Question 1

Can nominal GDP ever be less than real GDP?

Accepted Answer

Yes, nominal GDP can be less than real G

Question 2

When a recession ends, the turning point that immediately follows is called a

Accepted Answer

A)  trough. 
B)  depression. 
C)  peak. 
D)  None of the above answers is correct. 
A)  trough. 
B)  depression. 
C)  peak. 
D)  None of the above answers is correct.

Question 3

The times during which real GDP increases are referred to as

Accepted Answer

A)  contractions. 
B)  corrections. 
C)  expansions. 
D)  anti-cycles. 
A)  contractions. 
B)  corrections. 
C)  expansions. 
D)  anti-cycles.

Question 4

A common definition of a recession is a period of time

Accepted Answer

A)  with no change in real GDP. 
B)  with an increase in real economic output from the previous period. 
C)  with no change in the dollar money) value of economic output. 
D)  of at least 6 months during which real GDP decreases. 
A)  with no change in real GDP. 
B)  with an increase in real economic output from the previous period. 
C)  with no change in the dollar money) value of economic output. 
D)  of at least 6 months during which real GDP decreases.

Question 5

$$\begin{array} { | l | l | } 
\hline \text { Item } & \begin{array} { l } 
\text { Billions of } \
\text { dollars }
\end{array} \
\hline \text { Personal income } & 1,200 \
\hline \begin{array} { l } 
\text { Net domestic income at } \
\text { factor cost }
\end{array} & 2,100 \
\hline \begin{array} { l } 
\text { Government } \
\text { expenditure } \
\text { on goods and services }
\end{array} & 400 \
\hline \text { Depreciation } & 200 \
\hline \begin{array} { l } 
\text { Gross private domestic } \
\text { investment }
\end{array} & 100 \
\hline \text { Indirect taxes } & 600 \
\hline \text { Subsidies } & 100 \
\hline
\end{array}$$
-The above table shows some national income accounting data for a nation. In this nation, gross domestic product is equal to _________billion.

Accepted Answer

A)  $2,300 
B)  $2,800 
C)  $2,000 
D)  $2,500 
A)  $2,300 
B)  $2,800 
C)  $2,000 
D)  $2,500

Question 6

The term ʺbusiness cycleʺ most closely refers to the

Accepted Answer

A)  alternating periods of expansions and recessions. 
B)  accounting period used by firms. 
C)  fluctuating profits of firms. 
D)  fiscal year. 
A)  alternating periods of expansions and recessions. 
B)  accounting period used by firms. 
C)  fluctuating profits of firms. 
D)  fiscal year.

Question 7

$\begin{array}{|l|l|}
\hline \text { Item } & \text { Billions of dollars } \\hline \begin{array}{l}
\text { Government expenditure on } \
\text { goods and services }
\end{array} & 250 \\hline \text { Compensation of employees } & 1,675 \\hline \begin{array}{l}
\text { Gross private domestic } \
\text { inves tment }
\end{array} & 325 \\hline \text { Rental income } & 20 \\hline \begin{array}{l}
\text { Personal consumption } \
\text { expenditures }
\end{array} & 1425 \\hline \text { Net interest } & 40 \\hline \begin{array}{l}
\text { Net exports of goods and } \
\text { services }
\end{array} & 100 \\hline \begin{array}{l}
\text { Indirect busines s taxes and } \
\text { depreciation }
\end{array} & 300 \
\hline
\end{array}$
-The above table shows some but not all) national income accounting data for a hypothetical country. According to these data, the value of GDP is __________billion.

Accepted Answer

A)  $2050 
B)  $1850 
C)  $2000 
D)  $2100 
A)  $2050 
B)  $1850 
C)  $2000 
D)  $2100

Question 8

ʺWhen a companyʹs depreciation is larger than its gross investment, net investment becomes negative and the firmʹs capital stock decreases.ʺ Is the previous statement correct or incorrect? Explain your answer.

Accepted Answer

The statement is correct. Net investment

Question 9

$\begin{array}{|l|l|}
\hline \text { Component } & \begin{array}{l}
\text { Amount } \
\text { (dollars) }
\end{array} \
\hline \text { Net taxes } & 10\\hline \begin{array}{l}
\text { Personal consumption } \
\text { expenditure }
\end{array} & 50 \\hline \text { Depreciation } & 8 \
\hline \text { Government expenditure } & 20 \
\hline \text { Gros investment } & 26 \
\hline \text { Net exports } & -10 \\hline \begin{array}{l}
\text { Compensation of } \
\text { employees }
\end{array} & 65 \
\hline
\end{array}$
-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 10

Which of the following is NOT  included in the income approach to measuring GDP?

Accepted Answer

A)  corporate profits 
B)  compensation of employees 
C)  net interest 
D)  net exports 
A)  corporate profits 
B)  compensation of employees 
C)  net interest 
D)  net exports

Question 11

What is the distinction between gross investment and net investment?

Accepted Answer

Gross investment is the total spending o

Question 12

Explain the relationship between real GDP and potential GDP during the two phases of the business cycle.

Accepted Answer

During an expansion the level

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 nationʹs GDP.

Accepted Answer

The nationʹs GDP equals the sum of consu

Question 14

An economy recovering from a recession

Accepted Answer

A)  moves down from its trough to a period of depression. 
B)  moves up from its trough to a period of expansion. 
C)  moves down from its peak to a period of expansion. 
D)  moves up from its peak to a period of expansion. 
A)  moves down from its trough to a period of depression. 
B)  moves up from its trough to a period of expansion. 
C)  moves down from its peak to a period of expansion. 
D)  moves up from its peak to a period of expansion.

Question 15

An increase in exports of goods or services with no change in imports of goods or services

Accepted Answer

A)  increases GDP. 
B)  decreases GDP. 
C)  may increase or decrease GDP depending on whether it is the export of goods or the export of services that increased. 
D)  has no effect on GDP. 
A)  increases GDP. 
B)  decreases GDP. 
C)  may increase or decrease GDP depending on whether it is the export of goods or the export of services that increased. 
D)  has no effect on GDP.

Question 16

Which of the following is included in the category of corporate profits when measuring GDP?
I. Profits paid as dividends.
II. Undistributed profits.
III. Income received by owners and operators of businesses.

Accepted Answer

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

Question 17

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

Accepted Answer

A)  $195 million 
B)  $185 million 
C)  $145 million 
D)  $140 million 
A)  $195 million 
B)  $185 million 
C)  $145 million 
D)  $140 million

Question 18

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

Accepted Answer

The sentence is false. To calculate GDP,

Question 19

$$\begin{array} { | l | l | } 
\hline \text { Corporate profits } & \$ 200 \
\hline \text { Net interest } & 150 \
\hline \text { Indirect taxes less sub sidies } & 230 \
\hline \text { Depreciation } & 250 \
\hline \text { Compensation of employees } & 1,350 \
\hline \text { Proprietor's inc ome } & 150 \
\hline \text { Rental income } & 70 \
\hline \begin{array} { l } 
\text { Personal consumption } \
\text { expenditures }
\end{array} & 1,400 \
\hline \begin{array} { l } 
\text { Government exp enditure on } \
\text { goods } \
\text { and services }
\end{array} & 500 \
\hline \text { Net exports of goods and services } & 40 \
\hline
\end{array}$$
-Using the data in the table above, gross domestic product equals

Accepted Answer

A)  $2,400. 
B)  $1,920. 
C)  $2,150. 
D)  $1,940. 
A)  $2,400. 
B)  $1,920. 
C)  $2,150. 
D)  $1,940.

Question 20

Which of the following purchases is included in personal consumption expenditures when determining gross domestic product?

Accepted Answer

A)  vacation expenses for a spring trip to Fort Lauderdale 
B)  purchases of jeans to add to a storeʹs inventory 
C)  purchase of a new office building 
D)  purchase of a new house because of the arrival of a new baby 
A)  vacation expenses for a spring trip to Fort Lauderdale 
B)  purchases of jeans to add to a storeʹs inventory 
C)  purchase of a new office building 
D)  purchase of a new house because of the arrival of a new baby

Can nominal GDP ever be less than real GDP?

When a recession ends, the turning point that immediately follows is called a

The times during which real GDP increases are referred to as

A common definition of a recession is a period of time

The term ʺbusiness cycleʺ most closely refers to the

ʺWhen a companyʹs depreciation is larger than its gross investment, net investment becomes negative and the firmʹs capital stock decreases.ʺ Is the previous statement correct or incorrect? Explain your answer.

Component Amount (dollars) Net taxes 10 Personal consumption expenditure 50 Depreciation 8 Government expenditure 20 Gros investment 26 Net exports -10 Compensation of employees 65 -Using the information in the table above, calculate gross domestic product.

Which of the following is NOT included in the income approach to measuring GDP?

What is the distinction between gross investment and net investment?

Explain the relationship between real GDP and potential GDP during the two phases of the business cycle.

An economy recovering from a recession

An increase in exports of goods or services with no change in imports of goods or services

Which of the following is included in the category of corporate profits when measuring GDP? I. Profits paid as dividends. II. Undistributed profits. III. Income received by owners and operators of businesses.

Item Millions of dollars Personal consumption expenditure 80 Government expenditure on goods and services 30 Net taxes 35 Gross private domestic investment 20 Imports of goods and services 10 Exports of goods and services 20 -Using the information in the table above, calculate the value of GDP.

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

Which of the following purchases is included in personal consumption expenditures when determining gross domestic product?

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

Can nominal GDP ever be less than real GDP?

When a recession ends, the turning point that immediately follows is called a

The times during which real GDP increases are referred to as

A common definition of a recession is a period of time

The term ʺbusiness cycleʺ most closely refers to the

ʺWhen a companyʹs depreciation is larger than its gross investment, net investment becomes negative and the firmʹs capital stock decreases.ʺ Is the previous statement correct or incorrect? Explain your answer.

Component Amount (dollars) Net taxes 10 Personal consumption expenditure 50 Depreciation 8 Government expenditure 20 Gros investment 26 Net exports -10 Compensation of employees 65 -Using the information in the table above, calculate gross domestic product.

Which of the following is NOT included in the income approach to measuring GDP?

What is the distinction between gross investment and net investment?

Explain the relationship between real GDP and potential GDP during the two phases of the business cycle.

An economy recovering from a recession

An increase in exports of goods or services with no change in imports of goods or services

Which of the following is included in the category of corporate profits when measuring GDP? I. Profits paid as dividends. II. Undistributed profits. III. Income received by owners and operators of businesses.

Item Millions of dollars Personal consumption expenditure 80 Government expenditure on goods and services 30 Net taxes 35 Gross private domestic investment 20 Imports of goods and services 10 Exports of goods and services 20 -Using the information in the table above, calculate the value of GDP.

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

Which of the following purchases is included in personal consumption expenditures when determining gross domestic product?

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