Question

1. TRUE/FALSE( 1 mark per question, 20 marks in total) 11] An economy's income is the same as its expenditure because every transaction has a buyer and a seller. [21 GDP is the market value of all final goods and services produced by a country's citizens in a given period of time. 3] If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125. 14) Other things equal, in countries with higher levels of real GDP per person, life expectancy and literacy rates are higher than in countries with lower levels of real GDP per person. Is1 When the consumer price index falls, the typical family has to spend fewer dollars to maintain the same standard of living. t6] Economists use the term inflation to describe a situation in which the economy's overall price level is rising. 171 When a new good is introduced, consumers have more variety from which to choose, and this in turn increases the cost of maintaining the same level of economic well-being (8) The real interest rate is the interest rate corrected for inflation. (9) Like physical capital, human capital is a produced factor of production. 1o] When economists refer to investment, they mean the purchasing of stocks and [l1] An increase in the demand for loanable funds increases the equilibrium interest 112) When the government budget deficit rises, national saving is reduced, interest [13) Alberta buys a paint sprayer and a lift for her car customizing shop. A bonds and other types of saving. rate and increases the equilibrium level of saving rates rise, and investment falls. macroeconomist would refer to these purchases as investment. (141 Some degree of unemployment is inevitable in a complex economy 11s) The natural rate of unemployment is a type of unemployment that does not go away on its own even in the long run. 1i6] Full-time students and homemakers are included in the Bureau of Labor Statistics'"unemployed" category

Answer 1

1) true

because expenditure by consumers becomes the income of the producers.

2) false

gdp is final value of goods and services produced by RESIDENTS of the country ( not the citizens of the nation .) Residents may include citizens as well as non citizens .

3) true

gdp deflator = nominal gdp *100 / real gdp = 10,000 *100/8000 = 125

4 ) false. this statement may not always be true , it is possible that a nation may have higher gdp but perform poorly in human development index( education , health outcomes )

( done first 4parts as per policy )