Econ

Question 1
1.
Consumption spending is $4.5 billion, gross private domestic investment is $3 billion, and government expenditures are $2 billion. If GDP is $14 billion, which of the following could be true regarding exports and imports in the economy?
Answer

Exports are $6 billion, and imports are $8.5 billion.

Exports are $15 billion, and imports are $10.5 billion.

Exports are $4.5 billion, and imports are $2 billion.

Exports are $9 billion, and imports are $6 billion.
10 points
Question 2
1.
Caroline is an artist. She purchases canvas, paints, brushes, and accessories for $75. She sells one of her original paintings to an art gallery for $1,500, even though an art lover would pay $4,500 for that painting. How much value does Caroline add?
Answer

$75

$1,425

$1,500

$4,425
10 points
Question 3
1.
An inflation rate of 5% between 2011 and 2012 would be implied by a change in the GDP deflator from ________ in 2011 to ________ in 2012.
Answer

105; 115

200; 205

375; 390

400; 420
10 points
Question 4
1.
Which of the following are not considered part of government purchases?
Answer

a tank purchased by the federal government

welfare benefits

teacher's salaries paid by a local government

a bridge purchased by the state government
10 points
Question 5
1.
In periods when prices are falling, on average,
Answer

real GDP will grow as fast as nominal GDP.

real GDP will grow faster than nominal GDP.

real GDP will grow slower than nominal GDP.

one cannot calculate real GDP.
10 points
Question 6
1.
In a small economy, consumption spending in 2012 is $6,000, government spending is $1,200, gross investment is $1,500, exports are $2,000, and imports are $1,000. What is gross domestic product in 2012?
Answer

$9,700

$9,800

$10,800

$11,700
10 points
Question 7
1.
National income is derived from gross domestic product by
Answer

subtracting depreciation from gross domestic product.

adding personal taxes and depreciation to gross domestic product.

adding personal income and transfer payments to gross domestic product.

subtracting retained earnings from gross domestic product.
10 points
Question 8
1.
Which of the following accurately describes an effect of hurricane Katrina on GDP?
Answer

GDP would increase reflecting the costs of cleanup.

GDP would increase well-being.

GDP would decrease reflecting the costs of cleanup.

GDP would increase reflecting the decrease in production that occurred during the storm and the productive capacity lost in the storm.
10 points
Question 9
1.
How are intermediate goods treated in the calculation of GDP?
Answer

Their value is counted separately, but is not included as part of the value of the final good for which they are an input.

They are included only if they are imported.

Their value is counted separately, and their value is also included as part of the value of the final good for which they are an input.

Their value is not counted separately, but included as part of the value of the final good for which they are an input.
10 points
Question 10
1.
Emily is a writer. She buys pens and paper for $20 and writes a 500-page novel that she sells to a publishing company for $500,000. If the publisher prints 1 million copies that sell for $25 each, what is the contribution to GDP of Emily's novel?
Answer

$25 million

$20 million

$500,000

$50,000