Name: ________________________ Class: ___________________ Date: __________
ID: A
Modules 10-11 Worksheet: Measurement of Economic Performance (GDP) Multiple Choice Identify the choice that best completes the statement or answers the question. ____
1. The simplest circular-flow model shows the interaction between households and firms. In this model: A. only barter transactions take place. B. households and firms interact in the market for goods and services, but firms are the only participants in the factor markets. C. firms supply goods and services to households, which, in turn, supply factors of production to firms. D. attention is focused on “real” flows of goods, services, and factors of production, but money flows between households and firms are ignored for simplicity. E. firms supply factors of production to households, which, in turn, supply goods and services to the firms.
____
2. The circular-flow diagram illustrates how households ________ goods and services and ________ factors of production. A. buy; sell B. buy; buy C. own; buy D. own; sell E. sell; buy
____
3. The circular-flow diagram illustrates how firms ________ goods and services and ________ factors of production. A. buy; sell B. buy; buy C. sell; buy D. sell; sell E. buy; own
____
4. Which are the two markets represented in the simplest circular-flow diagram? A. The market for goods and services and the market for factors of production. B. The markets for households and firms. C. The market for money and the market for goods and services. D. The market for factors of production and the market for money. E. The market for goods and services and the market for human capital.
____
5. According to the circular flow diagram, which of the following economic agents engages in consumer spending? A. firms B. households C. factor markets D. financial markets E. government
1
Name: ________________________
ID: A
____
6. Total income households have after paying taxes and receiving government transfers is called: A. disposable income. B. private savings. C. aggregate spending. D. investment. E. gross income.
____
7. In the circular flow model, households: A. receive transfer payments from the government. B. buy resources in the factor markets. C. sell products in the market for goods and services. D. issue stocks and bonds to raise capital. E. pay taxes to the firms in the market for goods and services.
____
8. An example of a government transfer is a(n): A. expenditure on an interstate highway. B. bequest from a deceased relative. C. Social Security payment. D. salary for members of the armed forces. E. salary earned as an economist with a government agency.
____
9. Investment spending represents spending on: A. raw materials. B. stocks. C. mutual funds. D. corporate bonds. E. productive physical capital.
____ 10. If we add up the consumer spending on goods and services, investment spending, government purchases of goods and services, and the value of exports, then subtract the value of imports, we have measured the nation's _____. A. disposable income. B. gross domestic product. C. trade deficit. D. value added. E. national debt. ____ 11. Which of the following represents an outflow of funds from a domestic economy? A. household savings in domestic banks. B. government tax collections from domestic households and firms. C. government transfer payments to domestic households and firms. D. domestic spending on imported goods. E. investment spending by domestic firms. ____ 12. Gross domestic product is defined as: A. consumer spending + government purchases + financial spending + exports – imports. B. consumer spending + government transfers + investment spending + exports – imports. C. disposable income + taxes + investment spending + exports + imports. D. consumer spending + government purchases + investment spending + exports – imports. E. consumer spending + government purchases + investment spending + imports– exports. 2
Name: ________________________
ID: A
____ 13. Gross domestic product or GDP is: A. the total dollar value of intermediate goods and services produced in the economy in a given time period. B. the total dollar value of wages paid to producing workers in a given time period. C. the total dollar value of household income earned in a given time period. D. the total dollar value of government production in a given time period. E. the total dollar value of final goods and services produced in the economy in a given time period. ____ 14. Which one of the following transactions is included in a current year's GDP as investment spending? A. ABC company purchased 10,000 shares of IBM stock. B. Ronnie bought a new BMW. C. Anton purchased his friend's condo. D. Maggie bought a play-gym set for her day-care business. E. Melanie bought a new washing machine for her condominium. Rent $2,400 Consumption Spending 7,900 Social Security Benefit 6,100 Investment Spending 2,100 Wages and Salaries 6,500 Exports 800 Interest 1,900 Government Purchases of 2,600 goods and services Profits 1,400 Imports 1,200 Purchase of stocks 6,300 Unemployment 3,950 Compensation Payroll Taxes 2,965 Sales Taxes 1,300 Table 10-1: Calculating GDP ____ 15. Use Table 10-1. Using the information in the table provided, which of the following is the correct calculation for GDP in 2008? A. $47,475 B. $12,200 C. $21,485 D. $34,085 E. $12,600
3
Name: ________________________
ID: A
____ 16. Which one of the following is an example of consumption spending that would be counted toward GDP this year? A. Samantha bought an oven for her cooking show on Food Network. B. Stephanie bought a laptop for her brother. C. Jim purchased 200 shares of Google stock. D. Mr. Smith spent $1500 to buy a used car for his son. E. Eli invested $2000 in a mutual fund through his employer. Consumption Spending $65 Rental Income 10 Interest 35 Profit 20 Investment Spending 15 Wages 29 Government Purchases 18 Imports 7 Exports 3 Table 10-2: Elistan GDP ($ billions) ____ 17. Use Table 10-2. The GDP for Elistan is: A. $94 billion. B. $188 billion. C. $168 billion. D. $139 billion. E. $108 billion. ____ 18. Suppose that in 2008, consumption spending is $7,000, government purchasing is $2,000 and investment spending is $1,500. If GDP for 2008 is $10,300, then: A. Spending on exports is $400 and spending on imports is $200. B. Spending on exports is $100 and spending on imports is $200. C. Spending on exports is $600 and spending on imports is $800. D. Spending on exports is $500 and spending on imports is $300. E. Spending on exports is $500 and spending on imports is $500. ____ 19. An example of an intermediate good will be: A. wages paid to an employee. B. steel purchased by the aircraft manufacturers. C. vegetables purchased for your dinner. D. electric bills for the office. E. trucks purchased by the postal service. ____ 20. The intermediate goods are not counted in the calculation of GDP, because: A. that involves double-counting. B. these goods are not produced for the market. C. these are produced in the underground economy. D. these goods involve financial transactions. E. these goods were not produced in the current year.
4
Name: ________________________
ID: A
____ 21. Which of the following best represents the expenditure approach for computing GDP? A. GDP = C+ I + G – X + IM B. GDP = C + I + G + X – IM C. GDP = C + I + G + Taxes – Value Added D. GDP = C + I + G + Taxes + X + IM E. GDP = C + I + G + Taxes – Transfers + X - IM ____ 22. Suppose a consumer buys a frozen cheese pizza at the grocery store at a price of $10. The frozen pizza company sold the pizza to the store for $5. The frozen pizza company purchased the pizza dough and tomato sauce from a food processing company at a price of $2 and bought the cheese from a dairy at a price of $1. How much has GDP increased? A. $2 B. $5 C. $10 D. $18 E. $15 ____ 23. Real GDP is nominal GDP adjusted for: A. double counting. B. changes in prices. C. population. D. imports. E. interest rates. ____ 24. Consider an economy that only produces two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each, while this year 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Nominal GDP this year is: A. $100. B. $650. C. $700. D. $500 E. $1,350 ____ 25. Consider an economy that only produces two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each, while this year 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Real GDP this year using last year as the base year is: A. $100. B. $700. C. $1,300. D. $300 E. $650
5
Name: ________________________ Product Peanut Butter Jelly
ID: A
2008 Output
2008 Prices Product 2009 Output (base year) 200 units $1 per unit Peanut Butter 250 100 units $2 per unit Jelly 100 Table 11-1: Peanut Butter and Jelly Economy
2009 Prices $1.10 $2.50
____ 26. Use Table 11-1. A simple economy produces only peanut butter and jelly. Using the data in the attached table, nominal GDP in 2009 was ____ and real GDP in 2009 was _____. A. $450; $400 B. $525; $450 C. $525; $400 D. $450; $575 E. $500; $450 ____ 27. Use Table 11-1. A simple economy produces only peanut butter and jelly. Using the data in the attached table, from 2008 to 2009 real GDP ____ by _____%. A. increased; 12.5 B. decreased; 50 C. increased; 43.75 D. decreased; 12.5 E. increased; 50 Year 1 2 3 4 5 6
Units of Price per Unit Output 40 $1 30 2 50 2 70 4 60 6 60 8 Table 11-3: Real and Nominal Output
____ 28. Use Table 11-3. Nominal GDP in Year 4 is equal to: A. $40. B. $60. C. $100. D. $280. E. $70. ____ 29. Use Table 11-3. The year in which the increase in nominal GDP is exclusively due to the increase in the price level rather than physical output is Year: A. 2. B. 3. C. 4. D. 6. E. 5.
6
Name: ________________________
ID: A
____ 30. Use Table 11-3. Nominal GDP in Year 2 is equal to: A. $40. B. $60. C. $100. D. $280. E. $30. ____ 31. If the price level in the economy and the nominal wages both doubled, then the real wages would: A. also double. B. increase by 50%. C. decrease by 20%. D. decrease by 50%. E. remain unchanged. ____ 32. Nominal GDP is: A. the inflation adjusted GDP. B. the real GDP minus depreciation. C. the current dollar GDP. D. the constant dollar GDP. E. the future dollar GDP. The town of York produces two goods, Good A and Good B. The following is information regarding York's production of these two goods and their prices for three consectutive years. Year 2006 Year 2007 Year 2008 Quantity of Good A 3 4 5 Price of Goods A $500 $550 $550 Quantity of Good B 10 10 10 Price of Good B $2 $4 $5 Scenario 11-1: Good A and Good B ____ 33. Use Scenario 11-1. In 2007, nominal GDP is: A. greater than the nominal GDP in 2008. B. greater than the nominal GDP in 2006. C. equal to the nominal GDP in 2008. D. equal to the nominal GDP in 2006. E. less than the nominal GDP in 2006. ____ 34. Use Scenario 11-1. Using 2006 as the base year, then one would find that the real GDP in 2006: A. is equal to the real GDP in 2007. B. is equal to the nominal GDP in 2006. C. is greater than the real GDP in 2007. D. is greater than the real GDP in 2008. E. is the same as real GDP in 2007.
7
Name: ________________________
ID: A
____ 35. Per-capita GDP is calculated by A. adjusting GDP for inflation. B. converting domestic GDP into a foreign currency. C. dividing GDP by the price level. D. dividing GDP by the number of employed persons. E. dividing GDP by the population.
8
ID: A
Modules 10-11 Worksheet: Measurement of Economic Performance (GDP) Answer Section MULTIPLE CHOICE 1. ANS: MSC: 2. ANS: MSC: 3. ANS: MSC: 4. ANS: MSC: 5. ANS: MSC: 6. ANS: MSC: 7. ANS: MSC: 8. ANS: MSC: 9. ANS: MSC: 10. ANS: MSC: 11. ANS: MSC: 12. ANS: MSC: 13. ANS: MSC: 14. ANS: MSC: 15. ANS: MSC: 16. ANS: MSC: 17. ANS: MSC: 18. ANS: MSC: 19. ANS: MSC: 20. ANS: MSC:
C PTS: Fact-Based A PTS: Fact-Based C PTS: Fact-Based A PTS: Fact-Based B PTS: Fact-Based A PTS: Definitional A PTS: Fact-Based C PTS: Concept-Based E PTS: Definitional B PTS: Definitional D PTS: Concept-Based D PTS: Definitional E PTS: Definitional D PTS: Concept-Based B PTS: Critical Thinking B PTS: Concept-Based A PTS: Critical Thinking C PTS: Analytical Thinking B PTS: Critical Thinking A PTS: Concept-Based
1
DIF:
M
REF: Module 10
1
DIF:
M
REF: Module 10
1
DIF:
M
REF: Module 10
1
DIF:
E
REF: Module 10
1
DIF:
E
REF: Module 10
1
DIF:
E
REF: Module 10
1
DIF:
M
REF: Module 10
1
DIF:
M
REF: Module 10
1
DIF:
E
REF: Module 10
1
DIF:
E
REF: Module 10
1
DIF:
M
REF: Module 10
1
DIF:
E
REF: Module 10
1
DIF:
E
REF: Module 10
1
DIF:
M
REF: Module 10
1
DIF:
M
REF: Module 10
1
DIF:
M
REF: Module 10
1
DIF:
M
REF: Module 10
1
DIF:
D
REF: Module 10
1
DIF:
M
REF: Module 10
1
DIF:
E
REF: Module 10
1
ID: A 21. ANS: MSC: 22. ANS: MSC: 23. ANS: MSC: 24. ANS: MSC: 25. ANS: MSC: 26. ANS: MSC: 27. ANS: MSC: 28. ANS: MSC: 29. ANS: MSC: 30. ANS: MSC: 31. ANS: MSC: 32. ANS: MSC: 33. ANS: MSC: 34. ANS: MSC: 35. ANS: MSC:
B PTS: Fact-Based C PTS: Critical Thinking B PTS: Definitional B PTS: Analytical Thinking C PTS: Analytical Thinking B PTS: Analytical Thinking A PTS: Analytical Thinking D PTS: Critical Thinking D PTS: Critical Thinking B PTS: Critical Thinking E PTS: Critical Thinking C PTS: Definitional B PTS: Analytical Thinking B PTS: Analytical Thinking E PTS: Definitional
1
DIF:
M
REF: Module 10
1
DIF:
M
REF: Module 10
1
DIF:
E
REF: Module 11
1
DIF:
D
REF: Module 11
1
DIF:
D
REF: Module 11
1
DIF:
D
REF: Module 11
1
DIF:
D
REF: Module 11
1
DIF:
E
REF: Module 11
1
DIF:
M
REF: Module 11
1
DIF:
E
REF: Module 11
1
DIF:
M
REF: Module 11
1
DIF:
E
REF: Module 11
1
DIF:
M
REF: Module 11
1
DIF:
M
REF: Module 11
1
DIF:
E
REF: Module 11
2
Modules 10-11 Worksheet: Measurement of Economic Performance (GDP) [Answer Strip] A _____ 6.
E 13. _____
B 16. _____
B 21. _____
C _____ 1. C 22. _____
A _____ 7. D 14. _____
C _____ 8.
A _____ 2.
B 23. _____
A 17. _____
E _____ 9.
B 24. _____ C _____ 3. C 18. _____
B 10. _____
A _____ 4.
C 25. _____ B 15. _____
B 19. _____
D 11. _____
B _____ 5. A 20. _____ D 12. _____
ID: A
Modules 10-11 Worksheet: Measurement of Economic Performance (GDP) [Answer Strip] B 30. _____
B 26. _____
A 27. _____
E 31. _____
C 32. _____
B 33. _____ D 28. _____
B 34. _____ D 29. _____
E 35. _____
ID: A
