D) child mortality rates
E) consumption share of GDP

Question 57

Nominal GDP is given by ________, where the price level is the ________.

A) Nominal GDP = Price level * Real GDP; GDP deflator
B) Nominal GDP = Price level ÷ Real GDP; GDP deflator
C) Nominal GDP = Price level + Real GDP; CPI
D) Nominal GDP = Price level - Real GDP; GDP deflator
E) Nominal GDP = Price level * Real GDP; CPI

Question 58

When the city of Los Angeles hires more police officers, ________ may rise, but it may be due to the ________ associated with crime.

A) GDP; costs
B) revenues; costs
C) taxes; benefits
D) interest rates; costs
E) prices; costs

Question 59

Refer to the following table when answering .
In this economy, only two goods are produced: video games and pistachios.

Table 2.3: National Income Accounting
$$\begin{array} { l | r r } \hline & 2017 & 2018 \\\hline \text { Quantity of pistachios } & 1,000 & 1,100 \\\text { Quantity of video games } & 500 & 500 \\\text { Price of pistachios } & \$ 1.00 & \$ 1.50 \\\text { Price of video games } & \$ 15.00 & \$ 14.75 \\\hline\end{array}$$

-Consider Table 2.3. Using the Laspeyres index, the real GDP in 2017 is:

A) $8,900
B) $8,500
C) $1,500
D) $15,500
E) $9,150

Question 60

The price level can be derived as ________ and is called the ________.

A) Price level = Nominal GDP ÷ Real GDP; CPI
B) Price level = Nominal GDP $\times$ Real GDP; CPI
C) Price level = Real GDP $\times$ Nominal GDP; GDP deflator
D) Price level = Real GDP ÷ Nominal GDP; Paasche deflator
E) Price level = Nominal GDP ÷ Real GDP; GDP deflator

Question 61

If we want to calculate the Mexican real GDP in U.S. dollars but adjusted for prices, we use the following:

A)

B)

C)

D)

E) None of these answers are correct.

Question 62

Refer to the following table when answering
Table 2.4: U.S. and Eurozone Nominal GDP in 2011
$$\begin{array} { l | c } \hline & 2011 \\\hline \text { Eurozone nominal GDP (€ billions) } & € 13,144 \\\text { U.S. nominal GDP (\$ billions) } & \$ 15,100 \\\text { Dollar/euro exchange rate } & \$ 1.28 \text { /€1 } 1 \\\text { PEz } & \\& \\& \\\text { /Pus } & 0.96 \\\hline\end{array}$$

-Consider the data in Table 2.4. The value of Eurozone nominal GDP in U.S. dollars is:

A) $15,729 billion
B) $11,797 billion
C) $16,824 billion
D) $10,269 billion
E) $17,525 billion

Question 63

If the nominal GDP rises by 6 percent and the price level rises by 3 percent, then the real GDP ________ by ________.

A) falls; 3 percent
B) rises; 9 percent
C) rises; 3 percent
D) falls; 9 percent
E) None of these answers are correct.

Question 64

If we calculate the real GDP using the initial period's prices, we are using a ________ index. If, instead, we use the final period's prices, we are using a ________ index.

A) Paasche; chain-weighted
B) Laspeyres; chain-weighted
C) Laspeyres; Paasche
D) Paasche; Laspeyres
E) chain-weighted; Fisher

Question 65

Refer to the following table when answering .
In this economy, only two goods are produced: video games and pistachios.

Table 2.3: National Income Accounting
$$\begin{array} { l | r r } \hline & 2017 & 2018 \\\hline \text { Quantity of pistachios } & 1,000 & 1,100 \\\text { Quantity of video games } & 500 & 500 \\\text { Price of pistachios } & \$ 1.00 & \$ 1.50 \\\text { Price of video games } & \$ 15.00 & \$ 14.75 \\\hline\end{array}$$

-Consider Table 2.3. Using the Laspeyres index, inflation between 2017 and 2018 was about:

A) 0 percent
B) 5 percent
C) 1 percent
D) 6 percent
E) Not enough information is given.

Question 66

If NGDP is nominal GDP and P is the price level, which of the following can be used to calculate the growth of the real GDP?

A) percent change in NGDP - percent change in P
B) percent change in NGDP + percent change in P
C) percent change in NGDP $\times$ percent change in P
D) percent change in P + percent change in NGDP
E) percent change in P - percent change in NGDP

Question 67

Nominal GDP means that the value of all goods and services is measured in ________ prices.

A) average
B) last year's
C) the base year's
D) current
E) constant

Question 68

Suppose we calculate the percent change in real GDP from year 1 to year 2 using both the Laspeyres and the Paasche indices. With the Laspeyres index we get 12 percent and with the Paasche index we get 9 percent. The chain-weighted growth of real GDP is:

A) 1.5 percent
B) 9.75 percent
C) 1.33 percent
D) 9.5 percent
E) 10.5 percent

Question 69

To get a more accurate view of the size of countries' economies, we first need to convert each country's GDP to the dollar using ________ and then adjust for ________.

A) the interest rate; the exchange rate
B) the exchange rate; price level differences
C) price level differences; the interest rate
D) the exchange rate; fiscal policy
E) fiscal policy; the exchange rate

Question 70

If NGDP is nominal GDP and RGDP is real GDP, which of the following can be used to calculate inflation?

A) percent change in NGDP + percent change in RGDP
B) percent change in NGDP - percent change in RGDP
C) percent change in NGDP $\times$ percent change in RGDP
D) percent change in RGDP + percent change in NGDP
E) percent change in RGDP - percent change in NGDP

Question 71

If we calculate the real GDP using the ________ index, we use the ________ period's prices.

A) Laspeyres; final
B) Paasche; final
C) Paasche; initial
D) chain-weighted; current
E) chain-weighted; final

Question 72

Refer to the following table when answering .
In this economy, only two goods are produced: video games and pistachios.

Table 2.3: National Income Accounting
$$\begin{array} { l | r r } \hline & 2017 & 2018 \\\hline \text { Quantity of pistachios } & 1,000 & 1,100 \\\text { Quantity of video games } & 500 & 500 \\\text { Price of pistachios } & \$ 1.00 & \$ 1.50 \\\text { Price of video games } & \$ 15.00 & \$ 14.75 \\\hline\end{array}$$

-Consider Table 2.3. Using the Laspeyres index, the percent change in real GDP was about:

A) 6 percent
B) 5 percent
C) 0 percent
D) 1 percent
E) Not enough information is given.

Question 73

Refer to the following table when answering .
In this economy, only two goods are produced: video games and pistachios.

Table 2.3: National Income Accounting
$$\begin{array} { l | r r } \hline & 2017 & 2018 \\\hline \text { Quantity of pistachios } & 1,000 & 1,100 \\\text { Quantity of video games } & 500 & 500 \\\text { Price of pistachios } & \$ 1.00 & \$ 1.50 \\\text { Price of video games } & \$ 15.00 & \$ 14.75 \\\hline\end{array}$$

-Consider Table 2.3. Using the Laspeyres index, the percent change in nominal GDP was about:

A) 5 percent
B) 1 percent
C) 6 percent
D) 0 percent
E) Not enough information is given.

Question 74

Refer to the following table when answering .
In this economy, only two goods are produced: video games and pistachios.

Table 2.3: National Income Accounting
$$\begin{array} { l | r r } \hline & 2017 & 2018 \\\hline \text { Quantity of pistachios } & 1,000 & 1,100 \\\text { Quantity of video games } & 500 & 500 \\\text { Price of pistachios } & \$ 1.00 & \$ 1.50 \\\text { Price of video games } & \$ 15.00 & \$ 14.75 \\\hline\end{array}$$

-Consider Table 2.3. Using the Paasche index, real GDP in 2017 is:

A) $8,475
B) $8,500
C) $8,600
D) $9,150
E) $8,875

Question 75

The chain-weighted measure of real GDP uses prices from:

A) a constant base year
B) a constantly changing base year
C) a base year that changes every five years
D) a base year that changes every ten years
E) None of these answers are correct.

Question 76

If we want to calculate the U.S. real GDP in Mexican pesos, we would use the following:

A)

B)
C)
D)
E) None of these answers are correct.

Question 77

If the nominal GDP rises by 3 percent and the price level rises by 5 percent, then the real GDP ________ by ________.

A) rises; 8 percent
B) falls; 8 percent
C) rises; 2 percent
D) falls; 2 percent
E) None of these answers are correct.

Question 78

Refer to the following table when answering .
In this economy, only two goods are produced: video games and pistachios.

Table 2.3: National Income Accounting
$$\begin{array} { l | r r } \hline & 2017 & 2018 \\\hline \text { Quantity of pistachios } & 1,000 & 1,100 \\\text { Quantity of video games } & 500 & 500 \\\text { Price of pistachios } & \$ 1.00 & \$ 1.50 \\\text { Price of video games } & \$ 15.00 & \$ 14.75 \\\hline\end{array}$$

-Consider Table 2.3. Using the Paasche index, the real GDP in 2018 is:

A) $9,150
B) $8,500
C) $8,600
D) $9,025
E) $8,475

Question 79

If the nominal GDP rises by 6 percent and the real GDP rises by 3 percent, then the price level ________ by ________.

A) rises; 3 percent
B) rises; 9 percent
C) falls; 3 percent
D) falls; 9 percent
E) There is no change in inflation.

Question 80

Define E = $/£ as the dollar/pound exchange rate and NGDP_UK as the United Kingdom's nominal GDP; then NGDP ${ } ^ { U S . }$
UK , the United Kingdom's nominal GDP in dollars, is given by:

A) $E = \mathrm { NGDP } _ { \text {UK } } \times \mathrm { NGDP } ^ { \mathrm { US } } \text { UK }$

B)
C)
D)
E) None of these answer are correct.