Multiple choice questions

1.The three approaches to measuring economic activity (i.e. GDP) are the

a.cost, income, and expenditure approaches

b.product, income, and expenditure approaches c.consumer, business, and government approaches d.private, public, and international approaches

2. Which of the following goods is directly counted in GDP?

a.the lettuce that Subway purchases for its sandwiches

b.the bread that Subway purchases for its sandwiches c.12-inch Subway sandwich purchased by a student d.the plastic bags that Subway purchases to wrap its sandwiches

3. Suppose the current level of output is 5000. If the income share of capital and labor are 0.3 and 0.7, respectively, a 10% increase in capital combined with a 5% increase in labor and a 5% increase in productivity would increase the current level of output to

a.5015

b.5325

c.5575

d.6000

4. In the Solow model, if productivity doesn't change,

a.the economy must eventually reach a steady state.

b.the capital-labor ratio must decline

c.the capital-labor ratio must rise.

d.there can be no saving