Question 1

This year's nominal GDP is this year's output of final goods and services evaluated in base year dollars.

Accepted Answer

A) True 
 B)False

Question 2

Real GDP is gross domestic product measured:

Accepted Answer

A)  at a constant output level but at current prices. 
B)  using the prices of a specified base year. 
C)  in current dollars. 
D)  as the difference between the current year's GDP and last year's GDP. 
A)  at a constant output level but at current prices. 
B)  using the prices of a specified base year. 
C)  in current dollars. 
D)  as the difference between the current year's GDP and last year's GDP.

Question 3

The U.S. experienced a recession in 2001 and 2007. During the period 2002- 2006, the U.S. economy was in a:

Accepted Answer

A)  peak. 
B)  recession. 
C)  trough. 
D)  period of expansion. 
A)  peak. 
B)  recession. 
C)  trough. 
D)  period of expansion.

Question 4

The traditional definition of a recession is a decline in real GDP lasting for

Accepted Answer

A)  at least one year. 
B)  at least one month. 
C)  at least two consecutive quarters. 
D)  at least two consecutive years. 
A)  at least one year. 
B)  at least one month. 
C)  at least two consecutive quarters. 
D)  at least two consecutive years.

Question 5

Final goods and services include:

Accepted Answer

A)  those produced by one firm for use in further processing by another firm. 
B)  intermediate goods. 
C)  goods and services produced for final use by households and firms. 
D)  raw materials. 
A)  those produced by one firm for use in further processing by another firm. 
B)  intermediate goods. 
C)  goods and services produced for final use by households and firms. 
D)  raw materials.

Question 6

Refer to Table 5.4. Suppose this economy produces only the two goods X and Y. If year 2 is the base year, then the percentage growth rate in Real GDP between year 1 and year 2 is approximately:

Accepted Answer

A)  1.3 percent. 
B)  29 percent. 
C)  3 percent. 
D)  60 percent. 
A)  1.3 percent. 
B)  29 percent. 
C)  3 percent. 
D)  60 percent.

Question 7

The largest component of national income is compensation of employees.

Accepted Answer

A) True 
 B)False

Question 8

Explain why the following items are included in GDP:
(a) depreciation
(b) change in business inventories
(c) indirect taxes

Accepted Answer

(a) Depreciation is included in GDP beca

Question 9

Which of the following is not an example of a final good or service?

Accepted Answer

A)  the popcorn you bought before watching the new Harry Potter movie 
B)  coffee beans Starbucks purchases to make coffee 
C)  the gasoline you bought at the pump 
D)  the economics class that you are taking to complete your degree 
A)  the popcorn you bought before watching the new Harry Potter movie 
B)  coffee beans Starbucks purchases to make coffee 
C)  the gasoline you bought at the pump 
D)  the economics class that you are taking to complete your degree

Question 10

Refer to Application 1, "Using Value Added to Measure the True Size of Wal- Mart," to answer the following questions:
-If we try to estimate what Wal- Mart produces, we must measure its "value added," which is defined as the:

Accepted Answer

A)  value of sales + cost of sales. 
B)  value of sales - cost of sales. 
C)  value of total sales. 
D)  cost of sales. 
A)  value of sales + cost of sales. 
B)  value of sales - cost of sales. 
C)  value of total sales. 
D)  cost of sales.

Question 11

In the circular flow diagram, households demand _______ and supply _______.

Accepted Answer

A)  inputs; goods and services 
B)  goods and services; goods and services 
C)  inputs; inputs 
D)  goods and services; inputs 
A)  inputs; goods and services 
B)  goods and services; goods and services 
C)  inputs; inputs 
D)  goods and services; inputs

Question 12

Which of the following is not counted in the GNP of the United States?

Accepted Answer

A)  the wage of a U.S. citizen who works in a foreign country for a foreign firm 
B)  the value of services that are produced by state and local governments in the United States 
C)  the profit earned by a restaurant located in the United States but owned by a Mexican company 
D)  the interest earned by a U.S. bank on loans to a business firm located in Brazil 
A)  the wage of a U.S. citizen who works in a foreign country for a foreign firm 
B)  the value of services that are produced by state and local governments in the United States 
C)  the profit earned by a restaurant located in the United States but owned by a Mexican company 
D)  the interest earned by a U.S. bank on loans to a business firm located in Brazil

Question 13

If net investment is negative, then

Accepted Answer

A)  gross investment is less than zero. 
B)  gross investment is less than depreciation. 
C)  gross investment is greater than depreciation. 
D)  depreciation is less than zero. 
A)  gross investment is less than zero. 
B)  gross investment is less than depreciation. 
C)  gross investment is greater than depreciation. 
D)  depreciation is less than zero.

Question 14

Based on the expenditure approach, discuss and explain each of the components of GDP.

Accepted Answer

Personal consumption expenditures repres

Question 15

_______ is commonly defined as six consecutive months of declining real GDP.

Accepted Answer

A)  A trough 
B)  An expansion 
C)  A peak 
D)  A recession 
A)  A trough 
B)  An expansion 
C)  A peak 
D)  A recession

Question 16

Explain how real GDP could be increased without using additional inputs.

Accepted Answer

Real GDP could be increased even though

Question 17

Which of the following is not a topic studied in macroeconomics?

Accepted Answer

A)  the inflation rate 
B)  the unemployment rate 
C)  the relative price of IBM computers 
D)  Gross Domestic Product 
A)  the inflation rate 
B)  the unemployment rate 
C)  the relative price of IBM computers 
D)  Gross Domestic Product

Question 18

Which of the following is not a transfer payment?

Accepted Answer

A)  Medicaid 
B)  Social Security benefits 
C)  government welfare payments 
D)  corporate dividends 
A)  Medicaid 
B)  Social Security benefits 
C)  government welfare payments 
D)  corporate dividends

Question 19

The profit from IBM's production in Italy is included in the U.S. _ _ and in the Italian .

Accepted Answer

A)  GNP; GDP 
B)  GDP; GDP 
C)  GNP; GNP 
D)  GDP; GNP 
A)  GNP; GDP 
B)  GDP; GDP 
C)  GNP; GNP 
D)  GDP; GNP

Question 20

Net investment equals:

Accepted Answer

A)  gross investment minus depreciation. 
B)  GDP minus final sales. 
C)  depreciation plus GDP. 
D)  gross investment minus final sales. 
A)  gross investment minus depreciation. 
B)  GDP minus final sales. 
C)  depreciation plus GDP. 
D)  gross investment minus final sales.

This year's nominal GDP is this year's output of final goods and services evaluated in base year dollars.

Real GDP is gross domestic product measured:

The U.S. experienced a recession in 2001 and 2007. During the period 2002- 2006, the U.S. economy was in a:

The traditional definition of a recession is a decline in real GDP lasting for

Final goods and services include:

Refer to Table 5.4. Suppose this economy produces only the two goods X and Y. If year 2 is the base year, then the percentage growth rate in Real GDP between year 1 and year 2 is approximately:

The largest component of national income is compensation of employees.

Explain why the following items are included in GDP: (a) depreciation (b) change in business inventories (c) indirect taxes

Which of the following is not an example of a final good or service?

Refer to Application 1, "Using Value Added to Measure the True Size of Wal- Mart," to answer the following questions: -If we try to estimate what Wal- Mart produces, we must measure its "value added," which is defined as the:

In the circular flow diagram, households demand _ and supply _.

Which of the following is not counted in the GNP of the United States?

If net investment is negative, then

Based on the expenditure approach, discuss and explain each of the components of GDP.

_______ is commonly defined as six consecutive months of declining real GDP.

Explain how real GDP could be increased without using additional inputs.

Which of the following is not a topic studied in macroeconomics?

Which of the following is not a transfer payment?

The profit from IBM's production in Italy is included in the U.S. _ _ and in the Italian .

Net investment equals:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 5: Measuring a Nations Production and Income

This year's nominal GDP is this year's output of final goods and services evaluated in base year dollars.

Real GDP is gross domestic product measured:

The U.S. experienced a recession in 2001 and 2007. During the period 2002- 2006, the U.S. economy was in a:

The traditional definition of a recession is a decline in real GDP lasting for

Final goods and services include:

Refer to Table 5.4. Suppose this economy produces only the two goods X and Y. If year 2 is the base year, then the percentage growth rate in Real GDP between year 1 and year 2 is approximately:

The largest component of national income is compensation of employees.

Explain why the following items are included in GDP: (a) depreciation (b) change in business inventories (c) indirect taxes

Which of the following is not an example of a final good or service?

Refer to Application 1, "Using Value Added to Measure the True Size of Wal- Mart," to answer the following questions: -If we try to estimate what Wal- Mart produces, we must measure its "value added," which is defined as the:

In the circular flow diagram, households demand _______ and supply _______.

Which of the following is not counted in the GNP of the United States?

If net investment is negative, then

Based on the expenditure approach, discuss and explain each of the components of GDP.

_______ is commonly defined as six consecutive months of declining real GDP.

Explain how real GDP could be increased without using additional inputs.

Which of the following is not a topic studied in macroeconomics?

Which of the following is not a transfer payment?

The profit from IBM's production in Italy is included in the U.S. _ _ and in the Italian .

Net investment equals:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

In the circular flow diagram, households demand _ and supply _.