GDP Calculation Test

Mock Multiple Choice Test Please note : • • The mock test contains 7 questions, but the actual test will contain 10 questions. During the actual test, once you start you will have 40 minutes to complete the test. QUESTION 1 The following table shows the nominal GDP (in 2017 US dollars) and the population of Turkey in 2017 and 2018. Based on this information, which of the following statements is correct? Select one correct answer Year GDP Population 2017 $ 859,000,000,000 81,120,000 2018 $ 778,400,000,000 82,340,000 a. The GDP per capita in 2018 was $10,589. b. The GDP per capita fell by 10.7 % between 2017 and 2018. c. Population grew by 2.3 %. d. Turkish GDP fell by 5 % from 2017 to 2018. QUESTION 2 Westeros, a country, produces just two output goods: apples and potatoes. In 2018 the prices of apples and potatoes were $2 per kg and $3 per kg, respectively. In 2019, the prices changes to $3 and $4. The quantities produced of the two goods were 150 and 100, respectively, in 2018 and the 200 and 150, in 2019. Taking 2018 as the base year, select one correct answer: Hint: When calculating real GDP use base year prices and not current prices. a. The nominal GDP in 2018 is $600. b. The real GDP is lower in 2019 than in 2018. c. The nominal GDP growth rate between 2018 and 2019 is 50 %. d. The economy got smaller in real terms from 2018 to 2019. 1 QUESTION 3 The following is a table of the total cost (TC) of producing output Q for a particular firm. Based on this information, which of the following statements is correct? Select one correct answer: Q TC 20 120 40 180 60 270 80 400 100 540 a. The average cost at Q = 40 is £3. b. The marginal cost at Q = 60 is £6.50. c. The marginal cost is higher than the average cost at Q = 20. d. The marginal cost curve intersects the average cost curve at Q = 60. QUESTION 4 Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno for the use of the land. The figure shows Angela and Bruno’s feasible frontier, Angela’s biological survival constraint, and her reservation indifference curve. If Angela does not work, she receives a ration of 2.5 bushels from the government. Which of the following statements is correct? Select one correct answer) a. The economically feasible set is the same as the technically feasible set. b. For any given number of hours of free time, the marginal rate of substitution on the reservation indifference curve is smaller than that on the biological survival constraint. c. Some points are economically feasible but not technically feasible. d. If the ration Angela gets from the government increases from 2 to 3 bushels of grain, her reservation indifference curve will be above her biological survival constraint whatever her working hours. 2 QUESTION 5 Which of the following is an example of a negative externality? a. A firm training a worker who may quit for a better job. b. A country investing in carbon-emission-reducing technology. c. A student playing loud music late at night. d. A worker choosing to commute to work instead of driving. QUESTION 6 In which of the following cases is there a moral hazard problem? a. Overfishing in a lake. b. A home-owner who is trying to sell her house and not revealing repairs needed in the roof. c. Buying goods online. d. An investment in a friend’s new venture, where you cannot observe how hard he is trying. QUESTION 7 Which of the following statements about money and the banking system is correct? a. The policy rate is the rate at which the central bank lends to commercial banks. b. Banks create base money by extending loans to their customers. c. Money is the amount of wealth one receives over some period of time. d. Investment is the money deposited in the bank. 3