The circular flow diagram validates the fact that the different sectors in the economy are independent.
a. True
b. False
Indicate whether the statement is true or false
Question 2National income accounting fills in the dollar values in the circular flow of income.
a. True
b. False
Indicate whether the statement is true or false
Question 3The producer price index was earlier known as _____.
a. the retail price index
b. the commodity market index
c. the Fischer index
d. the wholesale price index
e. the cost of living index
Question 4The consumer price index:
a. tracks the value of output over time.
b. is not tied to cost-of-living adjustments.
c. doubles every five years in the economy.
d. is a weighted average of consumer prices.
e. is a broader price index measure than the implicit GDP deflator.
Question 5In terms of price indexes, what is a COLA?
a. A measure of the quality of living
b. A consumer price adjustment
c. An increase in wages designed to match consumer price increases
d. An estimate of gross domestic product
e. A measure of producer surplus
Question 6Suppose the current price of DVDs is 16, while its base-year price is 11.50 . The value of the price index for the current year is approximately:
a. 139
b. 39
c. 25
d. 160
e. 172
Question 7Suppose the price index is 100 in the base year and the price of a pound of oranges in that year is 1.96 . Now, if the price index changes to 105 in the following year, how much would a pound of oranges cost?
a. 2.45
b. 0.25
c. 1.96
d. 2.06
e. 1.50
Question 8The price index for the current year is 180 . This means that, on average, prices in the current year are:
a. 80 percent of prices in the base year.
b. 1.80 higher than prices in the base year.
c. 180 percent higher than prices in the base year.
d. 0.80 higher than prices in the base year.
e. 80 percent higher than prices in the base year.
Question 9Which of the following industrial countries experienced a relatively slower growth of real GDP in the latter half of the 1990s?
a. Canada
b. United States
c. Italy
d. France
e. Japan
Question 10If both real GDP and nominal GDP of a country increased at the same rate in a particular year, which of the following is most likely to have taken place?
a. Output increased and the price level increased
b. Output increased and the price level decreased
c. Output decreased and the price level increased
d. Output decreased and the price level decreased
e. Output increased and the price level remained constant
Question 11If nominal GDP of a country increased and real GDP remained unchanged in a particular year, which of the following is most likely to have taken place?
a. Output increased and the price level increased
b. Output increased and the price level decreased
c. Output remained constant and the price level increased
d. Output decreased and the price level decreased
e. Output increased and the price level remained constant