Question 1

The largest component of GDP is

Accepted Answer

A)  net exports of goods and services. 
B)  personal consumption expenditures. 
C)  gross private domestic investment. 
D)  government expenditure on goods and services. 
A)  net exports of goods and services. 
B)  personal consumption expenditures. 
C)  gross private domestic investment. 
D)  government expenditure on goods and services.

Question 2

Which of the following is NOT part of GDP calculated using the expenditure approach?

Accepted Answer

A)  General Motors' purchases of new capital equipment 
B)  social security payments made to the elderly 
C)  expenditures by the federal government for national defense 
D)  the purchase of new homes by consumers 
A)  General Motors' purchases of new capital equipment 
B)  social security payments made to the elderly 
C)  expenditures by the federal government for national defense 
D)  the purchase of new homes by consumers

Question 3

Because pollution reduces economic welfare, on this count real GDP

Accepted Answer

A)  overstates economic welfare. 
B)  increases to take into account the expenditures that will be made in the future to clean up the pollution. 
C)  decreases as pollution increases. 
D)  understates economic welfare. 
A)  overstates economic welfare. 
B)  increases to take into account the expenditures that will be made in the future to clean up the pollution. 
C)  decreases as pollution increases. 
D)  understates economic welfare.

Question 4

If Ford sells 200 Explorers for a total of $400,000 to Germany, while the United States imports 100 BMWs for a total of $500,000 from Germany,

Accepted Answer

A)  U.S. GDP decreases because net exports are negative. 
B)  U.S. GDP increases because it sells more Explorers. 
C)  Germany's GDP decreases. 
D)  U.S. net exports is positive. 
A)  U.S. GDP decreases because net exports are negative. 
B)  U.S. GDP increases because it sells more Explorers. 
C)  Germany's GDP decreases. 
D)  U.S. net exports is positive.

Question 5

Gross domestic product is the total produced within a country in a given time period.

Accepted Answer

A)  market value of all final goods and services 
B)  amount of final and intermediate goods and services 
C)  market value of all final and intermediate goods and services 
D)  market value of all goods and services 
A)  market value of all final goods and services 
B)  amount of final and intermediate goods and services 
C)  market value of all final and intermediate goods and services 
D)  market value of all goods and services

Question 6

Economists distinguish real GDP from nominal GDP to

Accepted Answer

A)  determine whether the government sector is growing. 
B)  determine whether real production has changed. 
C)  measure the change in nominal interest rates. 
D)  determine whether economic welfare has changed. 
A)  determine whether the government sector is growing. 
B)  determine whether real production has changed. 
C)  measure the change in nominal interest rates. 
D)  determine whether economic welfare has changed.

Question 7

Explain the relationship between potential GDP and real GDP in the United States since the early 1960s. You do not need to tell what happened during any specific year; just describe the general relationship.

Accepted Answer

Potential GDP has grown over t

Question 8

-Using the information in the table above, calculate gross domestic product.

Accepted Answer

A)  $78 
B)  $118 
C)  $108 
D)  $86 
A)  $78 
B)  $118 
C)  $108 
D)  $86

Question 9

-The table above gives the values of different expenditures in the United States during 1999. Answer the followin questions about the United States.
a) What was the value of net exports of goods and services in 1999?
b) What was (nominal) GDP equal to in 1999?
c) What was the (nominal) value of total production equal to in 1999?

Accepted Answer

a) Net exports of goods and services equ

Question 10

The business cycle refers to

Accepted Answer

A)  fluctuations in the level of real GDP around potential GDP. 
B)  changes in the level of nominal GDP. 
C)  changes in the level of employment. 
D)  changes in the level of the stock market. 
A)  fluctuations in the level of real GDP around potential GDP. 
B)  changes in the level of nominal GDP. 
C)  changes in the level of employment. 
D)  changes in the level of the stock market.

Question 11

Transfer payments are not included in GDP because

Accepted Answer

A)  their market value cannot be accurately determined. 
B)  their value is included in government expenditure. 
C)  they do not generate additional income. 
D)  they are not purchases of goods or services. 
A)  their market value cannot be accurately determined. 
B)  their value is included in government expenditure. 
C)  they do not generate additional income. 
D)  they are not purchases of goods or services.

Question 12

Real GDP can be criticized as a measure of economic welfare because it

Accepted Answer

A)  does not take account of the degradation of environmental quality. 
B)  does not include leisure time available to a society. 
C)  does not include the value of products produced in the household. 
D)  All of the above answers are correct. 
A)  does not take account of the degradation of environmental quality. 
B)  does not include leisure time available to a society. 
C)  does not include the value of products produced in the household. 
D)  All of the above answers are correct.

Question 13

Gross domestic product (GDP) measures the

Accepted Answer

A)  number of final goods and services produced in the economy in a given time period. 
B)  market value of old and new final goods and services sold in the economy in a given time period. 
C)  number of final goods and services sold in the economy in a given time period. 
D)  market value of final goods and services produced in the economy in a given time period. 
A)  number of final goods and services produced in the economy in a given time period. 
B)  market value of old and new final goods and services sold in the economy in a given time period. 
C)  number of final goods and services sold in the economy in a given time period. 
D)  market value of final goods and services produced in the economy in a given time period.

Question 14

Gross domestic product is a measure of the total value of all

Accepted Answer

A)  final goods and services produced in an economy over a period of time. 
B)  sales in an economy over a period of time. 
C)  consumer income in an economy over a period of time. 
D)  capital accumulation in an economy over a period of time. 
A)  final goods and services produced in an economy over a period of time. 
B)  sales in an economy over a period of time. 
C)  consumer income in an economy over a period of time. 
D)  capital accumulation in an economy over a period of time.

Question 15

In the circular flow model of an economy with no government sector and no international trade, households

Accepted Answer

A)  receive income from buyers of goods and services. 
B)  pay firms for the use of their factors. 
C)  receive income from the sale of factors in the goods markets. 
D)  receive income from producers for the use of factors in the factor markets. 
A)  receive income from buyers of goods and services. 
B)  pay firms for the use of their factors. 
C)  receive income from the sale of factors in the goods markets. 
D)  receive income from producers for the use of factors in the factor markets.

Question 16

Net investment equals

Accepted Answer

A)  savings - depreciation. 
B)  depreciation + addition to inventories. 
C)  gross investment - depreciation. 
D)  gross investment + depreciation. 
A)  savings - depreciation. 
B)  depreciation + addition to inventories. 
C)  gross investment - depreciation. 
D)  gross investment + depreciation.

Question 17

Which of the following is NOT included in real GDP?

Accepted Answer

A)  production of goods that last less than a year, such as production of hot dogs 
B)  production that takes place in the underground economy 
C)  production of services, such as the services of hair dressers 
D)  production of goods that last more than a year, such as a pair of roller blades 
A)  production of goods that last less than a year, such as production of hot dogs 
B)  production that takes place in the underground economy 
C)  production of services, such as the services of hair dressers 
D)  production of goods that last more than a year, such as a pair of roller blades

Question 18

The circular flow model shows that consumer goods and services produced by business firms are sold in the

Accepted Answer

A)  financial market. 
B)  goods market. 
C)  factor market. 
D)  labor market. 
A)  financial market. 
B)  goods market. 
C)  factor market. 
D)  labor market.

Question 19

In the calculation of GDP by the expenditure approach, exports from the United States must be

Accepted Answer

A)  ignored because they are not bought by U.S. citizens. 
B)  added. 
C)  subtracted if they are bought by foreign firms for investment purposes. 
D)  subtracted because they are included in the consumption of a foreign country. 
A)  ignored because they are not bought by U.S. citizens. 
B)  added. 
C)  subtracted if they are bought by foreign firms for investment purposes. 
D)  subtracted because they are included in the consumption of a foreign country.

Question 20

An expansion ends when the economy

Accepted Answer

A)  hits a trough and then enters a recession. 
B)  hits a peak and then enters a recession. 
C)  has grown for two quarters in a row. 
D)  begins to grow following a peak. 
A)  hits a trough and then enters a recession. 
B)  hits a peak and then enters a recession. 
C)  has grown for two quarters in a row. 
D)  begins to grow following a peak.

The largest component of GDP is

Which of the following is NOT part of GDP calculated using the expenditure approach?

Because pollution reduces economic welfare, on this count real GDP

If Ford sells 200 Explorers for a total of $400,000 to Germany, while the United States imports 100 BMWs for a total of $500,000 from Germany,

Gross domestic product is the total produced within a country in a given time period.

Economists distinguish real GDP from nominal GDP to

Explain the relationship between potential GDP and real GDP in the United States since the early 1960s. You do not need to tell what happened during any specific year; just describe the general relationship.

-Using the information in the table above, calculate gross domestic product.

The business cycle refers to

Transfer payments are not included in GDP because

Real GDP can be criticized as a measure of economic welfare because it

Gross domestic product (GDP) measures the

Gross domestic product is a measure of the total value of all

In the circular flow model of an economy with no government sector and no international trade, households

Net investment equals

Which of the following is NOT included in real GDP?

The circular flow model shows that consumer goods and services produced by business firms are sold in the

In the calculation of GDP by the expenditure approach, exports from the United States must be

An expansion ends when the economy

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

The largest component of GDP is

Which of the following is NOT part of GDP calculated using the expenditure approach?

Because pollution reduces economic welfare, on this count real GDP

If Ford sells 200 Explorers for a total of $400,000 to Germany, while the United States imports 100 BMWs for a total of $500,000 from Germany,

Gross domestic product is the total produced within a country in a given time period.

Economists distinguish real GDP from nominal GDP to

Explain the relationship between potential GDP and real GDP in the United States since the early 1960s. You do not need to tell what happened during any specific year; just describe the general relationship.

-Using the information in the table above, calculate gross domestic product.

The business cycle refers to

Transfer payments are not included in GDP because

Real GDP can be criticized as a measure of economic welfare because it

Gross domestic product (GDP) measures the

Gross domestic product is a measure of the total value of all

In the circular flow model of an economy with no government sector and no international trade, households

Net investment equals

Which of the following is NOT included in real GDP?

The circular flow model shows that consumer goods and services produced by business firms are sold in the

In the calculation of GDP by the expenditure approach, exports from the United States must be

An expansion ends when the economy

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