Assume nominal gdp increased by 42 in the us but by

7. Assume nominal GDP increased by 4.2% in the U.S. but by only 3.4% in Germany. We can
definitely conclude that
A) the standard of living of the people in the U.S. went up more than the standard of living of
the people in Germany
B) real economic growth in the U.S. was higher than in Germany
C) inflation in the U.S. was 0.8% higher than in Germany
D) productivity growth in the U.S. was higher than in Germany
E) none of the above
Ans: E
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Difficulty: Easy
8. Assume you deplete your savings to buy a new sofa and some government bonds and then
take a vacation in a foreign country. Which of the following is true?
Difficulty: Easy
9. If gross investment were zero, which of the following would be true?
Difficulty: Easy
10. Depreciation is
Difficulty: Medium
11. If we counted the value of autoworkers' salaries, wheels, tires, steel, body parts, and final car
sales in calculating GDP, then we would be
A) understating GDP by overlooking car dealers' profits
B) ignoring the contribution of capital to output
C) overstating GDP through double counting
D) using the value-added technique for calculating GDP
E) calculating GDP correctly only if we excluded any imported cars
Ans: C
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Difficulty: Medium
12. The difference between gross investment and net investment is
Difficulty: Easy