Deck 20: GDP and the Price Level

Question 1

Which of the following transactions would NOT be included in GDP?

A) A business buys a new printer.
B) Someone buys existing shares of stock.
C) A government buys new military uniforms.
D) A sick person buys medical services.

Answer 1

B

Question 2

The market value of all final goods and services produced in a country in a given time period is the definition of:

A) gross domestic product.
B) gross national product.
C) national income.
D) consumer price index.

Answer 2

A

Question 3

GDP is defined as the:

A) total income earned in a country in a time period by all owners of resources.
B) market value of all final goods and services produced in a country in a time period.
C) market value of all goods and services purchased in a country in a time period.
D) total expenditures by citizens of a country in a time period.

Answer 3

B

Question 4

Which statement is true regarding GDP?

A) Purchases of intermediate goods are included as a specific category.
B) Purchases of used items are included.
C) The value of services that are purchased is included.
D) The market value of nonmarket production is included.

Question 5

The value of which of the following items is NOT included in GDP?

A) A haircut purchased at a barbershop
B) Piano lessons purchased by a parent for a child
C) A new textbook purchased by a university student
D) An old chair purchased at a yard sale

Question 6

The value of which of the following items would NOT be included in GDP?

A) Fabric purchased by a family
B) Fabric purchased by a shirt factory
C) A lawn mower purchased by a family
D) A lawn mower purchased by Joe's Lawn Services company

Question 7

What is a final good in the computation of GDP?

A) A new or used finished good that has been manufactured
B) A good that is used in the production of another good (such as buttons for shirts)
C) A good that is used or consumed at the end of a process (such as dessert after dinner)
D) A finished good that is being sold to end users

Question 8

What is an intermediate good?

A) A finished good that is used by consumers to produce at home (such as lettuce to make salad for dinner)
B) A product that is neither a luxury product with maximum features nor a basic product with minimal features but rather has an average amount of features
C) A finished good that is used as an input and that becomes part of another product (such as thread that becomes part of a shirt)
D) A product that is sold when it is only partly produced, allowing the buyer to finish production (such as a kit to make a birdhouse)

Question 9

Assume that Toyota, a Japanese company, has a factory in the United States that manufactures cars that are sold in the United States. The value of the cars sold is included in:

A) U.S. household income.
B) U.S. GDP.
C) Japan's household income.
D) Japan's GDP.

Question 10

A new Yamaha piano that was manufactured in Japan is purchased by an American at a music store in Ohio. This piano:

A) has no impact on Japan's GDP.
B) is reflected in both U.S. consumer purchases and U.S. imports in the computation of U.S. GDP.
C) is included in both Japan's consumer purchases and Japan's imports in computation of Japan's GDP.
D) is a U.S. export.

Question 11

Adjustments for business inventory of product or inputs that are accumulated or sold during a year helps to ensure the accuracy of GDP by ensuring that GDP:

A) reflects the current cost of production as the measure of the value of a product.
B) does not include intermediate goods or capital investments.
C) includes all of the time period's production.
D) eliminates double counting when products are imported.

Question 12

In the calculation of GDP, what is considered the country's output?

A) Output that is produced by resources owned by citizens of the country
B) Output that is produced by companies that are headquartered within the country regardless of where the output is produced
C) Output that is purchased by the citizens of the country regardless of where it is produced
D) Goods and services that are produced within the geographic boundaries of the country

Question 13

What time period is typically used for GDP measurements?

A) semi-annual (every six months)
B) monthly (every month) or annual (every 12 months)
C) biannual (every two years)
D) annual (every 12 months) or quarterly (every three months)

Question 14

Changes in which of the following would NOT cause the GDP of a country to change?

A) prices
B) population
C) mix of products in output
D) quantity of output

Question 15

A significant part of economic activity in developing nations occurs in the _____ economy, which consists of small businesses that largely are unreported, are unregulated, and lack property rights.

A) nonmarket
B) formal
C) underground
D) illegal

Question 16

In the field of economics, the acronym FRED stands for:

A) Federal Reference Economic Data.
B) Federal Reserve Economic Data.
C) Foreign Real Economic Deliveries.
D) Foreign Return on Economic Deliveries.

Question 17

Disposable personal income is:

A) earned income plus unearned income minus taxes.
B) total income minus both necessary expenses and taxes.
C) total income earned by all resource owners in a country.
D) total income earned in a country minus personal income taxes.

Question 18

Earned income plus unearned income minus taxes is a measure called:

A) personal income.
B) national income.
C) disposable personal income.
D) take-home income.

Question 19

Which of the following is NOT one of the problems with using GDP per capita to measure standard of living?

A) GDP does not include nonmarket production.
B) GDP does not account for the environmental and health impacts of production.
C) GDP does not account for the average amount of leisure time.
D) GDP does not include services.

Question 20

How does the average amount of nonmarket production affect living standards?

A) It results in goods and services for consumption that are not included in GDP. Living standards are higher than what is represented by GDP per capita.
B) It results in goods and services for consumption that increase GDP. GDP is higher than it would be without the nonmarket production.
C) It raises the prices of goods and services due to increased demand for them. This means that GDP and living standards appear higher even though the quantity of production is unchanged.
D) It has no impact on living standards because it is outside of the markets that determine how much people have to consume.

Question 21

Which of the following is NOT a component of GDP when calculated by the expenditure approach?

A) salaries
B) consumer purchases
C) government purchases
D) net exports

Question 22

Which of the following is NOT one of the three main approaches to measuring GDP?

A) expenditure approach
B) value-added approach
C) production approach
D) income approach

Question 23

Mathematically, GDP equals:

A) C + I + G - NX.
B) C + I + G + NX.
C) Y + C + G - NX.
D) Y + C + G + NX.

Question 24

The largest category of expenditures in U.S. GDP is:

A) consumption expenditures.
B) investment expenditures.
C) government expenditures.
D) net export expenditures.

Question 25

Which is NOT a category of expenditures in GDP?

A) investment expenditures
B) government purchases
C) net export expenditures
D) monetary expenditures

Question 26

A durable good is a product that:

A) does not wear out.
B) can be used by more than one consumer.
C) is expected to last more than one year.
D) cannot be destroyed.

Question 27

Which product would be classified as a durable good?

A) a vacation trip costing $3,000
B) groceries worth $4,000
C) prescription medicine worth $1,000
D) a refrigerator with a price of $2,000

Question 28

In the calculation of GDP, which is NOT included as part of investment?

A) purchases of new homes and apartment buildings
B) changes in stockpiles of final goods and raw materials
C) purchases of lawn mowers by households
D) spending by businesses on physical capital

Question 29

Which area of government spending is NOT included in government purchases in the calculation of GDP?

A) education
B) military
C) salaries of government employees
D) transfer payments

Question 30

Why does a country's net exports need to be part of the calculation of the country's GDP?

A) Both imports and exports need to be subtracted because both are produced abroad even though purchased within the country.
B) Both imports and exports need to be added into GDP because both are part of the country's output even though imports are sold abroad.
C) Exports are part of the country's production that need to be counted. Imports are part of the country's purchases but need to be subtracted because they are not part of the country's output.
D) Exports are not part of the country's production and need to be subtracted. Imports are part of the country's production and need to be included.

Question 31

How are a country's net exports calculated?

A) The value of imports is subtracted from the value of exports.
B) The average price of imports minus the average price of exports is multiplied by the quantity of exports.
C) The value of exports is subtracted from the value of imports.
D) The amount of exports is added to the amount of imports.

Question 32

(Table 1: Macroeocnomic Data for Macroland, 2018) Table 1 provides economic data for Macroland. What are Macroland's net exports?
$\begin{array}{l}\text { Table 1: Macroeconomic Data for Macroland, } 2018 \text { (in billions of dollars) }\\\begin{array}{|c|c|c|c|c|c|c|}\hline \text { Imports } & \begin{array}{c}\text { Investment } \\\text { Expenditures }\end{array} & \text { Savings } & \begin{array}{c}\text { Consumer } \\\text { Purchases }\end{array} & \text { Exports } & \begin{array}{c}\text { Consumer } \\\text { Price Index }\end{array} & \begin{array}{c}\text { Government } \\\text { Purchases }\end{array} \\\hline \$ 200 & \$ 600 & \$ 400 & \$ 2,000 & \$ 500 & 140 & \$ 700 \\\hline\end{array}\end{array}$

A) $700 billion
B) $300 billion
C) -$300 billion
D) -$700 billion

Question 33

(Table 1: Macroeconomic Data for Macroland, 2018) Table 1 provides economic data for Macroland. What is Macroland's GDP?
$\begin{array}{l}\text { Table 1: Macroeconomic Data for Macroland, } 2018 \text { (in billions of dollars) }\\\begin{array}{|c|c|c|c|c|c|c|}\hline \text { Imports } & \begin{array}{c}\text { Investment } \\\text { Expenditures }\end{array} & \text { Savings } & \begin{array}{c}\text { Consumer } \\\text { Purchases }\end{array} & \text { Exports } & \begin{array}{c}\text { Consumer } \\\text { Price Index }\end{array} & \begin{array}{c}\text { Government } \\\text { Purchases }\end{array} \\\hline \$ 200 & \$ 600 & \$ 400 & \$ 2,000 & \$ 500 & 140 & \$ 700 \\\hline\end{array}\end{array}$

A) $3,600 billion
B) $4,400 billion
C) $4,540 billion
D) $3,000 billion

Question 34

(Table 2: Data for Macroland, 2018) Table 2 provides economic data for Macroland. What is Macroland's GDP?
$\begin{array}{l}\text { Table 2: Data for Macroland. } 2018 \text { (in billions of dollars) }\\\begin{array}{|l|l|l|l|l|l|l|}\hline \text { Imports } & \begin{array}{l}\text { Investment } \\\text { Expenditures }\end{array} & \text { Savings } & \begin{array}{l}\text { Consumer } \\\text { Purchases }\end{array} & \text { Exports } & \begin{array}{l}\text { Consumer } \\\text { Price Index }\end{array} & \begin{array}{l}\text { Government } \\\text { Purchases }\end{array} \\\hline \$ 300 & \$ 700 & \$ 400 & \$ 2,800 & \$ 400 & 130 & \$ 800 \\\hline\end{array}\end{array}$

A) $4,200 billion
B) $5,530 billion
C) $5,400 billion
D) $4,400 billion

Question 35

(Table 2: Data for Macroland, 2018) Table 2 provides economic data for Macroland. What are Macroland's net exports?
$\begin{array}{l}\text { Table 2: Data for Macroland. } 2018 \text { (in billions of dollars) }\\\begin{array}{|l|l|l|l|l|l|l|}\hline \text { Imports } & \begin{array}{l}\text { Investment } \\\text { Expenditures }\end{array} & \text { Savings } & \begin{array}{l}\text { Consumer } \\\text { Purchases }\end{array} & \text { Exports } & \begin{array}{l}\text { Consumer } \\\text { Price Index }\end{array} & \begin{array}{l}\text { Government } \\\text { Purchases }\end{array} \\\hline \$ 300 & \$ 700 & \$ 400 & \$ 2,800 & \$ 400 & 130 & \$ 800 \\\hline\end{array}\end{array}$

A) $700 billion
B) $100 billion
C) -$100 billion
D) -$700 billion

Question 36

What is domestic content in relation to the U.S. GDP?

A) A product that was produced in the United States
B) A product that is used in a home and not by a business
C) The proportion of consumption in the United States that is produced within the U.S. and not abroad
D) The share of the total cost of a product produced within the U.S.

Question 37

The value-added method for computing GDP:

A) adds all income earned in the economy.
B) measures the value of all goods and services purchased in the economy.
C) measures the additional value to a product or raw material in each stage of production.
D) excludes exports.

Question 38

What is the difference between gross domestic product (GDP) and net domestic product (NDP)?

A) NDP = GDP / Price index
B) NDP = GDP + Net productivity adjustment
C) NDP = GDP + Net exports
D) NDP = GDP - Depreciation of capital

Question 39

(Table 3: Macroeconomic Data for Econia, 2018) What was Econia's national income in 2018?
$\text { Table 3: Macroeconomic Data for Econia, } 2018 \text { (billions of dollars) }$
$\begin{array}{|c|l|c|c|l|l|l|}\hline \begin{array}{l}\text { Government } \\\text { Purchases }\end{array} & \begin{array}{l}\text { Consumer } \\\text { Expenditures }\end{array} & \begin{array}{l}\text { Depreciation of } \\\text { Capital }\end{array} & \text { Investment } & \begin{array}{l}\text { Indirect } \\\text { Business } \\\text { Taxes }\end{array} & \begin{array}{l}\text { Net } \\\text { Exports }\end{array} & \begin{array}{l}\text { Personal } \\\text { Taxes }\end{array} \\\hline \$ 600 & \$ 1,000 & \$ 50 & \$ 400 & \$ 60 & -\$ 50 & \$ 120 \\\hline\end{array}$

A) $1,950 billion
B) $2,110 billion
C) $1,890 billion
D) $1,840 billion

Question 40

(Table 4: Market Basket Prices in Macroland) Table 4 shows the cost of a given market basket of goods and services in Macroland over a four-year period. Use this market basket to compute the price index for year 4 if the base year is year 1. The year 4 price index is:
$\begin{array}{l}\text { Table 4: Market Basket Prices in Macroland }\\\begin{array}{|l|l|l|l|l|}\hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } \\\hline \text { Cost of the market basket } & \$ 600 & \$ 640 & \$ 630 & \$ 660 \\\hline\end{array}\end{array}$

A) 107.
B) 110.
C) 4.7%.
D) 10.0%.

Question 41

(Table 4: Market Basket Prices in Macroland) Table 4 shows the cost of a given market basket of goods and services in Macroland over a four-year period. Based on the data, during which year did deflation occur?
$\begin{array}{l}\text { Table 4: Market Basket Prices in Macroland }\\\begin{array}{|l|l|l|l|l|}\hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } \\\hline \text { Cost of the market basket } & \$ 600 & \$ 640 & \$ 630 & \$ 660 \\\hline\end{array}\end{array}$

A) year 1
B) year 2
C) year 3
D) year 4

Question 42

A decline in the value of money occurs when _____ occurs.

A) output growth
B) deflation
C) inflation
D) inventory growth

Question 43

When inflation occurs, a unit of money will buy _____ amount of goods than before the inflation.

A) a larger
B) a smaller
C) the same
D) a more diverse

Question 44

When inflation occurs, the purchasing power of money:

A) rises.
B) falls.
C) remains the same.
D) could rise, fall, or remain the same.

Question 45

(Table 5: Price Index for Macroland) Table 5 provides the price index for Macroland for four years. What was the inflation rate in Macroland during year 4?
$\begin{array}{l}\text { Table 5: Price Index for Macroland }\\\begin{array}{|c|c|c|c|c|}\hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } \\\hline \text { Price index } & 140 & 150 & 158 & 162 \\\hline\end{array}\end{array}$

A) 5.7%
B) 2.5%
C) 4.0%
D) 15.7%

Question 46

Inflation is an increase in:

A) the price of a particular product.
B) the average price level in an economy.
C) the rate at which the price of a good rises.
D) output beyond the full-employment level.

Question 47

The consumer price index (CPI) is 150 in year 1, 156 in year 2, and 160 in year 3. What is the inflation rate for year 2? Round to nearest whole percentage.

A) 3%
B) 4%
C) 6%
D) 7%

Question 48

The consumer price index (CPI) is 150 in year 1, 156 in year 2, and 160 in year 3. What is the inflation rate for year 3? Round to nearest whole percentage.

A) 3%
B) 4%
C) 6%
D) 7%

Question 49

When inflation occurs:

A) the prices of all goods and services rise.
B) the purchasing power of money rises.
C) incomes are falling.
D) the average price level rises.

Question 50

(Table 5: Price Index for Macroland) Table 5 provides the price index for Macroland for four years. What was the inflation rate in Macroland during year 3?
$\begin{array}{l}\text { Table 5: Price Index for Macroland }\\\begin{array}{|c|c|c|c|c|}\hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } \\\hline \text { Price index } & 140 & 150 & 158 & 162 \\\hline\end{array}\end{array}$

A) 5.3%
B) 2.5%
C) 4.0%
D) 12.9%

Question 51

(Table 5: Price Index for Macroland) Table 5 provides the price index for Macroland for four years. What was the inflation rate in Macroland during year 2?
$\begin{array}{l}\text { Table 5: Price Index for Macroland }\\\begin{array}{|c|c|c|c|c|}\hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } \\\hline \text { Price index } & 140 & 150 & 158 & 162 \\\hline\end{array}\end{array}$

A) 5.3%
B) 10.0%
C) 7.1%
D) 22.0%

Question 52

Which of the following is NOT a cost of inflation?

A) unexpected redistribution of wealth and income
B) reduction in the value of cash that is held
C) higher real values of output
D) small inefficiencies from things like printing new price labels with higher prices

Question 53

The real value of income is:

A) the amount of goods and services that it will buy.
B) the dollar amount of the income.
C) the same as the nominal value of income.
D) usually higher than the nominal value of income.

Question 54

When people are living on a fixed income, inflation will:

A) increase the real value of their income.
B) increase the nominal value of their income.
C) decrease the real value of their income.
D) decrease the nominal value of their income.

Question 55

Inflation can cause small inefficiencies in an economy, such as the need to change price tags, reprint catalogs, and update websites. These inefficiencies are referred to as:

A) inflation tax.
B) nominal costs.
C) real costs.
D) menu costs.

Question 56

What statistic measures the average price level that is faced by citizens of a country as they make their household purchases?

A) GDP deflator
B) producer price index
C) gross national product
D) consumer price index

Question 57

What does CPI stand for?

A) current personal investment
B) calculated productivity investment
C) consumer price index
D) current price indicator

Question 58

Which of the following areas of bias are NOT included in the consumer price index?

A) new product bias
B) foreign production bias
C) quality improvement bias
D) substitution bias

Question 59

Which of the following is an example of substitution bias in the consumer price index?

A) Consumers buy more apples and fewer pears when apples rise in price more rapidly than pears.
B) Consumers buy more apples and fewer pears when pears rise in price more rapidly than apples.
C) Consumers rely increasingly on government transfer payments during times of high inflation.
D) The government substitutes consumer support for military support during times of high inflation.

Question 60

Which of the following is NOT a reason for why the pricing of new products can create a bias in the consumer price index?

A) The prices of new products often fall over time as efficiency in production increases.
B) The consumer price index market basket is not adjusted every year, and so it may not include new products.
C) The prices of new products often fall over time as they become more popular and are produced in larger quantities.
D) New products are a small portion of total products and thus have little impact on average prices.

Question 61

Which describes the product quality improvement bias in the consumer price index?

A) The quality often remains constant while the price continues to increase.
B) New versions of a product may have more features than older versions, and yet the price may not be higher.
C) New products become available and reduce the demand for old products.
D) Product quality tends to fall rather than rise with time even though price remains constant.

Question 62

A chain-weighted price index is different from the consumer price index because:

A) the market basket is not fixed but reflects the current mix of items purchased.
B) the new product bias is reduced.
C) a wider range of products is included beyond only consumer purchases.
D) chain-weighted indices follow the actual purchases of a select group of consumers over time.

Question 63

Changes in the producer price index tend to _____ changes in actual producer costs.

A) overstate
B) understate
C) lag behind
D) precede

Question 64

The price index that focuses on the prices of inputs and raw materials is known as the:

A) input price index.
B) manufacturer's price index.
C) input cost index.
D) producer price index.

Question 65

How does the consumer price index (CPI) differ from the personal consumption expenditure (PCE) index?

A) CPI data is collected quarterly, and PCE data is collected annually.
B) PCE data is adjusted for price changes, and; CPI data is not adjusted for price changes.
C) The CPI includes services in its market basket, and the PCE does not include services.
D) The PCE is chain-weighted, and the CPI has a fixed market basket.

Question 66

Which price index considers the prices of the largest number of goods and services?

A) consumer price index
B) personal consumption expenditure
C) chain-weighted consumption index
D) GDP deflator

Question 67

Trends over the last 70 years for the consumer price index (CPI), producer price index (PPI), and gross domestic product (GDP) deflator show that:

A) They exhibit identical patterns.
B) They have changed in similar but not identical patterns.
C) The GDP deflator has shown considerably higher inflation than the other two measures.
D) The producer price index has shown considerably higher inflation than the other two measures.

Question 68

Which price index tends to be the most volatile over time?

A) CPI
B) PCE
C) PPI
D) GDP deflator

Question 69

What is the difference between nominal GDP and real GDP?

A) There is no difference. They are two terms for the same thing.
B) Nominal GDP is always smaller than real GDP because it does not include price changes.
C) Nominal GDP changes when output changes. Real GDP changes when output or prices change.
D) Nominal GDP changes when prices or output change. Real GDP changes when output changes.

Question 70

A nation's output rises by 3%, and its average price level rises by 2%. This means that the nation's nominal GDP rises by _____ and real GDP rises by:

A) 5%; 3%.
B) 6%; 4%.
C) 6%; 3%.
D) 5%; 2%.

Question 71

Nominal GDP is measured in _____, and real GDP is measured in:

A) current market outputs; constant outputs.
B) constant outputs; current market outputs.
C) constant prices; current market prices.
D) current market prices; constant prices.

Question 72

(Table 6: Real GDP and Population Data) Table 6 provides data on real GDP, population, and the GDP deflator measures for four countries for 2018. What was GDP per capita in country C in 2018?
$\begin{array}{l}\text { Table 6: Real GDP and Population Data, } 2018\\\begin{array}{|c|c|c|c|c|}\hline & \text { Country A } & \text { Country B } & \text { Country C } & \text { Country D } \\\hline \begin{array}{c}\text { Real GDP (millions } \\\text { of dollars) }\end{array} & \$ 4,000 & \$ 10,000 & \$ 8,000 & \$ 16,000 \\\hline \text { Population (millions) } & 4 & 5 & 2 & 4 \\\hline \text { GDP deflator } & 1.10 & 1.02 & 1.05 & 1.00 \\\hline\end{array}\end{array}$

A) $2,000
B) $668
C) $4,000
D) $3,810

Question 73

(Table 6: Real GDP and Population Data) Table 6 provides data on real GDP, population, and the GDP deflator measures for four countries for 2018. What was GDP per capita in country A in 2018?
$\begin{array}{l}\text { Table 6: Real GDP and Population Data, } 2018\\\begin{array}{|c|c|c|c|c|}\hline & \text { Country A } & \text { Country B } & \text { Country C } & \text { Country D } \\\hline \begin{array}{c}\text { Real GDP (millions } \\\text { of dollars) }\end{array} & \$ 4,000 & \$ 10,000 & \$ 8,000 & \$ 16,000 \\\hline \text { Population (millions) } & 4 & 5 & 2 & 4 \\\hline \text { GDP deflator } & 1.10 & 1.02 & 1.05 & 1.00 \\\hline\end{array}\end{array}$

A) $1,100
B) $909
C) $2,000
D) $1,000

Question 74

(Table 6: Real GDP and Population Data) Table 6 provides data on real GDP, population, and the GDP deflator measures for four countries for 2018. What was GDP per capita in country B in 2018?
$\begin{array}{l}\text { Table 6: Real GDP and Population Data, } 2018\\\begin{array}{|c|c|c|c|c|}\hline & \text { Country A } & \text { Country B } & \text { Country C } & \text { Country D } \\\hline \begin{array}{c}\text { Real GDP (millions } \\\text { of dollars) }\end{array} & \$ 4,000 & \$ 10,000 & \$ 8,000 & \$ 16,000 \\\hline \text { Population (millions) } & 4 & 5 & 2 & 4 \\\hline \text { GDP deflator } & 1.10 & 1.02 & 1.05 & 1.00 \\\hline\end{array}\end{array}$

A) $2,000
B) $668
C) $4,000
D) $10,200

Question 75

(Table 6: Real GDP and Population Data) Table 6 provides data on real GDP, population, and the GDP deflator measures for four countries for 2018. What was GDP per capita in country D in 2018?
$\begin{array}{l}\text { Table 6: Real GDP and Population Data, } 2018\\\begin{array}{|c|c|c|c|c|}\hline & \text { Country A } & \text { Country B } & \text { Country C } & \text { Country D } \\\hline \begin{array}{c}\text { Real GDP (millions } \\\text { of dollars) }\end{array} & \$ 4,000 & \$ 10,000 & \$ 8,000 & \$ 16,000 \\\hline \text { Population (millions) } & 4 & 5 & 2 & 4 \\\hline \text { GDP deflator } & 1.10 & 1.02 & 1.05 & 1.00 \\\hline\end{array}\end{array}$

A) $2,000
B) $668
C) $4,000
D) $10,200

Question 76

In order for a country's real GDP per capita to rise, its _____ must rise faster than its:

A) prices; output.
B) output; population.
C) output; prices.
D) prices; population.

Question 77

Real GDP per capita is GDP adjusted for _____ and:

A) output; population.
B) population; output.
C) price level; population.
D) output; price level.

Question 78

To measure GDP in constant dollars, _____ must be designated.

A) a rate of population growth
B) an annual inflation rate
C) a base year for output
D) a base year for prices

Question 79

The price index used to compute real GDP is the:

A) CPI.
B) PCE.
C) GDP deflator.
D) GDP PI.

Question 80

(Table 7: GDP and Price Index Data) Table 7 provides data on GDP and price indices for Macroland for four years. What was Macroland's real GDP in 2017 using 2015 prices?
$\begin{array}{l}\text { Table 7: GDP and Price Index Data }\\\begin{array}{|c|c|c|c|c|}\hline \text { Year } & 2015 & 2016 & 2017 & 2018 \\\hline \begin{array}{c}\text { Nominal GDP } \\\text { (billions of dollars) }\end{array} & \$ 800 & \$ 835 & \$ 890 & \$ 930 \\\hline \text { Price index } & 100 & 106 & 110 & 112 \\\hline\end{array}\end{array}$

A) $890
B) $830
C) $788
D) $809