1. For the CPI, what is the base year?

a.It is the year prior to the year for which the CPI is calculated.

b.It is the benchmark against which other years are compared, and it changes occasionally.

c.It is the year the CPI first appeared.

d.It is the benchmark against which other years are compared, and it changes each year.

2. How is GDP computed?

a.use weights determined by a survey regarding how much people value different sorts of goods and services to compute GDP as a weighted average

b.add up the cost of producing final goods and services within a country

c.add up the market values of all final goods and services produced within a country in a given period of time

d.add up the quantities of all final goods and services within a country

3. If two goods are complements, what happens if there is a decrease in the price of one good?

a.It reduces the quantity demanded of the other good.

b.It reduces the demand for the other good.

c.It raises the demand for the other good.

d.It increases the quantity demanded of the other good.

4. In the country of Kasnia, the price of copper increased from $6 per kilogram to $6.60 per kilogram during a time when the overall price level increased by 6 percent. During this period, what happened to the real price of copper?

a.It has decreased by about 8 percent.

b.It has increased by about 2 percent.

c.It has increased by about 10 percent.

d.It has decreased by about 4 percent.

5.Market demand is given as Qd = 190 - 2P. Market supply is given as Qs = P + 10. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

a.price will be $70 and quantity will be 60

b.price will be $60 and quantity will be 70

c.price will be $30 and quantity will be 35

d.price will be $95 and quantity will be 10

6. Market demand is given as Qd = 190 - 2P. Market supply is given as Qs = P + 10. What would result if the market price were $80?

a.a surplus of 30

b.a surplus of 60

c.a shortage of 60

d.a shortage of 30