Q3_f07 - a. Real GDP falls by at least 1.2 percent again...

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Temple University Economics 1101 Fall 2007 Quiz #3 Name ____________________________ Multiple Choice (2 points each) Please circle the most appropriate answer. 1. How does the purchase of flour to make cookies affect GDP? a. It depends on what one does with the cookies b. It never affects GDP because flour is an intermediate good c. It always counts as consumption (C) d. It always counts as investment (I) 2. If we add all incomes in an economy, the number we get will be a. Greater than real GDP but less than nominal GDP b. Greater real GDP due, in part, to depreciation c. Less than real GDP due, in part, to imported goods d. Less than real GDP due, in part, to intermediate goods 3. Real GDP is a better measure of well being than nominal GDP because a. It is automatically higher for larger countries b. It fully accounts for substitution effects c. It accounts for inflation and deflation d. It nets out the purchases of used goods 4. Japan’s real GDP fell by 1.2 percent last quarter. It will be in a recession if
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Unformatted text preview: a. Real GDP falls by at least 1.2 percent again this quarter b. Real GDP also falls over the next three quarters c. Real GDP also falls in the next quarter d. Real GDP fails to grow by at least 1.2 percent in the next quarter 5. When do substitution effects play a role in Aggregate Demand for Japan a. Never b. When investment by Japanese firms substitutes for consumption by Japanese households c. When Japanese consumers buy a cheaper domestically made good instead of a more expensive one d. When Japanese households buy imports rather than domestically made goods B. Short Answer (5 points) Please answer the following briefly but completely. 1. How does the GDP deflator differ from the CPI? 2. Use Aggregate Supply and Aggregate Demand to show what happened to the Japanese economy as a result of the large growth in economic activity in China. 3. Why dont intermediate goods count when we compute GDP?...
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Q3_f07 - a. Real GDP falls by at least 1.2 percent again...

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