Download Exercises for quiz 1

Exercises for quiz 1
1.
a)
b)
c)
d)
2.
GDP could be calculated for any given year by adding:
the value of all goods and services;
C+I+G+X-M;
all personal income;
any of the above methods.
A firm produces €1500 worth of widgets. It pays €500 for ingredients, and €600 in wages,
and keeps €400 as profit. The value added is:
a) €1000;
b) € 1500;
c) €1400;
d) €1100.
3. Net domestic product at factor prices is derived from gross domestic product at market
prices by:
a) subtracting an allowance for depreciation of capital equipment;
b) subtracting indirect taxation and an allowance for depreciation of capital
equipment, and adding subsidies;
c) subtracting subsidies and an allowance for depreciation and adding indirect
taxation;
d) subtracting subsidies and adding an allowance for depreciation of capital
equipment and indirect taxation.
4. Real GDP is:
a) GDP measured in current prices;
b) GDP measured in constant prices;
c) nominal GDP x GDP deflator;
d) all of the above.
5. Disposable income is:
a) national income – personal income;
b) personal income + personal income taxes;
c) personal income - personal income taxes;
d) personal income - indirect business taxes.
6. Which of the following is included as a final good in the GDP accounts:
a) purchases of flour by bakeries;
b) purchases of flour for national reserves by government;
c) purchases of flour by restaurants;
d) all of the above
7. If the GDP deflator for OZ is 98, then the rate of inflation in Oz is:
a) 2%
b) – 2%
c) 98%
d) 9.8%
II. Analysis. Each case counts 8 points
8. Consider the economy of Leisureland in 2008 and in 2009. The country GDP includes the
following goods:
goods A - consumer goods and services,
goods B – investment goods and services,
goods C – government purchases of final goods and services
goods D – exports
goods E – imported goods and services
Quantities of these goods and their prices are given in the table below:
2008
2009
Q of A P of A Q of B P of B Q of C P of C Q of D P of D Q of E P of E
130
$40
125
$50
115
$50
110
$40
110
10
128
$45
130
$40
125
$60
100
$50
115
12
compute the GDP deflator
9. Consider the macroeconomic data about OZ:
Consumer goods and services purchases
Net interest
Depreciation
Gross investment
Indirect business taxes
Imports
2000
200
150
600
400
900
Social security taxes
Retained earnings
Government purchases
Wages and salaries
Rents
Dividends
Income taxes
Proprietors' income
Transfer payments
Subsidies
Net interest on government bonds
Corporate taxes
a)
b)
c)
d)
e)
f)
g)
300
180
700
2100
120
350
420
450
380
60
80
100
compute GDP at factor prices (income approach);
compute GDP at market prices (expenditure approach);
compute exports;
compute domestic income
compute personal income;
compute disposable income.
compute real GDP if the deflator is 103