Question

14.) 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.

13.) The U.S. Air Force pays a Turkish citizen $30,000 to work on a U.S. base in Turkey. As a result,

A U.S. government purchases increase by $30,000; U.S. net exports decrease by $30,000; and U.S. GDP is unaffected.

B U.S. government purchases increase by $30,000; U.S. net exports are unaffected; and U.S. GDP increases by $30,000.

C U.S. government purchases, net exports, and GDP are unaffected.

D U.S. government purchases are unaffected; U.S. net exports decrease by $30,000; and U.S. GDP decreases by $30,000.

15.) 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.

9.) If you buy a burger and fries at your favorite fast food restaurant,

A then neither GDP nor consumption will be affected because you would have eaten at home had you not bought the meal at the restaurant.

B then GDP will be higher, but consumption spending will be unchanged.

C then GDP will be unchanged, but consumption spending will be higher.

D then both GDP and consumption spending will be higher.

Answer 1

14. Option C
(Increase in total spending can either mean increase in output or higher prices or both.)

13. Option A
(Government spending increases by $30,000 on hiring Turkish citizen, and its imports increase by $30,000 so net exports decrease by $30,000. Thus, GDP is unaffected.)

15. Option A
(Nominal GDP is value of goods at current prices and real GDP is value of goods at constant prices.)

9. Option D
(Due to purchase for consumption, GDP and consumption spending will increase.)