TRUE AND FALSE Macroeconomies Quiz (Ch4-10) Class: Student ID Number: Name: 10 L
ID: 1103988 • Letter: T
Question
TRUE AND FALSE
Macroeconomies Quiz (Ch4-10) Class: Student ID Number: Name: 10 L TRUE AND FALSE No. Answer No. 11 12 13 14 15 16 17 18 19 20 Answer 1. If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good. 2. In principle, trade can make a nation better off, because the gains to the winners exceed the losses to the losers. 3. If real GDP and the GDP deflator both rise, then it must be that nominal GDP rose. 4. GDP is a good measure of economic well-being for all purposes. 5. While GDP includes tangible goods such as books and bug spray, it excludes intangible services such as the services provided by teachers and exterminators. 6. The CPI is a measure of the overall cost of the goods and services bought by a typical consumer 7. The real interest rate is the interest rate corrected for inflation 8. When some dollar amount is automatically corrected for inflation by law or contract, the amount is said to be indexed for inflation. 9. Human capital is the tern economists use to refer to the knowledge and skills that workers acquire through education, training, and experience. 10. The catch-up efect refers to the idea that poor countries, despite their best efforts, are not likely ever to experience the economic growth rates of wealthier countries 11. Public saving is T- G, while private saving is Y-T-C. 12·The term crowding out refers to decreases in the interest rate caused by government budget surpluses. 13. An increase in the demand for loanable funds increases the equilibrium interest rate and decreases the equilibrium level of saving. 14. An increase in the budget deficit shifts the demand for loanable funds to the rightExplanation / Answer
1. If World price of a country is greater than the domestic price of a country then that country becomes exporter of the good, because it can supply goods in international market at a price that is greater than its equilibrium price and thus gets better off.
Answer- False
2.with trade every nations are better off. As trade allows people to buy a variety of goods at lower cost, gains to the winners exceeds exceeds loss to the losers.
Answer- True
3. GdP deflator= (Nominal GDP/Real GDP)*100 . When Real GDP increases according to this formula, GDP deflator will decrease. But it has been said that GDP deflator also increases. So, nominal GDP must have increased for GDP deflator to be increased.
Answer- true
4. GDP measures how the economy is performing, but it does not measure if the economy meets all of its demand, the health and living standards of the people. Thus for all purpose, GDP is not a good measure of economic well being.
Answer- False
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