5.4   Appendix: Measuring Real GDP

1) Using the chained-dollar method to calculate real GDP, real GDP is calculated by

A) valuing the current output at last year’s real GDP prices.

B) valuing the current output at current year prices.

C) averaging the growth of output from one year to the next when the growth rates are calculated using this year’s prices and using last year’s prices.

D) either A or C, depending which gives the larger value for real GDP.

E) averaging the value of current output valued using base year prices and current output valued using current year prices.

2) Janet calculated the GDP growth rates for France between 2012 and 2013. Using 2012 prices for both years, GDP increased 5 percent. Using 2013 prices for both years, GDP increased 1 percent. Hence the chained-price method will calculate that between these years, real GDP increased by

A) 1 percent.

B) 3 percent.

C) 5 percent.

D) 6 percent.

E) 4 percent.

3) The table above gives some data about GDP in a country for two years. Using these the chained-dollar method for calculating real GDP, real GDP increased by ________ percent between these two years.

A) 4

B) 5

C) 6

D) 10

E) 2

4) Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. Nominal GDP in 2012 is equal to

A) $500.

B) $625.

C) $640.

D) $800.

E) $100.

5) Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. Nominal GDP in 2013 is equal to

A) $500.

B) $800.

C) $640.

D) $625.

E) $200.

6) Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. Real GDP in 2012 is equal to

A) $800.

B) $640.

C) $625.

D) $500.

E) $200.

7) Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. Between 2012 and 2013, which grew more rapidly, nominal GDP or real GDP?

A) Nominal GDP grew more rapidly.

B) Real GDP grew more rapidly.

C) Both grew at the same rate.

D) Because real GDP and nominal GDP use different prices, it is not possible to determine which grew most rapidly.

E) More information is needed to determine which grew more rapidly.

8) Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. In 2013, which is larger, nominal GDP or real GDP?

A) Nominal GDP is larger.

B) Real GDP is larger.

C) Both are the same size.

D) The answer is ambiguous.

E) More information is needed to determine which is larger.

9) Real GDP measures the value of goods and services produced in a given year using

A) base year prices.

B) prices of that same year.

C) no prices.

D) future prices.

E) government approved prices.

10) In a small country, using prices of 2012, GDP in 2012 was $100 and GDP in 2013 was $110. Using prices of 2013, GDP in 2012 was $200 and GDP in 2013 was $210. The country’s BEA will calculate ________ percent as the growth in real GDP between those years.

A) 10

B) 5

C) 15

D) 7.5

E) None of the above answers is correct.

11) Using prices from 2012, GDP grew 10 percent between 2012 and 2013; using prices from 2013, GDP grew 8 percent between 2012 and 2013. For its link back to the base year, the BEA will use ________ percent as the growth in real GDP between 2012 and 2013.

A) 10

B) 8

C) 2

D) 18

E) 9