Question 1

Explain the relationship between real GDP and potential GDP during the two phases of the business cycle.

Accepted Answer

During an expansion the level

Question 2

Which of the following items is not a component of the expenditure approach to measuring U.S. GDP?

Accepted Answer

A)  purchases of food made by families 
B)  Social Security payments made by the government 
C)  purchases of U.S.-made movies by Europeans 
D)  purchases of new homes made by families 
A)  purchases of food made by families 
B)  Social Security payments made by the government 
C)  purchases of U.S.-made movies by Europeans 
D)  purchases of new homes made by families

Question 3

Which of the following is NOT included in real GDP?

Accepted Answer

A)  production of services, such as the services of hair dressers 
B)  production of goods that last less than a year, such as production of hot dogs 
C)  production that takes place in the underground economy 
D)  production of goods that last more than a year, such as a pair of roller blades 
A)  production of services, such as the services of hair dressers 
B)  production of goods that last less than a year, such as production of hot dogs 
C)  production that takes place in the underground economy 
D)  production of goods that last more than a year, such as a pair of roller blades

Question 4

A recession occurs when real GDP decreases for at least 6 months.

Accepted Answer

A) True 
 B)False

Question 5

In the calculation of GDP by the expenditure approach, exports from the United States must be

Accepted Answer

A)  subtracted because they are included in the consumption of a foreign country. 
B)  ignored because they are not bought by U.S. citizens. 
C)  subtracted if they are bought by foreign firms for investment purposes. 
D)  added. 
A)  subtracted because they are included in the consumption of a foreign country. 
B)  ignored because they are not bought by U.S. citizens. 
C)  subtracted if they are bought by foreign firms for investment purposes. 
D)  added.

Question 6

All economic activity in the underground economy represents the production of illegal goods and services.

Accepted Answer

A) True 
 B)False

Question 7

What would happen to measured GDP if more people started hiring workers to do house chores such as cooking and cleaning?

Accepted Answer

GDP is the value of the final goods and

Question 8

If we compare the four sources of spending in the economy we see that

Accepted Answer

A)  household consumption is the smallest. 
B)  government expenditure is the largest. 
C)  business investment is the largest. 
D)  household consumption is the largest. 
A)  household consumption is the smallest. 
B)  government expenditure is the largest. 
C)  business investment is the largest. 
D)  household consumption is the largest.

Question 9

Business cycles

Accepted Answer

A)  are more volatile during a Republican administration. 
B)  are unpredictable due to political upheavals and global markets. 
C)  follow a pattern of trough, expansion, peak and recession. 
D)  are all identical in duration over the last century. 
A)  are more volatile during a Republican administration. 
B)  are unpredictable due to political upheavals and global markets. 
C)  follow a pattern of trough, expansion, peak and recession. 
D)  are all identical in duration over the last century.

Question 10

Which of the following statements is TRUE?

Accepted Answer

A)  Real GDP fluctuates around potential GDP. 
B)  Potential GDP fluctuates around real GDP. 
C)  Potential GDP is the same as real GDP. 
D)  When all of the economy's resources are fully employed, the value of production is called real GDP. 
A)  Real GDP fluctuates around potential GDP. 
B)  Potential GDP fluctuates around real GDP. 
C)  Potential GDP is the same as real GDP. 
D)  When all of the economy's resources are fully employed, the value of production is called real GDP.

Question 11

When gross investment is greater than depreciation, then the nation's capital stock increased.

Accepted Answer

A) True 
 B)False

Question 12

According to the BEA, in the second quarter of 2011 nominal GDP was $15 trillion and in the second quarter of 2012 nominal GDP was $15.6 trillion. Based solely on this information, from the second quarter of 2011 to the second quarter of 2012

Accepted Answer

A)  real GDP may have increased, decreased, or stayed the same. 
B)  real GDP definitely increased. 
C)  real GDP definitely decreased. 
D)  prices definitely increased. 
A)  real GDP may have increased, decreased, or stayed the same. 
B)  real GDP definitely increased. 
C)  real GDP definitely decreased. 
D)  prices definitely increased.

Question 13

The following data describe France's economy in 2008. Consumption 234 billion euros
Government expenditure 93 billion euros
Investment 88 billion euros
Exports 128 billion euros
Imports 137 billion euros
From the data, we can conclude that in France

Accepted Answer

A)  net exports totaled -11 billion euros. 
B)  GDP equaled 424 billion euros. 
C)  GDP equaled 680 billion euros. 
D)  Net exports totaled 265 billion euros. 
A)  net exports totaled -11 billion euros. 
B)  GDP equaled 424 billion euros. 
C)  GDP equaled 680 billion euros. 
D)  Net exports totaled 265 billion euros.

Question 14

Purchasing power parity prices are used to construct GDP data that

Accepted Answer

A)  do not omit the underground economy. 
B)  can be used to make more valid comparisons between one country and another. 
C)  is a proper measure of economic welfare. 
D)  adjust for differences in population. 
A)  do not omit the underground economy. 
B)  can be used to make more valid comparisons between one country and another. 
C)  is a proper measure of economic welfare. 
D)  adjust for differences in population.

Question 15

In the national income accounts, government expenditure on goods and services refer to those purchases made by

Accepted Answer

A)  federal and state governments only. 
B)  the federal government only. 
C)  state and local governments only. 
D)  all levels of government. 
A)  federal and state governments only. 
B)  the federal government only. 
C)  state and local governments only. 
D)  all levels of government.

Question 16

The circular flow diagram shows

Accepted Answer

A)  how nominal GDP is distinct from real GDP. 
B)  how the prices of factors are determined. 
C)  the effects of inflation in a simple economy. 
D)  the flows between different sectors of the economy. 
A)  how nominal GDP is distinct from real GDP. 
B)  how the prices of factors are determined. 
C)  the effects of inflation in a simple economy. 
D)  the flows between different sectors of the economy.

Question 17

Total output and total income in the circular flow model

Accepted Answer

A)  are measures of the economy's level of savings. 
B)  include only intermediate goods. 
C)  are equal to each other. 
D)  are related because national income is less than national product. 
A)  are measures of the economy's level of savings. 
B)  include only intermediate goods. 
C)  are equal to each other. 
D)  are related because national income is less than national product.

Question 18

The circular flow diagram shows that the flow of payments to the factors used to produce goods and services exceeds the flow of payments for final goods and services.

Accepted Answer

A) True 
 B)False

Question 19

According to the BEA, in the second quarter of 2012 purchases of new residential structures rose by 8.9 percent. Using the expenditure approach, this change increases

Accepted Answer

A)  gross private domestic investment. 
B)  government expenditure on goods and services. 
C)  net exports of goods and services. 
D)  personal consumption expenditures. 
A)  gross private domestic investment. 
B)  government expenditure on goods and services. 
C)  net exports of goods and services. 
D)  personal consumption expenditures.

Question 20

To measure GDP using the expenditure approach you must collect data on

Accepted Answer

A)  inflation. 
B)  exports. 
C)  wages. 
D)  saving. 
A)  inflation. 
B)  exports. 
C)  wages. 
D)  saving.

Explain the relationship between real GDP and potential GDP during the two phases of the business cycle.

Which of the following items is not a component of the expenditure approach to measuring U.S. GDP?

Which of the following is NOT included in real GDP?

A recession occurs when real GDP decreases for at least 6 months.

In the calculation of GDP by the expenditure approach, exports from the United States must be

All economic activity in the underground economy represents the production of illegal goods and services.

What would happen to measured GDP if more people started hiring workers to do house chores such as cooking and cleaning?

If we compare the four sources of spending in the economy we see that

Business cycles

Which of the following statements is TRUE?

When gross investment is greater than depreciation, then the nation's capital stock increased.

According to the BEA, in the second quarter of 2011 nominal GDP was $15 trillion and in the second quarter of 2012 nominal GDP was $15.6 trillion. Based solely on this information, from the second quarter of 2011 to the second quarter of 2012

The following data describe France's economy in 2008. Consumption 234 billion euros Government expenditure 93 billion euros Investment 88 billion euros Exports 128 billion euros Imports 137 billion euros From the data, we can conclude that in France

Purchasing power parity prices are used to construct GDP data that

In the national income accounts, government expenditure on goods and services refer to those purchases made by

The circular flow diagram shows

Total output and total income in the circular flow model

The circular flow diagram shows that the flow of payments to the factors used to produce goods and services exceeds the flow of payments for final goods and services.

According to the BEA, in the second quarter of 2012 purchases of new residential structures rose by 8.9 percent. Using the expenditure approach, this change increases

To measure GDP using the expenditure approach you must collect data on

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

Explain the relationship between real GDP and potential GDP during the two phases of the business cycle.

Which of the following items is not a component of the expenditure approach to measuring U.S. GDP?

Which of the following is NOT included in real GDP?

A recession occurs when real GDP decreases for at least 6 months.

In the calculation of GDP by the expenditure approach, exports from the United States must be

All economic activity in the underground economy represents the production of illegal goods and services.

What would happen to measured GDP if more people started hiring workers to do house chores such as cooking and cleaning?

If we compare the four sources of spending in the economy we see that

Business cycles

Which of the following statements is TRUE?

When gross investment is greater than depreciation, then the nation's capital stock increased.

According to the BEA, in the second quarter of 2011 nominal GDP was $15 trillion and in the second quarter of 2012 nominal GDP was $15.6 trillion. Based solely on this information, from the second quarter of 2011 to the second quarter of 2012

The following data describe France's economy in 2008. Consumption 234 billion euros Government expenditure 93 billion euros Investment 88 billion euros Exports 128 billion euros Imports 137 billion euros From the data, we can conclude that in France

Purchasing power parity prices are used to construct GDP data that

In the national income accounts, government expenditure on goods and services refer to those purchases made by

The circular flow diagram shows

Total output and total income in the circular flow model

The circular flow diagram shows that the flow of payments to the factors used to produce goods and services exceeds the flow of payments for final goods and services.

According to the BEA, in the second quarter of 2012 purchases of new residential structures rose by 8.9 percent. Using the expenditure approach, this change increases

To measure GDP using the expenditure approach you must collect data on

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