Question 1

-In the above figure, the distance between points T and U represents

Accepted Answer

A)  an expansion. 
B)  a peak. 
C)  a recession. 
D)  a trough. 
A)  an expansion. 
B)  a peak. 
C)  a recession. 
D)  a trough.

Question 2

Gross investment is equal to

Accepted Answer

A)  depreciation plus net investment. 
B)  net investment minus capital stock. 
C)  depreciation minus net investment. 
D)  net investment plus capital stock. 
A)  depreciation plus net investment. 
B)  net investment minus capital stock. 
C)  depreciation minus net investment. 
D)  net investment plus capital stock.

Question 3

GDP decreases during

Accepted Answer

A)  the movement from peak to trough. 
B)  the movement from trough to peak. 
C)  the movement from below potential GDP back to potential GDP. 
D)  a decrease in unemployment. 
A)  the movement from peak to trough. 
B)  the movement from trough to peak. 
C)  the movement from below potential GDP back to potential GDP. 
D)  a decrease in unemployment.

Question 4

The following data are estimates describing Ireland's economy in 2006 and 2007 (in millions of euro constant prices):   Ireland's real GDP in 2007 was million euros.

Accepted Answer

A)  442,000 
B)  163,000 
C)  188,400 
D)  186,000 
A)  442,000 
B)  163,000 
C)  188,400 
D)  186,000

Question 5

In 2008, net exports in the United States were

Accepted Answer

A)  negative. 
B)  positive. 
C)  zero. 
D)  greater than personal consumption expenditures. 
A)  negative. 
B)  positive. 
C)  zero. 
D)  greater than personal consumption expenditures.

Question 6

refers to a period when the decreases.

Accepted Answer

A)  Recession; growth rate of nominal GDP 
B)  Productivity growth slowdown; growth rate of output per person 
C)  Productivity growth slowdown; growth rate of real GDP 
D)  Recession; growth rate of output per person 
A)  Recession; growth rate of nominal GDP 
B)  Productivity growth slowdown; growth rate of output per person 
C)  Productivity growth slowdown; growth rate of real GDP 
D)  Recession; growth rate of output per person

Question 7

The largest component of income is proprietors' income.

Accepted Answer

A) True 
 B)False

Question 8

What term is used to describe the lowest point of a business cycle?

Accepted Answer

A)  recession 
B)  peak 
C)  expansion 
D)  trough 
A)  recession 
B)  peak 
C)  expansion 
D)  trough

Question 9

Choose the best statement.

Accepted Answer

A)  An increase in compensation of employees increases aggregate income but does not change GDP. 
B)  GDP always equals aggregate expenditure and sometimes equals aggregate income. 
C)  GDP equals aggregate expenditure and equals aggregate income. 
D)  An increase in government purchases increases aggregate expenditure but does not change GDP. 
A)  An increase in compensation of employees increases aggregate income but does not change GDP. 
B)  GDP always equals aggregate expenditure and sometimes equals aggregate income. 
C)  GDP equals aggregate expenditure and equals aggregate income. 
D)  An increase in government purchases increases aggregate expenditure but does not change GDP.

Question 10

In part, the underground economy exists because of the

Accepted Answer

A)  ease of entry into the occupations that compose it. 
B)  high tax rates. 
C)  irrationality of people who choose to evade taxes. 
D)  greater efficiency of barter transactions compared to monetary ones. 
A)  ease of entry into the occupations that compose it. 
B)  high tax rates. 
C)  irrationality of people who choose to evade taxes. 
D)  greater efficiency of barter transactions compared to monetary ones.

Question 11

Which of the following is TRUE regarding business cycles?
I. Cycles are predictable.
II. In each cycle, a peak follows an expansion.
III. Potential GDP fluctuates around real GDP.

Accepted Answer

A)  II and III 
B)  I and II 
C)  II only 
D)  I and III 
A)  II and III 
B)  I and II 
C)  II only 
D)  I and III

Question 12

When gross investment is greater than depreciation, then the nation's capital stock increased.

Accepted Answer

A) True 
 B)False

Question 13

Explain the relationship among the capital stock, gross investment, net investment, and depreciation.

Accepted Answer

The capital stock is the total quantity

Question 14

Which of the following would lead GDP to overstate economic welfare?

Accepted Answer

A)  a self- employed CPA who takes a longer than normal vacation 
B)  the existence of home- cooked meals 
C)  electric utilities that switch to burning coal because of higher natural gas prices and thereby create more acid rain pollution 
D)  restaurant workers that under- report tip income 
A)  a self- employed CPA who takes a longer than normal vacation 
B)  the existence of home- cooked meals 
C)  electric utilities that switch to burning coal because of higher natural gas prices and thereby create more acid rain pollution 
D)  restaurant workers that under- report tip income

Question 15

"When a company's depreciation is larger than its gross investment, net investment becomes negative and the firm's capital stock decreases." Is the previous statement correct or incorrect? Explain your answer.

Accepted Answer

The statement is correct. Net investment

Question 16

The word "final" in the definition of GDP refers to

Accepted Answer

A)  not counting intermediate goods or services. 
B)  the time period when production took place. 
C)  counting the intermediate goods and services used to produce GDP. 
D)  valuing production at market prices. 
A)  not counting intermediate goods or services. 
B)  the time period when production took place. 
C)  counting the intermediate goods and services used to produce GDP. 
D)  valuing production at market prices.

Question 17

If we compare the four sources of spending in the economy we see that

Accepted Answer

A)  household consumption is the largest. 
B)  business investment is the largest. 
C)  government expenditure is the largest. 
D)  household consumption is the smallest. 
A)  household consumption is the largest. 
B)  business investment is the largest. 
C)  government expenditure is the largest. 
D)  household consumption is the smallest.

Question 18

The largest component of income is

Accepted Answer

A)  proprietors' income. 
B)  net interest. 
C)  corporate profits. 
D)  compensation of employees. 
A)  proprietors' income. 
B)  net interest. 
C)  corporate profits. 
D)  compensation of employees.

Question 19

In the circular flow model, consumption expenditures are the spending by

Accepted Answer

A)  government in financial markets. 
B)  households in the goods market. 
C)  firms for factors of production. 
D)  the rest of the world in the goods market. 
A)  government in financial markets. 
B)  households in the goods market. 
C)  firms for factors of production. 
D)  the rest of the world in the goods market.

Question 20

A trough is the

Accepted Answer

A)  lower turning point of a business cycle when an expansion begins. 
B)  upper turning point of a business cycle when a recession begins. 
C)  lower turning point of a business cycle when a recession begins. 
D)  upper turning point of a business cycle when an expansion begins. 
A)  lower turning point of a business cycle when an expansion begins. 
B)  upper turning point of a business cycle when a recession begins. 
C)  lower turning point of a business cycle when a recession begins. 
D)  upper turning point of a business cycle when an expansion begins.

-In the above figure, the distance between points T and U represents

Gross investment is equal to

GDP decreases during

The following data are estimates describing Ireland's economy in 2006 and 2007 (in millions of euro constant prices): Ireland's real GDP in 2007 was million euros.

In 2008, net exports in the United States were

refers to a period when the decreases.

The largest component of income is proprietors' income.

What term is used to describe the lowest point of a business cycle?

Choose the best statement.

In part, the underground economy exists because of the

Which of the following is TRUE regarding business cycles? I. Cycles are predictable. II. In each cycle, a peak follows an expansion. III. Potential GDP fluctuates around real GDP.

When gross investment is greater than depreciation, then the nation's capital stock increased.

Explain the relationship among the capital stock, gross investment, net investment, and depreciation.

Which of the following would lead GDP to overstate economic welfare?

"When a company's depreciation is larger than its gross investment, net investment becomes negative and the firm's capital stock decreases." Is the previous statement correct or incorrect? Explain your answer.

The word "final" in the definition of GDP refers to

If we compare the four sources of spending in the economy we see that

The largest component of income is

In the circular flow model, consumption expenditures are the spending by

A trough is the

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 above figure, the distance between points T and U represents

Gross investment is equal to

GDP decreases during

The following data are estimates describing Ireland's economy in 2006 and 2007 (in millions of euro constant prices): Ireland's real GDP in 2007 was million euros.

In 2008, net exports in the United States were

refers to a period when the decreases.

The largest component of income is proprietors' income.

What term is used to describe the lowest point of a business cycle?

Choose the best statement.

In part, the underground economy exists because of the

Which of the following is TRUE regarding business cycles? I. Cycles are predictable. II. In each cycle, a peak follows an expansion. III. Potential GDP fluctuates around real GDP.

When gross investment is greater than depreciation, then the nation's capital stock increased.

Explain the relationship among the capital stock, gross investment, net investment, and depreciation.

Which of the following would lead GDP to overstate economic welfare?

"When a company's depreciation is larger than its gross investment, net investment becomes negative and the firm's capital stock decreases." Is the previous statement correct or incorrect? Explain your answer.

The word "final" in the definition of GDP refers to

If we compare the four sources of spending in the economy we see that

The largest component of income is

In the circular flow model, consumption expenditures are the spending by

A trough is the

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