Question 1

Nominal gross domestic product is based on:

Accepted Answer

A) the existing prices at which final goods and services are actually sold. 
B) prices of final goods and services adjusted for inflation. 
C) prices at which intermediate goods are sold. 
D) none of these. 
A) the existing prices at which final goods and services are actually sold. 
B) prices of final goods and services adjusted for inflation. 
C) prices at which intermediate goods are sold. 
D) none of these.

Question 2

Exhibit 5-9 GDP data (billions of dollars)
  In Exhibit 5-10, compute national income (NI). Which of the following is correct?

Accepted Answer

A) $7,400 billion. 
B) $7,250 billion. 
C) $8,150 billion. 
D) $8,200 billion. 
E) $8,350 billion. 
A) $7,400 billion. 
B) $7,250 billion. 
C) $8,150 billion. 
D) $8,200 billion. 
E) $8,350 billion.

Question 3

Resources that flow through the circular flow model include all of the following except :

Accepted Answer

A) land. 
B) labor. 
C) capital. 
D) final goods. 
A) land. 
B) labor. 
C) capital. 
D) final goods.

Question 4

Which one of the following statements is true in the four-sector circular model?

Accepted Answer

A) Money flows from government to households for taxes. 
B) Money flows from foreign economies to households for exports. 
C) Money flows from government to firms for goods and services. 
D) Money flows from firms to foreign economies for exports. 
E) Money flows from households to foreign economies for resources. 
A) Money flows from government to households for taxes. 
B) Money flows from foreign economies to households for exports. 
C) Money flows from government to firms for goods and services. 
D) Money flows from firms to foreign economies for exports. 
E) Money flows from households to foreign economies for resources.

Question 5

GDP measures the economy's production of:

Accepted Answer

A) final goods and services. 
B) intermediate goods. 
C) consumer goods and services. 
D) capital goods. 
A) final goods and services. 
B) intermediate goods. 
C) consumer goods and services. 
D) capital goods.

Question 6

Gross domestic product is officially measured by adding together the:

Accepted Answer

A) quantity of each good and service produced by U.S. residents. 
B) market value of all final goods and services produced within the borders of a nation. 
C) quantity of goods and services produced by companies owned by U.S. citizens. 
D) none of these. 
A) quantity of each good and service produced by U.S. residents. 
B) market value of all final goods and services produced within the borders of a nation. 
C) quantity of goods and services produced by companies owned by U.S. citizens. 
D) none of these.

Question 7

Exhibit 5-3 Expenditure approach   As shown in Exhibit 5-3, total expenditures by households for domestically produced goods is:

Accepted Answer

A) $1,000 billion. 
B) $100 billion. 
C) $600 billion. 
D) $20 billion. 
A) $1,000 billion. 
B) $100 billion. 
C) $600 billion. 
D) $20 billion.

Question 8

Gross domestic product (GDP)is a satisfactory measure of both economic "goods" and "bads".

Accepted Answer

A) True 
 B)False

Question 9

If a man marries his hired housekeeper, the value of GDP:

Accepted Answer

A) rises. 
B) falls. 
C) is unchanged. 
D) rises, but the value of GDP falls. 
A) rises. 
B) falls. 
C) is unchanged. 
D) rises, but the value of GDP falls.

Question 10

The largest component of GDP as measured by the expenditure approach is:

Accepted Answer

A) wages and salary earnings. 
B) personal consumption. 
C) net profits of corporations. 
D) gross private investment. 
A) wages and salary earnings. 
B) personal consumption. 
C) net profits of corporations. 
D) gross private investment.

Question 11

Which approach to calculating GDP is computed using compensation of employees, rental income, profits, net interest, indirect business taxes, and depreciation?

Accepted Answer

A) The expenditure approach. 
B) The income approach. 
C) The product-market approach. 
D) The circular-flow approach. 
A) The expenditure approach. 
B) The income approach. 
C) The product-market approach. 
D) The circular-flow approach.

Question 12

If the underground economy is sizable, then GDP will:

Accepted Answer

A) understate the economy's performance. 
B) overstate the economy's performance. 
C) fluctuate unpredictably. 
D) accurately reflect this subterranean activity. 
A) understate the economy's performance. 
B) overstate the economy's performance. 
C) fluctuate unpredictably. 
D) accurately reflect this subterranean activity.

Question 13

The expenditure approach for the calculation of GDP includes spending on:

Accepted Answer

A) consumption, investment, durable goods and exports. 
B) consumption, gross private domestic investment, government spending for goods and services, and exports. 
C) consumption, gross private domestic investment, government spending for goods and services, and net exports. 
D) consumption, net private domestic investment, government spending for goods and services, and net exports. 
E) consumption, gross private domestic investment, all government spending including transfer payments, and net exports. 
A) consumption, investment, durable goods and exports. 
B) consumption, gross private domestic investment, government spending for goods and services, and exports. 
C) consumption, gross private domestic investment, government spending for goods and services, and net exports. 
D) consumption, net private domestic investment, government spending for goods and services, and net exports. 
E) consumption, gross private domestic investment, all government spending including transfer payments, and net exports.

Question 14

The Department of Commerce sums the payments made to resources to arrive at GDP in the form of wages, rents, interest, profits, indirect taxes, and depreciation. This method of deriving GDP is called the:

Accepted Answer

A) opportunity cost approach. 
B) income approach. 
C) expenditure approach. 
D) monetarist approach. 
A) opportunity cost approach. 
B) income approach. 
C) expenditure approach. 
D) monetarist approach.

Question 15

In any year, nominal GDP divided by the GDP chain price index times 100 equals real GDP.

Accepted Answer

A) True 
 B)False

Question 16

The equation for determining real GDP for year X is:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 17

Exhibit 5-1 Use the information below to answer the following question(s).   Refer to Exhibit 5-1. What is this country's net exports?

Accepted Answer

A) $35. 
B) - $35. 
C) $379. 
D) - $379. 
A) $35. 
B) - $35. 
C) $379. 
D) - $379.

Question 18

Gross domestic product (GDP)is defined as:

Accepted Answer

A) the market value of all final goods and services produced within the borders of a nation. 
B) incomes received by all of a nation's households. 
C) the quantity of each good and service produced by U.S. residents. 
D) none of these. 
A) the market value of all final goods and services produced within the borders of a nation. 
B) incomes received by all of a nation's households. 
C) the quantity of each good and service produced by U.S. residents. 
D) none of these.

Question 19

Social Security payments are included in personal income.

Accepted Answer

A) True 
 B)False

Question 20

Nominal values are values measured in terms of the prices at which goods and services are actually sold.

Accepted Answer

A) True 
 B)False

Exam 5: Gross Domestic Product

Nominal gross domestic product is based on:

Exhibit 5-9 GDP data (billions of dollars) In Exhibit 5-10, compute national income (NI). Which of the following is correct?

Resources that flow through the circular flow model include all of the following except :

Which one of the following statements is true in the four-sector circular model?

GDP measures the economy's production of:

Gross domestic product is officially measured by adding together the:

Exhibit 5-3 Expenditure approach As shown in Exhibit 5-3, total expenditures by households for domestically produced goods is:

Gross domestic product (GDP)is a satisfactory measure of both economic "goods" and "bads".

If a man marries his hired housekeeper, the value of GDP:

The largest component of GDP as measured by the expenditure approach is:

Which approach to calculating GDP is computed using compensation of employees, rental income, profits, net interest, indirect business taxes, and depreciation?

If the underground economy is sizable, then GDP will:

The expenditure approach for the calculation of GDP includes spending on:

The Department of Commerce sums the payments made to resources to arrive at GDP in the form of wages, rents, interest, profits, indirect taxes, and depreciation. This method of deriving GDP is called the:

In any year, nominal GDP divided by the GDP chain price index times 100 equals real GDP.

The equation for determining real GDP for year X is:

Exhibit 5-1 Use the information below to answer the following question(s). Refer to Exhibit 5-1. What is this country's net exports?

Gross domestic product (GDP)is defined as:

Social Security payments are included in personal income.

Nominal values are values measured in terms of the prices at which goods and services are actually sold.

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

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