Question 1

In the expenditures approach, transfer payments such as unemployment compensation are included in the G component of GDP.

Accepted Answer

A) True 
 B)False

Question 2

GDP excludes

Accepted Answer

A) the market value of unpaid work in the home. 
B) the production of services. 
C) the production of nondurable goods. 
D) positive changes in inventories. 
A) the market value of unpaid work in the home. 
B) the production of services. 
C) the production of nondurable goods. 
D) positive changes in inventories.

Question 3

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) were $5,000 billion.In year 2, the total expenditure for the same market basket of goods was $5,500 billion.What was the GDP price index for the economy in year 2?

Accepted Answer

A) 100 
B) 110 
C) 115 
D) 120 
A) 100 
B) 110 
C) 115 
D) 120

Question 4

Gross output (GO)

Accepted Answer

A) and GDP are equivalent measures of the final output of an economy. 
B) sums together the dollar value of economic activity at the four stages of production. 
C) measures all economic activity leading up to but excluding final output. 
D) always equals an amount smaller than GDP. 
A) and GDP are equivalent measures of the final output of an economy. 
B) sums together the dollar value of economic activity at the four stages of production. 
C) measures all economic activity leading up to but excluding final output. 
D) always equals an amount smaller than GDP.

Question 5

The National Income and Product Accounts (NIPA) help economists and policymakers to

Accepted Answer

A) determine which firms are likely to succeed or fail. 
B) follow the long-run course of the economy to determine whether it has grown or stagnated. 
C) measure what is occurring in each specific labor market. 
D) accomplish all of these. 
A) determine which firms are likely to succeed or fail. 
B) follow the long-run course of the economy to determine whether it has grown or stagnated. 
C) measure what is occurring in each specific labor market. 
D) accomplish all of these.

Question 6

U.S.gross domestic product (GDP) measures the market value of all goods and services produced by Americans in one year.

Accepted Answer

A) True 
 B)False

Question 7

The two ways of looking at GDP are the

Accepted Answer

A) output approach and expenditures approach. 
B) income approach and saving approach. 
C) expenditures approach and income approach. 
D) output approach and consumption approach. 
A) output approach and expenditures approach. 
B) income approach and saving approach. 
C) expenditures approach and income approach. 
D) output approach and consumption approach.

Question 8

The gross domestic product is not a good measure of the standard of living in a nation because it

Accepted Answer

A) includes the cost of health insurance. 
B) excludes payments for pollution control equipment. 
C) does not account for the size of the population. 
D) does not account for the cost of police protection. 
A) includes the cost of health insurance. 
B) excludes payments for pollution control equipment. 
C) does not account for the size of the population. 
D) does not account for the cost of police protection.

Question 9

Gross output (GO) for an economy in a given year

Accepted Answer

A) will always be less than GDP for that economy in the same year. 
B) will always equal GDP for that economy in the same year. 
C) may be greater than or less than GDP for that economy in the same year. 
D) will always exceed GDP for that economy in the same year. 
A) will always be less than GDP for that economy in the same year. 
B) will always equal GDP for that economy in the same year. 
C) may be greater than or less than GDP for that economy in the same year. 
D) will always exceed GDP for that economy in the same year.

Question 10

Nominal GDP is adjusted for price changes through the use of

Accepted Answer

A) the Consumer Price Index (CPI). 
B) the Producer Price Index (PPI). 
C) the GDP price index. 
D) exchange rates. 
A) the Consumer Price Index (CPI). 
B) the Producer Price Index (PPI). 
C) the GDP price index. 
D) exchange rates.

Question 11

Depreciation is all of the following, except

Accepted Answer

A) the difference between GDP and NDP. 
B) the difference between gross investment and net investment. 
C) the accumulation of capital stock. 
D) the consumption of fixed capital. 
A) the difference between GDP and NDP. 
B) the difference between gross investment and net investment. 
C) the accumulation of capital stock. 
D) the consumption of fixed capital.

Question 12

An example of intermediate goods would be

Accepted Answer

A) bricks bought by a homeowner for constructing a patio. 
B) sacks of groceries bought by a dentist for his family. 
C) cars bought by a car-rental company. 
D) paper and ink bought by a publishing company. 
A) bricks bought by a homeowner for constructing a patio. 
B) sacks of groceries bought by a dentist for his family. 
C) cars bought by a car-rental company. 
D) paper and ink bought by a publishing company.

Question 13

National income accountants can avoid multiple counting by

Accepted Answer

A) including transfer payments in their calculations. 
B) only counting final goods. 
C) counting both intermediate and final goods. 
D) only counting intermediate goods. 
A) including transfer payments in their calculations. 
B) only counting final goods. 
C) counting both intermediate and final goods. 
D) only counting intermediate goods.

Question 14

In the treatment of U.S.exports and imports, national income accountants

Accepted Answer

A) subtract exports, but add imports, in calculating GDP. 
B) subtract both exports and imports in calculating GDP. 
C) add both exports and imports in calculating GDP. 
D) add exports, but subtract imports, in calculating GDP. 
A) subtract exports, but add imports, in calculating GDP. 
B) subtract both exports and imports in calculating GDP. 
C) add both exports and imports in calculating GDP. 
D) add exports, but subtract imports, in calculating GDP.

Question 15

If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

Accepted Answer

A) True 
 B)False

Question 16

Gross domestic private investment, as defined in national income accounts, would include the following, except

Accepted Answer

A) changes to business inventories. 
B) all domestic construction done by the private sector. 
C) government construction of new highways and dams. 
D) the value of all capital goods bought by business firms. 
A) changes to business inventories. 
B) all domestic construction done by the private sector. 
C) government construction of new highways and dams. 
D) the value of all capital goods bought by business firms.

Question 17

Which of the following is an intermediate good?

Accepted Answer

A) the purchase of gasoline for a ski trip to Colorado 
B) the purchase of baseball uniforms by a professional baseball team 
C) the purchase of a pizza by a college student 
D) the purchase of jogging shoes by a professor 
A) the purchase of gasoline for a ski trip to Colorado 
B) the purchase of baseball uniforms by a professional baseball team 
C) the purchase of a pizza by a college student 
D) the purchase of jogging shoes by a professor

Question 18

Government purchases are the largest component of aggregate expenditures in the United States.

Accepted Answer

A) True 
 B)False

Question 19

Personal consumption expenditures include expenditures for new houses.

Accepted Answer

A) True 
 B)False

Question 20

Final goods and services refers to

Accepted Answer

A) goods and services that are unsold and therefore added to inventories. 
B) goods and services whose value has been adjusted for changes in the price level. 
C) goods and services purchased by ultimate users, rather than for resale or further processing. 
D) the excess of U.S.exports over U.S.imports. 
A) goods and services that are unsold and therefore added to inventories. 
B) goods and services whose value has been adjusted for changes in the price level. 
C) goods and services purchased by ultimate users, rather than for resale or further processing. 
D) the excess of U.S.exports over U.S.imports.

Exam 27: Measuring Domestic Output and National Income

In the expenditures approach, transfer payments such as unemployment compensation are included in the G component of GDP.

GDP excludes

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) were $5,000 billion.In year 2, the total expenditure for the same market basket of goods was $5,500 billion.What was the GDP price index for the economy in year 2?

Gross output (GO)

The National Income and Product Accounts (NIPA) help economists and policymakers to

U.S.gross domestic product (GDP) measures the market value of all goods and services produced by Americans in one year.

The two ways of looking at GDP are the

The gross domestic product is not a good measure of the standard of living in a nation because it

Gross output (GO) for an economy in a given year

Nominal GDP is adjusted for price changes through the use of

Depreciation is all of the following, except

An example of intermediate goods would be

National income accountants can avoid multiple counting by

In the treatment of U.S.exports and imports, national income accountants

If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

Gross domestic private investment, as defined in national income accounts, would include the following, except

Which of the following is an intermediate good?

Government purchases are the largest component of aggregate expenditures in the United States.

Personal consumption expenditures include expenditures for new houses.

Final goods and services refers to

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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