Question 1

If depreciation exceeds gross investment, net investment is negative.

Accepted Answer

A) True 
 B)False

Question 2

In the equation, GDP = C + I + G + X - M, G refers to

Accepted Answer

A)  federal government expenditures plus all transfer payments. 
B)  local, state, and federal government spending for all purposes. 
C)  the taxes and expenditures of all government units. 
D)  local, state, and federal government expenditure on goods and services, but does not include transfer payments. 
A)  federal government expenditures plus all transfer payments. 
B)  local, state, and federal government spending for all purposes. 
C)  the taxes and expenditures of all government units. 
D)  local, state, and federal government expenditure on goods and services, but does not include transfer payments.

Question 3

"To calculate GDP, economists begin with total income earned and then subtract total expenditure by the four sectors of the economy." Is the previous sentence true or false? Explain your answer.

Accepted Answer

The sentence is false. To calculate GDP,

Question 4

-Use the information in the table above plus the fact that indirect taxes less subsidies are $10 billion and depreciation is $30 billion to calculate the value of GDP.

Accepted Answer

A)  $180 billion 
B)  $150 billion 
C)  $140 billion 
D)  $130 billion 
A)  $180 billion 
B)  $150 billion 
C)  $140 billion 
D)  $130 billion

Question 5

A recession is commonly defined as occurring when

Accepted Answer

A)  real GDP decreases for a period of 12 or more months. 
B)  real GDP decreases for a period of 6 or more months. 
C)  the unemployment rate rises above 7.5 percent for 6 or more months. 
D)  the unemployment rate rises above 5.0 percent for 12 or more months. 
A)  real GDP decreases for a period of 12 or more months. 
B)  real GDP decreases for a period of 6 or more months. 
C)  the unemployment rate rises above 7.5 percent for 6 or more months. 
D)  the unemployment rate rises above 5.0 percent for 12 or more months.

Question 6

Double counting (counting the same thing twice) in GDP accounting is avoided by not including

Accepted Answer

A)  net exports. 
B)  intermediate goods. 
C)  illegal activities. 
D)  depreciation. 
A)  net exports. 
B)  intermediate goods. 
C)  illegal activities. 
D)  depreciation.

Question 7

By common definition, a recession occurs when

Accepted Answer

A)  the international deficit worsens for at least two successive quarters. 
B)  the government budget deficit exceeds the national debt. 
C)  the inflation rate exceeds 3.5 percent. 
D)  real GDP decreases for at least two successive quarters. 
A)  the international deficit worsens for at least two successive quarters. 
B)  the government budget deficit exceeds the national debt. 
C)  the inflation rate exceeds 3.5 percent. 
D)  real GDP decreases for at least two successive quarters.

Question 8

All of the following are components of the expenditure approach to measuring GDP EXCEPT

Accepted Answer

A)  Shaniq's purchase of a meal at the Olive Garden in Atlanta. 
B)  a Senator from Iowa being paid the monthly salary. 
C)  the army buying new M1 Abram tanks. 
D)  Ford Motor Company buying new Dell computers for use in its marketing department in Dearborn, Michigan. 
A)  Shaniq's purchase of a meal at the Olive Garden in Atlanta. 
B)  a Senator from Iowa being paid the monthly salary. 
C)  the army buying new M1 Abram tanks. 
D)  Ford Motor Company buying new Dell computers for use in its marketing department in Dearborn, Michigan.

Question 9

Last year in the country of Nerf imports equaled exports. Nerf's GDP was $500 million, its consumer expenditure was $380 million, and its investment was $20 million. Nerf's government expenditure on goods and services were

Accepted Answer

A)  $100 million. 
B)  $900 million. 
C)  $500 million. 
D)  zero. 
A)  $100 million. 
B)  $900 million. 
C)  $500 million. 
D)  zero.

Question 10

"As the credit crisis unfolded over the past year, one of the few certainties in the global economy seemed to be China's ability to plough on regardless of double-digit growth rates...The ...crisis has also focused ...on the need to update a growth model that...is still dependent on assembling goods for export without adding much value and on heavy industries that create pollution. Chinese companies have continued to find new foreign markets for their products...several other factors point to a slowing property market...production of steel, cement and air conditioners was down... Retail sales have risen by 23 per cent in each of the last two months".
Beijing's Burden, www.FT.com, by Geoff Dyer, Sept. 23, 2008
-According to the article, ________ can be expected to ________ this year.

Accepted Answer

A)  exports; increase 
B)  consumption; decrease 
C)  imports; decrease 
D)  net interest income; decrease 
A)  exports; increase 
B)  consumption; decrease 
C)  imports; decrease 
D)  net interest income; decrease

Question 11

Which of the following are examples of the gross private domestic investment component of GDP?
I. the purchase of production machinery by IBM
II. an increase in the finished goods inventory at Intel

Accepted Answer

A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II

Question 12

An economy recovering from a recession

Accepted Answer

A)  moves up from its trough to a period of expansion. 
B)  moves up from its peak to a period of expansion. 
C)  moves down from its trough to a period of depression. 
D)  moves down from its peak to a period of expansion. 
A)  moves up from its trough to a period of expansion. 
B)  moves up from its peak to a period of expansion. 
C)  moves down from its trough to a period of depression. 
D)  moves down from its peak to a period of expansion.

Question 13

A new 2017 Honda Civic produced in 2017 and purchased in 2018 is

Accepted Answer

A)  part of GDP in 2017. 
B)  part of GDP in 2018. 
C)  not part of GDP in either year because it was produced in one year and sold in another year. 
D)  part of GDP in both 2017 and 2018. 
A)  part of GDP in 2017. 
B)  part of GDP in 2018. 
C)  not part of GDP in either year because it was produced in one year and sold in another year. 
D)  part of GDP in both 2017 and 2018.

Question 14

Which of the following is included in the government expenditure component of the expenditure approach to GDP?

Accepted Answer

A)  state government expenditure on local schools 
B)  transfer payments 
C)  changes in inventories 
D)  taxes 
A)  state government expenditure on local schools 
B)  transfer payments 
C)  changes in inventories 
D)  taxes

Question 15

A trend is

Accepted Answer

A)  a measure of closeness on a scatter diagram. 
B)  a general tendency for a variable to rise or fall. 
C)  the maximum value of a variable. 
D)  the minimum value of a variable. 
A)  a measure of closeness on a scatter diagram. 
B)  a general tendency for a variable to rise or fall. 
C)  the maximum value of a variable. 
D)  the minimum value of a variable.

Question 16

The sum of compensation to employees, rental income, corporate profits, net interest, and proprietors' income is

Accepted Answer

A)  gross domestic product. 
B)  gross domestic income. 
C)  net domestic income at factor cost. 
D)  net domestic product. 
A)  gross domestic product. 
B)  gross domestic income. 
C)  net domestic income at factor cost. 
D)  net domestic product.

Question 17

Gross Domestic Product is equal to the sum of consumption expenditure, investment, net exports, and

Accepted Answer

A)  government expenditures on goods and services. 
B)  saving. 
C)  profits. 
D)  net taxes. 
A)  government expenditures on goods and services. 
B)  saving. 
C)  profits. 
D)  net taxes.

Question 18

"Life expectancy is exceptionally high in Japan. Scores for political freedom and civil liberties approach those of peer countries in Europe...equality of opportunity is extremely weak. The country also possesses one of the longer working weeks." Japan's GDP was estimated to be $4.2 trillion (purchasing power parity) and the population was 127.4 million.
"Driven by its attractive climate, Brazil performs substantially better on Life Satisfaction than Material Wealth. High international demand for Brazil's commodities and raw materials has produced a sustained economic expansion since 2004, which in turn has led to job creation, wage growth and relatively low inflation. Brazilians report that they control their own lives to a substantial degree." Brazil's GDP was estimated to be $1.7 trillion (purchasing power parity) and 190 million in 2006.
www.prosperity.com
-According to the information, Japan's real GDP per person

Accepted Answer

A)  is higher than Brazil's and therefore we can definitely conclude that economic well-being is higher in Japan. 
B)  is $33,000. 
C)  is lower than Brazil's, but its real GDP is higher which makes standard of living higher in Japan. 
D)  cannot be expected to change much given the other factors affecting GDP growth including political freedom and life expectancy. 
A)  is higher than Brazil's and therefore we can definitely conclude that economic well-being is higher in Japan. 
B)  is $33,000. 
C)  is lower than Brazil's, but its real GDP is higher which makes standard of living higher in Japan. 
D)  cannot be expected to change much given the other factors affecting GDP growth including political freedom and life expectancy.

Question 19

Gross investment equals

Accepted Answer

A)  net investment - depreciation + change in inventories. 
B)  net investment + depreciation. 
C)  net investment + change in inventories. 
D)  depreciation + change in inventories. 
A)  net investment - depreciation + change in inventories. 
B)  net investment + depreciation. 
C)  net investment + change in inventories. 
D)  depreciation + change in inventories.

Question 20

If an American firm produces goods that are sold to a German household, then

Accepted Answer

A)  German GDP increases but not U.S. GDP. 
B)  U.S. GDP increases. 
C)  the transaction is considered an export in the German GDP accounts. 
D)  net exports in the United States will not change because an export immediately generates an offsetting import. 
A)  German GDP increases but not U.S. GDP. 
B)  U.S. GDP increases. 
C)  the transaction is considered an export in the German GDP accounts. 
D)  net exports in the United States will not change because an export immediately generates an offsetting import.

If depreciation exceeds gross investment, net investment is negative.

In the equation, GDP = C + I + G + X - M, G refers to

"To calculate GDP, economists begin with total income earned and then subtract total expenditure by the four sectors of the economy." Is the previous sentence true or false? Explain your answer.

-Use the information in the table above plus the fact that indirect taxes less subsidies are $10 billion and depreciation is $30 billion to calculate the value of GDP.

A recession is commonly defined as occurring when

Double counting (counting the same thing twice) in GDP accounting is avoided by not including

By common definition, a recession occurs when

All of the following are components of the expenditure approach to measuring GDP EXCEPT

Last year in the country of Nerf imports equaled exports. Nerf's GDP was $500 million, its consumer expenditure was $380 million, and its investment was $20 million. Nerf's government expenditure on goods and services were

Which of the following are examples of the gross private domestic investment component of GDP? I. the purchase of production machinery by IBM II. an increase in the finished goods inventory at Intel

An economy recovering from a recession

A new 2017 Honda Civic produced in 2017 and purchased in 2018 is

Which of the following is included in the government expenditure component of the expenditure approach to GDP?

A trend is

The sum of compensation to employees, rental income, corporate profits, net interest, and proprietors' income is

Gross Domestic Product is equal to the sum of consumption expenditure, investment, net exports, and

Gross investment equals

If an American firm produces goods that are sold to a German household, then

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

If depreciation exceeds gross investment, net investment is negative.

In the equation, GDP = C + I + G + X - M, G refers to

"To calculate GDP, economists begin with total income earned and then subtract total expenditure by the four sectors of the economy." Is the previous sentence true or false? Explain your answer.

-Use the information in the table above plus the fact that indirect taxes less subsidies are $10 billion and depreciation is $30 billion to calculate the value of GDP.

A recession is commonly defined as occurring when

Double counting (counting the same thing twice) in GDP accounting is avoided by not including

By common definition, a recession occurs when

All of the following are components of the expenditure approach to measuring GDP EXCEPT

Last year in the country of Nerf imports equaled exports. Nerf's GDP was $500 million, its consumer expenditure was $380 million, and its investment was $20 million. Nerf's government expenditure on goods and services were

Which of the following are examples of the gross private domestic investment component of GDP? I. the purchase of production machinery by IBM II. an increase in the finished goods inventory at Intel

An economy recovering from a recession

A new 2017 Honda Civic produced in 2017 and purchased in 2018 is

Which of the following is included in the government expenditure component of the expenditure approach to GDP?

A trend is

The sum of compensation to employees, rental income, corporate profits, net interest, and proprietors' income is

Gross Domestic Product is equal to the sum of consumption expenditure, investment, net exports, and

Gross investment equals

If an American firm produces goods that are sold to a German household, then

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