Galen University – BKFN 315 – Intermediate Macroeconomics – Test # 1
Friday April 4, 2014. This test contributes 15% towards your semester grade.

1. Macroeconomic statistics include GDP, the inflation rate, the unemployment rate, retail sales, and the trade deficit. TRUE
2. Macroeconomic statistics tell us about a particular household, firm, or market. FALSE
3. Macroeconomics is the study of the economy as a whole. TRUE
4. The goal of macroeconomics is to explain the economic changes that affect many households, firms, and markets simultaneously. TRUE
5. Microeconomics and macroeconomics are closely linked. TRUE
6. The basic tools of supply and demand are as central to macroeconomic analysis as they are to microeconomic analysis. TRUE
7. GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society’s economic well-being. TRUE
8. GDP can measure either the total income of everyone in the economy or the total expenditure on the economy’s output of goods and services, but GDP cannot measure both at the same time. FALSE
9. For an economy as a whole, income must exceed expenditure. FALSE
10. An economy’s income is the same as its expenditure because every transaction has a buyer and a seller. TRUE
11. If exports are $500, GDP is $8000, government purchases are $1200, imports are $700, and investment is $800, then consumption is $6200. TRUE
12. If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300. FALSE

13. An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and services. FALSE

14. Economists use the term inflation to describe a situation in which the economy’s overall production level is rising. FALSE

15. GDP does not make adjustments for leisure time,