İktisada Giriş II National Accounts - Study Questions National Accounts Chapter 1 Study Questions Suppose an individual wishes to provide a 1) definition of GDP for a given period. Which of the following phrases would be used when defining GDP? final and intermediate goods and services, (a) plus raw materials final and intermediate goods and services (b) final and intermediate goods and services (c) produced by the private sector only all of the above (d) none of the above (e) When nominal GDP falls for a given period, 2) we know with certainty that: the price level (GDP deflator) has (a) decreased. real output and the price leve l (GDP (b) deflator) have both decreased. either real output or the price level (c) (GDP deflator) have decreased. real output has increased and the price (d) level has decreased. real output has decreased. (e) Use the following information to answer this 3) question. If no minal GDP rises from $40 trillion to $48 trillion, while the GDP deflator rises from 2.0 to 2.4, the percentage change in real GDP is: -10%. (a) 0%. (b) 9.1%. (c) 10%. (d) 20%. (e) Use the following information to answer this 4) question: 100 million people are working, 10 mi llion are not working but are looking for work, and 20 million are not working and have given up looking for work. The official unemployment rate for that month is: 7.7%. (a) 9.1%. (b) 10%. (c) 23%. (d) 30%. (e) An individual is said to be a discouraged 5) worker if he or she: wants to work, and is actively searching (a) for a job. is working, but prefers not to work. (b) wants to work, but has given up (c) searching for a job is working part time, but would prefer a (d) full-time job. is working in jobs she/he is not suited for. (e) Use the data below to answer the following questions. Suppose a country using the United States system of unemployment statistics has 200 million people, of whom 100 million are working age. Of these 100 million, 40 million have jobs. Of the remainder: 20 mil lion are actively searching for jobs; 20 million would like jobs but are not searching; and 20 million do not want jobs at all. The labor force is: 6) 20 million. (a) 40 million. (b) 60 million. (c) 80 million. (d) 100 million. (e) The labor force participation rate is: 7) .2. (a) .3. (b) .4. (c) .6. (d) .8. (e) The official unemployment rate is: 8) .1. (a) .2. (b) .33. (c) 0.4 (d) 0.66 (e) The prices for which of the following goods 9) are included in both the GDP deflator and the consumer price index? good bought by governments (a) goods bought by firms (b) goods bought by fo reign households (i.e., (c) exports) goods bought by households (d) all of the above (e) Suppose government officials decide to change 10) the base year to a more recent year (e.g. from 1992 to, say, 2002). A change in the base year such as this will cause: nominal G DP in every year to decrease. (a) nominal GDP in every year to increase. (b) both nominal and real GDP in every year (c) to decrease. real GDP in every year to decrease. (d) none of the above (e) Deflation generally occurs when which of the 11) following occurs?National Accounts Chapter 1 Study Questions the consum er price index is greater than (a) the GDP deflator the rate of inflation falls, for example, (b) from 4% to 2% the consumer price index decreases (c) nominal GDP does not change (d) During 2004 and 2005, we observed a 12) significant incre ase in oil prices. In Turkey , we would expect that this increase in oil prices would cause: an equal increase in the CPI and GDP (a) deflator. no change in the CPI and an increase in (b) the GDP deflator. a larger increase in the GDP deflator (c) compared to the CPI. a larger increase in the CPI compared (d) to the GDP deflator. During the late 1990s, Japan experienced 13) reductions in the GDP deflator. Given this information, we know with certainty that: real GDP did not change during these (a) periods. real GDP fell during these periods. (b) both real GDP and the overall price level (c) decreased during these periods. the overall price level in Japan (d) decreased during these periods. If GDP exceeds GNP, we know with certainty 14) that: a budget deficit exists. (a) a trade deficit exists. (b) a trade surplus exists. (c) re ceipts of factor income from the rest (d) of the world exceed payments of factor income to the rest of the world. A high current rate of inflation ________ those 15) who have saved and _________ those who have borrowed. harms, helps (a) harms, has no effect on (b) helps, helps (c) helps, has no effect on (d) helps, harms (e) The real income per capita is a measure of the 16) well-being of every individual in the (a) nation. well-being of the average individual in (b) the nation. well-being of the average employed (c) person in the nation. total wel l-being of the nation. (d) Suppose that nominal GDP were $1200 billion 17) in 1990 and $2000 billion in 1995. The implicit GDP deflator was 1.00 in 1990 and 1.50 in 1995. From this we can infer that, between 1990 and 1995 nominal GDP rose by 33%. (a) real GDP rose by 33%. (b) real GDP remained constant. (c) real GDP rose by about 11%. (d) If real GDP for a given year is $2400 billion 18) and nominal GDP is $2400 this year is the base year for the GDP (a) deflator. the GDP deflator for this year is 1.25. (b) the GDP deflator for this year is 0.8. (c) the GDP deflator for this year is 1.10. (d) A farmer sells raw milk for 50 cents to a dairy, 19) who sells cheese made from it for $1.50 to a grocery wholesaler, who sells it for $1.90 to a supermarket, who sells it to the final consumer for $2.19. These tra nsactions increase the GDP by $0.50 ? $1.00 ? $0.40 ? $0.29 ? $2.19. (a) $0.50 ? $1.00 ? $1.90 ? $2.19 ? $5.59. (b) $0.50 ? $1.00 ? $1.50. (c) $2.19 – $1.50 ? $0.69. (d) (e) $2.19 – $0.50 ? $1.69. Questions 20-21 are based on the following information: Robinson Crusoe (R C) and Friday (Friday) are living in an island. They engage following economic activities. In 20) 2003 Friday catches 5 0 fish and sells them to RC for 5 YTL each. RC uses all of the fish to make 25 liters of fish oil, all o f which he sells to Friday for 2 0 YTL per gallon. If these are the only transactions that take place in 2003, what is the GDP on this island in 2003? 250 YTL (a) 500 YTL (b) 750 YTL (c) 1250 YTL (d) none of the above (e) In 2004 Friday catches 50 fish and sells them 21) to RC for 5 YTL each. In 2005 RC use s all of the fish to make 25 liters of fish oil, all of National Accounts Chapter 1 Study Questions which he sells to Friday for 20 YTL per gallon. If these are the only transactions that take place in these two years, what is GDP in 2004 and 2005, respectively? 0 and 5 50 (a) 250 and 500 (b) 250 and 7 50 (c) 0 a nd 750 (d) none of the above (e) First, define nominal GDP and real GDP. Second, is it possible for nominal GDP in a year to be less than real GDP in the same year? Explain. Explain w hat factors cause changes in output in: (1) the short run; (2) medium run; and (3) long run.