Question 1

Which of the following expenditures would be included in GDP for this year?

Accepted Answer

A)  The purchase of a new car. 
B)  The purchase of a new tire by General Motors for a new car. 
C)  The purchase of a used car. 
D)  All of the above would be included. 
A)  The purchase of a new car. 
B)  The purchase of a new tire by General Motors for a new car. 
C)  The purchase of a used car. 
D)  All of the above would be included.

Question 2

If the GDP chain price index in a given year is greater than 100, real GDP in that year would be greater than nominal GDP.

Accepted Answer

A) True 
 B)False

Question 3

The equation for determining real GDP for year X is:

Accepted Answer

A)  **EQ**. 
B)  .**EQ** 
C)  **EQ**.. 
D)  **EQ** 
A)  **EQ**. 
B)  .**EQ** 
C)  **EQ**.. 
D)  **EQ**

Question 4

Exhibit 11-7  GDP data (billions of dollars)   In Exhibit 11-7, and using the expenditures approach, gross domestic product (GDP) equals:

Accepted Answer

A)  $4,066 billion. 
B)  $4,144 billion. 
C)  $3,988 billion. 
D)  $4,884 billion. 
E)  $5,782 billion. 
A)  $4,066 billion. 
B)  $4,144 billion. 
C)  $3,988 billion. 
D)  $4,884 billion. 
E)  $5,782 billion.

Question 5

Exhibit 11-2  Gross domestic product data   Using the expenditure approach in Exhibit 11-2, gross domestic product (GDP) is:

Accepted Answer

A)  $600 billion. 
B)  $100 billion. 
C)  $500 billion. 
D)  $915 billion. 
E)  $800 billion. 
A)  $600 billion. 
B)  $100 billion. 
C)  $500 billion. 
D)  $915 billion. 
E)  $800 billion.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Net exports equal imports minus exports.

Accepted Answer

A) True 
 B)False

Question 8

Which one of the following would count as investment in the GDP accounts?

Accepted Answer

A)  Purchase of a new airplane by an airline. 
B)  Purchase of a U.S. government bond. 
C)  Purchase of 100 shares of Wal-Mart stock. 
D)  Purchase of an existing house. 
A)  Purchase of a new airplane by an airline. 
B)  Purchase of a U.S. government bond. 
C)  Purchase of 100 shares of Wal-Mart stock. 
D)  Purchase of an existing house.

Question 9

Real GDP, as opposed to money (nominal) GDP, has been adjusted for changes in the general level of prices.

Accepted Answer

A) True 
 B)False

Question 10

The portion of the four-sector circular flow model which shows the flow of funds from savers to borrowers is the:

Accepted Answer

A)  product market. 
B)  factor market. 
C)  savings market. 
D)  financial market. 
A)  product market. 
B)  factor market. 
C)  savings market. 
D)  financial market.

Question 11

GDP overstates the productive capacity of a country when:

Accepted Answer

A)  economic bads like pollution are produced and then must be cleaned up. 
B)  there is a sizable underground economy. 
C)  nonmarket production represents a large portion of the economy. 
D)  working conditions improve, allowing jobs to be completed safer and faster. 
A)  economic bads like pollution are produced and then must be cleaned up. 
B)  there is a sizable underground economy. 
C)  nonmarket production represents a large portion of the economy. 
D)  working conditions improve, allowing jobs to be completed safer and faster.

Question 12

Personal income minus personal taxes equals disposable personal income.

Accepted Answer

A) True 
 B)False

Question 13

A GDP price chain price index number of 120.0 for a given year indicates that prices in that year are 20 percent higher than prices in the base year.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following activities would be calculated as part of GDP accounts?

Accepted Answer

A)  Drug trafficking. 
B)  Money laundry. 
C)  Prostitution. 
D)  Purchasing plastic surgery. 
E)  Burglary. 
A)  Drug trafficking. 
B)  Money laundry. 
C)  Prostitution. 
D)  Purchasing plastic surgery. 
E)  Burglary.

Question 15

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 16

Exhibit 11-6  GDP data (billions of dollars)   In Exhibit 11-6, national income (NI) equals:

Accepted Answer

A)  $2,330 billion. 
B)  $1,350 billion. 
C)  $1,320 billion. 
D)  $2,360 billion. 
E)  $1,440 billion. 
A)  $2,330 billion. 
B)  $1,350 billion. 
C)  $1,320 billion. 
D)  $2,360 billion. 
E)  $1,440 billion.

Question 17

Activities that are directly included in GDP accounts include:

Accepted Answer

A)  the value of housework done by householders. 
B)  the selling of illegal drugs. 
C)  unreported labor in sweatshops. 
D)  buying a ticket to a Dodgers-Expos game on your day off. 
A)  the value of housework done by householders. 
B)  the selling of illegal drugs. 
C)  unreported labor in sweatshops. 
D)  buying a ticket to a Dodgers-Expos game on your day off.

Question 18

Discuss how economists calculate NI, PI and DI.

Accepted Answer

GDP − depreciation = NI − prof

Question 19

Personal income equals disposable personal income plus:

Accepted Answer

A)  personal income taxes. 
B)  transfer payments. 
C)  dividend payments 
D)  personal savings. 
A)  personal income taxes. 
B)  transfer payments. 
C)  dividend payments 
D)  personal savings.

Question 20

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 the above. 
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 the above.

Exam 11: Gross Domestic Product

Which of the following expenditures would be included in GDP for this year?

If the GDP chain price index in a given year is greater than 100, real GDP in that year would be greater than nominal GDP.

The equation for determining real GDP for year X is:

Exhibit 11-7 GDP data (billions of dollars) In Exhibit 11-7, and using the expenditures approach, gross domestic product (GDP) equals:

Exhibit 11-2 Gross domestic product data Using the expenditure approach in Exhibit 11-2, gross domestic product (GDP) is:

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

Net exports equal imports minus exports.

Which one of the following would count as investment in the GDP accounts?

Real GDP, as opposed to money (nominal) GDP, has been adjusted for changes in the general level of prices.

The portion of the four-sector circular flow model which shows the flow of funds from savers to borrowers is the:

GDP overstates the productive capacity of a country when:

Personal income minus personal taxes equals disposable personal income.

A GDP price chain price index number of 120.0 for a given year indicates that prices in that year are 20 percent higher than prices in the base year.

Which of the following activities would be calculated as part of GDP accounts?

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

Exhibit 11-6 GDP data (billions of dollars) In Exhibit 11-6, national income (NI) equals:

Activities that are directly included in GDP accounts include:

Discuss how economists calculate NI, PI and DI.

Personal income equals disposable personal income plus:

Gross domestic product is officially measured by adding together the:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

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

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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