Deck 23: 4: Sec 234 Mc Real Versus Nominal Gdp

Question 1

The GDP deflator for years subsequent to the base year measures the change in

A)nominal GDP from the base year that cannot be attributable to a change in real GDP.
B)real GDP from the base year that cannot be attributable to a change in nominal GDP.
C)nominal GDP from the base year that cannot be attributable to a change in prices.
D)real GDP from the base year that cannot be attributable to a change in prices.

Answer 1

A

Question 2

Changes in the GDP deflator reflect

A)only changes in prices.
B)only changes in the amounts being produced.
C)both changes in prices and changes in the amounts being produced.
D)neither changes in prices nor changes in the amounts being produced.

Answer 2

B

Question 3

The GDP deflator is the ratio of

A)real GDP to nominal GDP multiplied by 100.
B)real GDP to the inflation rate multiplied by 100.
C)nominal GDP to real GDP multiplied by 100.
D)nominal GDP to the inflation rate multiplied by 100.

Answer 3

B

Question 4

Real GDP is the yearly production of final goods and services valued at

A)current prices.
B)constant prices.
C)expected future prices.
D)the ratio of current prices to constant prices.

Question 5

When studying changes in the economy over time,economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services.In other words,economists want to study

A)nominal GDP.
B)real GDP.
C)the GDP deflator.
D)GNP.

Question 6

If total spending rises from one year to the next,then

A)the economy must be producing a larger output of goods and services.
B)goods and services must be selling at higher prices.
C)either the economy must be producing a larger output of goods and services,or goods and services must be selling at higher prices,or both.
D)employment or productivity must be rising.

Question 7

Real GDP will increase

A)only when prices increase.
B)only when output increases.
C)when prices increase or output increases.
D)All of the above are correct.

Question 8

Which of the following always uses prices and quantities from the same period?

A)both nominal and real GDP.
B)nominal GDP but not real GDP.
C)real GDP but not nominal GDP.
D)neither nominal or real GDP.

Question 9

Which of the following is correct?

A)Nominal GDP is always less than real GDP.
B)Nominal GDP is always greater than real GDP.
C)Nominal GDP equals real GDP in the base year.
D)Nominal GDP equals real GDP in all years but the base year.

Question 10

Changes in nominal GDP reflect

A)only changes in prices.
B)only changes in the amounts being produced.
C)both changes in prices and changes in the amounts being produced.
D)neither changes in prices nor changes in the amounts being produced.

Question 11

In the base year,the GDP deflator is always

A)-1.
B)0.
C)1.
D)100.

Question 12

Which of the following statements about GDP is correct?

A)Nominal GDP values production at current prices,whereas real GDP values production at constant prices.
B)Nominal GDP values production at constant prices,whereas real GDP values production at current prices.
C)Nominal GDP values production at market prices,whereas real GDP values production at the cost of the resources used in the production process.
D)Nominal GDP values production at the cost of the resources used in the production process,whereas real GDP values production at market prices.

Question 13

If total spending rises from one year to the next,then which of the following could not be true?

A)the economy is producing a smaller output of goods and services,and goods and services are selling at higher prices.
B)the economy is producing a larger output of goods and services,and goods and services are selling at lower prices.
C)the economy is producing a larger output of goods and services,and goods and services are selling at higher prices.
D)the economy is producing a smaller output of goods and services,and goods and services are selling at lower prices.

Question 14

Nominal GDP will definitely increase when

A)prices increase and output increases.
B)prices increase and output decreases.
C)prices decrease and output increases.
D)All of the above are correct.

Question 15

When economists talk about growth in the economy,they measure that growth as the

A)absolute change in nominal GDP from one period to another.
B)percentage change in nominal GDP from one period to another.
C)absolute change in real GDP from one period to another.
D)percentage change in real GDP from one period to another.

Question 16

If the prices of all goods and services produced in the economy rose while the quantity of all goods and services stayed the same,which would rise?

A)both real GDP and nominal GDP.
B)real GDP but not nominal GDP.
C)nominal GDP but not real GDP.
D)neither nominal GDP nor real GDP.

Question 17

Which of the following statements about nominal GDP and real GDP is correct?

A)Nominal GDP is a better gauge of economic well-being than real GDP.
B)Real GDP is a better gauge of economic well-being than nominal GDP.
C)Real GDP and nominal GDP are equally good measures of economic well-being.
D)Neither nominal nor real GDP provide a measure of economic well-being.

Question 18

Which of the following is the correct formula for the GDP deflator?

A) .
B) .
C) .
D) .

Question 19

Changes in real GDP reflect

A)only changes in prices.
B)only changes in the amounts being produced.
C)both changes in prices and changes in the amounts being produced.
D)neither changes in prices nor changes in the amounts being produced.

Question 20

Which of the following is always measured in prices from a base-year?

A)both nominal and real GDP.
B)nominal but not real GDP.
C)real but not nominal GDP.
D)neither nominal nor real GDP.

Question 21

If real GDP doubles and the GDP deflator doubles,then nominal GDP

A)remains constant.
B)doubles.
C)triples.
D)quadruples.

Question 22

If real GDP is 5,100 and nominal GDP is 4,900,then the GDP deflator is

A)104.1 so prices are higher than in the base year.
B)104.1 so prices are lower than in the base year.
C)96.1 so prices are higher than in the base year.
D)96.1 so prices are lower than in the base year.

Question 23

If nominal GDP is $8 trillion and real GDP is $10 trillion,then the GDP deflator is

A)80,and this indicates that the price level has decreased by 20 percent since the base year.
B)80,and this indicates that the price level has increased by 80 percent since the base year.
C)125,and this indicates that the price level has increased by 25 percent since the base year.
D)125,and this indicates that the price level has increased by 125 percent since the base year.

Question 24

Suppose an economy's production consists only of corn and soybeans.In 2010,20 bushels of corn are sold at $4 per bushel and 10 bushels of soybeans are sold at $2 per bushel.In 2009,the price of corn was $2 per bushel and the price of soybeans was $1 per bushel.Using 2009 as the base year,it follows that,for 2010,

A)nominal GDP is $50,real GDP is $100,and the GDP deflator is 50.
B)nominal GDP is $50,real GDP is $100,and the GDP deflator is 200.
C)nominal GDP is $100,real GDP is $50,and the GDP deflator is 50.
D)nominal GDP is $100,real GDP is $50,and the GDP deflator is 200.

Question 25

If in some year nominal GDP was $28 trillion and real GDP was $32 trillion,what was the GDP deflator?

A)87.5.
B)114.3.
C)400.
D)896.

Question 26

A country's real GDP rose from $500 to $530 while its nominal GDP rose from $600 to $700.What was this country's inflation rate?

A)16.7%.
B)10.0%.
C)15.0%.
D)-9.1%.

Question 27

The term economists use to describe a situation in which the economy's overall price level is rising is

A)growth.
B)inflation.
C)recession.
D)expansion.

Question 28

The inflation rate in year 2 equals

A) .
B) .
C) .
D) .

Question 29

If nominal GDP doubles and the GDP deflator doubles,then real GDP

A)remains constant.
B)doubles.
C)triples.
D)quadruples.

Question 30

If in some year nominal GDP was $20 billion and the GDP deflator was 50,what was real GDP?

A)$2.5 billion.
B)$10 billion.
C)$40 billion.
D)$100 billion.

Question 31

If nominal GDP is $12 trillion and real GDP is $10 trillion,then the GDP deflator is

A)83.33,and this indicates that the price level has decreased by 16.67 percent since the base year.
B)83.33,and this indicates that the price level has increased by 83.33 percent since the base year.
C)120,and this indicates that the price level has increased by 20 percent since the base year.
D)120,and this indicates that the price level has increased by 120 percent since the base year.

Question 32

The percentage change in the price level from one period to another is called

A)the growth rate.
B)the inflation rate.
C)the GDP deflator.
D)the unemployment rate.

Question 33

If in some year real GDP was $5 trillion and the GDP deflator was 200,what was nominal GDP?

A)$2.5 trillion.
B)$10 trillion.
C)$40 trillion.
D)$100 trillion.

Question 34

An economy recently reported nominal GDP of 3 trillion euro and a GDP deflator of 200.What was real GDP?

A)1.5 trillion euro,and real GDP is a better gauge of economic activity than nominal GDP.
B)1.5 trillion euro,but nominal GDP is a better gauge of economic activity than real GDP.
C)6 trillion euro,and real GDP is a better gauge of economic activity than nominal GDP.
D)6 trillion euro,but nominal GDP is a better gauge of economic activity than real GDP.

Question 35

If nominal GDP is $10 trillion and real GDP is $8 trillion,then the GDP deflator is

A)80,and this indicates that the price level has decreased by 20 percent since the base year.
B)80,and this indicates that the price level has increased by 80 percent since the base year.
C)125,and this indicates that the price level has increased by 25 percent since the base year.
D)125,and this indicates that the price level has increased by 125 percent since the base year.

Question 36

If nominal GDP is $10 trillion and real GDP is $12 trillion,then the GDP deflator is

A)83.33,and this indicates that the price level has decreased by 16.67 percent since the base year.
B)83.33,and this indicates that the price level has increased by 83.33 percent since the base year.
C)120,and this indicates that the price level has increased by 20 percent since the base year.
D)120,and this indicates that the price level has increased by 120 percent since the base year.

Question 37

If in some year real GDP was $25 billion and the GDP deflator was 68,what was nominal GDP?

A)$2.72 billion.
B)$17 billion.
C)$36.8 billion.
D)$43 billion.

Question 38

The inflation rate is the

A)absolute change in real GDP from one period to another.
B)percentage change in real GDP from one period to another.
C)absolute change in the price level from one period to another.
D)percentage change in the price level from one period to another.

Question 39

If in some year nominal GDP was $18 billion and the GDP deflator was 120,what was real GDP?

A)$6.7 billion.
B)$15 billion.
C)$21.6 billion.
D)$38 billion.

Question 40

If in some year nominal GDP was $10 trillion and real GDP was $4 trillion,what was the GDP deflator?

A)25.
B)40.
C)250.
D)400.

Question 41

Suppose an economy produces only eggs and ham.In 2009,100 dozen eggs are sold at $3 per dozen and 50 pounds of ham sold at $4 per pound.In 2010,the base year,eggs sold at $1.50 per dozen and ham sold at $5 per pound.For 2009,

A)nominal GDP is $400,real GDP is $500,and the GDP deflator is 80.
B)nominal GDP is $400,real GDP is $500,and the GDP deflator is 125.
C)nominal GDP is $500,real GDP is $400,and the GDP deflator is 80.
D)nominal GDP is $500,real GDP is $400,and the GDP deflator is 125.

Question 42

Suppose an economy produces only iPhones and bananas.In 2010,1000 iPhones are sold at $300 each and 5000 pounds of bananas are sold at $3 per pound.In 2009,the base year,iPhones sold at $400 each and bananas sold at $2 per pound.For 2010,

A)nominal GDP is $315,000,real GDP is $410,000,and the GDP deflator is 76.83.
B)nominal GDP is $410,000,real GDP is $315,000,and the GDP deflator is 130.16.
C)nominal GDP is $315,000,real GDP is $410,000,and the GDP deflator is 130.16.
D)nominal GDP is $410,000,real GDP is $315,000,and the GDP deflator is 76.83.

Question 43

Suppose an economy produces only burgers and bags of fries.In 2010,4000 burgers are sold at $3 each and 6000 bags of fries are sold at $1.50 each.In 2008,the base year,burgers sold for $2.50 each and bags of fries sold for $2 each.

A)nominal GDP is $22,000,real GDP is $21,000,and the GDP deflator is 95.45.
B)nominal GDP is $22,000,real GDP is $21,000,and the GDP deflator is 104.77.
C)nominal GDP is $21,000,real GDP is $22,000,and the GDP deflator is 95.45.
D)nominal GDP is $21,000,real GDP is $22,000,and the GDP deflator is 104.77.

Question 44

A country reported nominal GDP of $200 billion in 2010 and $180 billion in 2009.It also reported a GDP deflator of 125 in 2010 and 105 in 2009.Between 2009 and 2010,

A)real output and the price level both rose.
B)real output rose and the price level fell.
C)real output fell and the price level rose.
D)real output and the price level both fell.

Question 45

A country reported nominal GDP of $115 billion in 2010 and $125 billion in 2009.It also reported a GDP deflator of 85 in 2010 and 100 in 2009.Between 2009 and 2010,

A)real output and the price level both rose.
B)real output rose and the price level fell.
C)real output fell and the price level rose.
D)real output and the price level both fell.

Question 46

A country reported nominal GDP of $100 billion in 2010 and $75 billion in 2009.It also reported a GDP deflator of 125 in 2010 and 120 in 2009.Between 2009 and 2010,

A)real output and the price level both rose.
B)real output rose and the price level fell.
C)real output fell and the price level rose.
D)real output and the price level both fell.

Question 47

Much of macroeconomics attempts to explain

A)changes in the price of oil and gasoline.
B)long-run growth and short-run fluctuations in real GDP.
C)changes in the growth rate of state government spending.
D)changes in the prices and quantities of individual goods and services.

Question 48

Which of the following is not a correct statement about the growth of real GDP in the U.S.economy?

A)Real GDP in 2009 was almost four times its 1965 level.
B)Growth was steady between 1965 and 2009.
C)Continued growth in real GDP enables the typical American to enjoy greater economic prosperity than his or her parents and grandparents did.
D)The output of goods and services produced grew on average about 3 percent per year between 1965 and 2009.

Question 49

A country reported a nominal GDP of $85 billion in 2010 and $100 billion in 2009.It also reported a GDP deflator of 100 in 2010 and 105 in 2009.Between 2009 and 2010,

A)real output and the price level both rose.
B)real output rose and the price level fell.
C)real output fell and the price level rose.
D)real output and the price level both fell.

Question 50

Which of the following statements about recessions is true?

A)An old rule of thumb defining recession is two consecutive quarters of falling nominal GDP.
B)Recessions occur at regular intervals and last standard amounts of time.
C)There is no ironclad rule for the declaration of recessions.
D)Recessions are associated with low unemployment and high income.

Question 51

Suppose an economy produces only cranberries and maple syrup.In 2010,50 units of cranberries are sold at $20 per unit and 100 units of maple syrup are sold at $8 per unit.In 2009,the base year,the price of cranberries was $10 per unit and the price of maple syrup was $15 per unit.For 2010,

A)nominal GDP is $1800,real GDP is $2000,and the GDP deflator is 90.
B)nominal GDP is $1800,real GDP is $2000,and the GDP deflator is 111.1.
C)nominal GDP is $2000,real GDP is $1800,and the GDP deflator is 90.
D)nominal GDP is $2000,real GDP is $1800,and the GDP deflator is 111.1.

Question 52

Suppose an economy produces only cheese and fish.In 2010,20 units of cheese are sold at $5 each and 8 units of fish are sold at $50 each.In 2009,the base year,the price of cheese was $10 per unit and the price of fish was $75 per unit.For 2010,

A)nominal GDP is $500,real GDP is $800,and the GDP deflator is 62.5.
B)nominal GDP is $500,real GDP is $800,and the GDP deflator is 160.
C)nominal GDP is $800,real GDP is $500,and the GDP deflator is 62.5.
D)nominal GDP is $800,real GDP is $500,and the GDP deflator is 160.