Question 1

The largest income component of U.S.GDP is

Accepted Answer

A)  corporate profits. 
B)  rental and interest income. 
C)  employee compensation. 
D)  personal and corporate taxes. 
E)  welfare payments. 
A)  corporate profits. 
B)  rental and interest income. 
C)  employee compensation. 
D)  personal and corporate taxes. 
E)  welfare payments.

Question 2

Government transfer payments are NOT included when computing GDP via the expenditures approach because they are

Accepted Answer

A)  included when computing GDP via the income approach. 
B)  payments to foreigners for the goods we import. 
C)  expressed in current rather than constant dollar terms. 
D)  not payments for current production. 
E)  incapable of affecting the economic well-being of households. 
A)  included when computing GDP via the income approach. 
B)  payments to foreigners for the goods we import. 
C)  expressed in current rather than constant dollar terms. 
D)  not payments for current production. 
E)  incapable of affecting the economic well-being of households.

Question 3

The greatest amount of consumer spending in the economy is on

Accepted Answer

A)  durable goods. 
B)  nondurable goods. 
C)  services. 
D)  plants and equipment. 
E)  residential structures. 
A)  durable goods. 
B)  nondurable goods. 
C)  services. 
D)  plants and equipment. 
E)  residential structures.

Question 4

The value added by an industry is the value of the goods and services produced minus

Accepted Answer

A)  depreciation. 
B)  taxes. 
C)  wages. 
D)  inflation. 
E)  the cost of intermediate goods. 
A)  depreciation. 
B)  taxes. 
C)  wages. 
D)  inflation. 
E)  the cost of intermediate goods.

Question 5

Productive activities typically excluded from GDP include

Accepted Answer

A)  government and private transfer payments. 
B)  sales of secondhand goods. 
C)  services performed by government. 
D)  nonmarket transactions. 
E)  sales and purchases of securities. 
A)  government and private transfer payments. 
B)  sales of secondhand goods. 
C)  services performed by government. 
D)  nonmarket transactions. 
E)  sales and purchases of securities.

Question 6

To deflate,one must

Accepted Answer

A)  multiply the price ratio by 100. 
B)  divide the current dollar values by the price index. 
C)  subtract the constant dollar values from the current dollar values. 
D)  add the price index in the current year to the price index in the base year. 
E)  find the difference between the values of two different sets of goods in a given year. 
A)  multiply the price ratio by 100. 
B)  divide the current dollar values by the price index. 
C)  subtract the constant dollar values from the current dollar values. 
D)  add the price index in the current year to the price index in the base year. 
E)  find the difference between the values of two different sets of goods in a given year.

Question 7

The dollar value of business sales minus the cost of intermediate products purchased from other firms equals the

Accepted Answer

A)  depreciation. 
B)  personal income. 
C)  direct and indirect tax liabilities. 
D)  value added. 
E)  profit. 
A)  depreciation. 
B)  personal income. 
C)  direct and indirect tax liabilities. 
D)  value added. 
E)  profit.

Question 8

If the estimated current dollar output is $3,535 billion and the relevant price index is 2.21,current prices must on average be what percentage of base-year prices?

Accepted Answer

A)  2.21 percent 
B)  22.1 percent 
C)  121 percent 
D)  221 percent 
E)  321 percent 
A)  2.21 percent 
B)  22.1 percent 
C)  121 percent 
D)  221 percent 
E)  321 percent

Question 9

In an economy as complex as ours,the only way to achieve a meaningful estimate of what we produce is to

Accepted Answer

A)  reduce everything to a common denominator: money. 
B)  consider the number of hours of labor involved in production. 
C)  calculate the ultimate value of each product to our social welfare. 
D)  count only tangible products, not intangible services. 
E)  aggregate all financial transactions for a given year. 
A)  reduce everything to a common denominator: money. 
B)  consider the number of hours of labor involved in production. 
C)  calculate the ultimate value of each product to our social welfare. 
D)  count only tangible products, not intangible services. 
E)  aggregate all financial transactions for a given year.

Question 10

To correct for changes in the price level,output values are expressed in terms of

Accepted Answer

A)  current dollars. 
B)  base-year prices. 
C)  residuals. 
D)  inflationary expectations. 
E)  relative deviations. 
A)  current dollars. 
B)  base-year prices. 
C)  residuals. 
D)  inflationary expectations. 
E)  relative deviations.

Question 11

Government services are valued in GDP at cost rather than at their market prices because

Accepted Answer

A)  price changes occur frequently as a result of inflation, which distorts the measurement of GDP. 
B)  it is necessary to avoid counting intermediate goods in GDP. 
C)  otherwise government and private transfer payments would end up being counted in GDP. 
D)  most government services produced are not purchased by their users. 
E)  the price of a service is not always a measure of the worth of a service. 
A)  price changes occur frequently as a result of inflation, which distorts the measurement of GDP. 
B)  it is necessary to avoid counting intermediate goods in GDP. 
C)  otherwise government and private transfer payments would end up being counted in GDP. 
D)  most government services produced are not purchased by their users. 
E)  the price of a service is not always a measure of the worth of a service.

Question 12

The new chain-weighted estimate of GDP has the disadvantage that

Accepted Answer

A)  real GDP is different in amount than GDP measured in current dollars. 
B)  it reflects only changes in current prices, not changes in the prices of previous years. 
C)  it is calculated on the basis of fewer goods and services than fixed-weight estimates. 
D)  the components of GDP do not precisely add up to total GDP. 
E)  it results in some double counting in the value of GDP. 
A)  real GDP is different in amount than GDP measured in current dollars. 
B)  it reflects only changes in current prices, not changes in the prices of previous years. 
C)  it is calculated on the basis of fewer goods and services than fixed-weight estimates. 
D)  the components of GDP do not precisely add up to total GDP. 
E)  it results in some double counting in the value of GDP.

Question 13

One important element of our well-being that does NOT show up in GDP is our consumption of

Accepted Answer

A)  new automobiles. 
B)  imported consumer goods. 
C)  nondurable goods. 
D)  medical services. 
E)  leisure time. 
A)  new automobiles. 
B)  imported consumer goods. 
C)  nondurable goods. 
D)  medical services. 
E)  leisure time.

Question 14

When computing GDP,services performed by the government are

Accepted Answer

A)  excluded. 
B)  considered nonproductive transactions. 
C)  valued at their cost to the taxpayer. 
D)  given values estimated from similar activities in the private sector. 
E)  added to government transfer payments. 
A)  excluded. 
B)  considered nonproductive transactions. 
C)  valued at their cost to the taxpayer. 
D)  given values estimated from similar activities in the private sector. 
E)  added to government transfer payments.

Question 15

Prior to the Great Depression,estimates of the level of economic well-being in the United States were based on

Accepted Answer

A)  measures of GDP, the same as it is now. 
B)  the measured economic welfare scale of Nordhaus and Tobin. 
C)  government statistics based on census and average net income. 
D)  consumers' personal sense of well-being. 
E)  deflating after-tax incomes received by households. 
A)  measures of GDP, the same as it is now. 
B)  the measured economic welfare scale of Nordhaus and Tobin. 
C)  government statistics based on census and average net income. 
D)  consumers' personal sense of well-being. 
E)  deflating after-tax incomes received by households.

Question 16

Gross domestic product is a measure of the country's

Accepted Answer

A)  leisure. 
B)  price level. 
C)  quantity of money in circulation. 
D)  population. 
E)  output. 
A)  leisure. 
B)  price level. 
C)  quantity of money in circulation. 
D)  population. 
E)  output.

Question 17

The following question are based on the following information about a hypothetical economy:
  
-GDP is ________ billion.

Accepted Answer

A)  $1,240 
B)  $1,250 
C)  $1,340 
D)  $1,640 
E)  $2,590 
A)  $1,240 
B)  $1,250 
C)  $1,340 
D)  $1,640 
E)  $2,590

Question 18

Which of the following would be explicitly counted when computing the gross domestic product by the expenditures approach?

Accepted Answer

A)  the purchase of a used car by a college student 
B)  the salary of the CEO of Gillette Corporation 
C)  the purchase of fuel injectors by Ford 
D)  Social Security payments to retired persons 
E)  the purchase of a microwave oven by newlyweds 
A)  the purchase of a used car by a college student 
B)  the salary of the CEO of Gillette Corporation 
C)  the purchase of fuel injectors by Ford 
D)  Social Security payments to retired persons 
E)  the purchase of a microwave oven by newlyweds

Question 19

Which of the following is a limitation of real GDP as a measure of economic well-being?

Accepted Answer

A)  Little is revealed about the distribution or composition of output. 
B)  Output is overstated because intermediate production is included. 
C)  It fails to account for the consumption of a country's productive capacity. 
D)  It measures only a country's expenditures, not its income. 
E)  It fails to account for expenditures by the public sector. 
A)  Little is revealed about the distribution or composition of output. 
B)  Output is overstated because intermediate production is included. 
C)  It fails to account for the consumption of a country's productive capacity. 
D)  It measures only a country's expenditures, not its income. 
E)  It fails to account for expenditures by the public sector.

Question 20

According to the video,which of the following is the best assessment of the overall value of GNP measure?

Accepted Answer

A)  Despite its statistical base, GNP is now considered an outmoded measure of productivity. 
B)  GNP is a highly accurate, remarkably precise measure of human welfare. 
C)  GNP is of interest to economists but offers no useful information to consumers or business people. 
D)  GNP is a universally useful estimate of our nation's productivity. 
E)  GNP is useful as a measure of annual output but not helpful in measuring economic growth over an extended period of time. 
A)  Despite its statistical base, GNP is now considered an outmoded measure of productivity. 
B)  GNP is a highly accurate, remarkably precise measure of human welfare. 
C)  GNP is of interest to economists but offers no useful information to consumers or business people. 
D)  GNP is a universally useful estimate of our nation's productivity. 
E)  GNP is useful as a measure of annual output but not helpful in measuring economic growth over an extended period of time.

Exam 15: National Income and Product

The largest income component of U.S.GDP is

Government transfer payments are NOT included when computing GDP via the expenditures approach because they are

The greatest amount of consumer spending in the economy is on

The value added by an industry is the value of the goods and services produced minus

Productive activities typically excluded from GDP include

To deflate,one must

The dollar value of business sales minus the cost of intermediate products purchased from other firms equals the

If the estimated current dollar output is $3,535 billion and the relevant price index is 2.21,current prices must on average be what percentage of base-year prices?

In an economy as complex as ours,the only way to achieve a meaningful estimate of what we produce is to

To correct for changes in the price level,output values are expressed in terms of

Government services are valued in GDP at cost rather than at their market prices because

The new chain-weighted estimate of GDP has the disadvantage that

One important element of our well-being that does NOT show up in GDP is our consumption of

When computing GDP,services performed by the government are

Prior to the Great Depression,estimates of the level of economic well-being in the United States were based on

Gross domestic product is a measure of the country's

The following question are based on the following information about a hypothetical economy: -GDP is ________ billion.

Which of the following would be explicitly counted when computing the gross domestic product by the expenditures approach?

Which of the following is a limitation of real GDP as a measure of economic well-being?

According to the video,which of the following is the best assessment of the overall value of GNP measure?

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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