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8.5  Distinguishing Between Nominal and Real Values

1) When economists discuss the nominal value of an economic variable, the variable is

A) expressed in current dollars.

B) expressed as an index figure.

C) adjusted for a changing price level.

D) expressed as a percentage.

2) Suppose that in 2011, nominal Gross Domestic Product (GDP) for the economy of Chiconia was \$10 trillion and the Gross Domestic Product (GDP) price index was 200.0.  What is Chiconia's real Gross Domestic Product (GDP) in 2011?

A) \$5 trillion

B) \$10 trillion

C) \$20 trillion

D) \$200 trillion

3) Which of the following statements does NOT describe the real value of an economic variable?

A) It is adjusted for changes in the price level.

B) It is expressed in constant dollars.

C) It is a measure of the purchasing power of the variable.

D) It is the variable's nominal value adjusted for unemployment.

4) If nominal Gross Domestic Product (GDP) in 2005 was \$500 billion with a price index of 100, what would be the real Gross Domestic Product (GDP) in 2013 if the 2013 nominal Gross Domestic Product (GDP) was \$900 billion and the 2013 price index was 140?

A) \$900 billion

B) \$540 billion

C) \$800 billion

D) \$643 billion

5) If nominal Gross Domestic Product (GDP) in 2001 was \$1 trillion, nominal Gross Domestic Product (GDP) in 2013 was \$2 trillion, and the 2001 and 2013 price indexes were 100 and 250 respectively,

A) real Gross Domestic Product (GDP) increased between 2001 and 2013.

B) real Gross Domestic Product (GDP) decreased between 2001 and 2013.

C) real Gross Domestic Product (GDP) remained constant.

D) we cannot draw any conclusions about changes in real Gross Domestic Product (GDP).

6) If nominal Gross Domestic Product (GDP) in 2013 was \$3,000 billion, and the price level index was 330 (1985 = 100), then real Gross Domestic Product (GDP) in terms of the price level in 2013 was about

A) \$105 billion.

B) \$4,220 billion.

C) \$909 billion.

D) \$537 billion.

7) The difference between nominal and real values is that real values take into account

A) depreciation.

B) changes in the composition of output.

C) changes in prices between years.

D) the presence of durable goods.

8) The nominal value of Gross Domestic Product (GDP) is expressed in

B) constant dollars.

C) base-year dollars.

D) none of the above.

9) Adjusting nominal Gross Domestic Product (GDP) for price changes from a base year yields

A) current Gross Domestic Product (GDP).

B) real Gross Domestic Product (GDP).

C) constant disposable income.

D) Gross Domestic Product (GDP) net of relative price changes.

10) Constant dollar Gross Domestic Product (GDP)

A) is the same as nominal Gross Domestic Product (GDP).

B) is nominal Gross Domestic Product (GDP) divided by the price index.

C) is equal to real GDP multiplied by the overall price level.

D) all of the above.

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