ANSWER KEY
ECONOMICS 353 (SECTION 2) L. Tesfatsion/Spring 00
EXERCISE SET 1: 5 POINTS TOTAL DUE: Tuesday, January 25, 2:10 P.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:
1-2. Nominal GDP (gross domestic product) for the U.S. in 1999 is
A. the total dollar value of all U.S.-owned assets at the end of 1999.
B. the total dollar value of all final goods and services produced in 1999
using U.S.-owned factors of production, measured in 1999 prices.
X C. the total dollar value of all final goods and services produced in 1999
within the borders of the U.S., measured in 1999 prices.
D. the total dollar value of all final goods and services produced
within the borders of the U.S. in 1999, measured in base year 1992 prices.
2-2. Letting P(T) denote the aggregate price level in period T, the inflation
rate from T to T+1 is defined to be
X A. [P(T+1) - P(T)]/P(T)
B. [P(T) - P(T+1)]/P(T)
C. [P(T+1) - P(T)]/P(T+1)
D. [P(T) - P(T+1)]/P(T+1)
3-2. Recurrent fluctuations that occur in time series data for real GDP
and other key macro variables are referred to as
A. variable trends.
B. measurement errors.
X C. the business cycle.
D. standard deviations.
E. none of the above
4-2. Evidence from the United States indicates that
A. interest rates are unrelated to the business cycle.
B. short-term interest rates are less variable than long-term
interest rates.
C. short and long-term interest rates show no relationship.
D. the relationship between money growth and interest rates has become
more clear-cut in the 1980s and 1990s.
X E. none of the above.
5-2. Government monetary policy is the management by government of
A. the extent of foreign borrowing.
B. the balance of payments.
C. U.S. exports and imports.
X D. money and interest rates.
