Question 1

In the GDP definition, market value refers to

Accepted Answer

A)  when the production took place. 
B)  not counting intermediate products. 
C)  valuing production in production units. 
D)  valuing production according to the market price. 
A)  when the production took place. 
B)  not counting intermediate products. 
C)  valuing production in production units. 
D)  valuing production according to the market price.

Question 2

Which of the following is included in the government expenditure component of the expenditure approach to GDP?

Accepted Answer

A)  changes in inventories 
B)  taxes 
C)  state government expenditure on local schools 
D)  transfer payments 
A)  changes in inventories 
B)  taxes 
C)  state government expenditure on local schools 
D)  transfer payments

Question 3

Double counting (counting the same thing twice) in GDP accounting is avoided by not including

Accepted Answer

A)  intermediate goods. 
B)  illegal activities. 
C)  net exports. 
D)  depreciation. 
A)  intermediate goods. 
B)  illegal activities. 
C)  net exports. 
D)  depreciation.

Question 4

The omission of household production causes actual economic production to be underestimated.

Accepted Answer

A) True 
 B)False

Question 5

Business cycles are

Accepted Answer

A)  unpredictable, and don't always have two phases and two turning points. 
B)  predictable, with a recession following a trough. 
C)  unpredictable, but always have two phases and two turning points. 
D)  irregular, with some having two recessions and no expansion. 
A)  unpredictable, and don't always have two phases and two turning points. 
B)  predictable, with a recession following a trough. 
C)  unpredictable, but always have two phases and two turning points. 
D)  irregular, with some having two recessions and no expansion.

Question 6

The underground economy means that GDP will overstate the actual level of economic welfare.

Accepted Answer

A) True 
 B)False

Question 7

"To calculate GDP, economists begin with total income earned and then subtract total expenditure by the four sectors of the economy." Is the previous sentence true or false? Explain your answer.

Accepted Answer

The sentence is false. To calculate GDP,

Question 8

What is the relationship shown by the circular flow among income, total expenditure, and GDP?

Accepted Answer

They are all equal. The value of product

Question 9

The following data are estimates describing Ireland's economy in 2006 and 2007 (in millions of euro constant prices):   In 2007, Ireland's net exports was _ million euros.

Accepted Answer

A)  - 23,000 
B)  279,000 
C)  23,000 
D)  149,100 
A)  - 23,000 
B)  279,000 
C)  23,000 
D)  149,100

Question 10

An example of "investment" in the national income accounts is the purchase of

Accepted Answer

A)  a new van by a potter, who packs it with his wares and travels to art shows. 
B)  a U.S. government bond. 
C)  100 shares of Canadian stock on the New York Stock Exchange. 
D)  a 100- year- old house that was just put on the protected historic sites list in the year in question. 
A)  a new van by a potter, who packs it with his wares and travels to art shows. 
B)  a U.S. government bond. 
C)  100 shares of Canadian stock on the New York Stock Exchange. 
D)  a 100- year- old house that was just put on the protected historic sites list in the year in question.

Question 11

Which of the following is NOT a final good?

Accepted Answer

A)  a hot dog sold to a spectator at a Chicago Bears football game 
B)  a new car sold to Avis for use in their fleet of rental cars 
C)  a purse sold to a foreign visitor 
D)  a new computer sold to an NYU student 
A)  a hot dog sold to a spectator at a Chicago Bears football game 
B)  a new car sold to Avis for use in their fleet of rental cars 
C)  a purse sold to a foreign visitor 
D)  a new computer sold to an NYU student

Question 12

Explain how underground economic activity affects measurement of GDP.

Accepted Answer

The underground economy are transactions

Question 13

If depreciation is less than gross investment, then net investment is

Accepted Answer

A)  positive. 
B)  zero. 
C)  negative. 
D)  This situation could never occur because it is impossible for depreciation to be less than gross investment. 
A)  positive. 
B)  zero. 
C)  negative. 
D)  This situation could never occur because it is impossible for depreciation to be less than gross investment.

Question 14

-Using the information in the table above, depreciation equals

Accepted Answer

A)  - $90 billion. 
B)  - $70 billion. 
C)  $90 billion. 
D)  some amount that cannot be determined. 
A)  - $90 billion. 
B)  - $70 billion. 
C)  $90 billion. 
D)  some amount that cannot be determined.

Question 15

Depreciation is

Accepted Answer

A)  the decrease in the stock of capital goods from physical wear and tear. 
B)  always larger than capital consumption. 
C)  added to GDP to equal net domestic product. 
D)  not included in GDP from the income side. 
A)  the decrease in the stock of capital goods from physical wear and tear. 
B)  always larger than capital consumption. 
C)  added to GDP to equal net domestic product. 
D)  not included in GDP from the income side.

Question 16

-Using the data in the above table, gross domestic product as calculated by the income approach equals _ .

Accepted Answer

A)  $2,333 
B)  $2,205 
C)  $2,925 
D)  $2,592 
A)  $2,333 
B)  $2,205 
C)  $2,925 
D)  $2,592

Question 17

Why does real GDP have limitations in determining economic welfare?

Accepted Answer

First economic welfare is a broad concep

Question 18

The data show Argentina's GDP (using purchasing power parity) in billions of dollars.   The data show that

Accepted Answer

A)  GDP per person increased between 1990 and 2006. 
B)  Argentina's potential GDP doubled between 1990 and 2006. 
C)  Argentina's economy reached a peak in 1998. 
D)  Argentina's economy entered a recession in 2000. 
A)  GDP per person increased between 1990 and 2006. 
B)  Argentina's potential GDP doubled between 1990 and 2006. 
C)  Argentina's economy reached a peak in 1998. 
D)  Argentina's economy entered a recession in 2000.

Question 19

Which of the following is correct?

Accepted Answer

A)  Aggregate income is greater than aggregate expenditure but equal to GDP. 
B)  Aggregate income, aggregate expenditure and GDP are all equal. 
C)  Aggregate income is greater than GDP but equal to aggregate expenditure. 
D)  Aggregate expenditure equals GDP but is less than aggregate income. 
A)  Aggregate income is greater than aggregate expenditure but equal to GDP. 
B)  Aggregate income, aggregate expenditure and GDP are all equal. 
C)  Aggregate income is greater than GDP but equal to aggregate expenditure. 
D)  Aggregate expenditure equals GDP but is less than aggregate income.

Question 20

If consumption expenditures are $500 million, net investment is $100 million, depreciation equals
$5 million, imports are $50 million, exports are $55 million, government expenditure on goods and services is $220 million, and government transfer payments are $20 million, then GDP is

Accepted Answer

A)  $830 million. 
B)  $800 million. 
C)  $790 million. 
D)  $850 million. 
A)  $830 million. 
B)  $800 million. 
C)  $790 million. 
D)  $850 million.

In the GDP definition, market value refers to

Which of the following is included in the government expenditure component of the expenditure approach to GDP?

Double counting (counting the same thing twice) in GDP accounting is avoided by not including

The omission of household production causes actual economic production to be underestimated.

Business cycles are

The underground economy means that GDP will overstate the actual level of economic welfare.

"To calculate GDP, economists begin with total income earned and then subtract total expenditure by the four sectors of the economy." Is the previous sentence true or false? Explain your answer.

What is the relationship shown by the circular flow among income, total expenditure, and GDP?

The following data are estimates describing Ireland's economy in 2006 and 2007 (in millions of euro constant prices): In 2007, Ireland's net exports was _ million euros.

An example of "investment" in the national income accounts is the purchase of

Which of the following is NOT a final good?

Explain how underground economic activity affects measurement of GDP.

If depreciation is less than gross investment, then net investment is

-Using the information in the table above, depreciation equals

Depreciation is

-Using the data in the above table, gross domestic product as calculated by the income approach equals _ .

Why does real GDP have limitations in determining economic welfare?

The data show Argentina's GDP (using purchasing power parity) in billions of dollars. The data show that

Which of the following is correct?

If consumption expenditures are $500 million, net investment is $100 million, depreciation equals $5 million, imports are $50 million, exports are $55 million, government expenditure on goods and services is $220 million, and government transfer payments are $20 million, then GDP is

What Is Economics

The Economic Problem

Demand and Supply

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 4: Measuring Gdp and Economic Growth

In the GDP definition, market value refers to

Which of the following is included in the government expenditure component of the expenditure approach to GDP?

Double counting (counting the same thing twice) in GDP accounting is avoided by not including

The omission of household production causes actual economic production to be underestimated.

Business cycles are

The underground economy means that GDP will overstate the actual level of economic welfare.

"To calculate GDP, economists begin with total income earned and then subtract total expenditure by the four sectors of the economy." Is the previous sentence true or false? Explain your answer.

What is the relationship shown by the circular flow among income, total expenditure, and GDP?

The following data are estimates describing Ireland's economy in 2006 and 2007 (in millions of euro constant prices): In 2007, Ireland's net exports was _ million euros.

An example of "investment" in the national income accounts is the purchase of

Which of the following is NOT a final good?

Explain how underground economic activity affects measurement of GDP.

If depreciation is less than gross investment, then net investment is

-Using the information in the table above, depreciation equals

Depreciation is

-Using the data in the above table, gross domestic product as calculated by the income approach equals _ .

Why does real GDP have limitations in determining economic welfare?

The data show Argentina's GDP (using purchasing power parity) in billions of dollars. The data show that

Which of the following is correct?

If consumption expenditures are $500 million, net investment is $100 million, depreciation equals $5 million, imports are $50 million, exports are $55 million, government expenditure on goods and services is $220 million, and government transfer payments are $20 million, then GDP is

What Is Economics

The Economic Problem

Demand and Supply

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters