Macro revision

GDP is defined as the

• value of all goods and

  services produced within a country in a given period of time.

• value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.

• value of all final goods and services produced within a country in a given period of time.

• value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.

In computing GDP, market prices are used to value final goods and services because

• market prices do not change much over time, so it is easy to make comparisons between years.

• market prices reflect the values of goods and services.

• market prices reflect the quantity sold.

• None of the above is

  correct; market prices are not used in computing GDP.

A farmer produces oranges and sells them to Fresh Juice, which makes orange juice. The oranges produced by the farmer are called

• inventory goods.

• transitory goods.

• final goods.

• intermediate goods.

Which of the following is included in the consumption component of GDP?

• household purchases of appliances.

• household purchases of

  medical care.

• household purchases of food.

• All of the above are included in the consumption component of GDP.

What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services?

• capital

• consumption

• investment

• costs

Which of the following is included in the investment component of GDP?

• Elaine pays her college tuition bill.

• John’s law firm buys

  him a new computer.

• Laura buys a bond that McDonald’s sells to raise funds.

• All of the above are correct.

Net exports equal

• exports plus imports.

• exports minus imports.

• imports minus exports.

• GDP minus imports.

The GDP deflator is the ratio of

• real GDP to nominal

  GDP multiplied by 100.

• real GDP to the

  inflation rate multiplied by 100.

• nominal GDP to real GDP multiplied by 100.

• nominal GDP to the inflation rate multiplied by 100.

The consumer price index is used to

• monitor changes in the level of wholesale prices in the economy.

• monitor changes in the cost of living over time.

• monitor changes in the level of real GDP over time.

• monitor changes in the stock market.

When the consumer price index rises, the typical family

• has to spend more

  dollars to maintain the same standard of living.

• can spend fewer

  dollars to maintain the same standard of living.

• finds that its

  standard of living is not affected.

• can offset the effects

  of rising prices by saving more.