1) Which sectors are missing in spaces x and y in the following expanded circular flow diagram?     A) Foreign Sector and Government Sector B) Foreign Sector and Business Sector C) Government Sector and Financial Markets D) Foreign Sector and Financial Markets 2

1) Which sectors are missing in spaces x and y in the following expanded circular flow diagram?

A) Foreign Sector and Government Sector

B) Foreign Sector and Business Sector

C) Government Sector and Financial Markets

D) Foreign Sector and Financial Markets

2. The following table for the years 2016 and 2017 represents the Economy of Columbus which produces only two goods: Jeni’s Ice-cream and Pens.

Based on the information above, calculate the value of nominal GDP for the year 2016.

A) 10,003

B) 10,005

C) 13,000

D) 17,001.1

3. The following table for the years 2016 and 2017 represents the Economy of Columbus which produces only two goods: Jeni’s Ice-cream and Pens.

Based on the information above, calculate the value of real GDP for the year 2017, considering 2016 as base year.

A) 13,000

B) 17,001.1

C) 10,003

D) 14,001

4. Which of the following is not a component of GDP?

A.) Consumption

B.) Taxes

C.) Net exports

D.) Government spending

5. Suppose the GDP of Honduras is $849 million, total taxes are $45 million, depreciation is $50 million, and wages are $500 million. What is the national income of Hondruas?

A) $849 million

B) $349 million

C) $799 million

D) $804 million

6. Use the table below of spending in a country to answer this question:

What is GDP in this country?

A.) $2,000

B.) $2,200

C.) $1,800

D.) $1,000

7. Which of the following statements is false regarding the limitations of GDP?

A) Activity in the underground economy is not included in GDP, although it is part of total production in the economy.

B) Home production is not included in GDP, even though it is often a major component of economic activity.

C) Environmental effects of production are not included in GDP.

D) Government purchases are not included in GDP, although, for example, state officers’ salaries should be included.

8. The following tables contain information for an imaginary economy:

Compute the price level percentage increase between 2016 and 2017 (hint: you must first compute the GDP deflator for 2017)

A) 3.32%

B) 3.02%

C) -4.81%

D) 5.05%

9. Suppose that a farmer sells ¼ pound of beef to a butcher shop for $1.00. The butcher shop grinds the beef and sells it for $1.75 to McDonalds. McDonalds uses the ground beef to make and sell a Quarter Pounder for $3.79. What is the butcher shop’s value added in producing the Quarter Pounder?

A.) $1.75

B.) $2.04

C.) $0.75

D.) $1.00

10. The national income of France is $650 million, transfer payments from the government to households are $30 million, and retained corporate profits are $200 million. What is the personal income of France?

A) $480 million

B) $650 million

C) $420 million

D) $680 million