Tackle the Test: Multiple-Choice Questions

1. Question

   Which of the following is true of real GDP?

   
   

   
   

   1. It is adjusted for changes in prices.

      
      
   
   

   2. It is always equal to nominal GDP.

      
      
   
   

   3. It increases whenever aggregate output increases.
      

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and III

   E.

   I, II, and III

   Which of the following is true of real GDP?

2. Question

   The best measure for comparing a country’s aggregate output over time is

   A.

   nominal GDP.

   B.

   real GDP.

   C.

   nominal GDP per capita.

   D.

   real GDP per capita.

   E.

   average GDP per capita.

   The best measure for comparing a country’s aggregate output over time is
3. Page 120

   Question

   Use the information provided in the table below for an economy that produces only apples and oranges. Assume year 1 is the base year.

   
   

   
   

   
   

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

   	Year 1	Year 2
   Quantity of apples	3,000	4,000
   Price of an apple	$0.20	$0.30
   Quantity of oranges	2,000	3,000
   Price of an orange	$0.40	$0.50

   
   

   
   

   What was the value of real GDP in each year?
   Year 1Year 2

   A.

   $1,400$2,700

   B.

   1,9002,700

   C.

   1,4002,000

   D.

   1,9002,000

   E.

   1,4001,900

   Use the information provided in the table below for an economy that produces only apples and oranges. Assume year 1 is the base year.

4. Question

   Real GDP per capita is an imperfect measure of the quality of life in part because it

   A.

   includes the value of leisure time.

   B.

   excludes expenditures on education.

   C.

   includes expenditures on natural disasters.

   D.

   excludes expenditures on entertainment.

   E.

   includes the value of housework.

   Real GDP per capita is an imperfect measure of the quality of life in part because it

5. Question

   Refer to the 2013 data in the table below.

   
   

   
   

   
   

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

   	Nominal GDP in billions of dollars
   United States	$16,803
   Japan	4,902
   European Union	17,371

   
   

   
   

   Which of the following can be determined with the information in the table?

   
   

   
   

   1. Residents of Japan were worse off than residents of the United States or the European Union.

      
      
   
   

   2. The European Union had a higher nominal GDP per capita than the United States.

      
      
   
   

   3. The European Union had a larger economy than the United States.
      

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   II and III

   E.

   I, II, and III

   Refer to the 2013 data in the table below.