Question 1

Choose the best statement.

Accepted Answer

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

Question 2

The data show Argentina?s GDP using purchasing power parity) in billions of dollars. $\begin{array}{ll}
\text {year }&1990&1991&1992&1993&1994&1995&1996&1997&1998&1999&2000&2001&2002&2003&2004&2005&2006\
GDP(\$)&182&209&235&255&277&274&294&324&340&333&338&330&300&333&373&420&270
\end{array}$
 The data show that

Accepted Answer

A)  Argentina?s economy was in a recession from 2004 through 2006. 
B)  GDP per person more than doubled between 1990 and 2006. 
C)  Argentina?s economy was in a recession in 2001 and 2002. 
D)  Argentina?s economy reached a peak in 1996. 
A)  Argentina?s economy was in a recession from 2004 through 2006. 
B)  GDP per person more than doubled between 1990 and 2006. 
C)  Argentina?s economy was in a recession in 2001 and 2002. 
D)  Argentina?s economy reached a peak in 1996.

Question 3

The largest component of GDP is

Accepted Answer

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

Question 4

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

Accepted Answer

The capital stock is the total quantity

Question 5

The four parts of the business cycle occur in the following order:

Accepted Answer

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

Question 6

The difference between gross investment and net investment is

Accepted Answer

A)  depreciation. 
B)  the capital stock. 
C)  equal to saving. 
D)  the real interest rate. 
A)  depreciation. 
B)  the capital stock. 
C)  equal to saving. 
D)  the real interest rate.

Question 7

Two reasons why valuing goods at their market prices is different than valuing them at their factor costs include

Accepted Answer

A)  exports and imports. 
B)  depreciation and investment. 
C)  personal taxes and corporate taxes. 
D)  indirect taxes and subsidies. 
A)  exports and imports. 
B)  depreciation and investment. 
C)  personal taxes and corporate taxes. 
D)  indirect taxes and subsidies.

Question 8

The circular flow of income shows that

Accepted Answer

A)  firms generally are the demanders in the goods markets and suppliers in the factor markets. 
B)  governments purchase goods and services. 
C)  households transact only in the goods market. 
D)  None of the above answers is correct. 
A)  firms generally are the demanders in the goods markets and suppliers in the factor markets. 
B)  governments purchase goods and services. 
C)  households transact only in the goods market. 
D)  None of the above answers is correct.

Question 9

The following data show Uruguay?s GDP using purchasing power parity in billions of dollars. $\begin{array}{ll}
\text {year }&2000&2001&2002&2003&2004&2005&2006&2007&2008\
GDP(\$)&26.1&25.8&23.3&24.3&27.9&30.1&33.9&37.2&40.2
\end{array}$
 Using the data, we can conclude that

Accepted Answer

A)  Uruguay?s economy was entered a recession in 2008. 
B)  Uruguay?s economy reached a peak in 2000. 
C)  GDP per person in Uruguay almost doubled between 2000 and 2008. 
D)  potential GDP in Uruguay doubled between 2000 and 2008. 
A)  Uruguay?s economy was entered a recession in 2008. 
B)  Uruguay?s economy reached a peak in 2000. 
C)  GDP per person in Uruguay almost doubled between 2000 and 2008. 
D)  potential GDP in Uruguay doubled between 2000 and 2008.

Question 10

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

Accepted Answer

Households are the owners of the factors

Question 11

The data show Argentina?s GDP using purchasing power parity) in billions of dollars. $\begin{array}{ll}
\text {year }&1990&1991&1992&1993&1994&1995&1996&1997&1998&1999&2000&2001&2002&2003&2004&2005&2006\
GDP(\$)&182&209&235&255&277&274&294&324&340&333&338&330&300&333&373&420&270
\end{array}$
 The data show that

Accepted Answer

A)  Argentina?s economy reached a peak in 1998. 
B)  Argentina?s economy entered a recession in 2000. 
C)  Argentina?s potential GDP doubled between 1990 and 2006. 
D)  GDP per person increased between 1990 and 2006. 
A)  Argentina?s economy reached a peak in 1998. 
B)  Argentina?s economy entered a recession in 2000. 
C)  Argentina?s potential GDP doubled between 1990 and 2006. 
D)  GDP per person increased between 1990 and 2006.

Question 12

$\begin{array}{|l|l|}
\hline \text { Component } & \begin{array}{l}
\text { Amount } \
\text { (billions of } \
\text { dollars) }
\end{array} \\hline \text { Net taxes } & 1,635 \\hline \begin{array}{l}
\text { Personal consumption } \
\text { expenditure }
\end{array} & 5,566 \\hline \text { Depreciation } & 622 \
\hline \text { Government expenditure } & 1,784 \
\hline \text { Gros s investment } & 1,234 \
\hline \text { Exports } & 957 \
\hline \text { Imports } & 1,138 \
\hline \text { Hous ehold saving } & 1,202 \
\hline
\end{array}$
-Using the data in the above table, what is the value of national saving?

Accepted Answer

A)  -$85 billion 
B)  $1,053 billion 
C)  $2,837 billion 
D)  $1,202 billion 
A)  -$85 billion 
B)  $1,053 billion 
C)  $2,837 billion 
D)  $1,202 billion

Question 13

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

Accepted Answer

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

Question 14

-In the above figure, consumption expenditure is shown by flow

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  F. 
A)  A. 
B)  B. 
C)  C. 
D)  F.

Question 15

To calculate GDP when using the income approach, you must add indirect business taxes and depreciation.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following expenditures is for an intermediate good?

Accepted Answer

A)  General Motors buys new tires to put on the cars itʹs building. 
B)  A U.S. tire firm sells new tires to Canada. 
C)  The government buys new tires for its military vehicles. 
D)  You buy new tires for your used car. 
A)  General Motors buys new tires to put on the cars itʹs building. 
B)  A U.S. tire firm sells new tires to Canada. 
C)  The government buys new tires for its military vehicles. 
D)  You buy new tires for your used car.

Question 17

Is every product produced in the United States included in U.S. gross domestic product?

Accepted Answer

No, not every product produced is includ

Question 18

Gross domestic product is the

Accepted Answer

A)  total amount that buyers spent on the final goods and services produced in a country during a specific time. 
B)  total amount of income earned in producing the final goods and services in a country during a specific time. 
C)  value of the final goods and services produced in a country during a specific time. 
D)  All of the above answers are correct. 
A)  total amount that buyers spent on the final goods and services produced in a country during a specific time. 
B)  total amount of income earned in producing the final goods and services in a country during a specific time. 
C)  value of the final goods and services produced in a country during a specific time. 
D)  All of the above answers are correct.

Question 19

Which of the following items is NOT part of government expenditure on goods and services in the GDP accounts?

Accepted Answer

A)  drapes to brighten up the presidentʹs office 
B)  Social Security expenditures 
C)  new computer hardware for use by the IRS 
D)  gasoline purchases for government car pools 
A)  drapes to brighten up the presidentʹs office 
B)  Social Security expenditures 
C)  new computer hardware for use by the IRS 
D)  gasoline purchases for government car pools

Question 20

What we produce during our working time is _________as part of GDP and the enjoyment we gain from our leisure time is _________as part of GDP.

Accepted Answer

A)  not included; not included 
B)  included; included 
C)  included; not included 
D)  not included; included 
A)  not included; not included 
B)  included; included 
C)  included; not included 
D)  not included; included

Choose the best statement.

The largest component of GDP is

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

The four parts of the business cycle occur in the following order:

The difference between gross investment and net investment is

Two reasons why valuing goods at their market prices is different than valuing them at their factor costs include

The circular flow of income shows that

The following data show Uruguay?s GDP using purchasing power parity in billions of dollars. $\begin{array}{ll}\text {year }&2000&2001&2002&2003&2004&2005&2006&2007&2008\\GDP(\$)&26.1&25.8&23.3&24.3&27.9&30.1&33.9&37.2&40.2\end{array}$ Using the data, we can conclude that

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

Component Amount (billions of dollars) Net taxes 1,635 Personal consumption expenditure 5,566 Depreciation 622 Government expenditure 1,784 Gros s investment 1,234 Exports 957 Imports 1,138 Hous ehold saving 1,202 -Using the data in the above table, what is the value of national saving?

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

-In the above figure, consumption expenditure is shown by flow

To calculate GDP when using the income approach, you must add indirect business taxes and depreciation.

Which of the following expenditures is for an intermediate good?

Is every product produced in the United States included in U.S. gross domestic product?

Gross domestic product is the

Which of the following items is NOT part of government expenditure on goods and services in the GDP accounts?

What we produce during our working time is _as part of GDP and the enjoyment we gain from our leisure time is _as part 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

Choose the best statement.

The largest component of GDP is

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

The four parts of the business cycle occur in the following order:

The difference between gross investment and net investment is

Two reasons why valuing goods at their market prices is different than valuing them at their factor costs include

The circular flow of income shows that

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

Component Amount (billions of dollars) Net taxes 1,635 Personal consumption expenditure 5,566 Depreciation 622 Government expenditure 1,784 Gros s investment 1,234 Exports 957 Imports 1,138 Hous ehold saving 1,202 -Using the data in the above table, what is the value of national saving?

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

-In the above figure, consumption expenditure is shown by flow

To calculate GDP when using the income approach, you must add indirect business taxes and depreciation.

Which of the following expenditures is for an intermediate good?

Is every product produced in the United States included in U.S. gross domestic product?

Gross domestic product is the

Which of the following items is NOT part of government expenditure on goods and services in the GDP accounts?

What we produce during our working time is _________as part of GDP and the enjoyment we gain from our leisure time is _________as part 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

What we produce during our working time is _as part of GDP and the enjoyment we gain from our leisure time is _as part of GDP.