ECONOMICS 353 (SECTION 1) L. Tesfatsion/Spring 01
EXERCISE SET 1: 5 POINTS TOTAL DUE: Tuesday, January 23, 9:30 A.M.
*IMPORTANT REMINDER: LATE ASSIGNMENTS CANNOT BE ACCEPTED -- NO EXCEPTIONS*
*NOTE:* Please FILL IN YOUR NAME, BIRTH DATE, AND ID (SOC SEC) No. on Side 1
of a RED bubble sheet and write "353 SECTION 1-EXERCISE SET 1" in the top
margin of Side 1. Use a #2 pencil to MARK YOUR ANSWERS on Side 1 of
the bubble sheet to the following five multiple choice questions:
1-1. As traditionally defined prior to 1995, real GDP (gross domestic product)
for the United States in year 2000 is a measure of the
A. total value of intermediate goods and services newly produced within the
borders of the U.S. in 2000, measured in year 2000 prices.
B. total value of real (physical) capital produced within the borders of the
U.S. in 2000, measured in year 2000 prices.
C C. total value of final goods and services newly produced within the
borders of the U.S. in 2000, measured in prices for some fixed base year.
D. total value of all real physical assets existing in the U.S. in 2000,
measured in prices for some fixed base year.
2-1. The U.S. GDP deflator for year 2000 is a measure of
A. the inflation-adjusted value of the U.S. GDP in 2000.
B B. the average price of the goods and services included in U.S. GDP in 2000.
C. the value of a basic basket of goods and services bought by a
typical U.S. urban household in 2000.
D. the sum of prices for the goods and services included in U.S. GDP in 2000.
3-1. A trend line is a measure of
A. the average magnitude of fluctuations in real GDP.
B B. the average movement exhibited by the time series data for some variable.
C. the average duration of business cycle expansions.
D. the currently hottest fads among consumers.
4-1. Evidence from the U.S. and from other countries indicates that
A. there is a strong negative correlation between the average price
level and the money supply (M2) -- that is, when one is increasing,
the other tends to be decreasing.
B. there is a strong positive correlation between the average price
level and the money supply (M2) -- that is, when one is increasing,
the other tends to be increasing as well.
C. the supply of money (M2) is unrelated to the average price level.
D. a high average inflation rate is associated with a high average money
growth rate, and vice versa.
E E. Only B and D are true.
5-1. It is important for the U.S. to keep track of its exchange rates because
A. these exchange rates have a direct affect on the cost of exports for
U.S. citizens
B. these exchange rates are direct measures of the net volume of trade
(exchange) between the U.S. and its trading partners.
C. these exchange rates measure migration flows and hence affect the
U.S. labor supply.
D D. these exchange rates have a direct affect on the cost of imports to
U.S. citizens
