Multiple Choice Questions

100 in 2006, 135 in 2007, and 155 in 2008
  • Refer to Table 24-1, Suppose the typical consumer basket consists of 10 bushels of peaches and 15 bushels of pecans. Using 2005 as the base year, what was the inflation rate in 2006?
  • If nominal GDP is $10 trillion and real GDP is $8 trillion, the GDP deflator is
  • Which of the following transactions adds to U.S. GDP for 2006?
  • Refer to Table 24-4. Using 2006 as the base year, the consumer price index is
new capital equipment, inventories, and structures, including new housing
  • After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. The purchases of goods and services are
  • In a simple circular-flow diagram total income and total expenditure are
  • For the purpose of calculating GDP, investment is spending on?
  • If total spending rises from one year to the next, then
the consumer price index increases
  • A COLA automatically raises the wage rate when
  • Which of the following transactions adds to U.S. GDP for 2006?
  • The inflation rate is defined as the
  • The consumer price index is used to
Only Ralph's payments are included in GDP
  • Ralph pays someone to mow his lawn, while Mike mows his own lawn. Regarding these two practices, which of the following statement is correct?
  • Which of the following represents a transfer payment?
  • A country reported nominal GDP of $200 billion in 2006 and $180 billion; it reported a GDP deflator of 125 in 2006 and 105 in 2005. Between 2005 and 2006,
  • A recession is a period during which
turn dollar figures into meaningful measures of purchasing power
  • The component of GDP called consumption consists of
  • The nominal interest rate tells you
  • The consumer price index is used to
  • The inflation rate is defined as the
The 2006 sale affected neither 2005 GDP nor 2006 GDP.
  • Which of the following represents a transfer payment?
  • Until recently, George lived in a home that was newly constructed in 2005. In 2005, he paid $200,000 for the brand new house. He sold the house in 2006 for $225000. Which of the following statements is correct regarding the sale of the house?
  • A recession is a period during which
  • Ralph pays someone to mow his lawn, while Mike mows his own lawn. Regarding these two practices, which of the following statement is correct?
20 percent
  • The price index in 2006 is 120, and in 2007 it is 127.2. What is the inflation rate?
  • Refer to Table 24-1, Suppose the typical consumer basket consists of 10 bushels of peaches and 15 bushels of pecans. Using 2005 as the base year, what was the inflation rate in 2006?
  • If the nominal interest rate is 6 percent and the rate of inflation is 9 percent, the the real interest rate is
  • Refer to Table 24-4. Using 2007 as the base year, the consumer price index is
the real GDP declines for about two consecutive quarters
  • Ralph pays someone to mow his lawn, while Mike mows his own lawn. Regarding these two practices, which of the following statement is correct?
  • A recession is a period during which
  • The inflation rate is defined as the
  • Which of the following represents a transfer payment?
The CPI was 100 in 2003, 120 in 2004 and 135 in 2005
  • A movie company makes 500,000 DVDs of one of its latest releases. It sells 300,000 of them before the end of the second quarter, and holds the others in its warehouse. How will the 200,000 unsold DVDs be treated in the GDP statistics?
  • One bag of flour is sold for $1.50 to a bakery, which uses the flour to bake bread that is sold for $4.00 to consumers. A second bag of flour is sold to a consumer in a grocery store for $2.00. Taking three transactions into account, what is the effect on GDP?
  • Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005. However, the inflation rate was lower between 2004 and 2005 than it was between 2003 and 2004. Which of the following scenarios is consistent with this assumption?
  • In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 10 hot dogs and 6 hamburgers. A hot dog costs $3 in 2006 and $5.40 in 2007. A hamburger cost $5 in 2006 and $6 in 2007. Which of the following statements is correct?
the market value of all final goods and services produced within a country in a given period of time
  • The price index in the first year is 150; in the second year it is 160; and in the third year it is 175. The inflation rate is about
  • Gross domestic product serves as a measure of two things:
  • GDP is defined as
  • The nominal interest rate tells you
GDP increase by $6.00
  • One bag of flour is sold for $1.50 to a bakery, which uses the flour to bake bread that is sold for $4.00 to consumers. A second bag of flour is sold to a consumer in a grocery store for $2.00. Taking three transactions into account, what is the effect on GDP?
  • Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005. However, the inflation rate was lower between 2004 and 2005 than it was between 2003 and 2004. Which of the following scenarios is consistent with this assumption?
  • In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 10 hot dogs and 6 hamburgers. A hot dog costs $3 in 2006 and $5.40 in 2007. A hamburger cost $5 in 2006 and $6 in 2007. Which of the following statements is correct?
  • Refer to Table 24-1, Suppose the typical consumer basket consists of 10 bushels of peaches and 15 bushels of pecans. Using 2005 as the base year, what was the inflation rate in 2006?
When the 2006 is chosen as the base year, the inflation rate in 150 percent in 2007.
  • Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005. However, the inflation rate was lower between 2004 and 2005 than it was between 2003 and 2004. Which of the following scenarios is consistent with this assumption?
  • If nominal GDP is $10 trillion and real GDP is $8 trillion, the GDP deflator is
  • If the real interest rate relevant to a bank account is 5 percent and the expected inflation rate is 4 percent, then after a year a person expects to have, relative to today
  • In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 10 hot dogs and 6 hamburgers. A hot dog costs $3 in 2006 and $5.40 in 2007. A hamburger cost $5 in 2006 and $6 in 2007. Which of the following statements is correct?
market prices reflect the values of goods and services
  • In computing GDP, market prices are used to value final goods and services because
  • Which of the following transactions adds to U.S. GDP for 2006?
  • If nominal GDP is $10 trillion and real GDP is $8 trillion, the GDP deflator is
  • In a simple circular-flow diagram total income and total expenditure are
The DVDs will be counted as a change in inventory in the second quarter and so will be included in second quarter GDP.
  • If the real interest rate relevant to a bank account is 5 percent and the expected inflation rate is 4 percent, then after a year a person expects to have, relative to today
  • Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005. However, the inflation rate was lower between 2004 and 2005 than it was between 2003 and 2004. Which of the following scenarios is consistent with this assumption?
  • A movie company makes 500,000 DVDs of one of its latest releases. It sells 300,000 of them before the end of the second quarter, and holds the others in its warehouse. How will the 200,000 unsold DVDs be treated in the GDP statistics?
  • In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 10 hot dogs and 6 hamburgers. A hot dog costs $3 in 2006 and $5.40 in 2007. A hamburger cost $5 in 2006 and $6 in 2007. Which of the following statements is correct?
6.0 percent
  • If the nominal interest rate is 6 percent and the rate of inflation is 9 percent, the the real interest rate is
  • Refer to Table 24-1, Suppose the typical consumer basket consists of 10 bushels of peaches and 15 bushels of pecans. Using 2005 as the base year, what was the inflation rate in 2006?
  • The price index in the first year is 150; in the second year it is 160; and in the third year it is 175. The inflation rate is about
  • The price index in 2006 is 120, and in 2007 it is 127.2. What is the inflation rate?
-3 percent
  • If the nominal interest rate is 6 percent and the rate of inflation is 9 percent, the the real interest rate is
  • If the real interest rate relevant to a bank account is 5 percent and the expected inflation rate is 4 percent, then after a year a person expects to have, relative to today
  • Refer to Table 24-1, Suppose the typical consumer basket consists of 10 bushels of peaches and 15 bushels of pecans. Using 2005 as the base year, what was the inflation rate in 2006?
  • The price index in 2006 is 120, and in 2007 it is 127.2. What is the inflation rate?
9 percent more dollars in the bank account, which will purchase 5 percent more goods
  • The price index in the first year is 150; in the second year it is 160; and in the third year it is 175. The inflation rate is about
  • In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 10 hot dogs and 6 hamburgers. A hot dog costs $3 in 2006 and $5.40 in 2007. A hamburger cost $5 in 2006 and $6 in 2007. Which of the following statements is correct?
  • After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. The purchases of goods and services are
  • If the real interest rate relevant to a bank account is 5 percent and the expected inflation rate is 4 percent, then after a year a person expects to have, relative to today
household spending on durable and nondurable goods as well as household spending on services
  • The consumer price index is used to
  • The component of GDP called consumption consists of
  • Gross domestic product serves as a measure of two things:
  • The nominal interest rate tells you
real output fell and the price level rose
  • After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. The purchases of goods and services are
  • A country reported nominal GDP of $200 billion in 2006 and $180 billion; it reported a GDP deflator of 125 in 2006 and 105 in 2005. Between 2005 and 2006,
  • In a particular economy, the price index was 270 in 2005 and it was 300 in 2006. Which of the following statements is correct?
  • Which of the following is the most accurate statement about real and nominal interest rates?
either the economy must be producing a larger output of goods and services, or the prices at which goods and services are sold must be higher, or both.
  • If total spending rises from one year to the next, then
  • Which of the following transactions adds to U.S. GDP for 2006?
  • The component of GDP called consumption consists of
  • If nominal GDP is $10 trillion and real GDP is $8 trillion, the GDP deflator is
74.07 in 2006, 100 in 2007, and 114.81
  • Refer to Table 24-1, Suppose the typical consumer basket consists of 10 bushels of peaches and 15 bushels of pecans. Using 2005 as the base year, what was the inflation rate in 2006?
  • Refer to Table 24-4. Using 2007 as the base year, the consumer price index is
  • Refer to Table 24-4. Using 2006 as the base year, the consumer price index is
  • Which of the following transactions adds to U.S. GDP for 2006?
Real interest rates can be either positive or negative, but nominal interest rates must be positive
  • Which statement represents most correctly the relationship between GDP and real GDP?
  • If nominal GDP is $10 trillion and real GDP is $8 trillion, the GDP deflator is
  • Which of the following transactions adds to U.S. GDP for 2006?
  • Which of the following is the most accurate statement about real and nominal interest rates?
The government sends your grandfather his Social Security check
  • Which of the following transactions adds to U.S. GDP for 2006?
  • Which of the following represents a transfer payment?
  • Until recently, George lived in a home that was newly constructed in 2005. In 2005, he paid $200,000 for the brand new house. He sold the house in 2006 for $225000. Which of the following statements is correct regarding the sale of the house?
  • A recession is a period during which
All of the above transactions add to GDP for 2006
  • In a simple circular-flow diagram total income and total expenditure are
  • Which of the following is the most accurate statement about real and nominal interest rates?
  • Refer to Table 24-4. Using 2006 as the base year, the consumer price index is
  • Which of the following transactions adds to U.S. GDP for 2006?
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Multiple Choice Questions
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