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GDP and PPP - Practice Questions

1. The market value of final goods and services sold within a country is more commonly known as: *

Gross Domestic Product

Consumer Price Index

Net National Product

2. Which of the following is NOT a problem in using exchange rates to convert the GDPs of different countries? *

exchange rates tend to change rapidly and frequently

exchange rates can be either fixed or floating, so discovering the appropriate exchange is extremely difficult

exchange rates are more relevant to some types of goods than others

3. After converting currencies, we often find the price of a good in one country is similar to that in another country. This is also known as: *

the Stolper-Samuelson Theorem

the Rybinski rule of prices

the law of one price

4. __________ GDP is the market value of all final goods and services sold within a country throughout a given year, while _______________ GDP is corrected to reflect changes in the price level. *

nominal, real

real, nominal

nominal, inflation-augmented

5. Countries with higher incomes tend to have higher exchange rates compared to poorer countries. This is known more commonly as the: *

Balassa-Samuelson Effect

Covered Interest Rate Parity

The Paradox of Exchange

6. One difficulty in using GDP comparisons over time is that: *

people tend to change their consumption patterns over time

the quality of goods changes over times

both a. and b.

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GDP and PPP - Practice Questions