Quiz
Quiz #2/3 [MCQ | Chapters 23-24]
Questions in this quiz (39)
1An example of a transfer payment is
- Aprofit.
- Brent.
- Cunemployment benefits.
- Dgovernment purchases.
- Ewages.
2The value of plant and equipment worn out in the process of manufacturing goods and services is measured by
- Aintermediate production.
- BNet National Product.
- Cinvestment.
- Ddepreciation.
- Econsumption.
3Which of the following would be excluded from UK GDP for 2005? The sale of?
- Aa haircut.
- Bthe value of a lawyer’s services.
- Ca 2005 Honda made in Swindon.
- DAll of things mentioned in these answers should be counted in 2005 GDP.
- Ea home built in 2004 and first sold in 2005.
4Gross Domestic Product can be measured as the sum of
- Afinal goods and services, intermediate goods, transfer payments, and rent.
- Bconsumption, investment, government purchases, and net exports.
- Cconsumption, transfer payments, wages, and profits.
- DNet National Product, Gross National Product, and Disposable personal income.
- Einvestment, wages, profits, and intermediate production.
5UK Gross Domestic Product (in contrast to Gross National Product) measures the production and income of
- ABritish-owned firms no matter where they are located in the world.
- Bnone of these answers.
- Cthe domestic service sector only.
- Dpeople and factories located within the borders of the UK.
- Ethe domestic manufacturing sector only.
6Gross Domestic Product is the sum of the market value of the
- Aintermediate goods.
- Bfinal goods and services.
- Cmanufactured goods.
- Dinferior goods and services.
- Enormal goods and services.
7If nominal GDP in 2005 exceeds nominal GDP in 2004, then the production of output
- Amust have fallen.
- Bmust have risen.
- Cmust have stayed the same.
- Dmay have risen, fallen, or stayed the same because there is not enough information to determine what happened to real output.
8If a cobbler buys leather for €100 and thread for €50 and uses them to produce and sell €500 worth of shoes to consumers, the contribution to GDP is
- A€50.
- B€100.
- C€650.
- D€500
- E€600.
9GDP would include which of the following?
- Athe value of taking a day off from work
- Bconsulting services
- Cintermediate sales
- Dillegal drug sales
- Ehousework
10Real GDP is measured in ________ prices while nominal GDP is measured in ________ prices.
- Aforeign; domestic
- Bcurrent year; base year
- Cdomestic; foreign
- Dbase year; current year
- Eintermediate; final
11What is the value of real GDP for 2004?
- A€800
- B€1,060
- C€1,460
- D€1,200
- Enone of these answers
12What is the value of the GDP deflator in 2004?
- A119
- B138
- C116
- D113
- E100
13What is the percentage increase in prices from 2003 to 2004?
- A16 percent
- B22 percent
- C13 percent
- D0 percent
- E38 percent
14What is the approximate percentage increase in prices from 2004 to 2005?
- A13 percent
- B0 percent
- C16 percent
- D38 percent
- E22 percent
15What is the percentage increase in real GDP from 2004 to 2005?
- A27 percent
- B7 percent
- C32 percent
- D0 percent
- E22 percent
16If UK GDP exceeds UK GNP, then
- Aintermediate production exceeds final production.
- Bforeigners are producing more in the UK than Britons are producing in foreign countries.
- Creal GNP exceeds nominal GNP.
- Dreal GDP exceeds nominal GDP.
- EBritons are producing more in foreign countries than foreigners are producing in the UK.
17UK GDP would exclude which of the following?
- ALawyer services purchased by a home buyer.
- BThe purchase of a new Nissan produced in Sunderland.
- CCopper purchased by tap manufacturer Bristan.
- DA new art gallery purchased by the city of Newcastle.
- ELawn care services purchased by a home owner.
18How is your purchase of a €40,000 BMW automobile that was produced entirely in Germany recorded in the UK GDP accounts?
- AConsumption increases by €40,000 and net exports decreases by €40,000.
- BNet exports increases by €40,000.
- CThere is no impact because this transaction does not involve domestic production.
- DInvestment increases by €40,000 and net exports increases by €40,000.
- ENet exports decreases by €40,000.
19If your grandparents buy a newly built retirement home, this transaction would affect
- Ainvestment.
- Bnet exports.
- Cgovernment purchases.
- Dconsumption.
- Enone of these answers.
20Inflation can be measured by all of the following except the
- AAll of these answers are used to measure inflation.
- Bconsumer price index.
- Cproducer price index.
- DGDP deflator.
- Efinished goods price index.
21The CPI will be most influenced by a 10 percent increase in the price of which of the following consumption categories?
- AClothing and footwear.
- BFurniture, household equipment and maintenance. See Figure 24.1 in the textbook.
- CTransport
- DFood and non-alcoholic beverages
- EAll of these answers would produce the same impact
22In 1989, the CPI was 124.0. In 1990, it was 130.7. What was the rate of inflation over this period?
- A5.4 percent
- B30.7 percent
- CYou can't tell without knowing the base year.
- D5.1 percent
- E6.7 percent
23Which of the following would probably cause the CPI to rise more than the GDP deflator in the UK?
- AAn increase in the price of BMWs produced in Germany and sold in the UK.
- BAn increase in the price of Peugeots produced in the UK.
- CAn increase in the price of helicopters purchased by the Royal Navy.
- DAn increase in the price of domestically produced armoured vehicles sold exclusively to India.
24The "basket" on which the CPI is based is composed of
- Aconsumer production.
- Bproducts purchased by the typical consumer.
- Craw materials purchased by firms.
- Dtotal current production.
- Enone of these answers.
25If there is an increase in the price of apples which causes consumers to purchase fewer kilograms of apples and more kilograms of oranges, the CPI will suffer from
- Anone of these answers.
- Bsubstitution bias.
- Cbase year bias.
- Dbias due to unmeasured quality change.
- Ebias due to the introduction of new goods.
26What is the value of the basket in the base year?
- A€459.25
- B€418.75
- C€300
- Dnone of these answers
- E€333
27What are the values of the CPI in 2000, 2001, and 2002, respectively?
- A83.5, 94.2, 100
- B100, 113.3, 125
- Cnone of these answers
- D100, 111, 139.6
- E100, 109.2, 116
28What is the inflation rate for 2001?
- A0 percent
- B13.3 percent
- C11 percent
- D9.2 percent
- Enone of these answers
29What is the inflation rate for 2002?
- A10.3 percent
- Bnone of these answers
- C11 percent
- D13.3 percent
- E0 percent
30The table shows that the 2001 inflation rate is biased upward because of
- Abase year bias.
- Bbias due to the introduction of new goods.
- Cnone of these answers.
- Dbias due to unmeasured quality change.
- Esubstitution bias.
31Suppose the base year is changed in the table from 2000 to 2002 (now use the 2002 consumption basket). What is the new value of the CPI in 2001?
- A90.6
- B100.0
- Cnone of these answers
- D114.7
- E134.3
32Suppose your income rises from €19,000 to €31,000 while the CPI rises from 122 to 169. Your standard of living has likely
- Afallen.
- BYou can't tell without knowing the base year.
- Crisen.
- Dstayed the same.
33If the nominal interest rate is 7 percent and the inflation rate is 3 percent, then the real interest rate is
- A4 percent.
- B10 percent.
- C-4 percent.
- D3 percent.
- E21 percent.
34Which of the following statements is correct?
- Anone of these answers
- BThe nominal interest rate is the inflation rate minus the real interest rate.
- CThe real interest rate is the nominal interest rate minus the inflation rate.
- DThe nominal interest rate is the real interest rate minus the inflation rate.
- EThe real interest rate is the sum of the nominal interest rate and the inflation rate.
35If inflation is 8 percent and the real interest rate is 3 percent, then the nominal interest rate must be
- A3/8 percent.
- B5 percent.
- C11 percent.
- D24 percent.
- E-5 percent.
36Under which of the following conditions would you prefer to be the lender?
- AThe nominal rate of interest is 15 percent and the inflation rate is 14 percent.
- BThe nominal rate of interest is 20 percent and the inflation rate is 25 percent.
- CThe nominal rate of interest is 12 percent and the inflation rate is 9 percent.
- DThe nominal rate of interest is 5 percent and the inflation rate is 1 percent.
37Under which of the following conditions would you prefer to be the borrower?
- AThe nominal rate of interest is 12 percent and the inflation rate is 9 percent.
- BThe nominal rate of interest is 20 percent and the inflation rate is 25 percent.
- CThe nominal rate of interest is 5 percent and the inflation rate is 1 percent.
- DThe nominal rate of interest is 15 percent and the inflation rate is 14 percent.
38If borrowers and lenders agree on a nominal interest rate and inflation turns out to be less than they had expected,
- Aneither borrowers nor lenders will gain because the nominal interest rate has been fixed by contract.
- Bnone of these answers
- Cborrowers will gain at the expense of lenders.
- Dlenders will gain at the expense of borrowers.
39If workers and firms agree on an increase in wages based on their expectations of inflation and inflation turns out to be more than they expected,
- Anone of these answers
- Bworkers will gain at the expense of firms.
- Cneither workers nor firms will gain because the increase in wages is fixed in the labour agreement.
- Dfirms will gain at the expense of workers.
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- Hell on Earth Economics [Teacher: Abdinova Makpal ; Final Exam + Quizzes] ▼ (Quizzes #2 & #3 [Chapters 1-3, 4-6, 13-17-18, 23-24]) Quiz on Quiz #2/3 [MCQ | Chapters 23-24], created by Good Guy Beket on 02/12/2018.
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