Econ 102 Quiz 1 With Answers Department of Economics.

Econ 102 Quiz 1 With Answers Department of Economics.1. GDP is defined as a. the market value of all goods and services produced within a country in a given period of time. b. the market value of all goods and services produced by the citizens of a country, regardless of where they are living in a given period of time. c. the market value of all final goods and services produced within a country in a given period of time. d. the market value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. 2. GDP is not a perfect measure of well-being, because: a. It Doesn’t show distribution of income b. It Doesn’t include Value of almost all activity that takes place outside markets c. It Doesn’t include Quality of the environment d. all the above 3. If all quantities produced rise by 10 percent, and all prices fall by 10 percent, which of the following occurs? a. Real GDP rises by 10 percent, while nominal GDP falls by 10 percent. b. Real GDP rises by 10 percent, while nominal GDP is unchanged. c. Real GDP is unchanged, while nominal GDP rises by 10 percent. d. Real GDP is unchanged, while nominal GDP falls by 10 percent. 4. Which of the following does NOT add to U.S. gross domestic product? a. Air France buys a plane from Boeing, the U.S. aircraft manufacturer. b. An American company, General Motors, builds a new auto factory in North Carolina (US). c. The city of New York pays a salary to a policeman. d. The federal government sends a Social Security check to your grandmother. 5. Which of the following is not considered as consumption? a. Your family buys a new house. b. You buy a new text book from local bookstore. c. A student pays train ticket to visit her family during semester break. d. You have your lunch at a restaurant. 2 6. Adam is a U.S. citizen, works only in Germany. The value he adds to production in Germany is included a. in both German GDP and U.S. GDP. b. in German GDP, but is not included in U.S. GDP. c. in U.S. GDP, but is not included in German GDP. d. in neither German GDP nor U.S. GDP. 7. During the period of recession, which of the following is correct? a. Lower income and Real GDP declines. b. Rising unemployment. c. Falling profits and Increased bankruptcies. d. All are correct. Table 1 8. Year 9. Price of Sandwich 10. Quantity of Sandwich 11. Price of Magazine 12. Quantity of Magazine 2006 $4 100 $2 180 2007 $5 120 $2.5 200 2008 $6 150 $3.5 200 8. Refer to Table 1. Nominal GDP for 2007 is: a. $900 b. $1,100 c. $1,250 d. $1,350 9. Refer to Table 1. Using 2006 as the base year, calculate the Real GDP for 2007. a. $780 b. $1100 c. $880 d. $950 10. Refer to Table 1. Using 2006 as the base year, calculate the GDP-deflator for 2007. a. 80 b. 115 c. 100 d. 125 Table 2. The table below pertains to an economy with only two goods - books and calculators. The fixed basket consists of 5 books and 10 calculators. 11. Year 12. Price of Books 13. Price of Calculators 2006 $24 $8 2007 $30 $12 2008 $32 $15 11. Refer to Table 2. Calculate the cost of the basket for the year 2006 a. $100 b. $150 c. $200 d. $250 12. Refer to Table 2. Using 2006 as the base year, calculate the consumer price index (CPI) for the year 2007. a. 135 b. 270 c. 370 d. 540 13. Refer to Table 2. Using 2006 as the base year, calculate the inflation rate for 2008 a. 1.48% b. 4.8% c. 14.8% d. 148% 3 14. Let 2002 be the base year; then a. Inflation rate in 2005 = CPI in 2005 CPI in 2004 100. CPI in 2002   b. Inflation rate in 2005 = CPI in 2005 CPI in 2002 100. CPI in 2005   c. Inflation rate in 2005 = CPI in 2005 CPI in 2002 100. CPI in 2004   d. Inflation rate in 2005 = CPI in 2005 CPI in 2004 100. CPI in 2004   15. The CPI is a measure of the overall cost of a. inputs purchased by a typical producer. b. goods and services bought by a typical consumer. c. goods and services produced in the economy. d. stocks on the New York Stock Exchange.