1) If the price level increased, then ceteris paribus:

a. The real value of money would fall

b. The nominal value of money would fall

c. The real value of money would rise

d. The nominal value of money would rise

2) GDP includes the value of final goods, and not intermediate goods, because:

a. the value of intermediate goods is already included in the value of final goods

b. the value of intermediate goods is too difficult to measure

c. the value of intermediate goods is measured by GNP

d. the value of intermediate goods depends on the number of separate production processes

3) Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities and desirable moral attributes of the population, are not measured as part of GDP.

a. Therefore GDP is not a useful measure of society's welfare

b. However, GDP is still a useful measure of society's welfare because these other attributes are the responsibility of government

c. However, GDP is still a useful measure of society's welfare because it measures a nation's ability to purchase the inputs that can be used to help produce these contributors to welfare

d. Therefore GDP is not a useful measure of society's welfare unless is it measured per person

4) Consider a country with a consumption of $485 billion, an investment of $175 billion, government purchases of $176 billion, government transfer payments of $24 billion, exports of $19 billion and imports of $40 billion for the year 2020. What is the country's total GDP for the year 2020? Write answer in billions of dollars.

5) Dennis buys a house in 1973 and finances it with a mortgage that carries an annual interest rate of 7 per cent. Inflation in 1973 is 3 per cent, inflation in 1974 is 4 per cent, and inflation in 1975 is 5 per cent. What is the real interest rate Dennis pays on his mortgage in 1974? Write answer as a percentage.