Question: Answer the following multiple choice.

A- Most goods and services produced at home

1- are excluded from GDP while most goods and services produced illegally are included in GDP

2- and most goods and services produced illegally are included in GDP.

3- and most goods and services produced illegally are excluded from GDP.

4- are included in GDP while most goods and services produced illegally

B- Which of the following items is included in U.S. GDP?

1- None of the above is included in U.S. GDP.

2- the difference in the price of the sale of an existing home and its original purchase price

3- goods produced by foreign citizens working in the United States

4- known illegal activities

C- If an economy's GDP falls, then it must be the case that the economy's

1- income and expenditure both fall.

2- income falls and expenditure rises.

3- income falls and saving rises.

4- income and saving both fall.

D- Social Security payments (transfer payment) are

1-excluded from GDP because they reflect economy's production.

2-included in GDP because they represent potential consumption.

3-excluded from GDP because they do not reflect the economy's production.

4-included in GDP because they represent current income.

E- When the consumer price index falls, the typical family

1- finds that its standard of living is not affected.

2- can save less because they do not need to offset the effects of rising prices.

3- can spend fewer dollars to maintain the same standard of living.

4- has to spend more dollars to maintain the same standard of living.

F- The price index was 220 in one year and 238.2 in the next year. What was the inflation rate?

1- 8.3 percent

2- 4.8 percent

3- 38.2 percent

4- 108.3 percent

G- The CPI differs from the GDP deflator in that

1- substitution bias is not a problem with the CPI, but it is a problem with the GDP deflator.

2- increases in the prices of domestically produced goods that are sold to the U.S. government show up in the CPI but not in the GDP deflator.

3- the CPI is a price index, while the GDP deflator is an inflation index.

4- increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the CPI but not in the GDP deflator.

H- Adam and Doug both build birdhouses. Adam works 30 hours a week and produces 15 bird houses. Doug works 20 hours a week and produces 12 bird houses. Which of the following is correct?

1- Doug's production and productivity are higher than Adam's.

2- Adam's production is higher than Doug's, but Doug's productivity is higher than Adam's.

3- Adam's production and productivity are higher than Doug's.

4 - Doug's production is higher than Adam's, but Adam's productivity is higher than Doug's.

I- Technological knowledge refers to

1- human capital.

2- available information on how to produce things.

3- resources expended transmitting society's understanding to the labor force.

4- All of the above are technological knowledge.

J- Which of the following is an example of human capital?

1- a student-desk

2- knowledge learned from reading books

3- training DVDs for new corporate employees

4- The car that you drive to school