6) If an American firm opens a production facility in india, the total value of the production will be included in the United States. States. of India. India A) gross domestic product of the B) national income of the United C) gross domestic product D) national income of 7) in 2013, Ford Motor Company's sales were rising. These events were caused by A) an economic recession. C) an increase in advertising. B) an economic expansion. D) improving quality of service. 8) Which of the folowing transactions represents the purchase of a final good? A) Starbucks purchases coffee beans B) Delta buys a new European-made jetliner. C) Apple computer buys computer processors from Intel. D) Your father buys a new John Deere riding lawn mower 9) Which component of GDe can have a negative value? B) investment D) net exports C) government spending 10) When consumers are less confident about their jobs or incomes, they are more likely to A) reduce purchases of durable goods than nondurable goods. 8) reduce purchases of nondurable goods and increase purchases of durable goods C) increase investment spending and decrease consumption spending. D) increase consumption spending and decrease investment spending 11) A example of an intermediate good would be Al the bread that goes into a sub sandwich that is sold by Quiznos. C) a sub sandwich sold D) the potato chips sold BI the soda pop sold by Quiznos. by Quiznos by Quiznos Choose the Best Option: (11 marks) 1)is/are the payment for the factor of production A) Wages;, capital B) Interest; labor D) Rent; capital 2) Which of the following would result in GDP for an economy equal to $10 trillion? A) C " S6 trilion1-52 trillion G-$1.5 trillion NX--$2 trillion B) C $5 trillion 1-$5 trillion G $2 trilion NX -$2 trillion C) C-S7 trillion S2 trillion G-S4 trillon NX-53 trillion DIC.S4 trillion 1 . S3 trillion G-S2 trilion NX.-$1 trion 3) The size of the underground economy would tend to increase if the government of a country A) decreased government regulations on businesses B) increased income tax rates C) legalized prostitution. D) legalized marijuana. 4) A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements. This wil A) increase GDP and increase well-being in the economy B) increase GDP and decrease well-being in the C) decrease GDP and increase well-being in the economy. D) decrease GDP and decrease well-being in the economy. 5) The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is A) 5% higher in year 2 than in year 1. B) 105% higher in year 2 than in year 1. C) 5% higher in year 1 than in year 2 D) 105% higher in year 1 than in year 2. Subjective Type (9 marks) Q:1 Given the following table: 2012 Commodities Price ($) 130 190 450 2018 Quantity Price (5) Quantity DVD 35 145 250 590 90 52 urniture utomobile ucation 13 nominal GDP of 2018 and real GDP of 2018 assuming 2012 as base year Calculate the Calculate the GDP Deflator o 18 assuming 2012 as base year If inflation decreases over time, comment on the cost of living in that economy (6+2+1 9 marks) 6) If an American firm opens a production facility in india, the total value of the production will be included in the United States. States. of India. India A) gross domestic product of the B) national income of the United C) gross domestic product D) national income of 7) in 2013, Ford Motor Company's sales were rising. These events were caused by A) an economic recession. C) an increase in advertising. B) an economic expansion. D) improving quality of service. 8) Which of the folowing transactions represents the purchase of a final good? A) Starbucks purchases coffee beans B) Delta buys a new European-made jetliner. C) Apple computer buys computer processors from Intel. D) Your father buys a new John Deere riding lawn mower 9) Which component of GDe can have a negative value? B) investment D) net exports C) government spending 10) When consumers are less confident about their jobs or incomes, they are more likely to A) reduce purchases of durable goods than nondurable goods. 8) reduce purchases of nondurable goods and increase purchases of durable goods C) increase investment spending and decrease consumption spending. D) increase consumption spending and decrease investment spending 11) A example of an intermediate good would be Al the bread that goes into a sub sandwich that is sold by Quiznos. C) a sub sandwich sold D) the potato chips sold BI the soda pop sold by Quiznos. by Quiznos by Quiznos Choose the Best Option: (11 marks) 1)is/are the payment for the factor of production A) Wages;, capital B) Interest; labor D) Rent; capital 2) Which of the following would result in GDP for an economy equal to $10 trillion? A) C " S6 trilion1-52 trillion G-$1.5 trillion NX--$2 trillion B) C $5 trillion 1-$5 trillion G $2 trilion NX -$2 trillion C) C-S7 trillion S2 trillion G-S4 trillon NX-53 trillion DIC.S4 trillion 1 . S3 trillion G-S2 trilion NX.-$1 trion 3) The size of the underground economy would tend to increase if the government of a country A) decreased government regulations on businesses B) increased income tax rates C) legalized prostitution. D) legalized marijuana. 4) A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements. This wil A) increase GDP and increase well-being in the economy B) increase GDP and decrease well-being in the C) decrease GDP and increase well-being in the economy. D) decrease GDP and decrease well-being in the economy. 5) The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is A) 5% higher in year 2 than in year 1. B) 105% higher in year 2 than in year 1. C) 5% higher in year 1 than in year 2 D) 105% higher in year 1 than in year 2. Subjective Type (9 marks) Q:1 Given the following table: 2012 Commodities Price ($) 130 190 450 2018 Quantity Price (5) Quantity DVD 35 145 250 590 90 52 urniture utomobile ucation 13 nominal GDP of 2018 and real GDP of 2018 assuming 2012 as base year Calculate the Calculate the GDP Deflator o 18 assuming 2012 as base year If inflation decreases over time, comment on the cost of living in that economy (6+2+1 9 marks)