1. True or false? Economic growth does not depend on how much people save or businesses invest, only on how much they consume.
2. Suppose that nominal GDP increased while prices for all goods and services remained the same (i.e. no inflation). We can conclude that: A. real GDP was higher than nominal GDP. B. real GDP remained the same. C. real GDP increased. D. real GDP decreased.
3. Say GDP is equal to $7 trillion. If personal consumption "C" is $4.2 trillion, business investment "I" is $1.4 trillion, and government purchases "G" are $1.8 trillion, then: A. exports are equal to imports. B. exports exceed imports by $0.4 trillion. C. exports are equal to $0.4 trillion. D. imports exceed exports by $0.4 trillion.
4. In 1969, the CPI was 37 (1982-84 = 100), and in 1989 it was 124. Therefore, the price level from 1969 to 1989 rose: A. 35% B. 87% C. 135% D. 235%
5. Which of the following is NOT included in our calculation of GDP? A. The value of products sold during the current year but produced during the previous year. B. The value of a haircut given in the current year. C. The value of a new car produced and purchased during the current year. D. The value of new houses built and ready for sale during the current year, but have yet to sell.
6. Suppose a farmer buys $100 worth of seed, $50 worth of fertilizer, and $100 worth of water to produce $800 worth of wheat. The value added (what would go into GDP) at that farm is: A. $450 B. $500 C. $550 D. $1050