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| 1 | |
What is the difference between GDP and GNP? |
| | A) | GNP does not account for depreciation (capital consumption allowances) |
| | B) | GNP includes payments to domestically owned factors of production abroad |
| | C) | GNP includes indirect taxes but GDP does not |
| | D) | GNP does not include government transfer payments but GDP does |
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| 2 | |
Assume a German tourist buys a Mexican beer in a pub in Houston, Texas. How will the U.S. GDP be affected? |
| | A) | U.S. GDP will be unaffected, since a foreigner buys a foreign product. |
| | B) | U.S. GDP will decrease since the beer has to be imported from Mexico |
| | C) | U.S. GDP will increase by the value added at the Houston pub |
| | D) | U.S. GDP will increase, but only by the sales tax assessed on the beer |
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| 3 | |
Which of the following is not included in private domestic investment (I) as defined in our text? |
| | A) | the construction of a new residential home |
| | B) | the increase in the number of new cars in the inventory of a car dealer |
| | C) | the buying of new equipment for an existing factory |
| | D) | investment in IBM stocks by financial investors |
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| 4 | |
Real GDP per capita is defined as |
| | A) | nominal GDP per capita minus depreciation |
| | B) | real GDP minus capital consumption allowances |
| | C) | real GDP divided by the population |
| | D) | the fraction of real GDP devoted to capital investment |
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| 5 | |
Depreciation is |
| | A) | the difference between private domestic saving and private domestic investment |
| | B) | the difference between real and nominal GDP |
| | C) | the difference between GNP and GDP |
| | D) | another word for capital consumption allowances |
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| 6 | |
If national income is Y = 9,300, disposable income is YD = 7,500, consumption is C = 6,600, net exports is NX = -180, and the budget surplus is BS = 230, what is the level of private domestic investment (I)? |
| | A) | 850 |
| | B) | 900 |
| | C) | 950 |
| | D) | 1,310 |
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| 7 | |
If nominal GDP is $10,406 billion and the GDP-deflator is 110, then real GDP is about |
| | A) | $11,450 billion |
| | B) | $10,516 billion |
| | C) | $10,296 billion |
| | D) | $9,460 billion |
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| 8 | |
The GDP-deflator and the CPI differ from each other since |
| | A) | the GDP-deflator does not include services but the CPI does |
| | B) | the GDP-deflator includes imported goods but the CPI doesn't |
| | C) | the CPI measures a fixed market basket but the GDP-deflator doesn't |
| | D) | the CPI includes more goods than the GDP-deflator does |
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| 9 | |
Assume you desire a real rate of return of 4% on an investment and you expect the annual average inflation rate to be 3.2%. What should the nominal interest rate be on this investment? |
| | A) | 0.8% |
| | B) | 3.0% |
| | C) | 4.0% |
| | D) | 7.2% |
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| 10 | |
Assume the British pound is worth $1.56 in U.S. dollars and the Hong Kong dollar is worth $0.13 in U.S. dollars. What does this imply? |
| | A) | everything in Hong Kong is 12 times cheaper than in Great Britain |
| | B) | everything in Hong Kong is 12 times more expensive than in Great Britain |
| | C) | you can get 12 Hong Kong dollars for one British pound |
| | D) | none of the above |
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