Spring 2004 First Prelim with answers

Spring 2004 First Prelim with answers - PART I: Multiple...

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PART I: Multiple Choice. 10 points (each question worth ½ point) 1. Which of the following statements about gross domestic product (GDP) is correct? a) GDP measures the market value of final goods and services produced within a country. b) GDP measures the market value of goods and services produced by U.S. owned companies. c) GDP measures physical quantity of goods produced in the United States. Because there is no common unit for measuring services, they are excluded from GDP. d) GDP measures the market value of both intermediate and final goods and services produced within a country. Ans: a 2. Which of the following is considered part of consumption spending in the calculation of GDP for 2001? a) The construction of a new house in Dallas, Texas in 2001 b) The purchase of bootleg CD’s of your favorite rock band on June 2001. c) The payment for a haircut on May 21 st 2001 d) The purchase of a baseball that was signed by legendary player Babe Ruth in 1920. Ans: c 3. Nominal GDP is higher this year than last. We can conclude that: a) Production levels are higher this year. b) Price levels are higher this year. c) There is less unemployment this year. d) We need more information before commenting. Ans: d 4. Which of the following measures is the best indicator of changes in the well-being of individuals in a country? a) An increase in nominal GDP b) An increase in real per-capita GDP c) An increase in real GDP d) An increase in the money supply Ans: b 5. Every payment from one individual to another:
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a) increases GDP b) decreases GDP c) increases national income d) none of the above Ans: d 6. The natural rate of unemployment is equal to: a) The minimum unemployment rate consistent with price stability b) The long-run average unemployment rate around which the short-run unemployment rate fluctuates c) The deviation of the unemployment rate from its long-run average d) The cyclical unemployment rate Ans: a or b 7. Which type of unemployment is most likely to be affected by more information about available jobs? a) Frictional b) Structural c) Cyclical d) Seasonal Ans: a 8. If CPI =132 for this quarter (Q1 2004), by how much have prices risen over the last decade. The base year is Q1 1994. a) By 132% b) By 1.32% c) By 32% d) We cannot tell, we need the CPI for Q1 1994. Ans: c
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9. Consider a closed, private economy, where GDP is composed of consumer spending and investment spending that is independent of the level of output. If investment spending increases by 10 million dollars and as a result aggregate output increases by 10 million dollars, then the slope of the planned aggregate expenditure curve is:
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This note was uploaded on 05/18/2008 for the course ECON 1120 taught by Professor Wissink during the Spring '05 term at Cornell University (Engineering School).

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Spring 2004 First Prelim with answers - PART I: Multiple...

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