Topics: Investment, Macroeconomics, International economics, Capital accumulation / Pages: 7 (1864 words) / Published: Jun 24th, 2014
Practice Problems


1. The CPI index:
A. Is usually highly correlated with the GDP deflator
B. Measures the price of a consumption basket; the GDP deflator, instead, measures the cost of a basket of locally produced goods
C. Is sensitive to the high volatility of the price of food and energy
D. All of the above

2. Looking at the composition of GDP in the last 50 years, we can claim that:
A. Both in India and the US the consumption share has been converging to about 70%
B. The investment share has a positive trend in India and negative trend in the US
C. Both US and India are net exporters, and their exports represent a large share of GDP
D. The government expenditure share has declined both in India and the US

3. The desired investment level:
A. increases when either the real rate in the economy or the price of equipment increase
B. decreases if expected productivity increases
C. increases if the Effective Tax Rate increases
D. none of the above.

4. The current negative Net-Exports (NX) in India:
E. Implies that the rest of the world (taken together) has negative NX
F. Is historically the largest component of GDP
G. Helps foreign countries to increase their financial investment in India
H. none of the above

5. Given the following report for the US economy:

A. US economic growth slowed during the first quarter of 2011 compared to previous quarter.
B. First quarter growth came in lower than the median projection for 2.0 percent.
C. Realized inflation was below expectations
D. All of the above

6. Suppose country X has a current account surplus, which of the following is true?
A. Net foreign wealth (i.e., wealth held by citizens of country X) will tend to increase.
B. Imports will be greater than exports.
C. National savings will be lower than if the country has a current account deficit. D. All of the above.

7. If a Brazilian company opens a new factory in Peru, it

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