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TEST 1 – GDP – CPI – INVESTMENT -SAVING

Q 1: Gross domestic product measures (GDP đo lường…)

A. expenditures but not income. B. income and expenditures.

C. neither income nor expenditures. D. income but not expenditures.

Q 2 : The consumer price index (CPI) was 120 in 2013 and 126 in 2014. The nominal interest rate during this period
was 8 percent. What was the real interest rate during this period?

A. 3.3 percent B. 12.8 percent C. 2 percent D. 3 percent

Q 3 : Suppose a basket of goods and services has been selected to calculate the CPI and 2009 has been selected as
the base year. In 2007, the basket’s cost was $64; in 2009, the basket’s cost was $68; and in 2011, the basket’s
cost was $70. The value of the CPI in 2011 was

A. 102.94. B. 109.38. C. 100.10. D. 97.14.

Q 4 : GDP includes the value of all…

A. final goods and services produced within a country using primarily market prices to measure the value of goods
and services.

B. goods and services produced within a country using primarily a survey of consumers to measure the value of
goods and services.

C. goods and services produced within a country using primarily market prices to measure the value of goods and
services.

D. final goods and services produced within a country using primarily a survey of consumers to measure the value
of goods and services.

Q 5 : If the nominal interest rate is 6 percent and the rate of inflation is 2 percent, then the real interest rate is

A. -4 percent. B. 3 percent. C. 4 percent. D. 8 percent

Q 6 : If the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was

A. 6 percent. B. 106 percent. C. 1.06 percent. D. 10.6 percent.

Q 7 : Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as
the base year. In 2012, the basket’s cost was $50; in 2014, the basket’s cost was $51; and in 2016, the basket’s
cost was $52. The value of the CPI in 2014 was

A. 102.0. B. 104.0. C. 98.0. D. 151.0.

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Q 8 : During a certain year, the nominal interest rate was 7 percent, the real interest rate was 4 percent, and the CPI
was 198.3 at the end of the year. The CPI at the beginning of the year was

A. 220.1 B. 178.6 C. 204.2 D. 192.5

Q 9 : Which of the following expressions must be equal to national saving for a closed economy?

A. Y - I - G - NX B. Y - C - G

C. Y - I - C D. G + C - Y

Q 10 : The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

A. the CPI is calculated more often than the GDP deflator is.

B. the CPI is easier to measure.

C. the GDP deflator cannot be used to gauge inflation.

D. the CPI better reflects the goods and services bought by consumers.

Q 11 : If the CPI was 68 in 1965 and is 285 today, then $100 today purchases the same amount of goods and services
as

A. $32.47 purchased in 1965. B. $23.86 purchased in 1965.

C. $68.00 purchased in 1965. D. $419.12 purchased in 1965.

Q 12 : Which of the following statements about GDP is correct?

A. GDP measures two things at once: the total income of everyone in the economy and the total expenditure on
the economy’s output of goods and services.

B. Money continuously flows from households to firms and then back to households, and GDP measures this flow
of money.

C. GDP is generally regarded as the best single measure of a society’s economic well-being.

D. All of the above are correct

Q 13 : You know that a candy bar cost five cents in 1962. You also know the CPI for 1962 and the CPI for today.
Which of the following would you use to compute the price of the candy bar in today's prices?

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A. five cents × (1962 CPI / today's CPI)

B. five cents × ((today's CPI - 1962 CPI)/1962 CPI)

C. five cents × today's CPI - five cents 1962 CPI.

D. five cents × (today's CPI / 1962 CPI)

Q 14 : The CPI differs from the GDP deflator in that

A. increases in the prices of domestically produced goods that are sold to the U.S. government show up in the
GDP deflator but not in the CPI

B. the CPI is an inflation index, while the GDP deflator is a price index.

C. increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the GDP deflator
but not in the CPI.

D. substitution bias is not a problem with the CPI, but it is a problem with the GDP deflator.

Q 15 : Wholesome Wheat Bakery buys $10.00 worth of flour from Mikes’ Mill and uses the flour to make bread.
Wholesome Wheat sells the bread to the public for $22.00. Taking these two transactions into account, what is
the effect on GDP?

A. GDP increases by $10.00 B. GDP increases by $22.00

C. GDP increases by $32.00 D. GDP increases by $12.00

Q 16 : If the price index was 90 in year 1, 100 in year 2, and 95 in year 3, then the economy experienced

A. 11.1 percent inflation between years 1 and 2, and 5 percent inflation between years 2 and 3.

B. 10 percent inflation between years 1 and 2, and 5 percent inflation between years 2 and 3.

C. 11.1 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.

D. 10 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.

Q 17 : The inflation rate is calculated

A. by determining the change in the price index from the preceding period.

B. by adding up the price increases of all goods and services.

C. by determining the percentage increase in the price index from the preceding period.

D. by computing a simple average of the price increases for all goods and services.

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Q 18 : Which of the following statements about real and nominal interest rates is correct?

A. Real interest rates must be positive, but nominal interest rates can be either positive or negative.

B. Real interest rates and nominal interest rates must be positive.

C. Real interest rates and nominal interest rates can be either positive or negative.

D. Real interest rates can be either positive or negative, but nominal interest rates must be positive.

Q 19 : Suppose that over the past year, the real interest rate was 5 percent and the inflation rate was 3 percent. It
follows that

A. the dollar value of savings increased at 5 percent, and the purchasing power of savings increased at 2 percent.

B. the dollar value of savings increased at 5 percent, and the purchasing power of savings increased at 8 percent.

C. the dollar value of savings increased at 8 percent, and the purchasing power of savings increased at 5 percent.

D. the dollar value of savings increased at 8 percent, and the purchasing power of savings increased at 2 percent.

Q 20 : A farmer sells $25,000 worth of apples to individuals who take them home to eat, $50,000 worth of apples to a
company that uses them all to produce cider, and $75,000 worth of apples to a grocery store that will sell them
to households. How much of the farmer’s sales will be included as apples in GDP?

A. $150,000 B. $125,000 C. $25,000 D. $100,000

Q 21 : The real interest rate tells you

A. the number of dollars in your bank account today.

B. the purchasing power of your bank account today

C. how fast the purchasing power of your bank account rises over time.

D. how fast the number of dollars in your bank account rises over time.

Q 22 : A farmer produces oranges and sells them to Fresh Juice, which makes orange juice. The oranges produced by
the farmer are called

A. inventory goods. B. transitory goods.

C. final goods. D. intermediate goods

Q 23 : Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as
the base year. In 2012, the basket’s cost was $77; in 2013, the basket’s cost was $82; and in 2014, the basket’s
cost was $90. The value of the CPI in 2014 was

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A. 109.8 and the inflation rate was 9.8%.

B. 116.9 and the inflation rate was 9.8%.

C. 109.8 and the inflation rate was 16.9%.

D. 116.9 and the inflation rate was 16.9%.

Q 24 : Which of the following is not included in GDP?

A. carrots grown in your garden and eaten by your family

B. carrots purchased at a farmer’s market and eaten by your family

C. carrots purchased at a grocery store and eaten by your family

D. None of the above are included in GDP.

Q 25 : Tom and Lilly rented a house for $12,000 last year. At the start of the year they bought the house they had
been renting directly from the owner for $250,000. They believe they could rent it for $12,000 this year, but stay
in the house. How much does Tom and Lilly’s decision to buy the house change GDP?

A. it does not change GDP B. it reduces GDP by $12,000

C. it raises GDP by $238,000 D. it raises GDP by $250,000

Q 26 : Al’s Aluminum Company sells $1 million worth of aluminum to Shiny Foil Company, which uses the aluminum
to make aluminum foil. Shiny Foil Company sells $4 million worth of aluminum foil to households. The
transactions just described contribute how much to GDP?

A. $5 million B. $3 million C. $1 million D. $4 million

Q 27 : The CPI is a measure of the overall cost of

A. the stocks on the New York Stock Exchange

B. the goods and services produced in the economy.

C. the goods and services purchased by a typical consumer.

D. the inputs purchased by a typical producer.

Q 28 : Which of the following headlines is more closely related to what microeconomists study than to what
macroeconomists study? (các yếu tố nào sau đây liên quan đến kinh tế vi mô hơn kinh tế vĩ mô)

A. Unemployment rate falls from 7.5 percent to 7.3 percent.

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B. Real GDP falls by 0.4 percent in the third quarter.

C. The price of gasoline rises due to rising oil prices.

D. Inflation was 2.4 percent last year.

Q 29 : Suppose a closed economy had public saving of -$1 trillion and private saving of $3 trillion. What are national
saving and investment for this country?

A. $2 trillion, $2 trillion

B. $2 trillion, $3 trillion

C. $3 trillion, $3 trillion

D. $4 trillion, $2 trillion

Q 30 : If in a closed economy Y = $11 trillion, which of the following combinations would be consistent with national
saving of $3 trillion?
A. C = $8 trillion, G = $3 trillion

B. C = $13 trillion, G = -$1 trillion

C. C = $9 trillion, G = $5 trillion

D. C = $7 trillion, G = $1 trillion

Q 31 : In an imaginary economy, consumers buy only sandwiches and magazines. The fixed basket consists of 20
sandwiches and 30 magazines. In 2006, a sandwich cost $4 and a magazine cost $2. In 2007, a sandwich cost
$5. The base year is 2006. If the inflation rate in 2007 was 16 percent, then how much did a magazine cost in
2007?

A. $2.08 B. $3.00 C. $2.32 D. $1.87

Q 32 : Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been chosen as
the base year. In 2012, the basket’s cost was $80.00; in 2013, the basket’s cost was $84; and in 2014, the
basket’s cost was $87.60. The value of the CPI was

A. 100 in 2012. B. 105 in 2013.

C. 109.5 in 2014. D. All of the above are correct.

Q 33 : A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to
produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

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A. $250 to GDP.

B. $150 to GDP.

C. between $250 and $400 to GDP, depending on the profit earned by the bicycle company when it sold the
bicycle.

D. $400 to GDP.

Q 34 : In a small closed economy investment is $50 billion and private saving is $45 billion. What are public saving and
national saving?

$5 billion and $45 -$5 billion and $45 $5 billion and $50
A. billion B. billion C. billion D. -$5 billion and $50 billion

Q 35 : Ryan lives in an apartment where he pays $7,000 a year in rent. Sarah lives in a house that could be rented for
$21,000 a year. How much do these housing services contribute to GDP?

A. $28,000 B. $14,000 C. $7,000 D. $21,000

Q 36: When opening a print shop you need to buy printers, computers, furniture, and similar items.
Economists call these expenditures
a. capital investment.
b. investment in human capital.
c. business consumption expenditures.
d. personal saving.
Q37: Given that Monika's income exceeds her expenditures, Monika is best described as a
a. saver or as a supplier of funds.
b. saver or as a demander of funds.
c. borrower or as a supplier of funds.
d. borrower or as a demander of funds.
Q38: Most entrepreneurs do not have enough money of their own to start their businesses. When they
acquire the necessary funds from someone else,
a. their consumption expenditures are being financed by someone else’s saving.
b. their consumption expenditures are being financed by someone else’s investment.
c. their investments are being financed by someone else’s saving.
d. their saving is being financed by someone else’s investment.
Q39: At the broadest level, the financial system moves the economy’s scarce resources from
a. the rich to the poor.
b. financial institutions to business firms and government.

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c. households to financial institutions.

d. savers to borrowers.
Q40: Two of the economy’s most important financial intermediaries are
a. suppliers of funds and demanders of funds.
b. banks and the bond market.
c. the stock market and the bond market.
d. banks and mutual funds.
Q41: For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S,
as the total income in the economy that is left after paying for consumption and government purchases,
then for an open economy, it is true that
a. S = I.
b. S = 0.
c. I = S + NX.
d. S = I + NX.

Use the information belows to answer question : Scenario 26-3

Consumption = $1,000; investment = $200; net exports = -$50; taxes = $230; private saving = $225; and
national saving = $150.

Q42 Refer to Scenario 26-3. This economy’s government is running a

a. budget deficit of $75.
b. budget deficit of $80.
c. budget deficit of $50.
d. budget deficit of $100.

Q43 Refer to Scenario 26-3. For this economy, government purchases amount to

a. $330.
b. $280.
c. $305.
d. $310.

Q44: Refer to Scenario 26-3. For this economy, GDP equals

a. $1,480.
b. $1,505.
c. $1,460
d. $1,455.

Q45: To maintain their standard of living, most people rely on

a. government assistance.

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b. their personal savings.

c. their labor earnings.
d. rental income

Q46: The amount of unemployment that an economy normally experiences is called the
a. average rate of unemployment.
b. natural rate of unemployment.
c. cyclical rate of unemployment.
d. typical rate of unemployment.

Q47: Which of the following is correct?

a. The Bureau of Labor Statistics uses data collected from those applying for unemployment
insurance to compute the unemployment rate.
b. The labor force includes all adults who are able to work.
c. Unpaid homemakers are counted as “employed” by the Bureau of Labor Statistics.
d. People working part time are counted as “employed” by the Bureau of Labor Statistics.

Q48: Which of the following is a requirement for the Bureau of Labor Statistics to place someone in the
“unemployed” category?
a. The person must have worked no more than 10 hours during the past week.
b. The person must have tried to find employment during the previous four weeks.
c. The person may not have been laid off.
d. All of the above are correct.

49: Satchel loses his job and immediately begins looking for another. Other things the same, the
unemployment rate
a. increases, and the labor-force participation rate decreases.
b. and the labor-force participation rate both increase.
c. increases, and the labor-force participation rate is unaffected.
d. is unaffected, and the labor-force participation rate decreases.

50. Matilda just graduated from college. In order to devote all her efforts to college, she didn’t hold a job.
She is going to tour around the country on her motorcycle for a month before she starts looking for work.
Other things the same, the unemployment rate
a. increases, and the labor-force participation rate decreases.
b. and the labor-force participation rate both increase.
c. increases, and the labor-force participation rate is unaffected.
d. and the labor-force participation rate are both unaffected.

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