Question

The price of a house in Year 1 was $50,000. If the price index for Year...

The price of a house in Year 1 was $50,000. If the price index for Year 1 is 101, and for Year 2 is 202, the value of the house in Year 2 is ________.

  • A. $55,000
  • B. $100,000
  • C. $150,000
  • D. $75,000

Tom is a U.S. citizen. He took up a job and moved to the U.K. His income will lead to a(n) ________.

  • A. increase in the GNP of U.K.
  • B. decrease in the GDP of U.K.
  • C. increase in the GNP of U.S.
  • D. increase in the GDP of U.S.

Which of the following is likely to happen if a German company opens a production unit in New York?

  • A. Germany's GDP will increase.
  • B. Germany's GNP will increase.
  • C. U.S.'s GDP will decrease.
  • D. U.S.'s GNP will increase.
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Answer #1

(1) Price of house in Year 1 = $50,000

Price index for year 1 = 101

Price index for year 2 = 202

The value of house in year 2 = $50,000 * (202 / 101)

=> The value of house in year 2 = $100,000

Answer: Option (B)

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(2) Tom is a U.S. citizen. He took up a job and moved to the U.K. His income will lead to an  increase in the GNP of U.S.

Answer: Option (C)

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(3)  Germany's GNP will increase if a German company opens a production unit in New York.

Answer: Option (B)

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