1. What is an accounting identity?

A. It is a statement that by definition must be true

B. It is an equality that must be true regardless of the value of its variables.

C. It is a technique accountants employ in the preparation of income statements.

D. All of the above.

E. A and B only.

2. The account identity that is used to estimate the gross domestic product of a country is given by

A. Income = Production - Consumption

B. Consumption = Income - Saving

C. Production = Expenditure = Consumption

D. Production = Expenditure = income

3. What important factors do GDP estimates leave out? (check all that apply)

A. Leisure

B. The value of intermediate goods.

C. Home production.

D. The production of illegal professions.

E. Capital depreciation.

4. Which of the following news stroies (all published in early 2014) would typically be studied in macroeconomics? (Select all that apply)

A. "5 Reasons Why Apple is Looking Like the Next Sony"

B. "Expectations High for March Employment"

C. "We Believe Inflation Should Rule Monetary Policy."

D. "Which College-and Which Major-Will Make You Richest"

E. "What If Economic Growth Is No Longer Possible?"

5. Why is it essential to differentiate between real and nominal growth rates of GDP?

A. The nominal growth rate is more informative than the real growth rate since it is broader in the sense that it captures both price and output changes.

B. The nominal growth rate combines the effect of price changes along with changes in the production of goods and services and thus gives a less clear indication of the impact on living standards

C. It is the real growth rate that is meaningful since it indicates the change in the production of goods and services, a very significant source of improved living standards.

D. All of the above.

E. B and C only.