Question 1

Gross domestic product is

Accepted Answer

A)  a measure of the value of all goods and services produced in a given year. 
B)  a measure of the value of all goods and services produced by the private sector in a given year. 
C)  measured, when possible, using the prices of goods and services as a measure of value. 
D)  equal to the total wage bill. 
E)  a measure of the total value of all market transactions in a given year. 
A)  a measure of the value of all goods and services produced in a given year. 
B)  a measure of the value of all goods and services produced by the private sector in a given year. 
C)  measured, when possible, using the prices of goods and services as a measure of value. 
D)  equal to the total wage bill. 
E)  a measure of the total value of all market transactions in a given year.

Question 2

The purchase of a new living room sofa from a major furniture store would be explicitly counted when computing the gross domestic product by the ________ approach.

Accepted Answer

A)  income 
B)  expenditures 
C)  surplus value 
D)  intermediate product 
E)  standard of living 
A)  income 
B)  expenditures 
C)  surplus value 
D)  intermediate product 
E)  standard of living

Question 3

Social Security payments by the government are NOT included in GDP because

Accepted Answer

A)  Social Security was not yet in place when procedures for calculating GDP were devised. 
B)  Social Security is counted as an economic cost and subtracted from output in determining GDP. 
C)  income received through Social Security is not directly related to contributions to production. 
D)  income received through Social Security is too small to affect GDP. 
E)  these payments are in current dollars and GDP is measured in constant dollars. 
A)  Social Security was not yet in place when procedures for calculating GDP were devised. 
B)  Social Security is counted as an economic cost and subtracted from output in determining GDP. 
C)  income received through Social Security is not directly related to contributions to production. 
D)  income received through Social Security is too small to affect GDP. 
E)  these payments are in current dollars and GDP is measured in constant dollars.

Question 4

Changes in the quality of a good

Accepted Answer

A)  are not reflected in GDP unless the price of the good reflects the improvement. 
B)  increase the national income and lower GDP. 
C)  are reflected in GDP when GDP is deflated. 
D)  are one reason the dollar value of output exceeds the dollar value of income. 
E)  explain why we must avoid double counting. 
A)  are not reflected in GDP unless the price of the good reflects the improvement. 
B)  increase the national income and lower GDP. 
C)  are reflected in GDP when GDP is deflated. 
D)  are one reason the dollar value of output exceeds the dollar value of income. 
E)  explain why we must avoid double counting.

Question 5

The total of the value added by all U.S.industries equals the

Accepted Answer

A)  net exports. 
B)  gross business profits. 
C)  total business sales. 
D)  gross private domestic investment. 
E)  gross domestic product. 
A)  net exports. 
B)  gross business profits. 
C)  total business sales. 
D)  gross private domestic investment. 
E)  gross domestic product.

Question 6

The following question are based on the following information about a hypothetical economy:
  
-In this economy

Accepted Answer

A)  the stock of capital goods fell during the year. 
B)  the government balanced its budget. 
C)  value added exceeded the income. 
D)  output exceeded GDP. 
E)  imports exceeded exports. 
A)  the stock of capital goods fell during the year. 
B)  the government balanced its budget. 
C)  value added exceeded the income. 
D)  output exceeded GDP. 
E)  imports exceeded exports.

Question 7

The concept of value added

Accepted Answer

A)  is not applicable to intermediate goods. 
B)  represents a firm's or industry's contribution to production. 
C)  is the same as a firm's profits. 
D)  refers to the nonmarketed goods and services not included in GDP. 
E)  helps distinguish between current dollar GDP and real GDP. 
A)  is not applicable to intermediate goods. 
B)  represents a firm's or industry's contribution to production. 
C)  is the same as a firm's profits. 
D)  refers to the nonmarketed goods and services not included in GDP. 
E)  helps distinguish between current dollar GDP and real GDP.

Question 8

The best example of a consumer nondurable counted in this year's GDP is a

Accepted Answer

A)  haircut. 
B)  refrigerator. 
C)  pizza. 
D)  concert. 
E)  used car. 
A)  haircut. 
B)  refrigerator. 
C)  pizza. 
D)  concert. 
E)  used car.

Question 9

Fixed-weight price indexes are less reliable when there have been changes in

Accepted Answer

A)  relative prices. 
B)  current dollar output. 
C)  the amount of nonproductive transactions. 
D)  the date of the base year. 
E)  population. 
A)  relative prices. 
B)  current dollar output. 
C)  the amount of nonproductive transactions. 
D)  the date of the base year. 
E)  population.

Question 10

Which of the following is excluded from GDP?

Accepted Answer

A)  gasoline purchased for the family car 
B)  services performed by municipal law enforcement officials 
C)  the purchase of cloth by a homemaker to make draperies for the bedroom 
D)  steel sold to a refrigerator manufacturer 
E)  goods and services sold to foreigners 
A)  gasoline purchased for the family car 
B)  services performed by municipal law enforcement officials 
C)  the purchase of cloth by a homemaker to make draperies for the bedroom 
D)  steel sold to a refrigerator manufacturer 
E)  goods and services sold to foreigners

Question 11

The following question are based on the following information about a hypothetical economy:
  
-Indirect taxes are

Accepted Answer

A)  $110 billion. 
B)  $190 billion. 
C)  $290 billion. 
D)  $410 billion. 
E)  impossible to calculate from the information given. 
A)  $110 billion. 
B)  $190 billion. 
C)  $290 billion. 
D)  $410 billion. 
E)  impossible to calculate from the information given.

Question 12

What effect did the U.S.contribution to the war effort during World War II have on GNP?

Accepted Answer

A)  It boosted GNP dramatically. 
B)  It boosted GNP slightly. 
C)  GNP fell to its lowest level in years as resources were depleted. 
D)  Since resources were only transferred from one kind of production to another, there was virtually no effect. 
E)  It made GNP difficult to estimate accurately, since output was being diverted to the government. 
A)  It boosted GNP dramatically. 
B)  It boosted GNP slightly. 
C)  GNP fell to its lowest level in years as resources were depleted. 
D)  Since resources were only transferred from one kind of production to another, there was virtually no effect. 
E)  It made GNP difficult to estimate accurately, since output was being diverted to the government.

Question 13

Income generated in the production of this year's output is measured by summing transactions in ________ markets.

Accepted Answer

A)  foreign 
B)  resource 
C)  commodity 
D)  stock 
E)  black 
A)  foreign 
B)  resource 
C)  commodity 
D)  stock 
E)  black

Question 14

The following question are based on the following information:
  
-Gross domestic product equals ________ billion.

Accepted Answer

A)  $3,050 
B)  $3,250 
C)  $3,350 
D)  $3,750 
E)  $4,250 
A)  $3,050 
B)  $3,250 
C)  $3,350 
D)  $3,750 
E)  $4,250

Question 15

When measuring GDP,we double count if we include the value of

Accepted Answer

A)  government expenditures. 
B)  intermediate goods. 
C)  nonmarket transactions. 
D)  nonproductive transactions. 
E)  net exports. 
A)  government expenditures. 
B)  intermediate goods. 
C)  nonmarket transactions. 
D)  nonproductive transactions. 
E)  net exports.

Question 16

If the ratio of the value of a set of goods expressed in current dollars to their value expressed in constant dollars is 1.54,prices on average must have risen by ________ percent.

Accepted Answer

A)  154 
B)  100 
C)  54 
D)  46 
E)  1.54 
A)  154 
B)  100 
C)  54 
D)  46 
E)  1.54

Question 17

The next question is based on the following information:
  
-GDP is ________ billion.

Accepted Answer

A)  $2,710 
B)  $2,960 
C)  $3,310 
D)  $3,610 
E)  $5,610 
A)  $2,710 
B)  $2,960 
C)  $3,310 
D)  $3,610 
E)  $5,610

Question 18

Negative net private domestic investment means that

Accepted Answer

A)  intermediate goods are being double counted. 
B)  gross investment is smaller than depreciation. 
C)  imports are greater than exports. 
D)  indirect business taxes are rising. 
E)  a country's stock of capital goods is rising. 
A)  intermediate goods are being double counted. 
B)  gross investment is smaller than depreciation. 
C)  imports are greater than exports. 
D)  indirect business taxes are rising. 
E)  a country's stock of capital goods is rising.

Question 19

Converting values expressed in current dollars to values expressed in constant dollars is called

Accepted Answer

A)  double counting. 
B)  deflating. 
C)  depleting. 
D)  depreciating. 
E)  devaluing. 
A)  double counting. 
B)  deflating. 
C)  depleting. 
D)  depreciating. 
E)  devaluing.

Question 20

If the estimated current dollar GDP is $5,616 billion while real GDP is $4,129 billion,then the prices of goods and services have risen by what percentage from their base-year levels?

Accepted Answer

A)  26 percent 
B)  36 percent 
C)  44 percent 
D)  74 percent 
E)  impossible to determine from the information given 
A)  26 percent 
B)  36 percent 
C)  44 percent 
D)  74 percent 
E)  impossible to determine from the information given

Exam 15: National Income and Product

Gross domestic product is

The purchase of a new living room sofa from a major furniture store would be explicitly counted when computing the gross domestic product by the ________ approach.

Social Security payments by the government are NOT included in GDP because

Changes in the quality of a good

The total of the value added by all U.S.industries equals the

The following question are based on the following information about a hypothetical economy: -In this economy

The concept of value added

The best example of a consumer nondurable counted in this year's GDP is a

Fixed-weight price indexes are less reliable when there have been changes in

Which of the following is excluded from GDP?

The following question are based on the following information about a hypothetical economy: -Indirect taxes are

What effect did the U.S.contribution to the war effort during World War II have on GNP?

Income generated in the production of this year's output is measured by summing transactions in ________ markets.

The following question are based on the following information: -Gross domestic product equals ________ billion.

When measuring GDP,we double count if we include the value of

If the ratio of the value of a set of goods expressed in current dollars to their value expressed in constant dollars is 1.54,prices on average must have risen by ________ percent.

The next question is based on the following information: -GDP is ________ billion.

Negative net private domestic investment means that

Converting values expressed in current dollars to values expressed in constant dollars is called

If the estimated current dollar GDP is $5,616 billion while real GDP is $4,129 billion,then the prices of goods and services have risen by what percentage from their base-year levels?

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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