ECO 211 EXAM 1 ACTUAL EXAM QUESTIONS AND CORRECT ANSWERS QUARANTEED A+

ECO 211 EXAM 1 ACTUAL EXAM QUESTIONS AND CORRECT ANSWERS QUARANTEED A+ The two largest economies in the world in 2012 were: A) China and the U.S. B) China and Germany. C) England and the U.S. D) Japan and the U.S. A.) China and the U.S. The most commonly used metric for measuring the value of a national economy is: A) gross national product, or GNP. B) gross domestic income, or GDI. C) gross national income, or GNI. D) gross domestic product, or GDP. D.) gross domestic product, or GDP GDP counts: A) both intermediate and final goods and services because it is important to capture all values, regardless of which market they take place in. B) only final goods and services, because otherwise certain things would be double-counted and the GDP would be overestimated. C) all values that are reported to the government. D) only intermediate goods and services, because those are easier to track. B.) only final goods and services, because otherwise certain things would be double-counted and the GDP would be overestimated You purchase a bag of chocolate chips for $3, a bag of flour for $1, a bag of sugar for $.50, a half a dozen eggs for $.50, and a half pound of butter for $2. You use all these ingredients to make three dozen cookies. Your roommate offers you $15 for them, and you happily accept. How much does this process contribute to GDP? A) $8 B) $15 C) $22 D) $7 D.) $7 Tallulah is a German citizen who works for Volkswagen located in Fresno, California. Tallulah's work contributes to: A) U.S. GDP, but not U.S. GNP. B) German GDP, but not U.S. GDP. C) U.S. GNP, but not U.S. GDP. D) German GDP and U.S. GNP. A.) U.S. GDP, but not U.S. GNP Ace has always been a top student, so it was no surprise he won a $1500 scholarship from the company where he worked summers to help with college expenses. Ace decides to spend his scholarship money on a new Apple MacBook. How will GDP be affected by Ace's recent purchases? A) Consumption will go up by $1,500, because a computer is a nondurable good. B) GDP will not be affected, since Ace acquired the computer with scholarship money. C) Consumption will go up by $1,500, because a computer is a durable good. D) Investment will go up by $1,500, because a computer is a durable good. C.) Consumption will go up by $1500, because a computer is a durable good The value of net exports is: A) exports + imports. B) exports - imports. C) imports - exports. D) (exports + imports) -tariffs. B.) exports-imports If total consumption is $5 billion, investments $2 billion, government purchases $1 billion, exports $1 billion, and imports $3 billion, the GDP must equal: A) $12 billion. B) $6 billion. C) $9 billion. D) $3 billion. B.) 8 (+or-) (1-3) =$6 billion If imports are $4 billion and net exports are $4 billion, what must be the value of exports? A) $4 billion B) $2 billion C) $0 billion D) $8 billion $4=e-$4=$8 A GDP deflator of 112 means: A) the overall price level is 12 percent higher than in the base year. B) the production of each good in the economy has increased by 12 percent. C) every price in the economy has gone up by 12 percent. D) the overall output increased by 12 percent since the base year. A.) the overall price level is 12 percent higher than in the base year If U.S. real GDP grew from $12 trillion one year to $12.7 trillion the next, the annual growth rate would be: A) 94.4 % B) 5.8 % C) 105.8 % D) 5.5 % B.) 5.8% When the CPI increases from one year to the next: A) the impact to the general standard of living is hard to measure. B) deflation has occurred. C) inflation has occurred. D) there has not been a change in the overall price level. C.) Inflation has occurred Core inflation: A) is inflation measured using the producer price index. B) is inflation measured using the retail price index. C) measures the changes in prices for the entire market basket of the average urban consumer. D) measures price changes for the market basket of the average urban consumer with food and energy costs taken out. D.) measures price changes for the market basket of the average urban consumer with food and energy costs taken out PPP is the acronym for: A) purchasing power parity. B) purchasing price power. C) producer purchasing power. D) producer power parity. A.) purchasing power parity A price index: A) summarizes the changes in the cost of living for only rural consumers. B) allows us to see clearly the changes in the cost of a market basket daily. C) measures how much the cost of a market basket has risen or fallen relative to the cost in a base time period. D) is generally only used with consumer goods and services C.) measures how much the cost of a market basket has risen or fallen relative to the cost in a base time period The market basket approach: A) is equivalent to simply averaging the increase in the price of each grocery item. B) is how economists monitor trends in what people like to buy from year to year. C) gives us a single number to measure how much your total costs for all goods and services change over time. D) measures changes in the cost of a fixed shopping basket, assuming that typical consumer buys the same items in the same quantities. D.) measures changes in the cost of a fixed shopping basket, assuming that typical consumer buys the same items in the same quantities Which of the following goods is least likely to be in a market basket? A) A gallon of milk B) A pair of khaki pants C) A missile D) A tank of heating oil