ECON 2123 Quiz 1

1. GDP is the value of all ________ produced in a given period.
A. final and intermediate goods and services produced by the private sector
only
B. final goods and services
C. final and intermediate goods and services, plus raw materials
D. all of these
2. Suppose nominal GDP increased in a given year. Based on this information, we

know with certainty that
A. real output has increased.
B. the price level (GDP deflator) has increased.
C. real output and the price level (GDP deflator) have both increased.
D. either real output or the price level (GDP deflator) has increased.
3. Use the following information to answer this question. If nominal GDP rises
from $100 trillion to $120 trillion, while the GDP deflator rises from 2.0 to 2.2,
the percentage change in real GDP is approximately equal to
A. -10%
B. 10%
C. 20%
D. 9.1%
4. In a given year, suppose a company spends $100 million on intermediate goods

and $200 million on wages, with no other expenses. Also assume that its total
sales are $800 million. The value added by this company equals
A. $300 million
B. $500 million
C. $700 million
D. $800 milion
5. A firm's value added equals

A. its revenue minus all of its costs.
B. its revenue minus its wages.
C. its revenue minus its wages and profit.
D. its revenue minus its cost of intermediate goods.
6. Inflation represents
A. an increase in output.
B. an increase in the aggregate price level.
C. an increase in the unemployment rate.
D. a recession.
7. Deflation generally occurs when which of the following occurs?

A. the consumer price index is greater than the GDP deflator
B. the consumer price index decreases
C. the rate of inflation falls, for example, from 4% to 2%
D. nominal GDP does not change
8. During the late 1990s, Japan experienced reductions in the GDP deflator. Given
this information, we know with certainty that
A. real GDP fell during these periods.
B. real GDP did not change during these periods.
C. the overall price level in Japan decreased during these periods.
D. both real GDP and the overall price level decreased during these periods.
9. Which of the following represents real GDP?

A. GDP in constant dollars
B. GDP in terms of goods
C. GDP in base year dollars
D. all of these
10. Based on the notation presented in Chapter 2, which of the following

expressions represents real GDP?
A. Y at time t
B. P at time t multiplied by Y at time t
C. Y at time t divided by P at time t
D. $Y at time t divided by P at time t
11. Suppose you are provided with the following data for your country for a
particular month: 200 million people are working, 20 million are not working
but are looking for work, and 40 million are not working and have given up
looking for work. The official unemployment rate for that month is
A. 7.7%
B. 9.1%
C. 10%
D. 23%
12. An individual is said to be a discouraged worker if he or she

A. is working, but prefers not to work.
B. is working part time, but would prefer a full time job.
C. wants to work, and is actively searching for a job.
D. wants to work, but has given up searching for a job.
13. Which of the following tends to occur when the unemployment rate increases?
A. a reduction in the labor force participation rate
B. a reduction in the number of discouraged workers
C. an increase in the number of employed workers
D. all of these
14. Suppose a country using the United States' system of calculating official
unemployment statistics has 100 million people, of whom 50 million are
working age. Of these 50 million, 20 million have jobs. Of the remainder: 10
million are actively searching for jobs; 10 million would like jobs but are not
searching; and 10 million do not want jobs at all. The labor force participation
rate is
A. 0.2
B. 0.3
C. 0.4
D. 0.6
15. The GDP deflator provides a measure of which of the following?

A. the ratio of GDP to the size of the population
B. real GDP divided by the aggregate price level
C. the ratio of nominal GDP to real GDP
D. the price of a typical consumer's basket of goods
16. The prices for which of the following goods are included in both the GDP
deflator and the consumer price index?
A. goods bought by households
B. goods bought by firms
C. good bought by governments
D. goods bought by foreign households (i.e., exports)
17. Which of the following is true for a "closed economy"?

A. government spending equals taxes
B. there are no imports or exports
C. exports equal imports
D. there is no saving
18. Which of the following is an example of consumer durables?

A. Health care
B. Stationery
C. Clothing
D. Cameras
19. One of the reasons macroeconomists have concerns about inflation is that
inflation causes
A. real GDP to rise.
B. nominal GDP to fall.
C. wages to rise as fast as prices.
D. none of these
20. Changes in GDP in the short run are caused primarily by

A. demand factors.
B. supply factors.
C. technology.
D. capital accumulation.

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1. GDP is the value of all ________ produced in a given period.

2. Suppose nominal GDP increased in a given year. Based on this information, we

4. In a given year, suppose a company spends $100 million on intermediate goods

5. A firm's value added equals

7. Deflation generally occurs when which of the following occurs?

9. Which of the following represents real GDP?

10. Based on the notation presented in Chapter 2, which of the following

12. An individual is said to be a discouraged worker if he or she

15. The GDP deflator provides a measure of which of the following?

17. Which of the following is true for a "closed economy"?

18. Which of the following is an example of consumer durables?

20. Changes in GDP in the short run are caused primarily by

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