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GDP is an imperfect measure of well-being because it

• includes physical goods produced but not intangible services

• excludes goods and services provided by the government

• ignores the environmental degradation from economic activity

• is not correlated with other measures of the quality of life

If Mr. Keating quits his job as a teacher to home school his own children, GDP

• stays the same because he is engaged in the same activity

• rises because he now pays lower income taxes

• falls because his market income decreases

• could rise or fall, depending on the value of home schooling

An economy produces 10 cookies in year 1 at a price of $2 per cookie and 12 cookies in year 2 at a price of $3 per cookie. From year 1 to year 2, real GDP increases by

• 20%

• 50%

• 70%

• 80%

You deposit $2,000 in a savings account, and a year later you have $2,100. Meanwhile, the CPI rises from 200 to 204. In this case, the nominal interest rate is _________ percent, and the real interest rate is _________ percent.

• 1; 5

• 3; 5

• 5; 1

• 5; 3

Thomas Robert Malthus believed that population growth would

• spread the capital stock too thinly across the labor force, lowering each worker’s productivity.

• put stress on the economy’s ability to produce food, dooming humans to remain in poverty

• promote technological progress, because there would be more scientists and inventors.

• eventually decline to sustainable levels, as birth control improved and people had smaller families.

When the Japanese car maker Toyota expands one of its car factories in the United States, what is the likely impact of this event on the gross domestic product and gross national product of the United States?

• GDP rises and GNP falls.

• GNP rises and GDP falls.

• GDP and GNP both rise but GDP rises by more

• GDP and GNP both rise but GNP rises by more.

If a popular TV show on personal finance convinces Americans to save more for retirement, the _________ curve for loanable funds would shift, driving the equilibrium interest rate _________.

• supply; down

• supply; up

• demand; up

• demand; down

Which of the following policy actions would unambiguously reduce the supply of loanable funds and crowd out investment?

• an increase in taxes and a decrease in government spending

• a decrease in taxes together with an increase in government spending

• an increase in both taxes and government spending

• a decrease in both taxes and government spending

From 2008 to 2012, in the aftermath of the financial crisis, the ratio of government debt to GDP in the United States

• increased markedly

• decreased markedly

• was stable at a historically high level

• was stable at a historically low level

Historically, index funds have had _________ than most actively managed mutual funds

• higher fees

• less diversification

• larger tax burdens

• better returns