Q: Suppose a country produces only two goods: computers and wheat. Last year, it produced 100 computers at $$1,000 each and 500 tons of wheat at 200 $$per ton. This year, it produced 120 computers at $$1,100 each and 600 tons of wheat at 220 $$per ton. If last year is the base year, what is the real GDP for this year?

$$ \ (120$$ \times 1,000) + (600 \times 200) = \$$120,000 + \120$$,000 = \$$240,000 $$

Question 1

Which of the following is an example of a capital good?

Accepted Answer

A delivery truck purchased by a logistics company

Question 2

Suppose a country produces only two goods: computers and wheat. Last year, it produced 100 computers at $$1,000 each and 500 tons of wheat at 200 $$per ton. This year, it produced 120 computers at $$1,100 each and 600 tons of wheat at 220 $$per ton. If last year is the base year, what is the real GDP for this year?

Accepted Answer

$$ \ (120$$ 	imes 1,000) + (600 	imes 200) = \$$120,000 + \120$$,000 = \$$240,000 $$

Question 3

Which of the following statements is a normative statement?

Accepted Answer

The government should increase spending to reduce unemployment.

Question 4

If the price of coffee increases and, as a result, the demand for tea increases, what is the relationship between coffee and tea?

Accepted Answer

They are substitute goods.

Question 5

Which of the following would NOT be included in the calculation of a country's GDP?

Accepted Answer

The purchase of used machinery by a factory

Question 6

A market is in equilibrium when:

Accepted Answer

Quantity demanded equals quantity supplied

Question 7

If the demand for a product increases while the supply remains unchanged, what will happen to the equilibrium price and quantity?

Accepted Answer

Equilibrium price will rise and equilibrium quantity will increase

Question 8

Which of the following best describes the opportunity cost of attending college full-time?

Accepted Answer

The income you could have earned by working instead of attending college

Question 9

Which of the following would cause a movement along the demand curve for pizza?

Accepted Answer

A decrease in the price of pizza

Question 10

Suppose the market price of apples is currently below the equilibrium price. What is likely to happen in this market?

Accepted Answer

There will be a shortage, and the price will tend to rise

Question 11

Which of the following is a microeconomic statement?

Accepted Answer

The price of smartphones has decreased due to technological advances.

Question 12

If nominal GDP increases from one year to the next, which of the following must be true?

Accepted Answer

Either prices, output, or both have increased

Question 13

Which of the following is an example of a government good or service included in GDP?

Accepted Answer

Salaries paid to public school teachers

Question 14

If the supply of oil decreases due to a natural disaster, what is the likely effect on the equilibrium price and quantity of oil, assuming demand remains unchanged?

Accepted Answer

Equilibrium price will rise and equilibrium quantity will fall

Question 15

Which of the following is NOT a characteristic of a centrally planned economy?

Accepted Answer

Prices are determined by supply and demand in markets

Question 16

A bakery buys flour to make bread, which it then sells to consumers. In calculating GDP, which of the following is counted?

Accepted Answer

The value of the bread sold to consumers

Question 17

If real GDP decreases from one year to the next, what can you infer?

Accepted Answer

Output has decreased, regardless of what happened to prices

Question 18

Which of the following is an example of an inferior good?

Accepted Answer

As income rises, people buy less instant noodles

Question 19

Suppose the government increases its purchases of goods and services by $100 million, with no change in other components of GDP. According to the expenditure approach, what happens to GDP?

Accepted Answer

GDP increases by $100 million

Question 20

Which of the following is a positive statement?

Accepted Answer

An increase in the minimum wage will lead to higher unemployment among teenagers.

Macroeconomics Midterm 1 Study Notes: Markets, Supply & Demand, and GDP

Study Guide - Practice Questions

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