1. What is an accounting identity?
- It is an equality that must be true regardless of the value of its variables.
- It is a statement that by definition must be true
- It is a technique accountants employ in the preparation of income statements.
- A and B only.
- All of the above.
2. The account identity that is used to estimate the gross domestic product of a country is given by
- Consumption = Income - Saving
- Income = Production - Consumption
- Production = Expenditure = income
- Production = Expenditure = Consumption
3. What important factors do GDP estimates leave out? (Check all that apply)
- Home production.
- Leisure
- The production of illegal professions.
- The value of intermediate goods.
- Capital depreciation.
4. Which of the following news stroies (all published in early 2014) would typically be studied in macroeconomics? (Select all that apply)
- "Expectations High for March Employment"
- "5 Reasons Why Apple is Looking Like the Next Sony"
- "Which College-and Which Major-Will Make You Richest"
- "We Believe Inflation Should Rule Monetary Policy."
- "What If Economic Growth Is No Longer Possible?"
5. Why is it essential to differentiate between real and nominal growth rates of GDP?
- 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
- 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.
- 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.
- B and C only.
- All of the above.