Question 1

If the economy adds to its inventory of goods during some year,

Accepted Answer

A) gross investment will exceed net investment by the amount of the inventory increase. 
B) this amount should be ignored in calculating that year's GDP. 
C) this amount should be subtracted in calculating that year's GDP. 
D) this amount should be included in calculating that year's GDP. 
A) gross investment will exceed net investment by the amount of the inventory increase. 
B) this amount should be ignored in calculating that year's GDP. 
C) this amount should be subtracted in calculating that year's GDP. 
D) this amount should be included in calculating that year's GDP.

Question 2

Which of the following activities is excluded from GDP, causing GDP to understate a nation's production?

Accepted Answer

A) the services of health care workers 
B) the services of military personnel 
C) the construction of new buildings 
D) goods and services produced in the underground economy 
A) the services of health care workers 
B) the services of military personnel 
C) the construction of new buildings 
D) goods and services produced in the underground economy

Question 3

Personal income (PI) refers to all income

Accepted Answer

A) received. 
B) earned. 
C) earned but not received. 
D) received but not earned. 
A) received. 
B) earned. 
C) earned but not received. 
D) received but not earned.

Question 4

Real GDP refers to

Accepted Answer

A) the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. 
B) GDP data that embody changes in the price level but not changes in physical output. 
C) GDP data that do not reflect changes in both physical output and the price level. 
D) GDP data that have been adjusted for changes in the price level. 
A) the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. 
B) GDP data that embody changes in the price level but not changes in physical output. 
C) GDP data that do not reflect changes in both physical output and the price level. 
D) GDP data that have been adjusted for changes in the price level.

Question 5

Suppose the total monetary value of all final goods and services produced in a particular country in 2015 is $500 billion and the total monetary value of final goods and services sold is $450 billion.We can conclude that

Accepted Answer

A) GDP in 2015 is $450 billion. 
B) NDP in 2015 is $450 billion. 
C) GDP in 2015 is $500 billion. 
D) inventories in 2015 fell by $50 billion. 
A) GDP in 2015 is $450 billion. 
B) NDP in 2015 is $450 billion. 
C) GDP in 2015 is $500 billion. 
D) inventories in 2015 fell by $50 billion.

Question 6

GDP can be calculated by summing

Accepted Answer

A) consumption, investment, government purchases, exports, and imports. 
B) consumption, investment, government purchases, and net exports. 
C) consumption, investment, wages, and rents. 
D) consumption, investment, government purchases, and imports. 
A) consumption, investment, government purchases, exports, and imports. 
B) consumption, investment, government purchases, and net exports. 
C) consumption, investment, wages, and rents. 
D) consumption, investment, government purchases, and imports.

Question 7

Welfare payments to low-income families are included in national income.

Accepted Answer

A) True 
 B)False

Question 8

The simplest way to calculate GDP is to sum the total sales of all business firms.

Accepted Answer

A) True 
 B)False

Question 9

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is

Accepted Answer

A) 100. 
B) 200. 
C) 240. 
D) 300. 
A) 100. 
B) 200. 
C) 240. 
D) 300.

Question 10

Within the circular flow model, the level of total resource income and total spending on output will be approximately equal.

Accepted Answer

A) True 
 B)False

Question 11

GDP excludes most nonmarket transactions.Therefore, GDP tends to

Accepted Answer

A) underestimate the rate of inflation in the economy. 
B) overestimate the rate of inflation in the economy. 
C) overestimate the amount of production of the economy. 
D) underestimate the amount of production in the economy. 
A) underestimate the rate of inflation in the economy. 
B) overestimate the rate of inflation in the economy. 
C) overestimate the amount of production of the economy. 
D) underestimate the amount of production in the economy.

Question 12

(Last Word) The U.S.government agency responsible for compiling the national income accounts is the

Accepted Answer

A) Census Bureau. 
B) Bureau of Labor Statistics (BLS). 
C) Commerce Department's Bureau of Economic Analysis (BE
A) . 
D) Government Accountability Office (GAO). 
A) Census Bureau. 
B) Bureau of Labor Statistics (BLS). 
C) Commerce Department's Bureau of Economic Analysis (BE
A) . 
D) Government Accountability Office (GAO).

Question 13

(Advanced analysis) Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5.The current year per-unit prices of these three goods are A = $2, B = $3, and C = $1.If the per-unit prices of the three goods were each $1 in a base year used to construct a GDP price index, then the GDP price index in the current year is

Accepted Answer

A) 205.5. 
B) 255.5. 
C) 39.3. 
D) 100. 
A) 205.5. 
B) 255.5. 
C) 39.3. 
D) 100.

Question 14

Which of the following government agencies estimates and compiles the U.S.GDP accounts?

Accepted Answer

A) the American Economic Association 
B) the Federal Reserve System 
C) the Bureau of Economic Analysis 
D) the Internal Revenue Service 
A) the American Economic Association 
B) the Federal Reserve System 
C) the Bureau of Economic Analysis 
D) the Internal Revenue Service

Question 15

Adding the market value of all final and intermediate goods and services in an economy in a given year would result in

Accepted Answer

A) the calculation of GDP for that year. 
B) the calculation of NDP for that year. 
C) an amount less than GDP for that year. 
D) an amount greater than GDP for that year. 
A) the calculation of GDP for that year. 
B) the calculation of NDP for that year. 
C) an amount less than GDP for that year. 
D) an amount greater than GDP for that year.

Question 16

In year 1, nominal GDP for the United States was $2,250 billion and in year 2 it was $2,508 billion.The GDP deflator was 72 in year 1 and 79 in year 2.Between year 1 and year 2, real GDP rose by

Accepted Answer

A) 11.4 percent. 
B) 9.7 percent. 
C) 2.4 percent. 
D) 1.6 percent. 
A) 11.4 percent. 
B) 9.7 percent. 
C) 2.4 percent. 
D) 1.6 percent.

Question 17

Exports are subtracted from imports in calculating U.S.GDP because exports are not available for domestic consumption.

Accepted Answer

A) True 
 B)False

Question 18

Gordon sells narcotics "on the street." This type of illegal activity

Accepted Answer

A) would be considered double counting in calculating GDP. 
B) is estimated and included in GDP figures. 
C) is excluded from GDP figures. 
D) causes GDP to be overstated. 
A) would be considered double counting in calculating GDP. 
B) is estimated and included in GDP figures. 
C) is excluded from GDP figures. 
D) causes GDP to be overstated.

Question 19

A large underground economy results in an

Accepted Answer

A) understated GDP. 
B) overstated GDP. 
C) understated GDP price index. 
D) overstated GDP price index. 
A) understated GDP. 
B) overstated GDP. 
C) understated GDP price index. 
D) overstated GDP price index.

Question 20

By summing the dollar value of all market transactions in the economy, we would

Accepted Answer

A) determine the market value of all resources used in the production process. 
B) obtain a sum substantially larger than the GDP. 
C) determine value added for the economy. 
D) measure GDP. 
A) determine the market value of all resources used in the production process. 
B) obtain a sum substantially larger than the GDP. 
C) determine value added for the economy. 
D) measure GDP.

Exam 27: Measuring Domestic Output and National Income

If the economy adds to its inventory of goods during some year,

Which of the following activities is excluded from GDP, causing GDP to understate a nation's production?

Personal income (PI) refers to all income

Real GDP refers to

Suppose the total monetary value of all final goods and services produced in a particular country in 2015 is $500 billion and the total monetary value of final goods and services sold is $450 billion.We can conclude that

GDP can be calculated by summing

Welfare payments to low-income families are included in national income.

The simplest way to calculate GDP is to sum the total sales of all business firms.

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is

Within the circular flow model, the level of total resource income and total spending on output will be approximately equal.

GDP excludes most nonmarket transactions.Therefore, GDP tends to

(Last Word) The U.S.government agency responsible for compiling the national income accounts is the

Which of the following government agencies estimates and compiles the U.S.GDP accounts?

Adding the market value of all final and intermediate goods and services in an economy in a given year would result in

In year 1, nominal GDP for the United States was $2,250 billion and in year 2 it was $2,508 billion.The GDP deflator was 72 in year 1 and 79 in year 2.Between year 1 and year 2, real GDP rose by

Exports are subtracted from imports in calculating U.S.GDP because exports are not available for domestic consumption.

Gordon sells narcotics "on the street." This type of illegal activity

A large underground economy results in an

By summing the dollar value of all market transactions in the economy, we would

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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