Download ECN202 Practice Questions: Macro Measurement (Output)

ECN202
Practice Questions: Macro Measurement (Output)
1. Which of the following would be included in GDP?
a. your sale of some Microsoft stock for a large capital gain
b. your purchase of a US Savings bond
c. your purchase of a new glasses for school
d. the average value of your savings account for the year
The only thing included in GDP would be your purchase of a new glasses for school
2. Given the way we measure GDP, which of the following would increase GDP?
a. my decision to grow my own vegetables in my garden this year
b. the decision of my brother to become a "Mr. Mom and raise the family's kids
c. my purchase of a new lamp for my office
d. my "investment" of $1,500 in my retirement account
e. my daughter's purchase of an historic house in downtown Newport
GDP is the value of currently produced products. The only currently produced goods or services is the lamp purchase
and the commission on the home purchase
3. If I were interested in doing some international comparisons of improvements in the standard of living over the past
decade, which of the following would be the best indicator?
a. real GDP
b. real GDP per capita
c. CPI
d. nominal GDP
If I was interested in the standard of living I would want per capita GDP, and to adjust for inflation I would use real per
capita GDP.
4. Which of the following statements is true?
a. part of the explanation for GDP in the US being higher than in China is the inclusion of leisure in the calculations
of GDP
b. one should use GDP per capita in country comparisons because it corrects for differences in inequality.
c. GDP statistics in poorer countries tend to overestimate the size of the economy because of the exclusion of illegal
activities
d. In making international comparisons you would want to use GDP in US$s.
5. Which one of the following statements is not true when we look at the economic track record? (could be more than
one answer)
a. the share of GDP accounted for by consumption spending tends to be higher in the US than other industrial
countries
b. the fastest growing components of demand for US goods & services in the past fifty years has been consumption
spending
c. the rise in inequality in the US weakens the link between average welfare and GDP per person
d. within the rich countries, Japan had the highest inflation rates in the 1990s
e. some of the worst inflation in the world in the early 1990s was in the former Soviet Union
The only incorrect statements are the fastest growing components of demand for US goods & services in the past fifty
years has been consumption spending and within the rich countries, Japan had the highest inflation rates in the 1990s
6. These lines represent indexed values for the
components of aggregate demand. The dashed line
represents which component of aggregate demand?
a. Consumption
b. Investment
c. Government
d. Exports
e. Imports
The dashed line is government spending because it is
not volatile – pretty steady increase – and it is
increasing slower than the other components of AD.
2000
2001
2002
2003
2004
2005
2006
Personal
Gross private
Government
consumption
domestic Exports
Imports
Spending
expenditures investment
6,739.40
1,735.50 1,096.30
1,475.80
1,721.60
7,055.00
1,614.30 1,032.80
1,399.80
1,825.60
7,350.70
1,582.10 1,005.90
1,430.30
1,961.10
7,703.60
1,664.10 1,040.80
1,540.20
2,092.50
8,195.90
1,888.60 1,182.40
1,797.80
2,216.80
8,707.80
2,077.20 1,309.40
2,023.90
2,363.40
9,224.50
2,209.20 1,467.60
2,229.60
2,523.00
Above is a table of output market data. Based on the table,
7. in 2006 the balance of trade was____.
The BOT = X - M = 1.467-2.229 = - .762 = $-760 billion
8. In 2006 GDP was____.
GDP = C+I+G+X-M = 9.2+2.2+1.5+2.5-2.2 = 13.2
China
Germany
India
Japan
Singapore
United Kingdom
United States
GDP
National Currency
52,183.69
2,658.87
97,699.84
474,558.64
339.867
1,547.87
15,653.37
US $s
8,250.24
3,366.65
1,946.77
5,984.39
267.941
2,433.78
15,653.37
PPP
12,382.56
3,194.20
4,710.81
4,616.88
326.679
2,316.25
15,653.37
9. Based on the table above that contains alternative measures of GDP, ____.
a. The biggest economy is Japan’s
b. Despite the headlines about China. India’s economy is actually larger than China’s
c. China’s economy looks much larger once adjustments have been made for lower prices in China
d. Prices in Singapore are high so when adjustments are made to account for this, Singapore’s economy looks
smaller
The PPP is the data that has been adjusted to account for differences in prices, so China’s economy looks much larger
once adjustments have been made for lower prices in China
10. Which one of the following statements is true when we look at the economic history of the world in the 1980s and
1990s?
a. Inflation in the 'rich' countries tended to rise in the 1990s
b. Inflation rates tended to be lower during wars
c. A sustained rise in inflation rates in the US was reversed in the early 2000s
d. The highest inflation rates in the 1990s tended to be in the former Soviet Union
The only true statement here is the highest inflation rates in the 1990s tended to be in the former Soviet Union.
11. What was the inflation rate in 2012? [closest approximation]
a. -1.3%
b. 1.2%
c. 2.1%
d. 2.9%
e. 3.2%
The inflation rate = the percentage change in the CPI, so inflation 2012 = (229.6-224.9)/224.9 = .0209 = 2.1%