Measuring the Economy: Unemployment, Inflation, and GDP 


1. Which of the following characterize index numbers?
A. Index numbers express observed data relative to some base value.
B. Index numbers indicate overall trends in an economy rather than specific detailed facts.
C. Index numbers often require that the individual items in the index be assigned some weight to reflect each item's overall importance to the final index number.
D. Index numbers are often used to measure aggregate macroeconomic variables.
E. all of the above.

2. Suppose that in 1979, the value of wholesale goods was $600 billion while in 1985, the value of wholesale goods produced was $900 billion. An index of wholesale production in 1985, using 1979 as the base period is:
A. 66.7
B. 150
C. 100
D. 133.3
E. there is insufficient information to construct an index.

3. If, between 1983 and 1985, nominal GDP rose by 20% and prices rose by 13%, actual output rose by approximately:
A. 33%
B. 2.6%
C. 20%
D. 7%
E. 13%

Use the following table to answer question 4 - 8

National Income Data (all figures are in billions of dollars)

Business retained earnings

$ 240

Corporate profits

276

Personal Consumption Expenditures

1491

Contributions for Social Insurance

0

Interest Income (Net Interest)

46

Personal Interest Income

46

Total Transfer Payments

274

Dividend Income

36

Depreciation (Capital Consumption Allowance)

234

Gross Capital Investment

378

Changes in Business Inventories

26

Rental Income

28

Corporate Profits Taxes

0

Direct Business Taxes

0

Imports

248

Federal Government Purchases of Goods & Services

148

State and Local Government Purchases of Goods & Services

286

Personal Income Taxes

514

Exports

261

Net Income Earned Abroad

0

Indirect Business Taxes (and miscellaneous adjustments)

177


4. Gross Domestic Product (GDP) is equal to:
A. $2342
B. $2265
C. $3485
D. $1997
E. $2056

5. Net National Product (NNP) is equal to:
A. $2165
B. $2342
C. $2108
D. $2094
E. $2066

6. National Income (NI) is equal to:
A. $1730
B. $2082
C. $2080
D. $1868
E. $1931

7. Personal Income (PI) is equal to:
A. $1931
B. $1965
C. $2108
D. $1823

8. Personal Disposable Income is equal to:
A. $1640
B. $1920
C. $1245
D. $1451
E. $1490

9. All of the following expenditures are included in investment expenditures except:
A. business purchase of a fleet of new cars.
B. household purchase of a new house.
C. a retail store's purchase of shoes to add to inventory.
D. a business firm financing a new plant by issuing stock.
E. a business firm buying the stock of a competing firm.

10. A price index for each year is listed in parenthesis after the dollar price of a gallon of gasoline. In which year was the real or relative price of gasoline highest?
A. 1973 - $ .35 (125)
B. 1977 - $ .95 (160)
C. 1981 - $1.20 (299)
D. 1985 - $1.25 (341)
E. 1988 - $ .99 (380)

11. Which of the following items would be included in the calculation of current GDP by the expenditure approach? The purchase of:
A. a house built in 1970.
B. a case of fine french champaign.
C. a corporate bond.
D. a U.S. government bond.
E. season tickets to the Springfield symphony.

12. Gross Domestic Product (GDP) is the total market value of all domestic:
A. commodities sold in a year.
B. services produced in a year.
C. production during a year.
D. consumer goods sold during a year.

13. Inflation imposes especially large burdens on people who:
A. receive social security benefits.
B. owe huge fixed interest rate mortgages on their houses.
C. work under union contracts with cost of living adjustments built in.
D. rely on fixed dollar assets for their retirement.
E. all of the above.

 

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