Question 1

Depreciation is defined as the

Accepted Answer

A)  decrease in the stock of capital due to wear and tear. 
B)  increase in the stock of capital due to investment by firms. 
C)  increase in the stock of capital due to wear and tear. 
D)  decrease in the stock of capital due to investment by firms. 
A)  decrease in the stock of capital due to wear and tear. 
B)  increase in the stock of capital due to investment by firms. 
C)  increase in the stock of capital due to wear and tear. 
D)  decrease in the stock of capital due to investment by firms.

Question 2

Gross domestic product (GDP) is the ________ in a given time period.

Accepted Answer

A)  value of personal consumption expenditures, gross private domestic investment, and federal government expenditures 
B)  sum of wage and salary compensation of employees and corporate profits 
C)  value of all final and intermediate goods and services produced by the economy excluding those goods exported to foreign nations 
D)  market value of final goods and services produced by the economy 
A)  value of personal consumption expenditures, gross private domestic investment, and federal government expenditures 
B)  sum of wage and salary compensation of employees and corporate profits 
C)  value of all final and intermediate goods and services produced by the economy excluding those goods exported to foreign nations 
D)  market value of final goods and services produced by the economy

Question 3

In any year, real GDP

Accepted Answer

A)  must always be less than potential GDP. 
B)  might be greater or less than potential GDP. 
C)  will always be greater than potential GDP because of the tendency of nations to incur inflation. 
D)  always equals potential GDP. 
A)  must always be less than potential GDP. 
B)  might be greater or less than potential GDP. 
C)  will always be greater than potential GDP because of the tendency of nations to incur inflation. 
D)  always equals potential GDP.

Question 4

-In the above figure, which point represents a situation with significant shortages of labor, capital, and other resources?

Accepted Answer

A)  point F 
B)  point G 
C)  point I 
D)  point K 
A)  point F 
B)  point G 
C)  point I 
D)  point K

Question 5

Gross domestic product (GDP) measures the

Accepted Answer

A)  number of final goods and services produced in the economy in a given time period. 
B)  number of final goods and services sold in the economy in a given time period. 
C)  market value of old and new final goods and services sold in the economy in a given time period. 
D)  market value of final goods and services produced in the economy in a given time period. 
A)  number of final goods and services produced in the economy in a given time period. 
B)  number of final goods and services sold in the economy in a given time period. 
C)  market value of old and new final goods and services sold in the economy in a given time period. 
D)  market value of final goods and services produced in the economy in a given time period.

Question 6

The four categories of expenditure used by the expenditure approach method to calculate GDP are

Accepted Answer

A)  consumption expenditure, taxes, saving and investment. 
B)  consumption expenditure, investment, net imports and saving. 
C)  saving, taxes, government expenditure and investment. 
D)  consumption expenditure, investment, government expenditure and net exports. 
A)  consumption expenditure, taxes, saving and investment. 
B)  consumption expenditure, investment, net imports and saving. 
C)  saving, taxes, government expenditure and investment. 
D)  consumption expenditure, investment, government expenditure and net exports.

Question 7

Real GDP fluctuates from year to year but is always below potential GDP.

Accepted Answer

A) True 
 B)False

Question 8

Use the idea of the circular flow diagram to explain why the value of production equals total income equals total expenditure.

Accepted Answer

The basic point is that nothing escapes

Question 9

Why does real GDP have limitations in determining economic welfare?

Accepted Answer

First economic welfare is a broad concep

Question 10

Which of the following is CORRECT?

Accepted Answer

A)  Aggregate expenditure equals GDP but is less than aggregate income. 
B)  Aggregate income is greater than GDP but equal to aggregate expenditure. 
C)  Aggregate income is greater than aggregate expenditure but equal to GDP. 
D)  Aggregate income, aggregate expenditure and GDP are all equal. 
A)  Aggregate expenditure equals GDP but is less than aggregate income. 
B)  Aggregate income is greater than GDP but equal to aggregate expenditure. 
C)  Aggregate income is greater than aggregate expenditure but equal to GDP. 
D)  Aggregate income, aggregate expenditure and GDP are all equal.

Question 11

Gross domestic product (GDP) is

Accepted Answer

A)  the value of all final goods and services produced in a country during a year. 
B)  the sum of consumption expenditure, investment, government expenditure on goods and services, and net exports. 
C)  the sum of compensation of employees, proprietors' income, net interest, rental income, corporate profits, depreciation, and indirect business taxes minus subsidies. 
D)  all of the above. 
A)  the value of all final goods and services produced in a country during a year. 
B)  the sum of consumption expenditure, investment, government expenditure on goods and services, and net exports. 
C)  the sum of compensation of employees, proprietors' income, net interest, rental income, corporate profits, depreciation, and indirect business taxes minus subsidies. 
D)  all of the above.

Question 12

Which of the following is TRUE regarding business cycles?
I. Cycles are predictable.
II. In each cycle, a peak follows an expansion.
III. Potential GDP fluctuates around real GDP.

Accepted Answer

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

Question 13

The data show Argentina's GDP (using purchasing power parity) in billions of dollars. Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
GDP($) 182 209 235 255 277 274 294 324 340 333 338 330 300
Year 2003 2004 2005 2006
GDP($) 333 373 420 470
The data show that

Accepted Answer

A)  Argentina's economy was in a recession from 2004 through 2006. 
B)  Argentina's economy was in a recession in 2001 and 2002. 
C)  GDP per person more than doubled between 1990 and 2006. 
D)  Argentina's economy reached a peak in 1996. 
A)  Argentina's economy was in a recession from 2004 through 2006. 
B)  Argentina's economy was in a recession in 2001 and 2002. 
C)  GDP per person more than doubled between 1990 and 2006. 
D)  Argentina's economy reached a peak in 1996.

Question 14

While studying with your friend, your friend states, "Our leisure time increases GDP but lowers our economic welfare because it reduces the amount of goods and services we can consume." Is your friend's statement CORRECT?

Accepted Answer

Your friend's assertion is incorrect on

Question 15

In the post-World War II period, considerable growth in total production took place in the United States. But at the same time, businesses were dumping their waste into the Great Lakes with minimal cost to themselves, significantly polluting the bodies of water as a result. This occurrence is an example where

Accepted Answer

A)  real GDP gives an overly positive view of economic welfare. 
B)  real GDP gives an overly negative view of economic welfare. 
C)  investment would have been a better measure of total production. 
D)  the pollution counts as a final good. 
A)  real GDP gives an overly positive view of economic welfare. 
B)  real GDP gives an overly negative view of economic welfare. 
C)  investment would have been a better measure of total production. 
D)  the pollution counts as a final good.

Question 16

Real GDP in 2017 is $10 trillion. Between 2017 and 2018, using 2017 prices, GDP grew 3 percent and using 2018 prices real GDP grew 7 percent. Using the chain-weighted output index method, real GDP in 2018 is ________ trillion.

Accepted Answer

A)  $10.5 
B)  $11 
C)  $10.1 
D)  $12.72 
A)  $10.5 
B)  $11 
C)  $10.1 
D)  $12.72

Question 17

Net exports is negative if

Accepted Answer

A)  the value of exports exceeds the value of imports. 
B)  the value of imports exceeds the value of exports. 
C)  the tariff payments are included in the value of imported and exported items. 
D)  too much production occurs in the exporting country during the year. 
A)  the value of exports exceeds the value of imports. 
B)  the value of imports exceeds the value of exports. 
C)  the tariff payments are included in the value of imported and exported items. 
D)  too much production occurs in the exporting country during the year.

Question 18

Which type of graph is used to identify trends?

Accepted Answer

A)  time-series 
B)  scatter diagram 
C)  cross-section 
D)  None of the above answers is correct. 
A)  time-series 
B)  scatter diagram 
C)  cross-section 
D)  None of the above answers is correct.

Question 19

The use of purchasing power parity prices

Accepted Answer

A)  decreases the real GDP per person statistics published by the International Monetary Fund. 
B)  weakens the validity of cross country comparisons of economic welfare. 
C)  increases the amount by which U.S. GDP is larger than that of any other nation. 
D)  accounts for differences in the prices of the same goods in different countries when measuring real GDP. 
A)  decreases the real GDP per person statistics published by the International Monetary Fund. 
B)  weakens the validity of cross country comparisons of economic welfare. 
C)  increases the amount by which U.S. GDP is larger than that of any other nation. 
D)  accounts for differences in the prices of the same goods in different countries when measuring real GDP.

Question 20

Rental income includes

Accepted Answer

A)  the payment for the use of land. 
B)  the payment for the use of all rented inputs. 
C)  no income from rental housing because most houses are occupied by their owners. 
D)  Both answers A and B are correct. 
A)  the payment for the use of land. 
B)  the payment for the use of all rented inputs. 
C)  no income from rental housing because most houses are occupied by their owners. 
D)  Both answers A and B are correct.

Depreciation is defined as the

Gross domestic product (GDP) is the ________ in a given time period.

In any year, real GDP

-In the above figure, which point represents a situation with significant shortages of labor, capital, and other resources?

Gross domestic product (GDP) measures the

The four categories of expenditure used by the expenditure approach method to calculate GDP are

Real GDP fluctuates from year to year but is always below potential GDP.

Use the idea of the circular flow diagram to explain why the value of production equals total income equals total expenditure.

Why does real GDP have limitations in determining economic welfare?

Which of the following is CORRECT?

Gross domestic product (GDP) is

Which of the following is TRUE regarding business cycles? I. Cycles are predictable. II. In each cycle, a peak follows an expansion. III. Potential GDP fluctuates around real GDP.

The data show Argentina's GDP (using purchasing power parity) in billions of dollars. Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 GDP($) 182 209 235 255 277 274 294 324 340 333 338 330 300 Year 2003 2004 2005 2006 GDP($) 333 373 420 470 The data show that

While studying with your friend, your friend states, "Our leisure time increases GDP but lowers our economic welfare because it reduces the amount of goods and services we can consume." Is your friend's statement CORRECT?

Real GDP in 2017 is $10 trillion. Between 2017 and 2018, using 2017 prices, GDP grew 3 percent and using 2018 prices real GDP grew 7 percent. Using the chain-weighted output index method, real GDP in 2018 is ________ trillion.

Net exports is negative if

Which type of graph is used to identify trends?

The use of purchasing power parity prices

Rental income includes

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

Depreciation is defined as the

Gross domestic product (GDP) is the ________ in a given time period.

In any year, real GDP

-In the above figure, which point represents a situation with significant shortages of labor, capital, and other resources?

Gross domestic product (GDP) measures the

The four categories of expenditure used by the expenditure approach method to calculate GDP are

Real GDP fluctuates from year to year but is always below potential GDP.

Use the idea of the circular flow diagram to explain why the value of production equals total income equals total expenditure.

Why does real GDP have limitations in determining economic welfare?

Which of the following is CORRECT?

Gross domestic product (GDP) is

Which of the following is TRUE regarding business cycles? I. Cycles are predictable. II. In each cycle, a peak follows an expansion. III. Potential GDP fluctuates around real GDP.

The data show Argentina's GDP (using purchasing power parity) in billions of dollars. Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 GDP($) 182 209 235 255 277 274 294 324 340 333 338 330 300 Year 2003 2004 2005 2006 GDP($) 333 373 420 470 The data show that

While studying with your friend, your friend states, "Our leisure time increases GDP but lowers our economic welfare because it reduces the amount of goods and services we can consume." Is your friend's statement CORRECT?

Real GDP in 2017 is $10 trillion. Between 2017 and 2018, using 2017 prices, GDP grew 3 percent and using 2018 prices real GDP grew 7 percent. Using the chain-weighted output index method, real GDP in 2018 is ________ trillion.

Net exports is negative if

Which type of graph is used to identify trends?

The use of purchasing power parity prices

Rental income includes

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