20908sol - 2 PART I: MULTIPLE CHOICE (total 40 marks; 2...

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2 PART I: MULTIPLE CHOICE (total 40 marks; 2 marks each) Record your answer on the scantron. 1. With the flexible price model, a. Output is determined by changes in overall demand b. we can use this model to explain recessions and booms c. Fluctuations in output may be the result of technological shocks / d. both (a) and (b) e. none of the above 2. Which of the following is true? a both the CPI and the GDP deflator are, in effect, examples of Laspeyres price indices b both the CPI and the GDP deflator are, in effect, examples of Paasche price indices c the CPI is, in effect, an example of a Paasche price index, whereas the GDP deflator is more accurately considered an example of a Laspeyres index d neither the CPI nor the GDP deflator comes close to being an example of either a Laspyeres price index or a Paasche price index e the CPI is, in effect, an example of a Laspeyres price index, whereas the GDP deflator is more accurately considered an example of a Paasche index # 3. Inventories are included in the computation of gross domestic product as part of a nonresidential fixed investment b residential fixed investment c depreciation allowances d the total capital stock e none of the above # 4. The highest component of GDP is A. the current account. B. investment. C. government purchases. D. consumption. # E. None of the above.
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3 5. GDP is supposed to measure A. the volume of production within a country’s borders. # B. the volume of services generated within a country’s borders. C. the volume of production of a country’s output. D.
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This note was uploaded on 04/26/2011 for the course ECON 209 taught by Professor Indart during the Fall '06 term at University of Toronto- Toronto.

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20908sol - 2 PART I: MULTIPLE CHOICE (total 40 marks; 2...

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