Question 1

To measure the value of all final goods produced in a given year,we must include the value of

Accepted Answer

A)  used goods that are resold. 
B)  intermediate goods. 
C)  government and private transfer payments. 
D)  all financial transactions. 
E)  changes in total inventories. 
A)  used goods that are resold. 
B)  intermediate goods. 
C)  government and private transfer payments. 
D)  all financial transactions. 
E)  changes in total inventories. E

Question 2

When computing GDP via the income approach,we must include

Accepted Answer

A)  exports minus imports. 
B)  gross investment. 
C)  depreciation and indirect business taxes. 
D)  household savings and consumption. 
E)  government purchases of goods and services. 
A)  exports minus imports. 
B)  gross investment. 
C)  depreciation and indirect business taxes. 
D)  household savings and consumption. 
E)  government purchases of goods and services. C

Question 3

Federal taxes on gasoline and cigarettes are examples of ________ taxes.

Accepted Answer

A)  active 
B)  beneficial 
C)  cost of living 
D)  indirect business 
E)  exercise 
A)  active 
B)  beneficial 
C)  cost of living 
D)  indirect business 
E)  exercise D

Question 4

A price index is computed by

Accepted Answer

A)  calculating the ratio of the percentage change in price to the percentage change in output. 
B)  multiplying average prices in the base year by 100. 
C)  subtracting GDP in the base year from the current GDP. 
D)  adding values expressed in base-year terms to current values. 
E)  dividing the current cost of a set of goods by the cost of the same goods in the base year. 
A)  calculating the ratio of the percentage change in price to the percentage change in output. 
B)  multiplying average prices in the base year by 100. 
C)  subtracting GDP in the base year from the current GDP. 
D)  adding values expressed in base-year terms to current values. 
E)  dividing the current cost of a set of goods by the cost of the same goods in the base year.

Question 5

A measure of the extent of production taking place in a particular firm is called

Accepted Answer

A)  value added. 
B)  double counting. 
C)  a nonmarket transaction. 
D)  a transfer payment. 
E)  opportunity cost. 
A)  value added. 
B)  double counting. 
C)  a nonmarket transaction. 
D)  a transfer payment. 
E)  opportunity cost.

Question 6

The following question are based on the following information:
  
-Depreciation equals ________ billion.

Accepted Answer

A)  $50 
B)  $150 
C)  $350 
D)  $850 
E)  $1,350 
A)  $50 
B)  $150 
C)  $350 
D)  $850 
E)  $1,350

Question 7

The measurement of GDP is useful to business executives because it

Accepted Answer

A)  aids in forecasting the future health of their firms. 
B)  represents the dollar value of all their economic transactions for the year. 
C)  enables businesses to estimate depreciation. 
D)  illustrates the social costs that arise from the production of private goods and services. 
E)  discourages businesses from cheating on their income taxes. 
A)  aids in forecasting the future health of their firms. 
B)  represents the dollar value of all their economic transactions for the year. 
C)  enables businesses to estimate depreciation. 
D)  illustrates the social costs that arise from the production of private goods and services. 
E)  discourages businesses from cheating on their income taxes.

Question 8

Gross domestic product (GDP)

Accepted Answer

A)  equals the total wages paid in a year. 
B)  is a measure of government output. 
C)  equals the total value of final goods and services produced in a year. 
D)  is the sum of all goods, both final and intermediate. 
E)  is an obsolete economic indicator of inflation. 
A)  equals the total wages paid in a year. 
B)  is a measure of government output. 
C)  equals the total value of final goods and services produced in a year. 
D)  is the sum of all goods, both final and intermediate. 
E)  is an obsolete economic indicator of inflation.

Question 9

GDP expressed in constant dollars is called

Accepted Answer

A)  capital accumulation. 
B)  the net national product. 
C)  permanent income. 
D)  real GDP. 
E)  a price index. 
A)  capital accumulation. 
B)  the net national product. 
C)  permanent income. 
D)  real GDP. 
E)  a price index.

Question 10

Comparisons of year-to-year changes in the current dollar value of output can be misleading because

Accepted Answer

A)  nonmarket transactions are included. 
B)  intermediate goods are excluded. 
C)  nonproductive transactions are added to changes in production costs. 
D)  secondhand goods are excluded. 
E)  they reflect changes in both prices and output. 
A)  nonmarket transactions are included. 
B)  intermediate goods are excluded. 
C)  nonproductive transactions are added to changes in production costs. 
D)  secondhand goods are excluded. 
E)  they reflect changes in both prices and output.

Question 11

The components of gross private domestic investment include

Accepted Answer

A)  net exports. 
B)  consumer durable goods. 
C)  the net change in total inventories. 
D)  government purchases of goods and services. 
E)  corporate income taxes. 
A)  net exports. 
B)  consumer durable goods. 
C)  the net change in total inventories. 
D)  government purchases of goods and services. 
E)  corporate income taxes.

Question 12

GDP overestimates our true economic welfare because

Accepted Answer

A)  goods are not valued at their market prices. 
B)  costs associated with environmental damage are not deducted. 
C)  it includes consumer expenditures on nondurables. 
D)  government economists are responsible for its computation. 
E)  intermediate goods are excluded. 
A)  goods are not valued at their market prices. 
B)  costs associated with environmental damage are not deducted. 
C)  it includes consumer expenditures on nondurables. 
D)  government economists are responsible for its computation. 
E)  intermediate goods are excluded.

Question 13

Which of the following would be included in GDP when computed by the expenditures approach?

Accepted Answer

A)  fertilizer purchased by a farmer 
B)  flour purchased by a bakery 
C)  bread purchased by a restaurant 
D)  purchases of shares of common stock in a bakery 
E)  new production machinery purchased by a bakery 
A)  fertilizer purchased by a farmer 
B)  flour purchased by a bakery 
C)  bread purchased by a restaurant 
D)  purchases of shares of common stock in a bakery 
E)  new production machinery purchased by a bakery

Question 14

The change in a country's stock of capital goods is indicated by its net

Accepted Answer

A)  exports. 
B)  output. 
C)  profit. 
D)  income. 
E)  investment. 
A)  exports. 
B)  output. 
C)  profit. 
D)  income. 
E)  investment.

Question 15

Kuznets was honored for his contribution to economics with the Nobel Prize,largely on the basis of his contributions to the GNP measure.In particular,Kuznets was cited for

Accepted Answer

A)  quantifying a measure that had previously been largely impressionistic. 
B)  recognizing that products have a higher economic value than services. 
C)  revealing that the nation's GNP was higher, even during the Depression, than anyone had supposed. 
D)  finding a way to include child care and other domestic services in the measure of GNP. 
E)  traffic violations, bootlegging, and tax evasion. 
A)  quantifying a measure that had previously been largely impressionistic. 
B)  recognizing that products have a higher economic value than services. 
C)  revealing that the nation's GNP was higher, even during the Depression, than anyone had supposed. 
D)  finding a way to include child care and other domestic services in the measure of GNP. 
E)  traffic violations, bootlegging, and tax evasion.

Question 16

U.S.gross domestic product measured in current dollars is

Accepted Answer

A)  growing more slowly than GDP measured in constant dollars. 
B)  measured in terms of 1996 dollars. 
C)  the same in the base year as GDP measured in constant dollars. 
D)  not affected by changes in the price level. 
E)  also known as real GDP. 
A)  growing more slowly than GDP measured in constant dollars. 
B)  measured in terms of 1996 dollars. 
C)  the same in the base year as GDP measured in constant dollars. 
D)  not affected by changes in the price level. 
E)  also known as real GDP.

Question 17

The following question is based on the following table:
  
-According to the data in the table,from 2002 to 2003,GDP in constant dollars rose by ________ percent.

Accepted Answer

A)  6.5 
B)  5.7 
C)  4.8 
D)  3.1 
E)  1.7 
A)  6.5 
B)  5.7 
C)  4.8 
D)  3.1 
E)  1.7

Question 18

Printed circuits used in the production of computers are an example of a(n)

Accepted Answer

A)  transfer payment. 
B)  base transaction. 
C)  secondhand good. 
D)  intermediate good. 
E)  nonmarket transaction. 
A)  transfer payment. 
B)  base transaction. 
C)  secondhand good. 
D)  intermediate good. 
E)  nonmarket transaction.

Question 19

GDP is improved as a measure of economic well-being when

Accepted Answer

A)  stated in per capita terms. 
B)  computed by the expenditures approach. 
C)  exports are excluded. 
D)  depreciation is added to it. 
E)  government and private transfer payments are equal. 
A)  stated in per capita terms. 
B)  computed by the expenditures approach. 
C)  exports are excluded. 
D)  depreciation is added to it. 
E)  government and private transfer payments are equal.

Question 20

When Simon Kuznets devised gross national product (GNP),he made the decision to exclude illegal activities like drug smuggling and gambling from his calculations.He based this decision mainly on the fact that

Accepted Answer

A)  such activities, at that time, netted little national income. 
B)  he wanted to focus on activities that were "goods" and not "bads." 
C)  he could not obtain accurate information on income generated through such activities. 
D)  such activities generated income but few tangible products. 
E)  such activities were not bought and sold in markets. 
A)  such activities, at that time, netted little national income. 
B)  he wanted to focus on activities that were "goods" and not "bads." 
C)  he could not obtain accurate information on income generated through such activities. 
D)  such activities generated income but few tangible products. 
E)  such activities were not bought and sold in markets.

Exam 15: National Income and Product

To measure the value of all final goods produced in a given year,we must include the value of

When computing GDP via the income approach,we must include

Federal taxes on gasoline and cigarettes are examples of ________ taxes.

A price index is computed by

A measure of the extent of production taking place in a particular firm is called

The following question are based on the following information: -Depreciation equals ________ billion.

The measurement of GDP is useful to business executives because it

Gross domestic product (GDP)

GDP expressed in constant dollars is called

Comparisons of year-to-year changes in the current dollar value of output can be misleading because

The components of gross private domestic investment include

GDP overestimates our true economic welfare because

Which of the following would be included in GDP when computed by the expenditures approach?

The change in a country's stock of capital goods is indicated by its net

Kuznets was honored for his contribution to economics with the Nobel Prize,largely on the basis of his contributions to the GNP measure.In particular,Kuznets was cited for

U.S.gross domestic product measured in current dollars is

The following question is based on the following table: -According to the data in the table,from 2002 to 2003,GDP in constant dollars rose by ________ percent.

Printed circuits used in the production of computers are an example of a(n)

GDP is improved as a measure of economic well-being when

When Simon Kuznets devised gross national product (GNP),he made the decision to exclude illegal activities like drug smuggling and gambling from his calculations.He based this decision mainly on the fact that

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

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