Question 1

Gross domestic product is a measure of both

Accepted Answer

A) the market value of a nation's capital assets (physical capital)and the costs that were incurred producing those assets. 
B) the expenditures on and sales revenues derived from all goods and services exchanged during a period. 
C) the market value of the output produced during a period and the cost of producing that output. 
D) the asset holdings of people and the happiness that they derived from the ownership of those assets. 
A) the market value of a nation's capital assets (physical capital)and the costs that were incurred producing those assets. 
B) the expenditures on and sales revenues derived from all goods and services exchanged during a period. 
C) the market value of the output produced during a period and the cost of producing that output. 
D) the asset holdings of people and the happiness that they derived from the ownership of those assets.

Question 2

If the GDP deflator in 2011 was 130 compared to a value of 100 during the 2005 base year,this would indicate that

Accepted Answer

A) the inflation rate during 2011 was 30 percent. 
B) the general level of prices during 2011 was 30 percent higher than during 2005. 
C) the inflation rate during 2011 was 130 percent. 
D) nominal GDP grew by 30 percent during 2011. 
E) real GDP was 30 percent higher in 2011 than 2005. 
A) the inflation rate during 2011 was 30 percent. 
B) the general level of prices during 2011 was 30 percent higher than during 2005. 
C) the inflation rate during 2011 was 130 percent. 
D) nominal GDP grew by 30 percent during 2011. 
E) real GDP was 30 percent higher in 2011 than 2005.

Question 3

Which of the following is the most likely side effect of an increase in the relative size of the underground economy with the passage of time?

Accepted Answer

A) The growth rate of real GDP will tend to understate the growth rate of total output. 
B) The growth rate of real GDP will tend to overstate the growth rate of total output. 
C) The GDP deflator will tend to overstate any increase in inflation. 
D) The GDP deflator will tend to understate any increase in inflation. 
A) The growth rate of real GDP will tend to understate the growth rate of total output. 
B) The growth rate of real GDP will tend to overstate the growth rate of total output. 
C) The GDP deflator will tend to overstate any increase in inflation. 
D) The GDP deflator will tend to understate any increase in inflation.

Question 4

Gross domestic product during a period is measured by adding

Accepted Answer

A) incomes received by households minus the sale of factor services supplied domestically. 
B) factor payments made by domestic firms minus retained earnings and indirect business taxes. 
C) expenditures on new final goods and services produced domestically. 
D) the market value of all goods and services produced domestically and then subtracting net exports from that figure. 
A) incomes received by households minus the sale of factor services supplied domestically. 
B) factor payments made by domestic firms minus retained earnings and indirect business taxes. 
C) expenditures on new final goods and services produced domestically. 
D) the market value of all goods and services produced domestically and then subtracting net exports from that figure.

Question 5

Over the last few decades,Americans have chosen to cook less at home and eat more at restaurants.This change in behavior,by itself,has

Accepted Answer

A) reduced measured GDP. 
B) not affected measured GDP. 
C) increased measured GDP only to the extent that the value of the restaurant meals exceeded the value of meals previously cooked at home. 
D) increased measured GDP by the full value of the restaurant meals. 
A) reduced measured GDP. 
B) not affected measured GDP. 
C) increased measured GDP only to the extent that the value of the restaurant meals exceeded the value of meals previously cooked at home. 
D) increased measured GDP by the full value of the restaurant meals.

Question 6

Use the table below to choose the correct answer.
 
Gross domestic product equals

Accepted Answer

A) $550. 
B) $510. 
C) $595. 
D) $610. 
A) $550. 
B) $510. 
C) $595. 
D) $610.

Question 7

One bag of flour is sold for $1.50 to a bakery,which uses the flour to bake bread that is sold for $4.00 to consumers.A second bag of flour is sold to a consumer in a grocery store for $2.00.Taking these three transactions into account,what is the effect on GDP?

Accepted Answer

A) GDP increases by $1.50. 
B) GDP increases by $3.50. 
C) GDP increases by $6.00. 
D) GDP increases by $7.50. 
A) GDP increases by $1.50. 
B) GDP increases by $3.50. 
C) GDP increases by $6.00. 
D) GDP increases by $7.50.

Question 8

U.S.exports are

Accepted Answer

A) not included in U.S.GDP because they are consumed abroad 
B) included in U.S.GDP because they are produced domestically 
C) included in U.S.GDP because they represent an increase in inventories 
D) included in U.S.GDP as government purchases because the government decides what goods may be exported 
E) not included in U.S.GDP because they are not subject to a tariff 
A) not included in U.S.GDP because they are consumed abroad 
B) included in U.S.GDP because they are produced domestically 
C) included in U.S.GDP because they represent an increase in inventories 
D) included in U.S.GDP as government purchases because the government decides what goods may be exported 
E) not included in U.S.GDP because they are not subject to a tariff

Question 9

Which one of the following would count as investment in the national income 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 10

A price index is designed to measure

Accepted Answer

A) changes in the general level of employment across time periods. 
B) changes in the quantity of output produced across time periods. 
C) the market value of output produced during the current period with the value of output produced during an earlier time period. 
D) the cost of buying a market basket of goods at a point in time relative to the cost of buying the same market basket during an earlier time period. 
A) changes in the general level of employment across time periods. 
B) changes in the quantity of output produced across time periods. 
C) the market value of output produced during the current period with the value of output produced during an earlier time period. 
D) the cost of buying a market basket of goods at a point in time relative to the cost of buying the same market basket during an earlier time period.

Question 11

If you wanted to compare the quantity of output of a country across time periods,which of the following would you use?

Accepted Answer

A) the consumer price index 
B) nominal GDP 
C) the GDP deflator 
D) real GDP 
A) the consumer price index 
B) nominal GDP 
C) the GDP deflator 
D) real GDP

Question 12

Which of the following would be included in the government consumption and investment component of GDP?

Accepted Answer

A) the export of 100 fighter jets to Japan 
B) construction costs of a new public school building 
C) food stamps used by the Smith family 
D) a $1,000 check issued by the federal government as part of the Pell Grant program to help college students pay for school 
A) the export of 100 fighter jets to Japan 
B) construction costs of a new public school building 
C) food stamps used by the Smith family 
D) a $1,000 check issued by the federal government as part of the Pell Grant program to help college students pay for school

Question 13

Discuss the problems with GDP as a measure of a country's current production and income.

Accepted Answer

First,GDP does not count nonmarket produ

Question 14

Use the table below to answer the following question(s).
Table 7-14
  
-Refer to Table 7-14.What is this country's gross domestic product?

Accepted Answer

A) 1,225 
B) 1,305 
C) 1,365 
D) 1,440 
A) 1,225 
B) 1,305 
C) 1,365 
D) 1,440

Question 15

Gross domestic product is the sum of

Accepted Answer

A) the purchase price of all goods and services exchanged during the period. 
B) the purchase price of all final goods and services produced domestically during the period. 
C) the purchase price of all goods and services produced during the period minus depreciation of productive assets during the period. 
D) the purchase price of all final goods and services produced by a country's citizens during the period. 
A) the purchase price of all goods and services exchanged during the period. 
B) the purchase price of all final goods and services produced domestically during the period. 
C) the purchase price of all goods and services produced during the period minus depreciation of productive assets during the period. 
D) the purchase price of all final goods and services produced by a country's citizens during the period.

Question 16

If national income accountants fail to make an adequate adjustment for increases in the quality of goods and services over time,

Accepted Answer

A) increases in real GDP will understate the growth rate of real output. 
B) increases in real GDP will overstate the growth rate of real output. 
C) the GDP deflator will overstate the rate of inflation. 
D) the GDP deflator will understate the rate of inflation. 
E) both a and c are correct. 
A) increases in real GDP will understate the growth rate of real output. 
B) increases in real GDP will overstate the growth rate of real output. 
C) the GDP deflator will overstate the rate of inflation. 
D) the GDP deflator will understate the rate of inflation. 
E) both a and c are correct.

Question 17

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

Accepted Answer

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

Question 18

The reporter on one broadcast network says 2011 GDP increased to an all-time high.Commenting on the same figure,a second reporter says GDP in 2011 was less than in 2010.Which of the following explanations is consistent with the statements of both reporters?

Accepted Answer

A) The first reporter was referring to real GDP,and the second was referring to nominal GDP. 
B) The first reporter was referring to nominal GDP,and the second was referring to real GDP. 
C) The first reporter was referring to GDP as measured by the expenditure approach,and the second was referring to GDP as measured by the income cost approach. 
D) The first reporter was referring to GDP as measured by the income cost approach,and the second was referring to GDP as measured by the expenditure approach. 
A) The first reporter was referring to real GDP,and the second was referring to nominal GDP. 
B) The first reporter was referring to nominal GDP,and the second was referring to real GDP. 
C) The first reporter was referring to GDP as measured by the expenditure approach,and the second was referring to GDP as measured by the income cost approach. 
D) The first reporter was referring to GDP as measured by the income cost approach,and the second was referring to GDP as measured by the expenditure approach.

Question 19

When the expenditure approach is used to measure GDP,the major components of GDP are

Accepted Answer

A) consumption,investment,indirect business taxes,and depreciation. 
B) employee compensation,rents,interest,self-employment income,and corporate profits. 
C) employee compensation,corporate profits,depreciation,and indirect business taxes. 
D) consumption,investment,government consumption and gross investment,and net exports. 
A) consumption,investment,indirect business taxes,and depreciation. 
B) employee compensation,rents,interest,self-employment income,and corporate profits. 
C) employee compensation,corporate profits,depreciation,and indirect business taxes. 
D) consumption,investment,government consumption and gross investment,and net exports.

Question 20

Which of the following events will reduce GDP?

Accepted Answer

A) A hurricane destroys your house. 
B) You lose $500 playing poker. 
C) You pay $500 to repair the damage done to your house by a hurricane. 
D) You work 15 hours less this month so that you can repair the damage done to your home by a hurricane. 
A) A hurricane destroys your house. 
B) You lose $500 playing poker. 
C) You pay $500 to repair the damage done to your house by a hurricane. 
D) You work 15 hours less this month so that you can repair the damage done to your home by a hurricane.

Exam 7: Ataking the Nations Economic Pulse

Gross domestic product is a measure of both

If the GDP deflator in 2011 was 130 compared to a value of 100 during the 2005 base year,this would indicate that

Which of the following is the most likely side effect of an increase in the relative size of the underground economy with the passage of time?

Gross domestic product during a period is measured by adding

Over the last few decades,Americans have chosen to cook less at home and eat more at restaurants.This change in behavior,by itself,has

Use the table below to choose the correct answer. Gross domestic product equals

One bag of flour is sold for $1.50 to a bakery,which uses the flour to bake bread that is sold for $4.00 to consumers.A second bag of flour is sold to a consumer in a grocery store for $2.00.Taking these three transactions into account,what is the effect on GDP?

U.S.exports are

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

A price index is designed to measure

If you wanted to compare the quantity of output of a country across time periods,which of the following would you use?

Which of the following would be included in the government consumption and investment component of GDP?

Discuss the problems with GDP as a measure of a country's current production and income.

Use the table below to answer the following question(s). Table 7-14 -Refer to Table 7-14.What is this country's gross domestic product?

Gross domestic product is the sum of

If national income accountants fail to make an adequate adjustment for increases in the quality of goods and services over time,

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

The reporter on one broadcast network says 2011 GDP increased to an all-time high.Commenting on the same figure,a second reporter says GDP in 2011 was less than in 2010.Which of the following explanations is consistent with the statements of both reporters?

When the expenditure approach is used to measure GDP,the major components of GDP are

Which of the following events will reduce GDP?

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

Filters