Question 1

-In the above figure, the letters A, B, and C represent which positions in the business cycle?

Accepted Answer

A)  recession, expansion, and peak, respectively 
B)  expansion, peak, and recession, respectively 
C)  peak, expansion, and recession, respectively 
D)  peak, recession, and expansion, respectively 
A)  recession, expansion, and peak, respectively 
B)  expansion, peak, and recession, respectively 
C)  peak, expansion, and recession, respectively 
D)  peak, recession, and expansion, respectively

Question 2

The components of the expenditure approach to measuring GDP include all of the following  EXCEPT

Accepted Answer

A)  government expenditure on goods and services. 
B)  investment. 
C)  net exports. 
D)  the implicit payments for unpaid household work. 
A)  government expenditure on goods and services. 
B)  investment. 
C)  net exports. 
D)  the implicit payments for unpaid household work.

Question 3

List and compare the four components of the expenditure approach to calculating GDP.

Accepted Answer

The 4 parts can be summarized according

Question 4

The circular flow shows that aggregate spending is larger than aggregate income because people save.

Accepted Answer

A) True 
 B)False

Question 5

Purchasing power parity prices are used to construct GDP data that

Accepted Answer

A)  is a proper measure of economic welfare. 
B)  can be used to make more valid comparisons between one country and another. 
C)  do not omit the underground economy. 
D)  adjust for differences in population. 
A)  is a proper measure of economic welfare. 
B)  can be used to make more valid comparisons between one country and another. 
C)  do not omit the underground economy. 
D)  adjust for differences in population.

Question 6

$$\begin{array} { | l | l | } 
\hline \text { Component } & \begin{array} { l } 
\text { Amount } \
\text { (billions of } \
\text { dollars) }
\end{array} \
\hline \text { Gross investment } & 1300 \
\hline \begin{array} { l } 
\text { Personal consumption } \
\text { expenditure }
\end{array} & 1475 \
\hline \text { Depreciation } & 25 \
\hline \begin{array} { l } 
\text { Government exp enditure on } \
\text { goods and services }
\end{array} & 1315 \
\hline \text { US.imports } & 260 \
\hline \text { US. exports } & 249 \
\hline \text { Compensation of employees } & 65 \
\hline
\end{array}$$
-The above table gives data for a hypothetical nation. Gross domestic product is

Accepted Answer

A)  $4,079 billion. 
B)  $4,049 billion. 
C)  $4,339 billion. 
D)  $4,054 billion. 
A)  $4,079 billion. 
B)  $4,049 billion. 
C)  $4,339 billion. 
D)  $4,054 billion.

Question 7

The underground economy exists for all of the following reasons EXCEPT the

Accepted Answer

A)  avoidance of government regulation. 
B)  avoidance of taxes. 
C)  production of illegal goods. 
D)  desire to maintain accurate records of economic transactions. 
A)  avoidance of government regulation. 
B)  avoidance of taxes. 
C)  production of illegal goods. 
D)  desire to maintain accurate records of economic transactions.

Question 8

Gross investment equals net investment plus

Accepted Answer

A)  dividends paid to the owners of the company. 
B)  depreciation. 
C)  capital gains. 
D)  capital. 
A)  dividends paid to the owners of the company. 
B)  depreciation. 
C)  capital gains. 
D)  capital.

Question 9

Which of the following is TRUE regarding real GDP?
I. Real GDP is the value of the total production of the countryʹs farms, factories, shops, and offices.
II. Real GDP rises whenever inflation occurs.
III. Real GDP does not measure all that is produced.

Accepted Answer

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

Question 10

Rental income includes

Accepted Answer

A)  the payment for the use of all rented inputs. 
B)  the payment for the use of land. 
C)  no income from rental housing because most houses are occupied by their owners. 
D)  Both answers A and B are correct. 
A)  the payment for the use of all rented inputs. 
B)  the payment for the use of land. 
C)  no income from rental housing because most houses are occupied by their owners. 
D)  Both answers A and B are correct.

Question 11

To see how variables evolve over time we use

Accepted Answer

A)  an evolution plot. 
B)  a scatter graph. 
C)  a cross-section plot. 
D)  a time-series graph. 
A)  an evolution plot. 
B)  a scatter graph. 
C)  a cross-section plot. 
D)  a time-series graph.

Question 12

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

Accepted Answer

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

Question 13

What is ʺunderground productionʺ? Is it included in GDP?

Accepted Answer

Underground production is the production

Question 14

$\begin{array}{|l|l|}
\hline \text { Item } & \begin{array}{l}
\text { Millions of } \
\text { dollars }
\end{array} \\hline \begin{array}{l}
\text { Personal consumption } \
\text { expenditure }
\end{array} & 80 \\hline \begin{array}{l}
\text { Government expenditure on } \
\text { goods } \
\text { and services }
\end{array} & 30 \\hline \text { Net taxes } & 35 \\hline \begin{array}{l}
\text { Gross private domestic } \
\text { investment }
\end{array} & 20 \\hline \text { Imports of goods and services } & 10 \
\hline \text { Exports of goods and services } & 20 \
\hline
\end{array}$
-Use the information in the table above to calculate the value of net exports.

Accepted Answer

A)  $10 million 
B)  $30 million 
C)  $0 
D)  -$10 million 
A)  $10 million 
B)  $30 million 
C)  $0 
D)  -$10 million

Question 15

While studying with your friend, your friend states, ʺOur leisure time increases GDP but lowers our economic welfare because it reduces the amount of goods and services we can consume.ʺ Is your friendʹs statement correct?

Accepted Answer

Your friendʹs assertion is incorrect on

Question 16

The chain-weighted output index method of calculating real GDP compares

Accepted Answer

A)  quantities produced in different years with the prices that prevailed during the year in which the output was produced. 
B)  quantities produced in different years using prices from a year chosen as a reference period. 
C)  prices at different points in time using a sample of goods that is representative of goods purchased by households. 
D)  compares the quantities of goods produced in consecutive years using prices in both years and averaging the percentage changes in the value of output. 
A)  quantities produced in different years with the prices that prevailed during the year in which the output was produced. 
B)  quantities produced in different years using prices from a year chosen as a reference period. 
C)  prices at different points in time using a sample of goods that is representative of goods purchased by households. 
D)  compares the quantities of goods produced in consecutive years using prices in both years and averaging the percentage changes in the value of output.

Question 17

List the components of the expenditure approach to measuring GDP.

Accepted Answer

The expenditure approach measures GDP by

Question 18

Household production is not measured in the GDP.

Accepted Answer

A) True 
 B)False

Question 19

In the circular flow of economic activity

Accepted Answer

A)  aggregate income measures the dollar value of labor resources only. 
B)  aggregate expenditure is measured as it moves through the financial markets. 
C)  aggregate expenditure measures the dollar value of purchases of factors. 
D)  aggregate expenditure measures the dollar value of purchases of final goods and services. 
A)  aggregate income measures the dollar value of labor resources only. 
B)  aggregate expenditure is measured as it moves through the financial markets. 
C)  aggregate expenditure measures the dollar value of purchases of factors. 
D)  aggregate expenditure measures the dollar value of purchases of final goods and services.

Question 20

Explain how underground economic activity affects measurement of GDP.

Accepted Answer

The underground economy are transactions

-In the above figure, the letters A, B, and C represent which positions in the business cycle?

The components of the expenditure approach to measuring GDP include all of the following EXCEPT

List and compare the four components of the expenditure approach to calculating GDP.

The circular flow shows that aggregate spending is larger than aggregate income because people save.

Purchasing power parity prices are used to construct GDP data that

The underground economy exists for all of the following reasons EXCEPT the

Gross investment equals net investment plus

Which of the following is TRUE regarding real GDP? I. Real GDP is the value of the total production of the countryʹs farms, factories, shops, and offices. II. Real GDP rises whenever inflation occurs. III. Real GDP does not measure all that is produced.

Rental income includes

To see how variables evolve over time we use

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

What is ʺunderground productionʺ? Is it included in GDP?

While studying with your friend, your friend states, ʺOur leisure time increases GDP but lowers our economic welfare because it reduces the amount of goods and services we can consume.ʺ Is your friendʹs statement correct?

The chain-weighted output index method of calculating real GDP compares

List the components of the expenditure approach to measuring GDP.

Household production is not measured in the GDP.

In the circular flow of economic activity

Explain how underground economic activity affects measurement of GDP.

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

Exam 4: Measuring Gdp and Economic Growth

-In the above figure, the letters A, B, and C represent which positions in the business cycle?

The components of the expenditure approach to measuring GDP include all of the following EXCEPT

List and compare the four components of the expenditure approach to calculating GDP.

The circular flow shows that aggregate spending is larger than aggregate income because people save.

Purchasing power parity prices are used to construct GDP data that

The underground economy exists for all of the following reasons EXCEPT the

Gross investment equals net investment plus

Which of the following is TRUE regarding real GDP? I. Real GDP is the value of the total production of the countryʹs farms, factories, shops, and offices. II. Real GDP rises whenever inflation occurs. III. Real GDP does not measure all that is produced.

Rental income includes

To see how variables evolve over time we use

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

What is ʺunderground productionʺ? Is it included in GDP?

While studying with your friend, your friend states, ʺOur leisure time increases GDP but lowers our economic welfare because it reduces the amount of goods and services we can consume.ʺ Is your friendʹs statement correct?

The chain-weighted output index method of calculating real GDP compares

List the components of the expenditure approach to measuring GDP.

Household production is not measured in the GDP.

In the circular flow of economic activity

Explain how underground economic activity affects measurement of GDP.

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters