Question 1

Explain how GDP is measured according to the expenditure and income approaches.

Accepted Answer

GDP is measured using the expenditure ap

Question 2

How do firms and households interact within the context of the circular flow model?

Accepted Answer

Households are the owners of the factors

Question 3

The growth rate of GDP per person since the 1960s has

Accepted Answer

A)  consistently risen as shown with the Lucas wedge. 
B)  slowed, especially during the 1970s, and has resulted in losses estimated by the Lucas wedge. 
C)  risen, particularly during the 1970s, and has meant GDP has grown as measured by the Okun gap. 
D)  remained constant and is measured by the Okun gap. 
A)  consistently risen as shown with the Lucas wedge. 
B)  slowed, especially during the 1970s, and has resulted in losses estimated by the Lucas wedge. 
C)  risen, particularly during the 1970s, and has meant GDP has grown as measured by the Okun gap. 
D)  remained constant and is measured by the Okun gap.

Question 4

In the United States, GDP is typically measured

Accepted Answer

A)  quarterly. 
B)  monthly. 
C)  daily. 
D)  weekly. 
A)  quarterly. 
B)  monthly. 
C)  daily. 
D)  weekly.

Question 5

All of the following are included in gross private domestic investment expenditure EXCEPT a

Accepted Answer

A)  household's purchase of a new house. 
B)  business's purchase of another company's stock. 
C)  a retail store's purchase of shoes to add to its inventory. 
D)  business's purchase of a fleet of cars. 
A)  household's purchase of a new house. 
B)  business's purchase of another company's stock. 
C)  a retail store's purchase of shoes to add to its inventory. 
D)  business's purchase of a fleet of cars.

Question 6

What is the relationship between actual and potential real GDP?

Accepted Answer

Real GDP equals potential GDP when all r

Question 7

Gross domestic product (GDP) is

Accepted Answer

A)  the sum of compensation of employees, proprietors' income, net interest, rental income, corporate profits, depreciation, and indirect business taxes minus subsidies. 
B)  the sum of consumption expenditure, investment, government expenditure on goods and services, and net exports. 
C)  the value of all final goods and services produced in a country during a year. 
D)  all of the above 
A)  the sum of compensation of employees, proprietors' income, net interest, rental income, corporate profits, depreciation, and indirect business taxes minus subsidies. 
B)  the sum of consumption expenditure, investment, government expenditure on goods and services, and net exports. 
C)  the value of all final goods and services produced in a country during a year. 
D)  all of the above

Question 8

The expenditure approach measures GDP by adding

Accepted Answer

A)  compensation of employees, rental income, corporate profits, net interest, and proprietors' income. 
B)  consumption expenditure, gross private domestic investment, net exports of goods and services, and government expenditure on goods and services. 
C)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracting subsidies paid by the government. 
D)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and depreciation. 
A)  compensation of employees, rental income, corporate profits, net interest, and proprietors' income. 
B)  consumption expenditure, gross private domestic investment, net exports of goods and services, and government expenditure on goods and services. 
C)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracting subsidies paid by the government. 
D)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and depreciation.

Question 9

The chain- weighted output index method of measuring real GDP is based on

Accepted Answer

A)  using current prices rather than base year prices 
B)  averaging the market value of the expenditures over a two year period and then comparing with a base period. 
C)  averaging the nominal and real measures of GDP to come up with a more accurate figure. 
D)  using the prices of two adjacent years to calculate the growth rate of real GDP. 
A)  using current prices rather than base year prices 
B)  averaging the market value of the expenditures over a two year period and then comparing with a base period. 
C)  averaging the nominal and real measures of GDP to come up with a more accurate figure. 
D)  using the prices of two adjacent years to calculate the growth rate of real GDP.

Question 10

In the country of Darrowby, net domestic income at factor cost is $2.0 million. Gross domestic product is $3.0 million, and depreciation is $0.5 million. Indirect taxes less subsidies _.

Accepted Answer

A)  are $0.5 million 
B)  are - $0.5 million 
C)  are $1 million 
D)  cannot be calculated 
A)  are $0.5 million 
B)  are - $0.5 million 
C)  are $1 million 
D)  cannot be calculated

Question 11

In the above figure, flow B represents households' _.

Accepted Answer

A)  income 
B)  saving 
C)  investment 
D)  consumption expenditures 
A)  income 
B)  saving 
C)  investment 
D)  consumption expenditures

Question 12

How are changes in inventory treated in GDP?

Accepted Answer

Changes in inventory are part of the inv

Question 13

Assume a small nation has the following statistics: its consumption expenditure is $15 million, investment is $2 million, government purchases of goods and services is $1 million, exports of goods and services to foreigners is
$1 million, and imports of goods and services from foreigners is $1.5 million. Calculate this nation's GDP.

Accepted Answer

The nation's GDP equals the sum of consu

Question 14

"Life expectancy is exceptionally high in Japan. Scores for political freedom and civil liberties approach those of peer countrie Europe...equality of opportunity is extremely weak. The country also possesses one of the longer working weeks." Japan's G estimated to be $4.2 trillion (purchasing power parity) and the population was 127.4 million.
"Driven by its attractive climate, Brazil performs substantially better on Life Satisfaction than Material Wealth. High international demand for Brazil's commodities and raw materials has produced a sustained economic expansion since 2004, which in turn has led to job creation, wage growth and relatively low inflation. Brazilians report that they control their own lives to a substantial degree." Brazil's GDP was estimated to be $1.7 trillion (purchasing power parity) and 190 million in 2006
-According to the article, we can conclude that the standard of living

Accepted Answer

A)  might be higher in Japan because it has a higher per capita real GDP but other factors such as Brazilians' satisfaction with their lives and economic growth should be considered when determining economic well being. 
B)  is higher in Japan because its GDP is higher. 
C)  is higher in Brazil because its citizens feel more control over their lives and have experienced job and wage growth. 
D)  is higher in Japan because their life expectancy is longer. 
A)  might be higher in Japan because it has a higher per capita real GDP but other factors such as Brazilians' satisfaction with their lives and economic growth should be considered when determining economic well being. 
B)  is higher in Japan because its GDP is higher. 
C)  is higher in Brazil because its citizens feel more control over their lives and have experienced job and wage growth. 
D)  is higher in Japan because their life expectancy is longer.

Question 15

The productivity slowdown in the United States during the 1970s most directly relates to the issue of

Accepted Answer

A)  the international deficit. 
B)  economic growth. 
C)  inflation. 
D)  unemployment. 
A)  the international deficit. 
B)  economic growth. 
C)  inflation. 
D)  unemployment.

Explain how GDP is measured according to the expenditure and income approaches.

How do firms and households interact within the context of the circular flow model?

The growth rate of GDP per person since the 1960s has

In the United States, GDP is typically measured

All of the following are included in gross private domestic investment expenditure EXCEPT a

What is the relationship between actual and potential real GDP?

Gross domestic product (GDP) is

The expenditure approach measures GDP by adding

The chain- weighted output index method of measuring real GDP is based on

In the country of Darrowby, net domestic income at factor cost is $2.0 million. Gross domestic product is $3.0 million, and depreciation is $0.5 million. Indirect taxes less subsidies _.

In the above figure, flow B represents households' _.

How are changes in inventory treated in GDP?

The productivity slowdown in the United States during the 1970s most directly relates to the issue of

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

Explain how GDP is measured according to the expenditure and income approaches.

How do firms and households interact within the context of the circular flow model?

The growth rate of GDP per person since the 1960s has

In the United States, GDP is typically measured

All of the following are included in gross private domestic investment expenditure EXCEPT a

What is the relationship between actual and potential real GDP?

Gross domestic product (GDP) is

The expenditure approach measures GDP by adding

The chain- weighted output index method of measuring real GDP is based on

In the country of Darrowby, net domestic income at factor cost is $2.0 million. Gross domestic product is $3.0 million, and depreciation is $0.5 million. Indirect taxes less subsidies _.

In the above figure, flow B represents households' _.

How are changes in inventory treated in GDP?

The productivity slowdown in the United States during the 1970s most directly relates to the issue of

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