Question

1. Which of the following is FALSE about GDP?

Group of answer choices

GDP is considered one of the most important stats of an economy

GDP can be used to at least informally determine whether a country is in recession

When a country’s economic stats are presented, the first stat is often GDP

GDP was invented by Franklin D. Roosevelt just after World War 2 ended

GDP is not exactly the same as GNP

2. Again, consider the market for video games in the US. It is primarily played by younger people. But suppose the number of young people is shrinking as people have fewer children. What is the effect of this demographic change on the price and quantity of video games?

Price rises; quantity falls

Price rises; quantity rises

Price falls; quantity falls

Price rises; quantity is unchanged

Price is unchanged; quantity is unchanged

3. Consider the housing market in LA. Suppose there is a massive increase in the amount of affordable housing constructed. What happens to this market?

Group of answer choices

Its price and quantity both increase

Its price and quantity both decrease

Its price rises while its quantity decreases

Its price is unchanged while its quantity decreases

Its price falls while its quantity increases

4. Which of the following accurately describes the video called “I, Pencil”?

Group of answer choices

Its main point about the pencil cannot be applied to other goods like pens or cell phones

It seeks to advocate Communism

It attempts to show how markets (rather than governments) are much better at distributing resources

It tries to show how the government can sometimes improve on market outcomes

It attempts to convince you how simple it is to make a pencil

Answer 1

1.

D

Modern concept of real GDP was not given the president as mentioned. Rather, it was Simon Kuznets who gave it in 1934.

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2.

C

When no. of younger people decrease, then demand made by these people also decrease and demand curve shifts to the left. It causes decrease in price as well as quantity at the new equilibrium.

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3.

E

It causes supply of homes to increase and supply curve shifts to the right. It makes price to fall while quantity increases.

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4.

C

It is the meaning, willing to be explain by the book.