Economics of Money, Banking, and Financial Markets, 8e (Mishkin) Chapter 1 1.5 Concluding Remarks

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Economics of Money, Banking, and Financial Markets, 8e (Mishkin) Chapter 1 1.6 Appendix: Defining Aggregate Output, Income, the Price Level, and the Inflation Rate

1) The most comprehensive measure of aggregate output is

A) gross domestic product. B) net national product. C) the stock value of the industrial 500. D) national income. Answer: A

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2) Values measured using current prices are called ________ values.

A) nominal B) real C) inflated D) aggregate Answer: A

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3) When the total value of final goods and services is calculated using current prices, the resulting measure is referred to as A) real GDP. B) the GDP deflator. C) nominal GDP. D) the index of leading indicators. Answer: C

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4) GDP measured with constant prices is referred to as

A) real GDP. B) nominal GDP. C) the GDP deflator. D) industrial production. Answer: A

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5) If the aggregate price level at time t is denoted by Pt, the inflation rate from time t - 1 to t is defined as

Π t = (P - P -1)/ P -1. A) ttt

Π t = (PB) t + 1 - Pt - 1) /Pt - 1. Π t = (PC) t + 1 - Pt) /Pt. Π t = (P - PD) tt - 1) /Pt.

Answer: A

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Economics of Money, Banking, and Financial Markets, 8e (Mishkin) Chapter 1

6) The gross domestic product is the

A) the value of all wealth in an economy. B) the value of all goods and services sold to other nations in a year. C) the market value of all final goods and services produced in an economy in a year. D) the market value of all intermediate goods and services produced in an economy in a year. Answer: C

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7) If an economy has aggregate output of $20 trillion, then aggregate income is

A) $10 trillion. B) $20 trillion. C) $30 trillion. D) $40 trillion. Answer: B

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8) If your nominal income in 1996 was $50,000, and prices doubled between 1996 and 2002, to have the same real income, your nominal income in 2002 must be A) $50,000. B) $75,000. C) $90,000. D) $100,000. Answer: D

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9) If your nominal income in 1990 is $50,000, and prices increase by 50% between 1990 and 2000, then to have the same real income, your nominal income in 2000 must be A) $50,000. B) $75,000. C) $100,000. D) $150,000. Answer: B

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10) If nominal GDP in 2001 is $9 trillion, and 2001 real GDP in 1996 prices is $6 trillion, the GDP deflator price

index is A) 7. B) 100. C) 150. D) 200. Answer: C

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Economics of Money, Banking, and Financial Markets, 8e (Mishkin) Chapter 1

11) If the price level increases from 200 in year 1 to 220 in year 2, the rate of inflation from year 1 to year 2 is

A) 20%. B) 10%. C) 11%. D) 120%. Answer: B

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12) If real GDP grows from $10 trillion in 2002 to $10.5 trillion in 2003, the growth rate for real GDP is

A) 5%. B) 10%. C) 50%. D) 0.5%. Answer: A

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13) If real GDP in 2002 is $10 trillion, and in 2003 real GDP is $9.5 trillion, then real GDP growth from 2002 to 2003

is A) 0.5%. B) 5%. C) 0%. D) -5%. Answer: D

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14) If the CPI is 120 in 1996 and 180 in 2002, then between 1996 and 2002, prices have increased by

A) 180%. B) 80%. C) 60%. D) 50%. Answer: D

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15) If the CPI in 2004 is 200, and in 2005 the CPI is 180, the rate of inflation from 2004 to 2005 is

A) 20%. B) 10%. C) 0%. D) -10%. Answer: D

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16) The measure of the aggregate price level that is most frequently reported in the media is the ________.

A) GDP deflator B) producer price index C) consumer price index D) household price index Answer: C

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