Econ 102 Midterm 1 - AnswersFebruary 9, 2006 Part I: Multiple Choice: (26 Questions, 3 pts each=78 pts) Select the best answer among the given choices 1. Please indicate which of the following statements are true I. In general, stocks are riskier than bonds, so bonds must pay a higher return II. Government bonds are considered less risky than corporate bonds III. Stocks and bonds are attractive financial instruments that pay fixed returns. a)I only b)II only c)III only d)I and III only e)II and III only Use the following table to answer questions 2 and 3: Year Nominal GDP (in billions) GDP Deflator (base year 1997) 2000 10,453 121 2001 11,115 124 2002 11,990 125 2. Inflation between 2000 and 2001 was approximately (GDP Deflator2001– GDP Deflator2000)/GDP Deflator2000x 100 = 2.5% 1
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