Question

27. A firm's value added equals a) its revenue minus all of its costs. b) its revenue minus its wages. c) its revenue minus its wages and profit. d) its revenue minus its cost of intermediate goods. e) none of the above 28. Deflation generally occurs when which of the following occurs? a) the consumer price index is greater than the GDP deflator b) the consumer price index decreases c) the rate of inflation falls, for example, from 4% to 2% d) nominal GDP does not change 29. Suppose nominal GDP in 2009 does not change (compared its previous level in 2008). Given this information, we know with certainty that a) real GDP increased during 2009. b) the GDP deflator increased during 2009. c) both the GDP deflator and real GDP fell during 2009. d) more information is needed to answer this question. 30. Which of the following does not represent real GDP? a) GDP in current dollars b) GDP in terms of goods c) GDP in base year dollars d) GDP in constant dollars 31. According to convention, a recession is referred to if an economy goes througlh a) at least two consecutive quarters of negative growth. b) at least three consecutive quarters of negative growth. c) at least four quarters of negative growth. d) at least two consecutive months of negative growth.

Answer 1

27. Correct answer is option d i.e. its revenue minus its cost of intermediate goods

28. Correct answer is option b i.e. when consume price index decreases

29. Correct answer is option d i.e. more information is needed to answer this question

30. Correct answer is option a i.e. GDP in current dollar

31. Correct answer is option a i.e. at least two consecutive quarter of negative growth