Economics Paper

Attempt 1
Question 1
4 out of 4 points

Suppose that a farmer grows wheat and sells it to a baker for $1, the baker makes bread and sells it to a store for $2, and the store sells it to the customer for $3. This transaction increases GDP by Answer

Selected Answer: $3.

Question 2
4 out of 4 points

If production remains the same and all prices double, then real GDP Answer

Selected Answer: is constant and nominal GDP doubles.

Question 3
4 out of 4 points

If the GDP price deflator is 2.0 and nominal GDP is $10,000 billion, then real GDP is Answer

Selected Answer: $5,000 billion.

Question 4
4 out of 4 points

The consumer price index (CPI) Answer

Selected Answer: measures the price of a fixed basket of good and services that typical households purchase.

Question 5
4 out of 4 points

In the national income accounts, all of the following are classified as government purchases except: Answer

Selected Answer: payments made to Social Security recipients.

Question 6
4 out of 4 points

Your grandparents tell you that in 1960 they paid $0.35 for admission to a movie. The price index in 1960 was 30. The price index today is 171. What is the price your grandparents paid in today’s dollars? Answer

Selected Answer: $1.99

Question 7
4 out of 4 points

Which of the following is a type of open-market operation? Answer

Selected Answer: The Fed sells Treasury bills to the public.

Question 8
4 out of 4 points

Consider the following table

Year Inflation Rate Nominal Interest Rate

1 5% 10%

2 10% 5%

By how much has the real interest rate changed between year 1