Principles of Macroeconomics Practice Exam with Correct
Answers Chapter 23
Microeconomicsz-zCORRECTzANSWER-
thezstudyzofzhowzindividualzhouseholdszandzfirmszmakezdecisionszandzhowztheyzinteractzwithzonezanothe
rzinzmarkets
Macroeconomicsz-zCORRECTzANSWER-thezstudyzofzthezeconomyzaszazwhole
Anzeconomy'szgrosszdomesticzproductzisz-zCORRECTzANSWER-totalzincomezandztotalzspending
SamzbakeszazcakezandzsellszitztozCarlazforz$10.zWoodyzpayszDianez$30ztoztutorzhim.zInzthiszeconomy,zGDPzi
sz-zCORRECTzANSWER-$40
GrosszDomesticzProductz(GDP)z-zCORRECTzANSWER-
thezmarketzvaluezofzallzfinalzgoodszandzserviceszproducedzwithinzazcountryzinzazgivenzperiodzofztime
Ifzthezpricezofzazhotzdogzisz$2zandzthezpricezofzazhamburgerzisz$4,zthenz30zhotzdogszcontributezaszmuchztoz
GDPzasz_____zhamburgers.z-zCORRECTzANSWER-30
AnguszthezsheepzfarmerzsellszwoolztozBarnabyzthezknitterzforz$20.zBarnabyzmakesztwozsweaters,zeachzofz
whichzhaszazmarketzpricezofz$40.zCollettezbuyszonezofzthem,zwhilezthezotherzremainszonzthezshelfzofzBarna
by'szstoreztozbezsoldzlater.zWhatziszGDPzhere?z-zCORRECTzANSWER-$80
Afterzgraduation,zanzAmericanzcollegezstudentzmovesztozJapanztozteachzEnglish.zHerzsalaryziszincludedz-
zCORRECTzANSWER-onlyzinzJapan'szGDP
Consumptionz-zCORRECTzANSWER-
spendingzbyzhouseholdszonzgoodszandzservices,zwithzthezexceptionzofzpurchaseszofznewzhousing
, Investmentz-zCORRECTzANSWER-
thezpurchasezofzgoodsz(calledzcapitalzgoods)zthatzwillzbezusedzinzthezfutureztozproducezmorezgoodszandzse
rvices
GovernmentzPurchasesz-zCORRECTzANSWER-
measurezspendingzonzgoodszandzserviceszbyzlocal,zstate,zandzfederalzgovernments
NetzExportsz-zCORRECTzANSWER-
equalzthezforeignzpurchaseszofzdomesticallyzproducedzgoodsz(exports)zminuszthezdomesticzpurchaseszofzf
oreignzgoodsz(imports)
WhichzofzthezfollowingzdoeszNOTzaddztozU.S.zGDP?z-zCORRECTzANSWER-
ThezfederalzgovernmentzsendszazSocialzSecurityzcheckztozyourzgrandmother
AnzAmericanzbuyszazpairzofzshoeszmadezinzItaly.zHowzdozthezU.S.znationalzincomezaccountsztreatztheztrans
action?z-zCORRECTzANSWER-Netzexportszfall,zwhilezGDPzdoesznotzchange
WhichziszthezlargestzcomponentzofzGDP?z-zCORRECTzANSWER-consumption
nominalzGDPz-zCORRECTzANSWER-thezproductionzofzgoodszandzserviceszvaluedzatzcurrentzprices
realzGDPz-zCORRECTzANSWER-thezproductionzofzgoodszandzserviceszvaluedzatzconstantzprices
GDPzdeflatorz-zCORRECTzANSWER-
azmeasurezofzthezpricezlevelzcalculatedzaszthezratiozofznominalzGDPztozrealzGDPztimesz100
GDPzdeflatorzequationz-zCORRECTzANSWER-NominalzGDP/RealzGDPzxz100
Anzeconomyzproducesz10zcookieszinzyearz1zatzazpricezofz$2zperzcookiezandz12zcookieszinzyearz2zatzazpricezo
fz$3zperzcookie.zFromzyearz1ztozyearz2,zrealzGDPzincreaseszbyz-zCORRECTzANSWER-20zpercent
Answers Chapter 23
Microeconomicsz-zCORRECTzANSWER-
thezstudyzofzhowzindividualzhouseholdszandzfirmszmakezdecisionszandzhowztheyzinteractzwithzonezanothe
rzinzmarkets
Macroeconomicsz-zCORRECTzANSWER-thezstudyzofzthezeconomyzaszazwhole
Anzeconomy'szgrosszdomesticzproductzisz-zCORRECTzANSWER-totalzincomezandztotalzspending
SamzbakeszazcakezandzsellszitztozCarlazforz$10.zWoodyzpayszDianez$30ztoztutorzhim.zInzthiszeconomy,zGDPzi
sz-zCORRECTzANSWER-$40
GrosszDomesticzProductz(GDP)z-zCORRECTzANSWER-
thezmarketzvaluezofzallzfinalzgoodszandzserviceszproducedzwithinzazcountryzinzazgivenzperiodzofztime
Ifzthezpricezofzazhotzdogzisz$2zandzthezpricezofzazhamburgerzisz$4,zthenz30zhotzdogszcontributezaszmuchztoz
GDPzasz_____zhamburgers.z-zCORRECTzANSWER-30
AnguszthezsheepzfarmerzsellszwoolztozBarnabyzthezknitterzforz$20.zBarnabyzmakesztwozsweaters,zeachzofz
whichzhaszazmarketzpricezofz$40.zCollettezbuyszonezofzthem,zwhilezthezotherzremainszonzthezshelfzofzBarna
by'szstoreztozbezsoldzlater.zWhatziszGDPzhere?z-zCORRECTzANSWER-$80
Afterzgraduation,zanzAmericanzcollegezstudentzmovesztozJapanztozteachzEnglish.zHerzsalaryziszincludedz-
zCORRECTzANSWER-onlyzinzJapan'szGDP
Consumptionz-zCORRECTzANSWER-
spendingzbyzhouseholdszonzgoodszandzservices,zwithzthezexceptionzofzpurchaseszofznewzhousing
, Investmentz-zCORRECTzANSWER-
thezpurchasezofzgoodsz(calledzcapitalzgoods)zthatzwillzbezusedzinzthezfutureztozproducezmorezgoodszandzse
rvices
GovernmentzPurchasesz-zCORRECTzANSWER-
measurezspendingzonzgoodszandzserviceszbyzlocal,zstate,zandzfederalzgovernments
NetzExportsz-zCORRECTzANSWER-
equalzthezforeignzpurchaseszofzdomesticallyzproducedzgoodsz(exports)zminuszthezdomesticzpurchaseszofzf
oreignzgoodsz(imports)
WhichzofzthezfollowingzdoeszNOTzaddztozU.S.zGDP?z-zCORRECTzANSWER-
ThezfederalzgovernmentzsendszazSocialzSecurityzcheckztozyourzgrandmother
AnzAmericanzbuyszazpairzofzshoeszmadezinzItaly.zHowzdozthezU.S.znationalzincomezaccountsztreatztheztrans
action?z-zCORRECTzANSWER-Netzexportszfall,zwhilezGDPzdoesznotzchange
WhichziszthezlargestzcomponentzofzGDP?z-zCORRECTzANSWER-consumption
nominalzGDPz-zCORRECTzANSWER-thezproductionzofzgoodszandzserviceszvaluedzatzcurrentzprices
realzGDPz-zCORRECTzANSWER-thezproductionzofzgoodszandzserviceszvaluedzatzconstantzprices
GDPzdeflatorz-zCORRECTzANSWER-
azmeasurezofzthezpricezlevelzcalculatedzaszthezratiozofznominalzGDPztozrealzGDPztimesz100
GDPzdeflatorzequationz-zCORRECTzANSWER-NominalzGDP/RealzGDPzxz100
Anzeconomyzproducesz10zcookieszinzyearz1zatzazpricezofz$2zperzcookiezandz12zcookieszinzyearz2zatzazpricezo
fz$3zperzcookie.zFromzyearz1ztozyearz2,zrealzGDPzincreaseszbyz-zCORRECTzANSWER-20zpercent
