1- Assume that apples cost 0.90 in 2002 and 1.2 in 2009, whereas oranges cost 1 in 2002 and 1.7 in 2009. If 4 apples were produced in 2002 and 16 in 2009, whereas 3 oranges were produced in 2002 and 12 in 2009, then the GDP deflator in 2009, using a base year of 2002, was approximately

a. 1.6

b. 1.5

c. 2.0

d. 1.53

2- GDP = $100,000; taxes = $22,000; government purchases = $25, 000; saving = $25,000.For this economy, consumption amounts to

Select one:

a. $68,000.

b. $40,000.

c. $50,000.

d. $60,000

3-If the economy is operating on the long-run aggregate supply curve, then expansionary fiscal policy will generate an increase in real GDP and higher prices in the short run, but then real GDP will decrease to its long-run level, and the price level will increase some more.

Select one:

a. True.

b. False

4- Which of the following government policies is most likely to lead to long-run economic growth?

Select one:

a. Increasing taxes on income received from foreign investment

b. Decreasing the money supply to raise the real interest rate

c. Increasing taxes on corporate income

d. Establishing a price control to curb inflation