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Unformatted text preview: ECON 110 (3) P RACTICE RACTICE Q Q UESTIONS UESTIONS 1. Which of the following is a flow variable? A. The value of the house in which you live B. The balance in your savings account C. Your monthly consumption of hamburgers D. The number of hamburgers in your refrigerator at the beginning of the month 2. Which of the following is not a stock variable? A. Government debt B. The labor force C. The amount of money held by the public D. Inventory investment 3. GDP is A. a stock. B. a flow. C. both a stock and a flow. D. neither a stock nor a flow. 4. GDP measures A. expenditure on all final goods and services. B. total income of everyone in the economy. C. total value-added by all firms in the economy. D. all of the above. 5. Suppose that a farmer grows wheat and sells it to a baker for $1, the baker makes bread and sells it to a store for $2, and the store sells it to the customer for $3. This transaction increases GDP by A. $1. B. $2. C. $3. D. $6. 6. Which of the following is not included in GDP? A. The salary paid to a federal judge B. The value of housing services enjoyed by homeowners C. The value of automobile services enjoyed by car owners D. The value-added of a shipping company that transports goods from the factory to retail stores 7. In which case is total expenditure in an economy not equal to total income? A. if total saving is larger than total investment B. if net exports are not zero C. if inventory investment is negative Page 1 D. none of the above--they are always equal 8. All other things equal, GDP will rise if A. imports rise. B. exports fall. C. durable goods consumption rises. D. military spending falls. 9. Which of the following statements describes the difference between nominal and real GDP? A. Real GDP includes only goods; nominal GDP includes goods and services. B. Real GDP is measured using constant base-year prices; nominal GDP is measured using current prices. C. Real GDP is equal to nominal GDP less the depreciation of the capital stock. D. Real GDP is equal to nominal GDP multiplied by the CPI. 10. If production remains the same and all prices double, then real GDP A. and nominal GDP are both constant. B. is constant and nominal GDP is reduced by half. C. is constant and nominal GDP doubles. D. doubles and nominal GDP is constant. 11. Real GDP equals A. nominal GDP minus net exports. B. nominal GDP divided by the GDP deflator. C. nominal GDP multiplied by the GDP deflator. D. GDP minus depreciation. 12. If production remains the same and all prices double relative to the base year, then the GDP deflator is A. 1/4. B. 1/2. C. 1. D. 2. 13. Consider the following table: APPLES/ ORANGES Year Production/Price Production/Price 1995 20/ $0.50 10/$1.00 2000 10/ $1.00 10/$0.50 If 1995 is the base year, what is the GDP deflator for 2000?...
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- Spring '08