ANSWER KEY
ECONOMICS 353 (SECTION 1) L. Tesfatsion/Spring 00
EXERCISE SET 1: 5 POINTS TOTAL DUE: Tuesday, January 25, 9:30 A.M.
*IMPORTANT REMINDER: LATE ASSIGNMENTS CANNOT BE ACCEPTED -- NO EXCEPTIONS*
NOTE: Please FILL IN YOUR NAME on Side 1 of the accompanying General Purpose
NCS Answer Sheet and use a #2 pencil to MARK YOUR ANSWERS on Side 1 of this
Answer Sheet to the following five multiple choice questions:
1-1. The key difference between nominal GDP (gross domestic product) and real
GDP for the United States is that
A. Nominal GDP includes production outside the borders of the U.S.
whereas real GDP does not.
X B. Real GDP is corrected for price movements whereas nominal GDP is not.
C. Nominal GDP includes financial assets whereas real GDP includes only
real assets.
D. Nominal GDP is the initial measure of output and real GDP is the
final revised measure of output.
2-1. The aggregate price level for the U.S. in 1999
A. is the total value of all goods and services sold in the U.S. in 1999.
B. is the total sum of prices for goods and services in the U.S. during 1999.
X C. is the average price of goods and services in the U.S. during 1999.
D. is the average value of U.S.-owned assets at the end of 1999.
3-1. Sustained downward movements in real GDP are referred to as
A. economic recoveries.
X B. recessions.
C. slides.
D. expansions.
E. none of the above
4-1. Evidence from the United States and other foreign countries indicates that
A. there is a strong negative association between the inflation rate and
the growth rate of money over long periods of time (i.e., when one is
high, the over tends to be low).
B. there is strong positive association between the inflation rate and
the growth rate of money over long periods of time (i.e., when one is
high, the other tends to be high as well)
C. the money growth rate is unrelated to inflation.
D. the money growth rate is related to the business cycle.
X E. only B and D are true
5-1. The U.S. government budget DEFICIT for 1999 measures the extent to which
A. the U.S. had to rely on foreign borrowing in 1999.
X B. 1999 government expenditures exceeded 1999 government tax revenues.
C. 1999 government tax revenues exceeded 1999 government expenditures.
D. U.S. exports exceeded U.S. imports in 1999.
