Practice Test 1 Questions - Principles of Economics | ECON 203, Exams of Introduction to Macroeconomics

Download Practice Test 1 Questions - Principles of Economics | ECON 203 and more Exams Introduction to Macroeconomics in PDF only on Docsity! Econ 203 Test 1 (Make sure to put your name on the test and on your scantron; 2 pts off if not) 1. Currently, nominal GDP in the U.S. is closest to which of the following ranges? a. $19-20 trillion b. $14-15 trillion c. $8-9 trillion d. none of the above 2. GDP is made up of what major components? a. consumption, investment, government transfers, exports b. consumption, investment, government purchases, exports minus imports c. consumption, investment, exports minus imports d. none of the above 3. The CPI a. It calculates how much a given group of goods or services costs in comparison to a base year b. Fully adjusts the index quality changes goods and services c. Has been about the same level for the past 10 years d. None of the above c. It takes into account every good purchased by every consumer in a given time frame 4. Which of the following is not included in GDP computations? a. payments to a plumbing company for repairs b. the value of the labor a homeowner puts in fixing a leaky faucet c. the purchase in Nashville of strawberries grown in Mexico d. all of the above are included in GDP computations 5. The Washington apple, Florida orange example illustrated the principle that a. What one group gains in a trade, the other party to the trade loses b. Volutntary trade is based on who can produce more of a good than someone else c. That people like apples better than oranges but orange juice better than apple juice d. none of the above 6. Although “money can’t buy happiness” one reason to think that happiness measures and GDP might be related is that (this questions was messed up – put A for answer) a. happiness and GDP are not closely correlated, possibly because of rising expectations b. GDP is closely correlated only with more goods, not with other outcomes that people care about such as life expectancy c. GDP and happiness measures tend to be very closely correlated d. GDP is intended as a measure of happiness 7. Constant dollar or “real” GDP a. is a different method of measuring the average price level than the CPI b. is always higher than nominal GDP c. Measures expenditures while holding the purchasing power of the dollar constant d. all of the above 8. GDP is very nearly equivalent to a. national savingb. national income c. total wealth d. none of the above 9. The recovery spending from a natural disaster does not increase overall economic activity and welfare because a. the disaster involves the destruction of wealth b. wealth is not adjusted for purchasing power c. wealth includes the value of d. all of the above 10. What is a source of comparative advantage? a. Land-location b. Human Capital (knowledge; skills) c. Labor d. All of the Above 11. The 1977 film, Star Wars (Episode IV: A New Hope), earned about $800 million in worldwide box office revenues. If the CPI in 1977 were 60 and the CPI in 2000 were 180, compute the 2000 constant dollar amount the film earned: a. $266 million b. $2.4 billion c. $1.9 billion d. none of the above