ECON 102 Introductory Macroeconomic Analysis
PRACTICE MIDTERM 1
____ 1. When a firm sells a good or a service, the sale contributes to U.S. GDP, as measured by the expenditure
method
a. only if the buyer of the good or service is a household.
b. only if the buyer of the good or service is a household or another firm.
c. only if the good or service was produced within the U.S.
d. only if the good or service was sold within the U.S.
____ 2. GDP is defined as
a. the market value of all goods and services produced within a country in a given period of
time.
b. the market value of all goods and services produced by the citizens of a country,
regardless of where they are living in a given period of time.
c. the market value of all final goods and services produced within a country in a given
period of time.
d. the market value of all final goods and services produced by the citizens of a country,
regardless of where they are living, in a given period of time.
____ 3. If GDP is growing at 5%, and population is growing at 2%, what is the (approximate) growth rate of per capita
GDP?
a. 3%
b. 5%
c. 7%
d. 2.5%
____ 4. A steel company sells some steel to a bicycle company for $100. The bicycle company uses the steel to
produce a bicycle, which it sells for $200. Taken together, these two transactions contribute
a. $100 to GDP.
b. $200 to GDP.
c. between $200 and $300 to GDP, depending on the profit earned by the bicycle company
when it sold the bicycle.
d. $300 to GDP.
____ 5. A U.S. publisher purchases new computers that were manufactured in the U.S. This purchase by itself makes
a. a positive contribution both to investment and to GDP.
b. a positive contribution both to consumption and to GDP.
c. a positive contribution to GDP, but it does not affect investment or consumption.
d. a positive contribution to investment, but it does not affect GDP.
