Day 7 Quiz

1. Why do economists include only the value of final goods and services when counting GDP?

• 1. To avoid double counting

• 1. Final goods are the only goods that increase output

• 1. Intermediate goods do not add to the total output of a nation

• 1. Intermediate goods are less valuable

• None of the above

1. Which of the following transactions would be excluded from GDP calculations?

• 1. Natural disaster relief spending

• 1. Government payments for new Dodge Chargers to use as police cars

• 1. The sale of new buildings to BASIS Scottsdale

• 1. Sale on eBay of an autographed Richard Sherman jersey from the Super Bowl

• None of the above

1. Which of the following is true of real GDP?

1. I. It is adjusted for changes in price

2. II. It is always equal to nominal GDP

3. III. It increases whenever aggregate output increases

• I only

• II only

• III only

• I, II, III

• None of the above

1. Gotham has 150 people with jobs, 50 people actively seeking work, and 500 discouraged workers. If the population of Gotham is 1,000 what is the unemployment rate?

• 1. 25%

• 1. 20%

• 1. 15%

• 1. 35%

• None of the above

1. Stagflation occurs when

• 1. The overall price level increases rapidly during an expansion period

• 1. The overall price level falls during a recession period

• 1. The overall price level increases during a period of increased unemployment

• 1. The overall price level and employment are both stable for a long period

• None of the above

Steve the Bear recently lost his job when the firm he worked for no longer employed his position because it has become obsolete. This is what type of unemployment?

• Seasonal

• Cyclical

• Frictional

• Structural

• None of the above

1. Transformer action figures are made in Brazil and then shipped to the U.S. to be sold. Mangoes are grown in the U.S. and shipped to Brazil to be sold. Which of the following is true?

• 1. Transformer action figures are an import of Brazil and an export of the U.S.

• 1. Mangoes are an import of the U.S. as transformer action figures are an import in Brazil

• 1. Mangoes are an export of the U.S. and transformers action figures are an import of Brazil

• 2. Mangoes are an export of the U.S. and an import of Brazil

• None of the above

The market basket of goods used to calculate the Consumer Price Index cost $5 in 1996 (CPI = 100). The same basket of goods now costs $10. What is the value of today’s CPI?

• 50

• 100

• 200

• 125

• None of the above

1. If unsold inventory is counted in the GDP for 2011 but is then sold in 2012 which year’s GDP does it count for after the transaction?

• 1. Both 2011 and 2012

• 1. 2012

• 1. 2011

• 1. 2010

• None of the above

1. Nancy wants to make a 10% real return on a $5.2 million dollar loan, and the expected inflation rate during the period of the loan is 12%. She should charge an interest rate of

• 1. 12%

• 1. 22%

• 1. 10%

• 1. 2%

• None of the above