Practice Test #1 in Macroeconomics

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Question 1: The statistic used by economists to measure the value of economic output is:

[] (a) the CPI
[] (b) the GDP deflator
[] (c) GDP
[] (d) the unemployment rate

Question 2: The economic statistic used to measure the level of prices is: 

[] a GDP
[] b GNP
[] c real GDP
[] d CPI

Question 3: The GDP is all of the following except the total: 

[] a expenditure of everyone in the economy.
[] b income of everyone in the economy.
[] c expenditure on the economy's output of goods and services.
[] d output of the economy

Question 4: The total income of everyone in the economy is exactly equal to the total: 

[] a expenditure on the economy's output of goods and services.
[] b consumption expenditures of everone in the economy.
[] c expenditures of all businesses in the economy.
[] d expenditures of government.

Question 5: An economy's _______ equals its _______ . 

[] consumption; income
[] consumption; expenditure on goods and services
[]expenditure on goods; expenditures on services
[]income;expenditure on goods and services

Question 6: All of the following are a stock except: 

[] a consumer wealth
[] the government budget deficit
[] the number of unemployed people
[] the amount of capital in the economy

Question 7: All of the following are a flow except: 

[] purchases of new automobiles.
[] people losing their jobs.
[] business expenditures on plant and equipoment.
[] the government debt.

Question 8: Assume that a firm hires workers and pays them wages, and that the workers produce more bread. GDP increases as a result of these acts in all of the following cases except where the bread: 

[] is sold to households.
[] is stored away for later sale.
[] spoils
[] is sold to other firms.

Question 9: When bread is baked but put away for later sale, this act is called: 

[] waste.
[] saving.
[] fixed investment.
[] inventory investment.

Question 10 Assume that total output consists of 4 apples and 6 oranges and that apples cost $1 each while oranges cost $0.50 each. In this case, the value of GDP is: 

[] 10 pieces of fruit.
[] $7.
[] $8.
[] $10.

Nouriel Roubini, Stern School of Business, 1997.
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