Macroeconomics, 11e (Gordon)
Chapter 2 The Measurement of Income, Prices, and Unemployment
3) GDP can be measured by the
A) total value of all sales in the economy.
B) total market value of final goods and services produced in the economy.
C) total value of all intermediate goods produced in the economy.
D) net national product plus investment.
5) Market prices are used to measure each final good included in the GDP. Therefore, the GDP ________ wellbeing if ________.
A) overstates; pollution results when the good is produced
B) understates; pollution results when the good is produced
C) overstates; rich people buy the good
D) understates; poor people buy the good
7) Which of the following is NOT an injection?
A) the state of Illinois builds a new courthouse
B) Kansas farmers sell 1 million bushels of wheat to Russia
C) the Smithsonian Institute purchases Chris Evert Lloyd's tennis racket
D) an accountant purchases a new personal computer for use in his office
Figure 2-1
8) Assuming a closed economy (i.e., NX = O) the data in Figure 2-1 suggest that for each year after 1980
A) private saving could have been either positive or negative.
B) private saving was negative.
C) private saving was positive.
D) private saving equaled zero.
11) Suppose that steel produced this year is used to produce a car sold next year. The value of the steel ________
included in GDP this year as ________.
A) is; an intermediate good
B) is not; an intermediate good
C) is; an adjustment to inventories
D) is not; an adjustment to inventories
13) If nominal GDP increases, which of the following will always take place?
A) Output will have increased but prices will have fallen or remained the same.
B) Prices will have increased but output will have fallen or remained the same.
C) Both output and prices will have increased.
D) none of the above
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14) If real GDP has increased, which of the following statements is always true?
A) Nominal GDP has increased.
B) Output has increased.
C) Prices have remained the same.
D) Output might have decreased if prices have risen enough.
15) Suppose that nominal GDP were $1200 billion in 1990 and $2000 billion in 1995. The implicit GDP deflator
was 1.00 in 1990 and 1.50 in 1995. From this we can infer that, between 1990 and 1995
A) nominal GDP rose by 33%.
B) prices rose by 66%.
C) real GDP remained constant.
D) real GDP rose by about 11%.
19) Which of the following is not a leakage?
A) import of a Toyota
B) export of a Cadillac
C) personal saving
D) indirect business taxes
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Table 2-2
83) Refer to above Table 2-2. What is the nominal GDP in year 2?
A) $18.60
B) $14.60
C) $18.00
D) 400 units
84) Refer to above Table 2-2. What are the constant-dollar expenditures in years 1 and 2 at fixed year 1 prices?
A) $5.00, $7.80
B) $14.00, $14.60
C) $18.00, $18.60
D) $9.00, $10.80
85) Refer to above Table 2-2. What are the constant-dollar expenditures in years 1 and 2 at fixed year 2 prices?
A) $14.00, $14.60
B) $7.90, $13.50
C) $18.00, $18.60
D) $12.80, $19.80
86) Refer to above Table 2-2. What is the increase in real GDP between years 1 and 2 at fixed year 1 prices?
A) 4.3%
B) 3.3%
C) 2.5%
D) 1.9%
87) Refer to above Table 2-2. What is the increase in real GDP between years 1 and 2 at fixed year 2 prices?
A) 2.1%
B) 5.1%
C) 4.4%
D) 3.3%
91) Refer to above Table 2-2. The implicit GDP deflator for year 2 is
A) 1.284
B) 1.432
C) 1.101
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D)1.334
Macroeconomics, 11e (Gordon)
Chapter 3 Spending, Income, and Interest Rates
Figure 3-1
7) Employing Figure above, autonomous consumption expenditures are ________, and the marginal propensity
to consume is ________.
A) 200; 0.75
B) 500; 1
C) 200; 0.60
D) 0; 1
8) As used in this text, "autonomous" variables are
A) spontaneous variables that are completely unpredictable.
B) completely independent of income, although they can be explained by movements in other variables.
C) determined only by income levels.
D) the same as endogenous variables.
9) The multiplier measures the
A) number of steps it takes to move from one equilibrium to another.
B) rise in saving resulting from a rise in income.
C) marginal propensity to invest.
D) rise in equilibrium GDP resulting from a one dollar rise in planned autonomous expenditures.
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11) The size of the multiplier depends in part on the
A) level of autonomous expenditures.
B) change in autonomous consumption.
C) level of consumption.
D) marginal propensity to consume.
12) If disposable income increases by $100 and consumption increased by $85, ceteris paribus, we may conclude
that
A) the marginal propensity to consume is 0.85.
B) the marginal propensity to consume is 0.15.
C) $15 is autonomous consumption.
D) a change in disposable income is induced by a change in consumption.
13) If disposable income increases by $100 and saving increased by $25, ceteris paribus, we may conclude that
A) the marginal propensity to consume is 0.25.
B) the marginal propensity to save is 0.25.
C) $15 is autonomous consumption.
D) a change in disposable income is induced by a change in consumption.
14) In the simple Keynesian model of the determination of income, planned investment is
A) an endogenous parameter.
B) autonomous and thus an exogenous parameter.
C) explained by the model of income determination.
D) None of the above.
17) An exogenous rise in government expenditures will have the same effect on GDP as an equal rise in either
autonomous ________ or autonomous ________.
A) consumption; investment
B) taxes; consumption
C) savings; investment
D) taxes; investment
19) A rise in the income tax rate will
A) raise the multiplier and raise equilibrium income.
B) lower the multiplier and raise equilibrium income.
C) raise the multiplier and lower equilibrium income.
D) lower the multiplier and lower equilibrium income.
20) Assume that all taxes are lump-sum, net exports = 0, and the marginal propensity to consume is 0.8. Then, if
investment and taxes were each to fall by $100 million, the equilibrium level of income would
A) rise by $100 million.
B) fall by $100 million.
C) rise by $500 million.
D) fall by $500 million.
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Figure 3-2
21) Employing the information in the figure above, when real disposable income is 1000, savings from
households would be ________ and the marginal propensity to save would be ________.
A) 300; 0.1
B) 100; 0.2
C) 100; 0.1
D) 500; 0.2
Assume that the level of autonomous consumption in an economy equals 400, the level of planned investment = 200, G =
0, T = 0, NX = 0, and the marginal propensity to consume is 0.6.
22) Refer to the information above. What is the level of consumption when the level of income equals 2000?
A) 600
B) 1000
C) 1600
D) 2000
23) Refer to the information above. What is the equilibrium level of GDP?
A) 600
B) 1000
C) 1500
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D) 1800
Chapter 3 Problem 1 and problem 2
Chapter 1 Problem 1
Chapter 2 Q2, 3
Chapter 2 Problem 2,5,7
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