question
According to the cycle of inflation, the inflation peaks occurred in the:
A. 1860s
B. 1770s
C. 1970s
D. all of the above
A. 1860s
B. 1770s
C. 1970s
D. all of the above
answer
D. All of the above
question
A rise in per capita GDP means that:
A. output grows faster than the labor force
B. output grows faster than the population
C. output grows slower than the population
A. output grows faster than the labor force
B. output grows faster than the population
C. output grows slower than the population
answer
B. output grows faster than the population
question
Lately the CEO wages rise:
A. only when company profits are high.
B. only when stock prices are rising
C. regardless of the CEO's performance.
A. only when company profits are high.
B. only when stock prices are rising
C. regardless of the CEO's performance.
answer
C. regardless of the CEO's performance
question
When inflation rises:
A. congressmen suffer.
B. the fixed-income retirees suffer
C. borrowers suffer
D. All of the above
A. congressmen suffer.
B. the fixed-income retirees suffer
C. borrowers suffer
D. All of the above
answer
B. the fixed-income retirees suffer
question
Net Domestic Product (NDP) is defined as: A. GDP Depreciation
B. GDP-Sales Taxes
C. GDP-Depreciation
D. GDP+Sales Taxes
B. GDP-Sales Taxes
C. GDP-Depreciation
D. GDP+Sales Taxes
answer
C. GDP-Depreciation
question
If the value of unsold consumption goods increases:
A. investment goes up.
B. Consumption falls.
C. Both A&B
A. investment goes up.
B. Consumption falls.
C. Both A&B
answer
C. Both A&B
question
If nominal GDP is $6000 billion, the CPI is 125, the base year GDP deflator is 100, and the current year deflator is 200, then real GDP equals:
answer
$3000 billion
(6000/200) x 100 = 3000
(6000/200) x 100 = 3000
question
National income can be calculated as:
A. GDP-depreciation-indirect business taxes+NFP.
B. as payments to some factors of production.
C. By adding wages, interest, rents, proprietors income and profits.
D. All of the above
A. GDP-depreciation-indirect business taxes+NFP.
B. as payments to some factors of production.
C. By adding wages, interest, rents, proprietors income and profits.
D. All of the above
answer
D. All of the above
(A. GDP-depreciation-indirect business taxes+NFP. B. as payments to some factors of production. C. By adding wages, interest, rents, proprietors income and profits.)
(A. GDP-depreciation-indirect business taxes+NFP. B. as payments to some factors of production. C. By adding wages, interest, rents, proprietors income and profits.)
question
Which of the following is a capital good:
A. a car purchased by an individual.
B. a car purchased by a taxi cab company
C. Gasoline purchase by an individual.
D. Gasoline purchased by a taxi cab company.
A. a car purchased by an individual.
B. a car purchased by a taxi cab company
C. Gasoline purchase by an individual.
D. Gasoline purchased by a taxi cab company.
answer
B. A car purchased by a taxi cab company.
question
5. The CPI:
A. is used to calculate real incomes.
B. was more or less constant between 1820 to 1940.
C. nowadays usually rises every year.
D. All of the Above.
A. is used to calculate real incomes.
B. was more or less constant between 1820 to 1940.
C. nowadays usually rises every year.
D. All of the Above.
answer
D. All of the above.
question
Personal income equals:
A. Domestic income-CR+TR+Government Interest+NFP
B. National Income-CR+TR+Government Interest
C. Both a and b
A. Domestic income-CR+TR+Government Interest+NFP
B. National Income-CR+TR+Government Interest
C. Both a and b
answer
Both a and b
(A. Domestic income-CR+TR+Government Interest+NFP
B. National Income-CR+TR+Government Interest)
(A. Domestic income-CR+TR+Government Interest+NFP
B. National Income-CR+TR+Government Interest)
question
Household savings equal:
A. Personal income-indirect taxes-consumer spending
B. Personal income-personal taxes-consumer spending
C. both a and b
A. Personal income-indirect taxes-consumer spending
B. Personal income-personal taxes-consumer spending
C. both a and b
answer
B. Personal income-personal taxes-consumer spending
question
An accumulation of unsold goods is:
A. counted in GDP as investment.
B. counted in GDP as consumption.
C. counted in GDP, but not as consumption of investment
A. counted in GDP as investment.
B. counted in GDP as consumption.
C. counted in GDP, but not as consumption of investment
answer
A. counted in GDP as investment.
question
**T or F:
The nominal production wage has been rising since 1972-1973.
The nominal production wage has been rising since 1972-1973.
answer
True
question
**T or F:
If money wage rises by 5% and the CPI rises by 8%, the real wage rises.
If money wage rises by 5% and the CPI rises by 8%, the real wage rises.
answer
False
question
**T or F:
The low inflation decades are the decades of low growth in money supply.
The low inflation decades are the decades of low growth in money supply.
answer
True
question
**T or F:
Unsold intermediate goods are treated as final goods, because they are part of investment.
Unsold intermediate goods are treated as final goods, because they are part of investment.
answer
True
question
**T or F:
Domestic income= GDP-indirect taxes-depreciation + NFP
Domestic income= GDP-indirect taxes-depreciation + NFP
answer
False
question
**T or F:
PDI= personal income - personal taxes
PDI= personal income - personal taxes
answer
True
question
**T or F:
If you add the production value of all firms in a year, you get more than GDP for that year.
If you add the production value of all firms in a year, you get more than GDP for that year.
answer
True
question
**T or F:
If unsold goods decrease then investment falls, but current GDP is constant
If unsold goods decrease then investment falls, but current GDP is constant
answer
True
question
**T or F:
Income tax was introduced in the US in 1913-1914 to replace the revenue of a falling tariff.
Income tax was introduced in the US in 1913-1914 to replace the revenue of a falling tariff.
answer
True
question
**T or F:
The nominal production wage has been falling since 1972-1973
The nominal production wage has been falling since 1972-1973
answer
False
question
**T or F:
Real GDP always equals nominal GDP in the base year
Real GDP always equals nominal GDP in the base year
answer
True
question
How to calculate Nominal GDP:
answer
Multiply the output of X years by the price of X years for each good EXCEPT STEEL and then add them all together
question
How to calculate Real GDP:
answer
Multiply the output of X years by the price of base year for each good EXCEPT STEEL and then add them all together
question
How to calculate GDP deflator:
answer
(nominal GDP/real GDP) x 100
question
**T or F:
The rate of unemployment in the U.S. economy has been relatively low since peaking at close to 25 percent in 1933.
The rate of unemployment in the U.S. economy has been relatively low since peaking at close to 25 percent in 1933.
answer
True
question
Which of the following is an intermediate good:
A. a car purchased by an individual
B. a car purchased by a taxi cab company
C. gasoline purchased by an individual
D. gasoline purchased by a taxi cab company
A. a car purchased by an individual
B. a car purchased by a taxi cab company
C. gasoline purchased by an individual
D. gasoline purchased by a taxi cab company
answer
D. gasoline purchased by a taxi cab company
question
How do you calculate inflation:
answer
[(GDP Deflator - 100)/100] x 100
question
How do you calculate real investment:
answer
[(RI + BI + II)/GDP Deflator] x 100
question
**T or F:
Real GDP is half the level of nominal GDP if the GDP deflator equals 50
Real GDP is half the level of nominal GDP if the GDP deflator equals 50
answer
False
question
**T or F:
A rise in inventory investment has no effect on the current level of GDP
A rise in inventory investment has no effect on the current level of GDP
answer
True
question
**T or F:
If GM buys steel worth $200 to build autos worth $700, then GM's value added rises by $700
If GM buys steel worth $200 to build autos worth $700, then GM's value added rises by $700
answer
False
question
**T or F:
If GM buys steel worth $50 to build autos worth $100, then GDP rises by $100
If GM buys steel worth $50 to build autos worth $100, then GDP rises by $100
answer
True
question
**T or F:
Real GDP is the output of all goods valued at current prices
Real GDP is the output of all goods valued at current prices
answer
False
question
**T or F:
If NFP rises, GDP rises as well
If NFP rises, GDP rises as well
answer
False
question
**T or F:
In the GDP accounting system, GDP = wages + interest + rent + profit + proprietors' income + indirect business taxes + depreciation, provided NFP is zero
In the GDP accounting system, GDP = wages + interest + rent + profit + proprietors' income + indirect business taxes + depreciation, provided NFP is zero
answer
True
question
**T or F:
Dogmas are dangerous because they lead to crises
Dogmas are dangerous because they lead to crises
answer
True
question
**T or F:
Inflation benefits the weakest sections of society
Inflation benefits the weakest sections of society
answer
False
question
**T or F:
When a new apartment is built, its contribution to GDP is its price
When a new apartment is built, its contribution to GDP is its price
answer
True
question
**T or F:
A house built in 2010 and sold in 2011 is included in the GDP of 2011
A house built in 2010 and sold in 2011 is included in the GDP of 2011
answer
False
question
**T or F:
All unsold goods are treated as capital goods
All unsold goods are treated as capital goods
answer
True
question
**T or F:
When the real wage gap falls as fast as labor productivity, the wage gap is constant
When the real wage gap falls as fast as labor productivity, the wage gap is constant
answer
True
question
What are the three types of Investment:
answer
Business Investment (BI) = machines, other capital goods
Residential Investment (RI) = homes
Inventory Investment (II) = retail value of all unsold goods
Residential Investment (RI) = homes
Inventory Investment (II) = retail value of all unsold goods
question
To get BI, RI, or II if you multiply output by:
A. X year price
B. Base year price
C. None of the above
A. X year price
B. Base year price
C. None of the above
answer
A. X year price
question
If the value of unsold intermediate goods increases and there is no change in prices, then:
A. Nominal GDP goes up
B. Real GDP stays constant
C. Both A and B
A. Nominal GDP goes up
B. Real GDP stays constant
C. Both A and B
answer
B. Real GDP stays constant
question
**T or F:
According to the cycle of inflation, the 1830s were a peak decade of inflation even though the actual inflation rate during the decade was close to zero
According to the cycle of inflation, the 1830s were a peak decade of inflation even though the actual inflation rate during the decade was close to zero
answer
True
question
**T or F:
A fall in the price of missiles will cause the GDP deflator to fall if no other price changes, while CPI is unchanged
A fall in the price of missiles will cause the GDP deflator to fall if no other price changes, while CPI is unchanged
answer
True
question
According to the Cycle of Money Growth, money growth peaked during the:
A. 1860s
B. 1770s
C. 1970s
D. 1910s
E. all of the above
A. 1860s
B. 1770s
C. 1970s
D. 1910s
E. all of the above
answer
E. all of the above
question
Inflation hurts:
A. the weakest sections of society
B. the money lender
C. the minimum-wage earner
D. all of the above
A. the weakest sections of society
B. the money lender
C. the minimum-wage earner
D. all of the above
answer
D. All of the above
question
Net Domestic Product (NDP) is defined as:
A. GDP + depreciation
B. GDP - depreciation
C. GDP - capital consumption
D. both b and c
A. GDP + depreciation
B. GDP - depreciation
C. GDP - capital consumption
D. both b and c
answer
D. both b and c
question
**T or F:
In the GDP accounting system, GDP = C + I + G + M - X
In the GDP accounting system, GDP = C + I + G + M - X
answer
False
question
**T or F:
If exports exceed imports, then net exports are positive and a country has a trade deficit
If exports exceed imports, then net exports are positive and a country has a trade deficit
answer
False
question
**T or F:
The sum of consumption expenditure and household savings equals Personal Disposable Income
The sum of consumption expenditure and household savings equals Personal Disposable Income
answer
True
question
**T or F:
An increase in real GDP could mean that output is rising, or that prices are rising, or both output and prices are rising
An increase in real GDP could mean that output is rising, or that prices are rising, or both output and prices are rising
answer
False
question
**T or F:
The CEO wage is more than 500 times the production wage nowadays
The CEO wage is more than 500 times the production wage nowadays
answer
True
question
**T or F:
The CPI was more or less constant between 1820 and 1940
The CPI was more or less constant between 1820 and 1940
answer
True
question
**T or F:
The CPI has been generally been rising year after year ever since 1940
The CPI has been generally been rising year after year ever since 1940
answer
True
question
**T or F:
America did not become an open economy until the 1970s
America did not become an open economy until the 1970s
answer
True
question
**T or F:
China is the largest lender of the United States
China is the largest lender of the United States
answer
True
question
**T or F:
Unsold consumption goods are treated as capital goods
Unsold consumption goods are treated as capital goods
answer
False
question
**T or F:
Manufacturing employed just 5% of the labor force in 1800s
Manufacturing employed just 5% of the labor force in 1800s
answer
True
question
**T or F:
Manufacturing employs less than 10% of the labor force today
Manufacturing employs less than 10% of the labor force today
answer
True
question
**T or F:
Real GDP = (Nominal GDP/Deflator) x 100
Real GDP = (Nominal GDP/Deflator) x 100
answer
True
question
**T or F:
Real GDP is currently produced final goods at base year prices
Real GDP is currently produced final goods at base year prices
answer
True
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