Question 1

Of the following,the largest component of GDP is

Accepted Answer

A)  personal consumption expenditure. 
B)  gross private domestic investment. 
C)  government expenditure on goods and services. 
D)  net exports of goods and services. 
A)  personal consumption expenditure. 
B)  gross private domestic investment. 
C)  government expenditure on goods and services. 
D)  net exports of goods and services.

Question 2

Suppose an economy has some inflation.Then,after a base year,the value of real GDP will

Accepted Answer

A)  be less than nominal GDP. 
B)  not be different from nominal GDP. 
C)  be greater than nominal GDP. 
D)  will be approximately half the value of nominal GDP. 
A)  be less than nominal GDP. 
B)  not be different from nominal GDP. 
C)  be greater than nominal GDP. 
D)  will be approximately half the value of nominal GDP.

Question 3

Gross domestic product is a measure of the total value of all

Accepted Answer

A)  sales in an economy over a period of time. 
B)  consumer income in an economy over a period of time. 
C)  capital accumulation in an economy over a period of time. 
D)  final goods and services produced in an economy over a period of time. 
A)  sales in an economy over a period of time. 
B)  consumer income in an economy over a period of time. 
C)  capital accumulation in an economy over a period of time. 
D)  final goods and services produced in an economy over a period of time.

Question 4

The circular flow shows that the household sector earns its income by

Accepted Answer

A)  selling factors of production. 
B)  buying factors of production. 
C)  selling goods and services. 
D)  selling financial assets. 
A)  selling factors of production. 
B)  buying factors of production. 
C)  selling goods and services. 
D)  selling financial assets.

Question 5

Gross domestic product is the

Accepted Answer

A)  value of the final goods and services produced in a country during a specific time. 
B)  total amount that buyers spent on the final goods and services produced in a country during a specific time. 
C)  total amount of income earned in producing the final goods and services in a country during a specific time. 
D)  All of the above answers are correct. 
A)  value of the final goods and services produced in a country during a specific time. 
B)  total amount that buyers spent on the final goods and services produced in a country during a specific time. 
C)  total amount of income earned in producing the final goods and services in a country during a specific time. 
D)  All of the above answers are correct.

Question 6

A productivity growth slowdown can be shown as year-to-year fluctuations of real GDP around potential GDP.

Accepted Answer

A) True 
 B)False

Question 7

$$\begin{array} { | l | c | } 
\hline  { \text { Component } } & \begin{array} { c } 
\text { Amount } \
\text { (billions of } \
\text { dollars) }
\end{array} \
\hline \text { Gross investment } & 1300 \
\hline \begin{array} { l } 
\text { Personal consumption } \
\text { expenditure }
\end{array} & 1475 \
\hline \text { Depreciation } & 25 \
\hline \begin{array} { l } 
\text { Government expenditure on } \
\text { goods and services }
\end{array} & 1315 \
\hline \text { U.S. imports } & 260 \
\hline \text { U.S. exports } & 249 \
\hline \text { Compensation of employees } & 65 \
\hline
\end{array}$$
-Nominal GDP is the value of final goods and services

Accepted Answer

A)  at the prices of that year. 
B)  at the prices of the immediately previous year. 
C)  at the prices of a base year. 
D)  produced in foreign countries but consumed in the domestic country. 
A)  at the prices of that year. 
B)  at the prices of the immediately previous year. 
C)  at the prices of a base year. 
D)  produced in foreign countries but consumed in the domestic country.

Question 8

According to the BEA,in the second quarter of 2011 nominal GDP was $15 trillion and in the second quarter of 2012 nominal GDP was $15.6 trillion.Based solely on this information,from the second quarter of 2011 to the second quarter of 2012

Accepted Answer

A)  real GDP may have increased, decreased, or stayed the same. 
B)  real GDP definitely increased. 
C)  real GDP definitely decreased. 
D)  prices definitely increased. 
A)  real GDP may have increased, decreased, or stayed the same. 
B)  real GDP definitely increased. 
C)  real GDP definitely decreased. 
D)  prices definitely increased.

Question 9

According to the BEA,in the second quarter of 2012 personal consumption expenditures grew by 1.7 percent,gross private domestic investment grew by 3.0 percent,government expenditure on goods and services decreased by -0.9 percent,imports grew by 2.9%,and exports grew by 6.0%.Given these data,it is most likely that

Accepted Answer

A)  GDP growth was positive in the 2nd quarter. 
B)  GDP growth was negative in the 2nd quarter. 
C)  the economy hit a business cycle peak. 
D)  the economy hit a business cycle trough. 
A)  GDP growth was positive in the 2nd quarter. 
B)  GDP growth was negative in the 2nd quarter. 
C)  the economy hit a business cycle peak. 
D)  the economy hit a business cycle trough.

Question 10

In computing GDP,it is essential to

Accepted Answer

A)  avoid double counting. 
B)  include government transfer payments. 
C)  include government tax revenues. 
D)  count all intermediate products directly as they are produced. 
A)  avoid double counting. 
B)  include government transfer payments. 
C)  include government tax revenues. 
D)  count all intermediate products directly as they are produced.

Question 11

The income approach to measuring GDP sums together

Accepted Answer

A)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and depreciation. 
B)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracts subsidies paid by the government. 
C)  the sales of each firm in the economy. 
D)  the costs of each firm in the economy and then subtracts indirect business taxes and depreciation. 
A)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and depreciation. 
B)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracts subsidies paid by the government. 
C)  the sales of each firm in the economy. 
D)  the costs of each firm in the economy and then subtracts indirect business taxes and depreciation.

Question 12

What is "underground production"?
Is it included in GDP?

Accepted Answer

Underground production is the production

Question 13

If depreciation is less than gross investment,then net investment is

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  This situation could never occur because it is impossible for depreciation to be less than gross investment. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  This situation could never occur because it is impossible for depreciation to be less than gross investment.

Question 14

The low point of economic activity during a business cycle is called the

Accepted Answer

A)  trough. 
B)  recession. 
C)  peak. 
D)  failure. 
A)  trough. 
B)  recession. 
C)  peak. 
D)  failure.

Question 15

The relationship between real GDP and potential GDP is that

Accepted Answer

A)  real GDP always equals potential GDP. 
B)  real GDP never equals potential GDP. 
C)  real GDP fluctuates about potential GDP. 
D)  real GDP is always below potential GDP. 
A)  real GDP always equals potential GDP. 
B)  real GDP never equals potential GDP. 
C)  real GDP fluctuates about potential GDP. 
D)  real GDP is always below potential GDP.

Question 16

$\begin{array}{c}
\begin{array}{|l|}
\hline \text {Corporate profits}\
\hline \text {Net interest}\
\hline \text {Indirect taxes less subsidies}\
\hline \text {Depreciation}\
\hline \text {Compensation of employees}\
\hline \text {Proprietor's income}\
\hline \text {Rental income}\
\hline \text {Personal consumption}\
\text {expenditure}\
\hline \text {Government expenditure on}\
\text {goods and services}\
\hline \text {Net exports of goods and}\
 \text {services}\
\hline
\end{array}
\begin{array}{c|}
\hline\$ 200 \
\hline 150 \
\hline 230 \
\hline 250 \
\hline 1,350 \
\hline 150 \
\hline 70 \
\hline\
 1,400 \
\hline\
500 \
\hline\
40\
\hline
\end{array}
\end{array}$

-Using the data in the table above,gross domestic product equals

Accepted Answer

A)  $1,920. 
B)  $1,940. 
C)  $2,150. 
D)  $2,400. 
A)  $1,920. 
B)  $1,940. 
C)  $2,150. 
D)  $2,400.

Question 17

An indirect tax is exemplified by

Accepted Answer

A)  an income tax. 
B)  a sales tax. 
C)  a subsidy. 
D)  None of the above answers is correct. 
A)  an income tax. 
B)  a sales tax. 
C)  a subsidy. 
D)  None of the above answers is correct.

Question 18

In the circular flow diagram,aggregate expenditure includes the sum of

Accepted Answer

A)  saving and investment. 
B)  consumption and investment. 
C)  consumption, investment, and saving. 
D)  income and saving. 
A)  saving and investment. 
B)  consumption and investment. 
C)  consumption, investment, and saving. 
D)  income and saving.

Question 19

GDP can be computed as the sum of

Accepted Answer

A)  all sales that have taken place in an economy over a period of time. 
B)  the total expenditures of consumers and business over a period of time. 
C)  the total expenditures of consumption, investment, and government expenditure on goods and services over a period of time. 
D)  the total expenditures of consumption, investment, government expenditure on goods and services, and net exports over a period of time. 
A)  all sales that have taken place in an economy over a period of time. 
B)  the total expenditures of consumers and business over a period of time. 
C)  the total expenditures of consumption, investment, and government expenditure on goods and services over a period of time. 
D)  the total expenditures of consumption, investment, government expenditure on goods and services, and net exports over a period of time.

Question 20

The calculation of the final goods and services sold in an economy would NOT include

Accepted Answer

A)  the purchase of a lawnmower by a household. 
B)  General Motors' purchases of tires for new automobiles. 
C)  Ford Motor Company's purchase of a new industrial robot to be used to produce cars. 
D)  the purchase of a service by a household. 
A)  the purchase of a lawnmower by a household. 
B)  General Motors' purchases of tires for new automobiles. 
C)  Ford Motor Company's purchase of a new industrial robot to be used to produce cars. 
D)  the purchase of a service by a household.

Of the following,the largest component of GDP is

Suppose an economy has some inflation.Then,after a base year,the value of real GDP will

Gross domestic product is a measure of the total value of all

The circular flow shows that the household sector earns its income by

Gross domestic product is the

A productivity growth slowdown can be shown as year-to-year fluctuations of real GDP around potential GDP.

Component Amount (billions of dollars) Gross investment 1300 Personal consumption expenditure 1475 Depreciation 25 Government expenditure on goods and services 1315 U.S. imports 260 U.S. exports 249 Compensation of employees 65 -Nominal GDP is the value of final goods and services

According to the BEA,in the second quarter of 2011 nominal GDP was $15 trillion and in the second quarter of 2012 nominal GDP was $15.6 trillion.Based solely on this information,from the second quarter of 2011 to the second quarter of 2012

In computing GDP,it is essential to

The income approach to measuring GDP sums together

What is "underground production"? Is it included in GDP?

If depreciation is less than gross investment,then net investment is

The low point of economic activity during a business cycle is called the

The relationship between real GDP and potential GDP is that

An indirect tax is exemplified by

In the circular flow diagram,aggregate expenditure includes the sum of

GDP can be computed as the sum of

The calculation of the final goods and services sold in an economy would NOT include

What Is Economics

The Economic Problem

Demand and Supply

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 4: Measuring GDP and Economic Growth

Of the following,the largest component of GDP is

Suppose an economy has some inflation.Then,after a base year,the value of real GDP will

Gross domestic product is a measure of the total value of all

The circular flow shows that the household sector earns its income by

Gross domestic product is the

A productivity growth slowdown can be shown as year-to-year fluctuations of real GDP around potential GDP.

Component Amount (billions of dollars) Gross investment 1300 Personal consumption expenditure 1475 Depreciation 25 Government expenditure on goods and services 1315 U.S. imports 260 U.S. exports 249 Compensation of employees 65 -Nominal GDP is the value of final goods and services

According to the BEA,in the second quarter of 2011 nominal GDP was $15 trillion and in the second quarter of 2012 nominal GDP was $15.6 trillion.Based solely on this information,from the second quarter of 2011 to the second quarter of 2012

In computing GDP,it is essential to

The income approach to measuring GDP sums together

What is "underground production"? Is it included in GDP?

If depreciation is less than gross investment,then net investment is

The low point of economic activity during a business cycle is called the

The relationship between real GDP and potential GDP is that

An indirect tax is exemplified by

In the circular flow diagram,aggregate expenditure includes the sum of

GDP can be computed as the sum of

The calculation of the final goods and services sold in an economy would NOT include

What Is Economics

The Economic Problem

Demand and Supply

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters