Economics Exam 1 Practice True/False Questions

An economy’s income is the same as its expenditure because every transaction has a buyer and a seller.

• True

• False

U.S. GDP excludes the production of most illegal goods.

• True

• False

New home construction is included in the consumption component of GDP.

• True

• False

An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and services.

• True

• False

If the current year CPI is 140, then the price level has increased 40 percent since the base year.

• True

• False

The goal of the consumer price index is to gauge how much incomes must rise to maintain a constant standard of living.

• True

• False

It is possible to observe a positive nominal interest rate together with a negative real interest rate.

• True

• False

Persistent inflation, or increases in the overall level of prices, has been the norm.

• True

• False

Increases in both human capital per worker and physical capital per worker increase productivity.

• True

• False

The same size decrease in the amount of capital stock per worker will cause output per worker to fall by more in a country with a relatively high level of capital per worker than in a country with a relatively low level of capital per worker.

• True

• False