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Unformatted text preview: Middle East Technical University Fall, 2011 Department of Economics ECON 202 Dr. Pınar Derin-Güre Name___________________________________ Due Date: Thursday, October 20 , 2011 in class . No late problem sets will be accepted. Note: Please keep your answers short ! In most cases one or two sentences will be more than enough. If your answers are too long or contain obviously irrelevant information you may incur a penalty, i.e. brevity in your responses is strongly recommended. If you would like, you may work in small groups of 2-4 people to discuss the problem sets. However, you must write up answers individually. If you decide to work in a group, please list the names of the group members on your problem set. A note on academic integrity: As the syllabus clearly states, work that you hand in should be your own work: “A student shall not submit work […] that is not the result of the student’s own effort.” Please show your work for full credit on analytical questions, i.e., show the formulas, calculations (if appropriate). Do not report only the final answers for the essay questions. MULTIPLE CHOICE ANSWERS WILL BE HANDED IN USING THE OPTICAL FORMS. I WILL HAND IN THE EMPTY OPTICAL FORMS IN CLASS ON TUESDAY. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Suppose an individual wishes to provide a definition of GDP for a given period. Which of the following phrases would be used when defining GDP? A) final and intermediate goods and services B) final and intermediate goods and services produced by the private sector only C) final and intermediate goods and services, plus raw materials D) all of the above E) none of the above 2) When nominal GDP falls for a given period, we know with certainty that: A) real output and the price level (GDP deflator) have both decreased. B) real output has increased and the price level has decreased. C) the price level (GDP deflator) has decreased. D) real output has decreased. E) either real output or the price level (GDP deflator) have decreased. 3) Use the following information to answer this question. If nominal GDP rises from $40 trillion to $48 trillion, while the GDP deflator rises from 2.0 to 2.4, the percentage change in real GDP is: A) 10%. B) 9.1%. C) 0%. D) - 10%. E) 20%. 4) In a given year, suppose a company spends $200 million on intermediate goods and $400 million on wages, with no other expenses. Also assume that its total sales are $700 million. The value added by this company equals: A) $100 million. B) $200 million. C) $300 million. D) $400 million. E) $500 million....
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