Online sample answers S2 2017.doc

Online sample answers S2 2017.doc - Practice Questions and...

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Practice Questions and answers for online test 1 Question No. 1 Suppose a loaf of bread that is ultimately sold to a customer at The Corner Store is produced by the following production process: Name of Company Revenues Cost of Purchased Inputs Seed supplier $1.00 $0.00 Mildura Wheat Co-op $2.00 $1.00 The Corner Shop $3.50 $2.00 What is the sum of the value added of all the firms? Answer Correct $1.00 No $2.00 No $2.75 No $3.50 Yes $6.50 No
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Question No. 2 The values of real and nominal GDP must necessarily be equal in the current period if Answer Correct GDP is measured using the production or value added measure No the current period and base or reference period are the same Yes the quantity of GDP has not changed since the base or reference period No the rate of inflation has fallen since the base or reference period No GDP is measured using the expenditure approach No
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Question No. 3 If the general level of prices is decreasing at a rate of 10% per year, we would expect that the real interest rate will be Answer Correct less than 10% No the same as the nominal interest rate No 10 % or higher Yes less than 5% No none of the above No
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Question No. 4 Use the following information about the economy to answer the question: Household saving $300 Business saving $700 Government purchases $1000 Government transfers and interest payments $500 Government tax collections $1500 GDP $5000 Private saving equals ____ and national saving equals ____.
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