Question 1

Net domestic product is calculated as GDP:

Accepted Answer

A) plus depreciation. 
B) plus indirect business taxes. 
C) minus indirect business taxes. 
D) minus depreciation. 
A) plus depreciation. 
B) plus indirect business taxes. 
C) minus indirect business taxes. 
D) minus depreciation.

Question 2

In the factor market,firms demand:

Accepted Answer

A) wages, rents, interest and profit. 
B) goods and services. 
C) material, land, labour, capital and entrepreneurship. 
D) money for their goods and services. 
A) wages, rents, interest and profit. 
B) goods and services. 
C) material, land, labour, capital and entrepreneurship. 
D) money for their goods and services.

Question 3

The difference between GDP at factor cost and GDP at market prices is:

Accepted Answer

A) wages. 
B) profit. 
C) interest. 
D) indirect taxes less subsidies. 
E) indirect taxes plus subsidies. 
A) wages. 
B) profit. 
C) interest. 
D) indirect taxes less subsidies. 
E) indirect taxes plus subsidies.

Question 4

GDP figures tend to understate the quantity of goods and services available because:

Accepted Answer

A) exports are subtracted from GDP but imports are not added back in. 
B) many items are counted twice or more in intermediate stages of production. 
C) more women are entering the labour force. 
D) the changes in quality of products are not included in GDP. 
A) exports are subtracted from GDP but imports are not added back in. 
B) many items are counted twice or more in intermediate stages of production. 
C) more women are entering the labour force. 
D) the changes in quality of products are not included in GDP.

Question 5

Gross national expenditure (GNE)is equal to:

Accepted Answer

A) C + I + G + NX. 
B) C + I + G - NX. 
C)  C + I + G. 
D)  C + I + G + M. 
E)  C + I + G - M. 
A) C + I + G + NX. 
B) C + I + G - NX. 
C)  C + I + G. 
D)  C + I + G + M. 
E)  C + I + G - M.

Question 6

A country's current account balance is equal to:

Accepted Answer

A) current account balance minus the capital account balance. 
B) net exports plus imports. 
C) net exports minus net income paid overseas. 
D) net exports plus government spending. 
E) net exports plus investment. 
A) current account balance minus the capital account balance. 
B) net exports plus imports. 
C) net exports minus net income paid overseas. 
D) net exports plus government spending. 
E) net exports plus investment.

Question 7

One way that an economy can grow in the long run is by:

Accepted Answer

A) people saving some of their income and having it invested in capital goods by firms. 
B) people spending more of their income on consumption and less on saving. 
C) governments running continual budget deficits. 
D) people consuming more than they earn. 
A) people saving some of their income and having it invested in capital goods by firms. 
B) people spending more of their income on consumption and less on saving. 
C) governments running continual budget deficits. 
D) people consuming more than they earn.

Question 8

Which of the following is a shortcoming of GDP?

Accepted Answer

A) It measures non-market transactions. 
B) It includes an estimate of illegal transactions. 
C) It includes an estimate of the value of household services. 
D) It does not include the value of the black market. 
A) It measures non-market transactions. 
B) It includes an estimate of illegal transactions. 
C) It includes an estimate of the value of household services. 
D) It does not include the value of the black market.

Question 9

Gross domestic product is officially measured by adding together:

Accepted Answer

A) the quantity of each good and service produced by Australian residents. 
B) gross national product and depreciation of resources. 
C) incomes received by all of a nation's households. 
D) the market value of all final goods and services produced within the borders of a nation. 
A) the quantity of each good and service produced by Australian residents. 
B) gross national product and depreciation of resources. 
C) incomes received by all of a nation's households. 
D) the market value of all final goods and services produced within the borders of a nation.

Question 10

Exhibit 11-3 GDP data (billions of dollars)
  
-Use the information in Exhibit 11-3 to compute GDP.Which of the following is correct?

Accepted Answer

A) $8500 billion. 
B) $8400 billion. 
C) $7400 billion. 
D) $8650 billion. 
E) $8350 billion. 
A) $8500 billion. 
B) $8400 billion. 
C) $7400 billion. 
D) $8650 billion. 
E) $8350 billion.

Question 11

In a closed economy,which of the following must be true?

Accepted Answer

A) C = I. 
B) S = I. 
C) G = T. 
D) C = S. 
E) G = S. 
A) C = I. 
B) S = I. 
C) G = T. 
D) C = S. 
E) G = S.

Question 12

Assume that household consumption is $500 billion,gross private domestic investment is $200 billion,government expenditure is $200 billion,and net exports are -$10 billion.The GDP is:

Accepted Answer

A) $910 billion. 
B) $900 billion. 
C) $890 billion. 
D) $700 billion. 
E) indeterminate as not enough information is provided. 
A) $910 billion. 
B) $900 billion. 
C) $890 billion. 
D) $700 billion. 
E) indeterminate as not enough information is provided.

Question 13

The portion of the 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 14

GDP is not a perfect measure of economic welfare because it ignores:

Accepted Answer

A) production of goods and services by the government. 
B) goods produced in Australia but shipped overseas. 
C) environmental degradation. 
D) consumer spending on new goods and services. 
A) production of goods and services by the government. 
B) goods produced in Australia but shipped overseas. 
C) environmental degradation. 
D) consumer spending on new goods and services.

Question 15

Because GDP does not account for improvements in the quality of goods,the GDP calculation:

Accepted Answer

A) tends to overstate the true value of output in Australia. 
B) tends to understate the true value of output in Australia. 
C) provides an accurate value of output in Australia. 
D) provides the best measure of output in Australia. 
E) measures the value correctly because price changes always capture the value of quality changes. 
A) tends to overstate the true value of output in Australia. 
B) tends to understate the true value of output in Australia. 
C) provides an accurate value of output in Australia. 
D) provides the best measure of output in Australia. 
E) measures the value correctly because price changes always capture the value of quality changes.

Question 16

The underground economy:

Accepted Answer

A) produces final goods and services that can be counted in GDP. 
B) is illegal because it is not included in GDP. 
C) is about 60 to 65 per cent of GDP. 
D) is a good indicator of the size of GDP. 
A) produces final goods and services that can be counted in GDP. 
B) is illegal because it is not included in GDP. 
C) is about 60 to 65 per cent of GDP. 
D) is a good indicator of the size of GDP.

Question 17

Which of the following would not be included in the measurement of GDP?

Accepted Answer

A) You hire someone to fix a leaky faucet. 
B) You do the (unpaid) housework. 
C) The value of housing services, if you own your own home. 
D) An unplanned drop in business inventories. 
E) The Federal government buys wheat to ship to Afghanistan. 
A) You hire someone to fix a leaky faucet. 
B) You do the (unpaid) housework. 
C) The value of housing services, if you own your own home. 
D) An unplanned drop in business inventories. 
E) The Federal government buys wheat to ship to Afghanistan.

Question 18

An estimate of the depreciation of plant,equipment and structures is called:

Accepted Answer

A) depreciation of variable capital. 
B) expenditure on capital. 
C) consumption of fixed capital. 
D) undesirable expenses. 
E) government consumption. 
A) depreciation of variable capital. 
B) expenditure on capital. 
C) consumption of fixed capital. 
D) undesirable expenses. 
E) government consumption.

Question 19

If a woman marries her hired helper and keeps hiring him to do housework,the value of GDP:

Accepted Answer

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

Question 20

GDP provides information about:

Accepted Answer

A) the total value of incomes of labour, land and capital. 
B) distribution and quality of products produced. 
C) the total value of goods and services produced on the black market. 
D) the individual incomes. 
A) the total value of incomes of labour, land and capital. 
B) distribution and quality of products produced. 
C) the total value of goods and services produced on the black market. 
D) the individual incomes.

Net domestic product is calculated as GDP:

In the factor market,firms demand:

The difference between GDP at factor cost and GDP at market prices is:

GDP figures tend to understate the quantity of goods and services available because:

Gross national expenditure (GNE)is equal to:

A country's current account balance is equal to:

One way that an economy can grow in the long run is by:

Which of the following is a shortcoming of GDP?

Gross domestic product is officially measured by adding together:

Exhibit 11-3 GDP data (billions of dollars) -Use the information in Exhibit 11-3 to compute GDP.Which of the following is correct?

In a closed economy,which of the following must be true?

Assume that household consumption is $500 billion,gross private domestic investment is $200 billion,government expenditure is $200 billion,and net exports are -$10 billion.The GDP is:

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

GDP is not a perfect measure of economic welfare because it ignores:

Because GDP does not account for improvements in the quality of goods,the GDP calculation:

The underground economy:

Which of the following would not be included in the measurement of GDP?

An estimate of the depreciation of plant,equipment and structures is called:

If a woman marries her hired helper and keeps hiring him to do housework,the value of GDP:

GDP provides information about:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Exam 11: Measuring the size of the economy

Net domestic product is calculated as GDP:

In the factor market,firms demand:

The difference between GDP at factor cost and GDP at market prices is:

GDP figures tend to understate the quantity of goods and services available because:

Gross national expenditure (GNE)is equal to:

A country's current account balance is equal to:

One way that an economy can grow in the long run is by:

Which of the following is a shortcoming of GDP?

Gross domestic product is officially measured by adding together:

Exhibit 11-3 GDP data (billions of dollars) -Use the information in Exhibit 11-3 to compute GDP.Which of the following is correct?

In a closed economy,which of the following must be true?

Assume that household consumption is $500 billion,gross private domestic investment is $200 billion,government expenditure is $200 billion,and net exports are -$10 billion.The GDP is:

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

GDP is not a perfect measure of economic welfare because it ignores:

Because GDP does not account for improvements in the quality of goods,the GDP calculation:

The underground economy:

Which of the following would not be included in the measurement of GDP?

An estimate of the depreciation of plant,equipment and structures is called:

If a woman marries her hired helper and keeps hiring him to do housework,the value of GDP:

GDP provides information about:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters