Sample questions

# Sample questions - 1 Suppose nominal GDP increases in a...

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1) Suppose nominal GDP increases in a given year. Based on this information, we know with certainty that: A) real output has increased. B) the price level (GDP deflator) has increased. C) real output and the price level (GDP deflator) have both increased. D) either real output or the price level (GDP deflator) have increased. E) real output has decreased and the price level has increased. Answer: D 2) If nominal GDP rises from \$10 trillion to \$12 trillion, while the GDP deflator rises from 2.0 to 2.2, the percentage change in real GDP is: 3) Suppose that for the year 2003, a company spends \$200 million on intermediate goods and \$400 million on wages, with no other expenses. Also assume that its total sales are \$900 million. The value added by this company is: 4) Suppose nominal GDP in 2003 increased by 6% (over its previous level in 2002). Given this information, we know with certainty that:

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5) When disposable income is zero, we know that: A) consumption must be zero. B) saving must be zero. C) saving equals investment. D) saving is negative. E) the marginal propensity to consume must be zero. Answer: D 6) If C = 100 + .5Y D , what increase in government spending would raise GDP by 1000? 7) An increase in the marginal propensity to consume from .5 to .7 will cause:
8) When C = c 0 + c 1 Y D , an increase in c 0 will cause which of the following to increase? 9) The interest rate will increase as a result of which of the following events? A) a decrease in income B) an open market purchase of bonds by the central bank C) an increase in income D) all of the above E) none of the above Answer: C

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