Question 1

Inflation climbed steadily from 1952 to 1972. A time-series graph with inflation on the vertical axis and time (in years) on the horizontal axis would show

Accepted Answer

A)  the rate of inflation as a horizontal line. 
B)  that inflation was following a decreasing trend line. 
C)  that inflation had a positive trend. 
D)  that inflation had a negative trend. 
A)  the rate of inflation as a horizontal line. 
B)  that inflation was following a decreasing trend line. 
C)  that inflation had a positive trend. 
D)  that inflation had a negative trend. C

Question 2

The circular flow shows that

Accepted Answer

A)  aggregate production equals aggregate expenditure. 
B)  aggregate expenditure is less than aggregate income. 
C)  GDP equals aggregate income. 
D)  Both answers A and C are correct. 
A)  aggregate production equals aggregate expenditure. 
B)  aggregate expenditure is less than aggregate income. 
C)  GDP equals aggregate income. 
D)  Both answers A and C are correct. D

Question 3

-Using the information in the table above, calculate the government's budget deficit or surplus.

Accepted Answer

A)  $2 
B)  -$4 
C)  -$10 
D)  $4 
A)  $2 
B)  -$4 
C)  -$10 
D)  $4 C

Question 4

Nominal GDP is

Accepted Answer

A)  real GDP adjusted for price changes. 
B)  GDP valued at prices of that year. 
C)  GDP valued at constant prices. 
D)  real GDP valued at base year prices. 
A)  real GDP adjusted for price changes. 
B)  GDP valued at prices of that year. 
C)  GDP valued at constant prices. 
D)  real GDP valued at base year prices.

Question 5

Which of the following are parts of the business cycles?

Accepted Answer

A)  peak and potential GDP 
B)  real GDP and potential GDP 
C)  recession and expansion 
D)  inflation and recession 
A)  peak and potential GDP 
B)  real GDP and potential GDP 
C)  recession and expansion 
D)  inflation and recession

Question 6

According to the BEA, in the second quarter of 2012 state and local government spending on goods and services changed by -1.4 percent. Using the expenditure approach, this change leads to

Accepted Answer

A)  a decrease in government expenditure on goods and services. 
B)  no change in GDP because only federal government expenditures are included in GDP. 
C)  a decrease in gross private domestic investment. 
D)  no change in GDP because state and local government expenditure is always canceled out by federal government expenditure. 
A)  a decrease in government expenditure on goods and services. 
B)  no change in GDP because only federal government expenditures are included in GDP. 
C)  a decrease in gross private domestic investment. 
D)  no change in GDP because state and local government expenditure is always canceled out by federal government expenditure.

Question 7

The expenditure approach measures GDP by adding

Accepted Answer

A)  compensation of employees, rental income, corporate profits, net interest, and proprietors' income. 
B)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and depreciation. 
C)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracting subsidies paid by the government. 
D)  consumption expenditure, gross private domestic investment, net exports of goods and services, and government expenditure on goods and services. 
A)  compensation of employees, rental income, corporate profits, net interest, and proprietors' income. 
B)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and depreciation. 
C)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracting subsidies paid by the government. 
D)  consumption expenditure, gross private domestic investment, net exports of goods and services, and government expenditure on goods and services.

Question 8

The circular flow shows that aggregate spending is larger than aggregate income because people save.

Accepted Answer

A) True 
 B)False

Question 9

What is the relationship between actual and potential real GDP?

Accepted Answer

Real GDP equals potential GDP when all r

Question 10

Can nominal GDP ever be less than real GDP?

Accepted Answer

Yes, nominal GDP can be less than real G

Question 11

In computing GDP, it is essential to

Accepted Answer

A)  avoid double counting. 
B)  include government transfer payments. 
C)  include government tax revenues. 
D)  count all intermediate products directly as they are produced. 
A)  avoid double counting. 
B)  include government transfer payments. 
C)  include government tax revenues. 
D)  count all intermediate products directly as they are produced.

Question 12

A productivity growth slowdown can be shown as year-to-year fluctuations of real GDP around potential GDP.

Accepted Answer

A) True 
 B)False

Question 13

Potential GDP is

Accepted Answer

A)  the maximum GDP that an economy actually achieves throughout its entire history. 
B)  the level of GDP achieved during periods when 100 percent of the labor force is employed. 
C)  a goal that can never be achieved by the economy. 
D)  the maximum amount of GDP that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation. 
A)  the maximum GDP that an economy actually achieves throughout its entire history. 
B)  the level of GDP achieved during periods when 100 percent of the labor force is employed. 
C)  a goal that can never be achieved by the economy. 
D)  the maximum amount of GDP that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation.

Question 14

Real GDP does not show the state of economic welfare in a country in part because GDP omits
I. household production.
II. leisure time available.
III. the quality of the environment.

Accepted Answer

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

Question 15

Net investment equals

Accepted Answer

A)  gross investment + depreciation. 
B)  depreciation + addition to inventories. 
C)  savings - depreciation. 
D)  gross investment - depreciation. 
A)  gross investment + depreciation. 
B)  depreciation + addition to inventories. 
C)  savings - depreciation. 
D)  gross investment - depreciation.

Question 16

The omission of household production causes actual economic production to be underestimated.

Accepted Answer

A) True 
 B)False

Question 17

-Based on the data in the above table, gross domestic product equals

Accepted Answer

A)  $2,190. 
B)  $2,840. 
C)  $2,465. 
D)  $2,750. 
A)  $2,190. 
B)  $2,840. 
C)  $2,465. 
D)  $2,750.

Question 18

"When a company's depreciation is larger than its gross investment, net investment becomes negative and the firm's capital stock decreases." Is the previous statement correct or incorrect? Explain your answer.

Accepted Answer

The statement is correct. Net investment

Question 19

Which of the following is NOT a reason that real GDP is a poor measure of a nation's economic welfare?

Accepted Answer

A)  Real GDP omits measures of political freedom. 
B)  Real GDP does not take into account the value of people's leisure time. 
C)  Real GDP does not include the underground economy. 
D)  Real GDP overvalues household production. 
A)  Real GDP omits measures of political freedom. 
B)  Real GDP does not take into account the value of people's leisure time. 
C)  Real GDP does not include the underground economy. 
D)  Real GDP overvalues household production.

Question 20

How does the production of a U.S. firm located in France affect U.S. GDP? How does the production of a French firm located in Ohio affect U.S. GDP?

Accepted Answer

U.S. GDP includes all production in the

Inflation climbed steadily from 1952 to 1972. A time-series graph with inflation on the vertical axis and time (in years) on the horizontal axis would show

The circular flow shows that

-Using the information in the table above, calculate the government's budget deficit or surplus.

Nominal GDP is

Which of the following are parts of the business cycles?

According to the BEA, in the second quarter of 2012 state and local government spending on goods and services changed by -1.4 percent. Using the expenditure approach, this change leads to

The expenditure approach measures GDP by adding

The circular flow shows that aggregate spending is larger than aggregate income because people save.

What is the relationship between actual and potential real GDP?

Can nominal GDP ever be less than real GDP?

In computing GDP, it is essential to

A productivity growth slowdown can be shown as year-to-year fluctuations of real GDP around potential GDP.

Potential GDP is

Real GDP does not show the state of economic welfare in a country in part because GDP omits I. household production. II. leisure time available. III. the quality of the environment.

Net investment equals

The omission of household production causes actual economic production to be underestimated.

-Based on the data in the above table, gross domestic product equals

"When a company's depreciation is larger than its gross investment, net investment becomes negative and the firm's capital stock decreases." Is the previous statement correct or incorrect? Explain your answer.

Which of the following is NOT a reason that real GDP is a poor measure of a nation's economic welfare?

How does the production of a U.S. firm located in France affect U.S. GDP? How does the production of a French firm located in Ohio affect U.S. 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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 4: Measuring Gdp and Economic Growth

Inflation climbed steadily from 1952 to 1972. A time-series graph with inflation on the vertical axis and time (in years) on the horizontal axis would show

The circular flow shows that

-Using the information in the table above, calculate the government's budget deficit or surplus.

Nominal GDP is

Which of the following are parts of the business cycles?

According to the BEA, in the second quarter of 2012 state and local government spending on goods and services changed by -1.4 percent. Using the expenditure approach, this change leads to

The expenditure approach measures GDP by adding

The circular flow shows that aggregate spending is larger than aggregate income because people save.

What is the relationship between actual and potential real GDP?

Can nominal GDP ever be less than real GDP?

In computing GDP, it is essential to

A productivity growth slowdown can be shown as year-to-year fluctuations of real GDP around potential GDP.

Potential GDP is

Real GDP does not show the state of economic welfare in a country in part because GDP omits I. household production. II. leisure time available. III. the quality of the environment.

Net investment equals

The omission of household production causes actual economic production to be underestimated.

-Based on the data in the above table, gross domestic product equals

"When a company's depreciation is larger than its gross investment, net investment becomes negative and the firm's capital stock decreases." Is the previous statement correct or incorrect? Explain your answer.

Which of the following is NOT a reason that real GDP is a poor measure of a nation's economic welfare?

How does the production of a U.S. firm located in France affect U.S. GDP? How does the production of a French firm located in Ohio affect U.S. 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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters