2020exam1 - Economics 2020 Spring 2005 Exam 1...

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Economics 2020 Spring 2005 Exam 1 Multiple-choice questions (choose the best answer): 1. The least stable expenditure component of GDP is a. consumption b. investment c. government expenditures d. net exports 2. If your parents purchased a new home this would be counted in which component of GDP? a. consumption b. investment c. government expenditures d. net exports 3. GDP does not directly measure the levels of education, nutrition and other factors of overall well-being a. but these levels are highly correlated with per capita GDP, so GDP is one of the best available measures of national welfare b. and these levels are only modestly correlated with GDP so GDP is not a good measure of national welfare c. so GDP is only a good measure of wealth d. so measuring GDP is useless 4. If the price of Mt. Dew was $0.50 and the price of Coors was $3.00/6-pack in 1993, and now Mt. Dew is $0.65 and Coors is $4.00 a. there is no change in relative prices b. Mt. Dew drinkers are relatively better off today versus 1993 than are Coors drinkers c. Coors drinkers are relatively better off today versus 1993 than are Mt. Dew drinkers d. Relative prices don't matter 5. As savings and thus investment increase we should expect a. Productivity to decrease at an increasing rate. b. Productivity to increase at a decreasing rate. c. Productivity to increases at an increasing rate. d. Productivity to remain constant. 6. If the nominal rate of interest is 10.5%, and the inflation rate is 4.3%, what is the real rate of interest? a. 3.0% b. 4.3% c. 6.2% d. 10.5% 7. How does an increase in the price level affect equilibrium real GDP? a. it decreases it b. it increases it c. it leaves it unchanged d. all of the above 8. Which of the following is counted in GDP? a. the value of a housewives’ services b. the cost of the Exxon Valdez cleanup c. the value of leisure d. the value of do-it-yourself work
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9. The substitution bias in the consumer price index refers to a. the substitution of new goods for old goods in the purchases of consumers b. the fact that consumers substitute toward goods that have become relatively less expensive c. the substitution of new prices for old prices in the basket of goods d. the substitution of quality for quantity in consumer purchases over time
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2020exam1 - Economics 2020 Spring 2005 Exam 1...

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