Question

1. Economic growth can be measured by: a) The CPI b) The CBI c) GDP d)...

1. Economic growth can be measured by: a) The CPI

b) The CBI

c) GDP

d) MPC

2. In a boom: a) Unemployment is likely to fall

b) Prices are likely to fall

c) Demand is likely to fall

d) Imports are likely to fall

3. As a measure of economic welfare, gross domestic product underestimates a country’s production of goods and services when there is an increase in: a. The production of military goods

b. The production of antipollution devices

c. Crime prevention services

d. Household production

e. Legal services

4. Natural Rate of Unemployment means: a) The growth of the fastest economy in the world

b) The fastest growth an economy has ever achieved

c) The present rate of growth of an economy

d) The rate at which resources were fully employed

5. The major difference between real and nominal gross domestic product (GDP) is that real GDP.

a. Excludes government transfer payments

b. Excludes imports

c. Is adjusted for price-level changes using a price index

d. Measures only the value of final goods and services that are consumed e. Measures the prices of a market basket of goods purchased by a typical urban consumer

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Homework Answers

Answer #1

1.

Answer: (C)

The GDP is used as the yardstick to measure the economic growth of country. The CPI is used to measure the inflation rate.

2.

Answer: (A)

During the boom phase, the unemployment is likely to fall and price and aggregate demand are high.

3.

Answer: (D)

The home production of goods and services is not included in the GDP, Thus GDP underestimate the welfare or economic welfare.

4.

Answer: (D)

At the natural rate of unemployment, the all resources are full employed.

5.

Answer: (C)

The real GDP is adjusted for the inflation rate while the nominal GDP is not adjusted for the change in the price level.

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