MEAP Practice Quiz

Quiz: PRACTICE QUIZ I (2015-17) # Correct Answers: 7 # Incorrect Answers: 1 # Blank Answers:12 Points Awarded: 6.75 QN o 1

Question Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. Suppose nominal GDP increased in a given year. Based on this information, we know with certainty that:

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real output has increased.

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the price level (GDP deflator) has increased.

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real output and the price level (GDP deflator) have both increased.

4

either real output or the price level (GDP deflator) have increased.

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real output has increased and the price level has decreased. Correct Answer: 4 Your Answer: 4 Points Awarded: 1

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. Use the following information to answer this question. If nominal GDP rises from $100 trillion to $120 trillion, while the GDP deflator rises from 2.0 to 2.2, the percentage change in real GDP is approximately equal to:

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-10%

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10%

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20%

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9.1%

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0% Correct Answer: 5 Your Answer: 0 Points Awarded: 0

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. In a given year, suppose a company spends $100 million on intermediate goods and $200 million on wages, with no other expenses. Also assume that

its total sales are $800 million. The value added by this company equals:

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$200 million.

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$300 million.

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$500 million.

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$700 million.

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$800 million. Correct Answer: 4 Your Answer: 4 Points Awarded: 1

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. A firm's value added equals:

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its revenue minus all of its costs.

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its revenue minus its wages.

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its revenue minus its wages and profit.

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its revenue minus its cost of intermediate goods.

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none of the above Correct Answer: 4 Your Answer: 4 Points Awarded: 1

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. The GDP deflator provides a measure of which of the following?

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the ratio of GDP to the size of the population.

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the ratio of GDP to the number of workers employed.

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the ratio of nominal GDP to real GDP.

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the price of a typical consumer's basket of goods.

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real GDP divided by the aggregate price level. Correct Answer: 3 Your Answer: 3 Points Awarded: 1

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. Which of the following calculations will yield the correct measure of real GDP?

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divide nominal GDP by the consumer price index.

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divide the GDP deflator by the consumer price index.

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multiply nominal GDP by the consumer price index.

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multiply nominal GDP by the GDP deflator.

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none of the above Correct Answer: 5 Your Answer: 4 Points Awarded: -0.25

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. GDP in current dollars is equivalent to which of the following?

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real GDP

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GDP in terms of goods

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GDP in 2000 dollars

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GDP in constant dollars

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none of the above Correct Answer: 5 Your Answer: 5 Points Awarded: 1

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. Suppose nominal GDP in 2009 does not change (compared its previous level in 2008). Given this information, we know with certainty that:

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real GDP increased during 2009

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the GDP deflator increased during 2009

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both the GDP deflator and real GDP fell during 2009

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more information is needed to answer this question Correct Answer: 4 Your Answer: 4 Points Awarded: 1

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. Imagine that an economy produces two goods, apple pies and bird feeders. In 2007, the economy produced 60 apple pies and 30 bird feeders, and the prices of apple pies and bird feeders were $6 and $10, respectively. In 2008, the economy produced 80 apple pies and 35 bird feeders, and the prices of apple pies and bird feeders were $7 and $12, respectively. Which of the following represent the nominal and real GDP growth between 2007 and 2008

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18, 26

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18, 48

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48, 18

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26, 18

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48, 26 Correct Answer: 5 Your Answer: 0 Points Awarded: 0

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. The prices for which of the following goods are included in both the GDP deflator and the consumer price index?

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goods bought by households.

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goods bought by firms.

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good bought by governments.

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goods bought by foreign households (i.e., exports).

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all of the above. Correct Answer: 1 Your Answer: 1 Points Awarded: 1

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. Suppose we switch the base year from 2000 to 2008. This change in the base year will cause:

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nominal GDP in every year to increase.

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nominal GDP in every year to decrease.

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both nominal and real GDP in every year to decrease.

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real GDP in every year to decrease.

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none of the above Correct Answer: 5 Your Answer: 0 Points Awarded: 0

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. If an American construction company built a road in Kuwait, this activity would be

0 I do not want to answer this Question 1 excluded from U.S. GNP.

2 fully included in U.S. GDP. 3 included in U.S. GNP only for that portion that was attributable to American capital and labor. 4 included in U.S. GDP but not in U.S. GNP. Correct Answer: 3 Your Answer: 0 Points Awarded: 0 13

Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. Fred the farmer purchased five new tractors at $20,000 each. Fred sold his old tractors to other farmers for $50,000. The net increase in GDP of these transactions was

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$50,000.

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$100,000.

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$125,000.

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$150,000. Correct Answer: 2 Your Answer: 0 Points Awarded: 0

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. Inventories include each of the following EXCEPT

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unsold finished goods.

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goods in process.

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raw materials held by firms.

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office equipment. Correct Answer: 4 Your Answer: 0 Points Awarded: 0

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. Monica grows coconuts and catches fish. Last year she harvested 1500 coconuts and 600 fish. She values one fish as having a worth of three coconuts. She gave Rachel 300 coconuts and 100 fish for helping her to harvest coconuts and catch fish, all of which were consumed by Rachel. Monica consumed the remaining fish and coconuts. In terms of fish, total consumption by both Monica and Rachel would equal

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700 fish.

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900 fish.

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1100 fish.

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2700 fish. Correct Answer: 3 Your Answer: 0 Points Awarded: 0

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. Carl's Computer Center sells computers to business firms. Businesses then use the computers to produce other goods and services. Over the past year, sales representatives were paid $3.5 million, $0.5 million went for rent on the building, $0.5 million went for taxes, $0.5 million was profit for Carl, and $10 million was paid for computers at the wholesale level. What was the firm's total contribution to GDP?

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$5 million

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$10 million

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$15 million

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$4.5 million

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$0.5 million Correct Answer: 1 Your Answer: 0 Points Awarded: 0

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. In one year in the country of Countem, workers earned $4150, proprietor's income was $392, rental income was $20, corporate profits were $683, net interest was $228, taxes on production and imports were $329, business current transfer payments were $12, the current surplus of government enterprises was $3, statistical discrepancy was $28, consumption of fixed capital was $882, factor income received from the rest of the world was $331, and payments of factor income to the rest of the world was $623. Based on these data, the national income, net national product, gross national product, and gross domestic product figures would be

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5817, 5845, 7019, 6727

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7019,6727, 5845, 5589

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5589, 6073, 6727, 7019

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5817, 5845, 6727, 7019

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6727, 7019, 5815, 5844 Correct Answer: 3 Your Answer: 0 Points Awarded: 0

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks.

Which of the following markets is closely related to macroeconomics?

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Cattle futures market.

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Fulton's fish market.

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Skilled labor market

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Nation's unemployment rate Correct Answer: 4 Your Answer: 0 Points Awarded: 0

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. Which of the following expenditures would be included in GDP for this year?

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The purchase of a new car.

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The purchae of a new tyre by General Motors for a new car.

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The purchase of a used car.

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All of the above would be included. Correct Answer: 1 Your Answer: 0 Points Awarded: 0

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Each correct answer carries 1 mark and each wrong answer carries 0.25 negative marks. New residential housing is counted in GDP as a(n):

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durable consumption good.

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household durable good.

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investment good.

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inventory expansion.

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long-term durable good. Correct Answer: 3 Your Answer: 0 Points Awarded: 0