120mc - Final Practice Multiple Choice Multiple Choice...

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Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. The goal of macroeconomics is a. to explain how economic changes affect prices of particular goods. b. to devise policies to deal with market failures such as externalities and monopoly. c. to explain changes that affect households and firms in general. d. None of the above are correct. ____ 2. GDP is computed using market prices as the value of final goods and services because a. market prices don't change much, so it is easy to make comparisons between years. b. if market prices are out of line with how people value goods, the government sets ceilings and floors on them. c. market prices reflect the value of goods and services. d. None of the above are correct; the government does not use market prices to compute GDP. ____ 3. Roommates Grace and Kelly are sharing household chores and think they have an even exchange. Other things the same, if instead they paid each other for the chores the other did GDP would a. rise. b. fall. c. be unaffected because paid or not, household chores are not included in GDP. d. be unaffected because paid or not, household chores are included in GDP. ____ 4. A movie company makes 500,000 DVDs of one of its latest releases. It sells 300,000 of them before the end of the second quarter, and holds the others in its warehouse. a. Since the DVDs will eventually be bought by consumers, they are included as consumption in the second quarter. b. Since the DVDs were not purchased this quarter, they will be counted as an increase in third-quarter GDP. c. The DVDs will be counted as a change in inventory in the second quarter and so will be included in second-quarter GDP. d. The DVDs will be counted as a change in inventory in the second quarter, and when sold in the third quarter will raise GDP. ____ 5. Which of the following is included in GDP? a. the sale of stocks and bonds b. the estimated rental value of owner occupied housing c. unpaid production of goods and services at home d. All of the above are correct. ____ 6. In the nation of Ophelia, quarterly GDP is always higher in the second quarter than in other quarters. In order to account for this predictable jump in GDP, Ophelia's government statisticians will a. make sure to account for inventory changes during the second quarter. b. report real GDP, not nominal GDP. c. focus on GNP rather than GDP during the second quarter. d. make a seasonal adjustment for the second quarter data. ____ 7. Government purchases include spending on goods and services by a. the federal government only. b. state and federal governments only. c. local, state and federal governments. d.
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This note was uploaded on 04/13/2010 for the course CA 1001 taught by Professor James during the Spring '06 term at Buffalo State.

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120mc - Final Practice Multiple Choice Multiple Choice...

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