Answer the next question on the basis of the following data. All figures are in billions of dollars: Government purchases $20 Consumption purchases $80 Gross Private Domestic Investment $30 Exports Imports $11 20. Refer to the above data. GDP is: A. $127. B. $111. C. $115. D. $149 Answer questions 21 - 25 using the following data. All figures are in billions of dollars. Consumption of Fixed Capital $25 Government Purchases 315 US Imports 260 Personal Taxes 45 Transfer Payments 247 US Exports 249 Personal Consumption Expenditures 475 Net Foreign Factor Income Gross Private Domestic Investment 300 Taxes on Production and Imports 245 Undistributed Corporate Profits 60 Social Security Contributions 240 Corporate Income Taxes 65 Statistical Discrepancy 40 21. Refer to the above data. Gross domestic product is: A. $1,049 billion B. $1.079 billion C. $1.090 billion D. $1,101 billion 22. Refer to the above data. Net domestic product is: A. $1,039 billion B. $1.044 billion C. $1,054 billion D. $1,076 billion 23. Refer to the above data. National income is: A. $804 billion B. $940 billion C. $975 billion D. $1,019 billion 24. Refer to the above data. Personal income is: A. $621 billion 3. $656 billion C. $705 billion D. $716 billion25. Refer to the above data. Disposable income is: A. $611 billion B. $659 billion C. $667 billion D. $686 billion 26. Assume a manufacturer of bulldozers purchases $22,000 in parts for each bulldozer. The completed bulldozer sells for $32,000. The value added by the manufacturer for each bulldozer is: A. $30,000. B. $8.000. C. $22,000. D. $10,000. 27. Real GDP refers to A. the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. B. nominal GDP data that embody changes in inventories. C. nominal NDP data that reflect changes in both physical output and the price level. D. nominal GDP data that have been adjusted for changes in the price level. 28. In the second quarter (3-month period) of 2001, U.S. nominal GDP increased but U.S. real GDP declined. We can conclude that: A. nominal income declined by more than personal income B. the price level rose by more than nominal GDP. C. real wages declined by more than real GDP. D. the price level fell. 29. A price index is: A. a comparison of the price of a market basket, the latter which varies considerably from year to year. B. a comparison of real GDP in one period relative to another C. a measure of the price of a market basket in a given year compared to the price of an identical (or highly) similar market basket in a reference (base) year. D. a ratio of real GDP in one year to RGDP in another year. 30. Real GDP and nominal GDP differ because real GDP and nominal GDP has (does) not. A. is adjusted for changes in the volume of intermediate transactions. B. includes the economic effects of international trade C. has been adjusted for changes in the price level. D. excludes depreciation charges. 31-32: Use the following table for a hypothetical single-product economy that produces one type of output: bagels. Price Price Units of of bagel index Year Output per unit (year 1 = 100) 10 $10 100 12 20 200 WN 30 300 20 40 400 31. Refer to the above data. Nominal GDP in year 2 is: A. $300 B. $450. C. $120. D. $240.33. Consider the following data (nominal GDP in millions) for a small nation: Year Nominal GDP Price Index $35 90 40 100 45 110 DAWN 48 120 56 140 The country's real GDP declined between years: A. 1 and 2 B. 2 and 3 C. 3 and 4 D. 4 and 5 34. Nominal GDP was $10,624 billion in year 1 and the GDP price index was 104. Nominal GDP was $11,246 in year 2 and the GDP deflator that year was 106. What was real GDP in years 1 and 2, respectively? A. $9,983 billion and $10,111 billion B. $10,022 billion and $10,813 billion C. $10,215 billion and $10,609 billion D. $10,624 billion and $11,246 billion 35. Suppose nominal GDP for a small country in 2000 was $500 billion and in 2001 it was $550 billion. The general price index in 2000 was 100 and in 2001 it was 104. Between 2000 and 2001 real GDP rose by about: A. 5.8% B. 5.0%% C. 10.8%. D. 28.8% Nominal GDP Real GDP Nominal and real GDP (S) 2000 Time 36. Refer to the above diagram. The base year used in determining RGDP for this economy: A. cannot be determined from the information given. B. is some year before 2000. C. is more recent than 2000. D. is 2000. 37. Refer to the above diagram. For years preceding 2000, the general price index (GDP deflator) is greater than 100. A. TRUE B. FALSE38. Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being? A. the services of new car dealerships B. the construction of new homes C. leisure D. government expenditures on roads and schools 39. A large underground economy results in an: A. understated GDP. B. overstated GDP C. understated GDP price index. D. overstated GDP price index. 40. GDP data are criticized as being inaccurate measures of economic well-being because: A. they do not take into account the distribution of output B. they do not take into account all changes in product quality. C. they do not take into account the adverse effects of economic activity on the environment. D. of all of these criticisms. 41. The National Income and Product Accounts (NIPA) help economists and policymakers to: A. determine which firms are likely to succeed or fail. B. follow the long-run course of the economy to determine whether it has grown, contracted, or stagnated. C. measure what is occurring in each specific labor market. D. accomplish none of these. 42. Which of the following statements best describes price flexibility in the economy? A. Prices tend to be sticky in the short run and stuck in the long run. B. Prices tend to be just as sticky in the short run as in the long run. C. Prices tend to be sticky in the short run, but become more flexible over time. D. Prices tend to be flexible in the short run, but become more sticky over time. 43. Demand shocks: A. refer to unexpected changes in the desires of households and businesses to buy goods and services. B. refer to unexpected changes in the ability of firms to produce and sell goods and services. C. always have a negative impact on the economy. D. cause fewer short-run fluctuations than supply shocks.44 Oprice A: OP, Quantity The figure above depicts a situation where: A. prices are sticky, but output is constant. B. prices are flexible, but output is constant. C. prices and output are both flexible. D. prices are sticky, and output is flexible. 45. Refer to the figure in question 44 and assume current demand is D3. Assuming this market is representative of the economy as a whole, a negative demand shock will most likely: A. cause inflation. B. lower output and increase unemployment. C. lower prices, but leave output unaffected. D. reduce both prices and output. See the PowerPoint on Notable Economic Thinkers to answer the three questions below. 46. Which of the following economists is considered the 'father or capitalism', first articulated how a market economy would work in a book titled The Wealth of Nations, and coined the phrase 'the invisible hand'? A. Keynes B. Marx C. Smith D. Friedman 47. Which of the following economists wrote The General Theory during the period of the Great Depression and is considered to be the father of modern macroeconomic science? A. Keynes B. Marx C. Smith D. Friedman 48. Which of the following economists lived during the 1800s, wrote Das Kapital, and was a critic of the capitalist economic system? A. Keynes B. Marx C. Smith D. Friedman