ECO4223 Final Exam Review Questions
And Answers With Verified Solutions
Already Passed !!!
Q1: Which of the following contributes to GDP?
A1:
A) The sales price of homes built 30 years ago.
B) Intermediate goods, which are used to produce final goods.
C) Both A and B
D) Value of all final goods and services.
Answer: D) Value of all final goods and services.
Q2: Which of the following is true regarding GDP?
A2:
A) GDP does not include intermediate goods, which are used to produce other final
goods. (Example: Tires used to make a car)
B) GDP includes the purchases of goods and services in the past.
C) None of the above are true.
D) GDP includes the purchases of stocks and bonds.
Answer: A) GDP does not include intermediate goods, which are used to produce
other final goods. (Example: Tires used to make a car)
Q3: If the CPI in 2004 is 200, and in 2005 the CPI is 180, what is the rate of
inflation from 2004 to 2005?
A3:
A) 20%.
B) 10%.
C) 0%.
D) -10%.
Answer: D) -10%
,Q4: If the Nominal GDP in 2001 is $9 trillion, and 2001 real GDP in 1996
price is $6 trillion, what is the GDP deflator price index?
A4:
A) 200
B) 150
C) 7
D) 100
Answer: B) 150
Q5: If the CPI is 120 in 1996 and 180 in 2002, then between 1996 and 2002,
how much have prices increased?
A5:
A) 180%.
B) 80%.
C) 60%.
D) 50%.
Answer: D) 50%
Q6: What is the inflation rate if the GDP deflator in 2012 was 112, and the
GDP deflator in 2013 was 115?
A6:
A) 2.68%
B) 0.72%
C) 3.42%
D) 1.70%
Answer: A) 2.68%
Q7: What is the nominal GDP in 2010, if real GDP in 2009 was $12 billion and
the GDP deflator is 108?
A7:
A) $10.24 billion
B) $9.0 billion
C) $8.48 billion
, D) $12.96 billion
Answer: D) $12.96 billion
Q8: If expected inflation decreases, what happens to the real cost of
borrowing and the supply of bonds?
A8:
A) Falls, shifts to the right
B) Rises, shifts to the left
C) Rises, shifts to the right
D) Falls, shifts to the left
Answer: B) Rises, shifts to the left
Q9: If the nominal rate of interest is 2 percent, and the expected inflation rate
is -10 percent, what is the real rate of interest?
A9:
A) 2%
B) 8%
C) 12%
D) 10%
Answer: C) 12%
Q10: If you expect the inflation rate to be 12% and a 1-year bond has a yield
to maturity of 7%, what is the real interest rate on this bond?
A10:
A) 12%
B) 2%
C) -5%
D) -2%
Answer: C) -5%
Q11: If you expect the inflation rate to be 15% next year and a 1-year bond
has a yield to maturity of 7%, what is the real interest rate on this bond?
A11:
And Answers With Verified Solutions
Already Passed !!!
Q1: Which of the following contributes to GDP?
A1:
A) The sales price of homes built 30 years ago.
B) Intermediate goods, which are used to produce final goods.
C) Both A and B
D) Value of all final goods and services.
Answer: D) Value of all final goods and services.
Q2: Which of the following is true regarding GDP?
A2:
A) GDP does not include intermediate goods, which are used to produce other final
goods. (Example: Tires used to make a car)
B) GDP includes the purchases of goods and services in the past.
C) None of the above are true.
D) GDP includes the purchases of stocks and bonds.
Answer: A) GDP does not include intermediate goods, which are used to produce
other final goods. (Example: Tires used to make a car)
Q3: If the CPI in 2004 is 200, and in 2005 the CPI is 180, what is the rate of
inflation from 2004 to 2005?
A3:
A) 20%.
B) 10%.
C) 0%.
D) -10%.
Answer: D) -10%
,Q4: If the Nominal GDP in 2001 is $9 trillion, and 2001 real GDP in 1996
price is $6 trillion, what is the GDP deflator price index?
A4:
A) 200
B) 150
C) 7
D) 100
Answer: B) 150
Q5: If the CPI is 120 in 1996 and 180 in 2002, then between 1996 and 2002,
how much have prices increased?
A5:
A) 180%.
B) 80%.
C) 60%.
D) 50%.
Answer: D) 50%
Q6: What is the inflation rate if the GDP deflator in 2012 was 112, and the
GDP deflator in 2013 was 115?
A6:
A) 2.68%
B) 0.72%
C) 3.42%
D) 1.70%
Answer: A) 2.68%
Q7: What is the nominal GDP in 2010, if real GDP in 2009 was $12 billion and
the GDP deflator is 108?
A7:
A) $10.24 billion
B) $9.0 billion
C) $8.48 billion
, D) $12.96 billion
Answer: D) $12.96 billion
Q8: If expected inflation decreases, what happens to the real cost of
borrowing and the supply of bonds?
A8:
A) Falls, shifts to the right
B) Rises, shifts to the left
C) Rises, shifts to the right
D) Falls, shifts to the left
Answer: B) Rises, shifts to the left
Q9: If the nominal rate of interest is 2 percent, and the expected inflation rate
is -10 percent, what is the real rate of interest?
A9:
A) 2%
B) 8%
C) 12%
D) 10%
Answer: C) 12%
Q10: If you expect the inflation rate to be 12% and a 1-year bond has a yield
to maturity of 7%, what is the real interest rate on this bond?
A10:
A) 12%
B) 2%
C) -5%
D) -2%
Answer: C) -5%
Q11: If you expect the inflation rate to be 15% next year and a 1-year bond
has a yield to maturity of 7%, what is the real interest rate on this bond?
A11:
