EC202PracticeExam1WithKey

EC202PracticeExam1WithKey - EC202-D1 Practice Exam 1...

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EC202-D1 Practice Exam 1 Sp.2010 With Answer Key At The End 1. Macroeconomics does not try to answer the question of: A) why do some countries experience rapid growth. B) what is the rate of return on education. C) why do some countries have high rates of inflation. D) what causes recessions and depressions. 2. Two equivalent ways to view GDP are as the: A) total payments made to all workers in the economy or the total profits of all firms and businesses in the economy. B) total expenditures on all goods produced in the economy or the total income earned from producing all services in the economy. C) total profits of all firms and businesses in the economy or the total consumption of goods and services by all households in the economy. D) total income of everyone in the economy or the total expenditure on the economy's output of goods and services. 3. Since GDP includes only the additions to income, not transfers of assets, ______ are not included in the computation of GDP. A) final goods B) used goods C) consumption goods D) goods produced for inventory 4. Real GDP is measured in _____ dollars ____ time. A) current; at a point in B) current; per unit of C) constant; at a point in D) constant; per unit of 5. Real GDP is a better measure of economic well-being than nominal GDP, because real GDP: A) excludes the value of goods and services exported abroad. B) includes the value of government transfer payments. C) measures changes in the quantity of goods and services produced by holding prices constant. D) adjusts the value of goods and services produced for changes in the foreign exchange rate. Page 1
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6. Net national product equals GDP: A) plus net investment. B) minus net investment. C) plus depreciation. D) minus depreciation. 7. The largest component of national income is: A) corporate profits. B) compensation of employees. C) proprietors' income. D) net interest. 8. The CPI is determined by computing: A) an average of prices of all goods and services. B) -the price of a basket of goods and services that changes every year, relative to the same basket in a base year. C) the price of a fixed basket of goods and services, relative to the price of the same basket in a base year. D) nominal GDP relative to real GDP. 9. Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure called core inflation: A) provides a real, rather than a nominal, rate of inflation. B) gives a better measure of ongoing, sustained price changes. C) is more consistent with measures of inflation used in other countries. D) fluctuates more than measures of inflation that include food and energy prices. 10. According to the definition used by the U.S. Bureau of Labor Statistics, people are
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EC202PracticeExam1WithKey - EC202-D1 Practice Exam 1...

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