Question 1

Suppose nominal GDP in 2009 was $100 billion and in 2010 it was $260 billion.The general price index in 2009 was 100 and in 2010 it was 180.Between 2009 and 2010 the real GDP rose by approximately:

Accepted Answer

The answer of Suppose nominal GDP in 2009 was $100...

Question 2

A price index is:

Accepted Answer

The answer of A price index is:
...

Question 3

If real GDP falls from one period to another,we can conclude that:

Accepted Answer

Real GDP measures the value of economic output adjusted for price changes (inflation or deflation). A fall in real GDP indicates a decrease in the volume of goods and services produced, but it does not necessarily imply deflation, inflation, or a fall in nominal GDP, as these are influenced by price level changes.

Question 4

Historically,real GDP has increased less rapidly than nominal GDP because:

Accepted Answer

The answer of Historically,real GDP has increased less rapidly than...

Question 5

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion,the GDP price index for that year is:

Accepted Answer

The GDP price index is calculated as (Nominal GDP / Real GDP) * 100. Therefore, ($240 billion / $80 billion) * 100 = 300.

Question 6

Assume an economy that makes only one product and that year 3 is the base year.Output and price data for a five-year period are as follows.Answer the question on the basis of these data. $\begin{array}{c}
\begin{array}{c}
\
\underline{\text { Year }} \
1 \
2 \
3 \
4 \
5
\end{array}
\begin{array}{c}
\text { Units of}\
\underline{\text { Output}}\
3 \
4 \
6 \
7 \
8
\end{array}
\begin{array}{c}
\text { Price Per } \
\underline{\text { Unit } }\
 \$ 3 \
4 \
5 \
7 \
8
\end{array}
\end{array}$
  Refer to the data.Real GDP for year 5 is:

Accepted Answer

The answer of Assume an economy that makes only one...

Question 7

Assume an economy that makes only one product and that year 3 is the base year.Output and price data for a five-year period are as follows.Answer the question on the basis of these data. $\begin{array}{c}
\begin{array}{c}
\
\underline{\text { Year }} \
1 \
2 \
3 \
4 \
5
\end{array}
\begin{array}{c}
\text { Units of}\
\underline{\text { Output}}\
3 \
4 \
6 \
7 \
8
\end{array}
\begin{array}{c}
\text { Price Per } \
\underline{\text { Unit } }\
 \$ 3 \
4 \
5 \
7 \
8
\end{array}
\end{array}$
  Refer to the data.In determining real GDP,the nominal GDP for:

Accepted Answer

The answer of Assume an economy that makes only one...

Question 8

Nominal GDP is adjusted for price changes through the use of:

Accepted Answer

Nominal GDP is adjusted for price changes through the use of the GDP price index, also known as the GDP deflator. This index measures the change in prices of all goods and services produced in an economy and is used to convert nominal GDP to real GDP. The Consumer Price Index (CPI) and the Producer Price Index (PPI) are used to measure changes in prices of specific goods and services or at specific stages of production, but they are not used to adjust GDP. Exchange rates are used to convert GDP measured in one currency to another currency, but they do not adjust for price changes within a single economy.

Question 9

Use the following table for a hypothetical single-product economy. $\begin{array}{c}
\begin{array}{c}
\
\underline{\text { Year }} \
 1 \
2 \
3 \
4
\end{array}
\begin{array}{c}
\text {Units of}\
\underline{\text { Output}}\
10\
12\
15\
20
\end{array}
\begin{array}{c}
\text { Price of Bagel}\
\underline{\text {  Per Unit}}\
\$ 10\
20\
 30\
 40
\end{array}
\begin{array}{c}
\text {Price Index}\
\underline{\text {( Year 1=100)}}\
100\
200\
300\
400
\end{array}
\end{array}$
 Refer to the data.Real GDP in year 4 is:

Accepted Answer

Real GDP is calculated by dividing nominal GDP by the price index (in hundredths). For year 4, nominal GDP is 20 units * $40 = $800. The price index is 400, so real GDP = $800 / (400/100) = $200.

Question 10

Suppose nominal GDP was $360 billion in 1990 and $450 billion in 2000.The appropriate price index (1985 = 100)was 120 in 1990 and 125 in 2000.Between 1990 and 2000 real GDP:

Accepted Answer

The answer of Suppose nominal GDP was $360 billion in...

Question 11

Assume an economy that makes only one product and that year 3 is the base year.Output and price data for a five-year period are as follows.Answer the question on the basis of these data. $\begin{array}{c}
\begin{array}{c}
\
\underline{\text { Year }} \
1 \
2 \
3 \
4 \
5
\end{array}
\begin{array}{c}
\text { Units of}\
\underline{\text { Output}}\
3 \
4 \
6 \
7 \
8
\end{array}
\begin{array}{c}
\text { Price Per } \
\underline{\text { Unit } }\
 \$ 3 \
4 \
5 \
7 \
8
\end{array}
\end{array}$
  Refer to the data.For the years shown,the growth of:

Accepted Answer

Nominal GDP has increased in each year, but the base year prices have not kept up with inflation. Therefore, nominal GDP overstates the increase in real output, and the growth of real GDP is slower than the growth of nominal GDP.

Question 12

Suppose a nation's 2010 nominal GDP was $972 billion and the general price index was 90.To make the 2010 GDP comparable with the base year GDP,the 2010 GDP must be:

Accepted Answer

The answer of Suppose a nation's 2010 nominal GDP was...

Question 13

In the second quarter (three-month period)of 2001,U.S.nominal GDP increased but U.S.real GDP declined.We can conclude that:

Accepted Answer

Nominal GDP measures economic output using current prices, while real GDP adjusts for inflation. Therefore, if nominal GDP increases but real GDP declines, it means that inflation (or the general price level) must have increased. Option B correctly reflects this relationship.

Question 14

Use the following table for a hypothetical single-product economy. $\begin{array}{c}
\begin{array}{c}
\
\underline{\text { Year }} \
 1 \
2 \
3 \
4
\end{array}
\begin{array}{c}
\text {Units of}\
\underline{\text { Output}}\
10\
12\
15\
20
\end{array}
\begin{array}{c}
\text { Price of Bagel}\
\underline{\text {  Per Unit}}\
\$ 10\
20\
 30\
 40
\end{array}
\begin{array}{c}
\text {Price Index}\
\underline{\text {( Year 1=100)}}\
100\
200\
300\
400
\end{array}
\end{array}$
 Refer to the data.Nominal GDP in year 3 is:

Accepted Answer

Nominal GDP in year 3 is calculated by taking the quantity of the good produced in year 3 and multiplying it by the price of the good in year 3. In this case, quantity produced in year 3 is 50 and the price in year 3 is $9. Therefore, Nominal GDP in year 3 is 50 x $9 = $450.

Question 15

Real GDP measures:

Accepted Answer

Real GDP measures current output at base year prices, meaning it adjusts for inflation by using a common set of prices (from a chosen base year) to value goods and services produced in different years. This allows for a more accurate comparison of economic output over time.

Question 16

Assume an economy that makes only one product and that year 3 is the base year.Output and price data for a five-year period are as follows.Answer the question on the basis of these data. $\begin{array}{c}
\begin{array}{c}
\
\underline{\text { Year }} \
1 \
2 \
3 \
4 \
5
\end{array}
\begin{array}{c}
\text { Units of}\
\underline{\text { Output}}\
3 \
4 \
6 \
7 \
8
\end{array}
\begin{array}{c}
\text { Price Per } \
\underline{\text { Unit } }\
 \$ 3 \
4 \
5 \
7 \
8
\end{array}
\end{array}$
 Refer to the data.If year 3 is chosen as the base year,the price index for year 1 is:

Accepted Answer

The price index for year 1 is calculated as (Price in Year 1 / Price in Base Year) * 100 = (3 / 5) * 100 = 60.

Question 17

Use the following table for a hypothetical single-product economy. $\begin{array}{c}
\begin{array}{c}
\
\underline{\text { Year }} \
 1 \
2 \
3 \
4
\end{array}
\begin{array}{c}
\text {Units of}\
\underline{\text { Output}}\
10\
12\
15\
20
\end{array}
\begin{array}{c}
\text { Price of Bagel}\
\underline{\text {  Per Unit}}\
\$ 10\
20\
 30\
 40
\end{array}
\begin{array}{c}
\text {Price Index}\
\underline{\text {( Year 1=100)}}\
100\
200\
300\
400
\end{array}
\end{array}$
 Refer to the data.Nominal GDP in year 4 is:

Accepted Answer

Nominal GDP is calculated by multiplying the units of output by the price per unit. In year 4, the output is 20 units and the price per unit is $40, so nominal GDP is 20 * $40 = $800.

Question 18

If nominal GDP rises:

Accepted Answer

Nominal GDP measures the value of all final goods and services produced at current market prices. Therefore, if nominal GDP rises, it could be because either the quantity of goods and services produced (i.e. real GDP) has increased, or because the prices of those goods and services have increased. So, real GDP may either rise or fall alongside a nominal GDP increase.

Question 19

Assume an economy that makes only one product and that year 3 is the base year.Output and price data for a five-year period are as follows.Answer the question on the basis of these data. $\begin{array}{c}
\begin{array}{c}
\
\underline{\text { Year }} \
1 \
2 \
3 \
4 \
5
\end{array}
\begin{array}{c}
\text { Units of}\
\underline{\text { Output}}\
3 \
4 \
6 \
7 \
8
\end{array}
\begin{array}{c}
\text { Price Per } \
\underline{\text { Unit } }\
 \$ 3 \
4 \
5 \
7 \
8
\end{array}
\end{array}$
  Refer to the data.The nominal GDP for year 4 is:

Accepted Answer

Nominal GDP is calculated by multiplying the quantity of output by the price per unit. In year 4, the quantity of output is 7 units and the price per unit is $7. Therefore, the nominal GDP for year 4 is 7 * $7 = $49.

Question 20

Use the following table for a hypothetical single-product economy. $\begin{array}{c}
\begin{array}{c}
\
\underline{\text { Year }} \
 1 \
2 \
3 \
4
\end{array}
\begin{array}{c}
\text {Units of}\
\underline{\text { Output}}\
10\
12\
15\
20
\end{array}
\begin{array}{c}
\text { Price of Bagel}\
\underline{\text {  Per Unit}}\
\$ 10\
20\
 30\
 40
\end{array}
\begin{array}{c}
\text {Price Index}\
\underline{\text {( Year 1=100)}}\
100\
200\
300\
400
\end{array}
\end{array}$
 Refer to the data.Real GDP in year 3 is:

Accepted Answer

The answer of Use the following table for a hypothetical...

Quiz 26: Measuring Domestic Output and National Income