Question 1

Business cycles are

Accepted Answer

A)  irregular, with some having two recessions and no expansion. 
B)  predictable, with a recession following a trough. 
C)  unpredictable, but always have two phases and two turning points. 
D)  unpredictable, and don't always have two phases and two turning points. 
A)  irregular, with some having two recessions and no expansion. 
B)  predictable, with a recession following a trough. 
C)  unpredictable, but always have two phases and two turning points. 
D)  unpredictable, and don't always have two phases and two turning points.

Question 2

Intermediate goods are excluded from GDP because

Accepted Answer

A)  their inclusion would involve double counting. 
B)  they represent goods that have never been purchased so they cannot be counted. 
C)  their inclusion would understate GDP 
D)  the premise of the question is incorrect because intermediate goods are directly included in calculating GDP. 
A)  their inclusion would involve double counting. 
B)  they represent goods that have never been purchased so they cannot be counted. 
C)  their inclusion would understate GDP 
D)  the premise of the question is incorrect because intermediate goods are directly included in calculating GDP.

Question 3

Gross private domestic investment is a component of which approach to measuring GDP?

Accepted Answer

A)  incomes approach 
B)  expenditure approach 
C)  linking approach 
D)  output approach 
A)  incomes approach 
B)  expenditure approach 
C)  linking approach 
D)  output approach

Question 4

$$\begin{array} { | l | c |} 
\hline { \text { Component } } & \begin{array} { c } 
\text { Amount } \
\text { (billions of } \
\text { dollars) }
\end{array} \
\hline \text { Net taxes } & 1,635 \
\hline \text { Personal consumption } & 5,566 \
 \text { expenditure } &  \
\hline \text { Depreciation } &  622 \
\hline \text { Government expenditure } & 1,784 \
\hline \text { Gross investment } & 1,234\
\hline \text { Exports } & 957 \
\hline \text { Imports } &1,138  \
\hline \text { Household saving } & 1,202 \
\hline
\end{array}$$
-Using the data in the above table,what is the value of net exports?

Accepted Answer

A)  -$181 billion 
B)  $181 billion 
C)  $957 billion 
D)  -$957 billion 
A)  -$181 billion 
B)  $181 billion 
C)  $957 billion 
D)  -$957 billion

Question 5

-In the above figure,which point represents an economy which is at the peak part of a business cycle?

Accepted Answer

A)  point F 
B)  point G 
C)  point I 
D)  point K 
A)  point F 
B)  point G 
C)  point I 
D)  point K

Question 6

Potential GDP

Accepted Answer

A)  measures the actual production from year to year. 
B)  measures the maximum amount of production that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation. 
C)  is cyclical. 
D)  Both answers A and C are correct 
A)  measures the actual production from year to year. 
B)  measures the maximum amount of production that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation. 
C)  is cyclical. 
D)  Both answers A and C are correct

Question 7

If Ford sells 200 Explorers for a total of $400,000 to Germany,while the United States imports 100 BMWs for a total of $500,000 from Germany,

Accepted Answer

A)  U.S. GDP increases because it sells more Explorers. 
B)  U.S. GDP decreases because net exports are negative. 
C)  Germany's GDP decreases. 
D)  U.S. net exports is positive. 
A)  U.S. GDP increases because it sells more Explorers. 
B)  U.S. GDP decreases because net exports are negative. 
C)  Germany's GDP decreases. 
D)  U.S. net exports is positive.

Question 8

Two reasons why valuing goods at their market prices is different than valuing them at their factor costs include

Accepted Answer

A)  depreciation and investment. 
B)  exports and imports. 
C)  personal taxes and corporate taxes. 
D)  indirect taxes and subsidies. 
A)  depreciation and investment. 
B)  exports and imports. 
C)  personal taxes and corporate taxes. 
D)  indirect taxes and subsidies.

Question 9

Which of the following is NOT a reason that real GDP is a poor measure of a nation's economic welfare?

Accepted Answer

A)  Real GDP omits measures of political freedom. 
B)  Real GDP does not take into account the value of people's leisure time. 
C)  Real GDP does not include the underground economy. 
D)  Real GDP overvalues household production. 
A)  Real GDP omits measures of political freedom. 
B)  Real GDP does not take into account the value of people's leisure time. 
C)  Real GDP does not include the underground economy. 
D)  Real GDP overvalues household production.

Question 10

The business cycle refers to

Accepted Answer

A)  fluctuations in the level of real GDP around potential GDP. 
B)  changes in the level of nominal GDP. 
C)  changes in the level of the stock market. 
D)  changes in the level of employment. 
A)  fluctuations in the level of real GDP around potential GDP. 
B)  changes in the level of nominal GDP. 
C)  changes in the level of the stock market. 
D)  changes in the level of employment.

Question 11

The maximum amount of production that can be produced while avoiding shortages of labor,capital,land,and entrepreneurship that would bring rising inflation is called

Accepted Answer

A)  real GDP. 
B)  nominal GDP. 
C)  actual GDP. 
D)  potential GDP. 
A)  real GDP. 
B)  nominal GDP. 
C)  actual GDP. 
D)  potential GDP.

Question 12

A trough is the

Accepted Answer

A)  lower turning point of a business cycle when an expansion begins. 
B)  lower turning point of a business cycle when a recession begins. 
C)  upper turning point of a business cycle when an expansion begins. 
D)  upper turning point of a business cycle when a recession begins. 
A)  lower turning point of a business cycle when an expansion begins. 
B)  lower turning point of a business cycle when a recession begins. 
C)  upper turning point of a business cycle when an expansion begins. 
D)  upper turning point of a business cycle when a recession begins.

Question 13

How are changes in inventory treated in GDP?

Accepted Answer

Changes in inventory are part of the inv

Question 14

It is estimated that in 2007,Mexico had a population of 110 million and Brazil had a population of 190 million. At the same time,Mexico's GDP was $1 trillion while Brazil's was $1.31 trillion.These data show that

Accepted Answer

A)  Brazil had a healthier economy than did Mexico. 
B)  Mexico's GDP per person was lower than was Brazil's GDP per person in 2007. 
C)  Mexico's GDP per person was $9090 in 2007. 
D)  Brazil's GDP per person was $5300 in 2007. 
A)  Brazil had a healthier economy than did Mexico. 
B)  Mexico's GDP per person was lower than was Brazil's GDP per person in 2007. 
C)  Mexico's GDP per person was $9090 in 2007. 
D)  Brazil's GDP per person was $5300 in 2007.

Question 15

Which of the following is NOT part of GDP calculated using the expenditure approach?

Accepted Answer

A)  General Motors' purchases of new capital equipment 
B)  expenditures by the federal government for national defense 
C)  social security payments made to the elderly 
D)  the purchase of new homes by consumers 
A)  General Motors' purchases of new capital equipment 
B)  expenditures by the federal government for national defense 
C)  social security payments made to the elderly 
D)  the purchase of new homes by consumers

Question 16

Which of the following is not a component of the incomes approach to GDP?

Accepted Answer

A)  net exports 
B)  wages and salaries 
C)  corporate profits 
D)  proprietors' income 
A)  net exports 
B)  wages and salaries 
C)  corporate profits 
D)  proprietors' income

Question 17

A time-series graph showing total production in Japan from 1960 to 2010 shows a positive trend.It is the case that total production

Accepted Answer

A)  fell every year between 1960 and 2010. 
B)  rose every year between 1960 and 2010. 
C)  was lower in 2010 than in 1960. 
D)  was higher in 2010 than in 1960. 
A)  fell every year between 1960 and 2010. 
B)  rose every year between 1960 and 2010. 
C)  was lower in 2010 than in 1960. 
D)  was higher in 2010 than in 1960.

Question 18

If we compare the four sources of spending in the economy we see that

Accepted Answer

A)  household consumption is the smallest. 
B)  government expenditure is the largest. 
C)  business investment is the largest. 
D)  household consumption is the largest. 
A)  household consumption is the smallest. 
B)  government expenditure is the largest. 
C)  business investment is the largest. 
D)  household consumption is the largest.

Question 19

What is the relationship shown by the circular flow among income,total expenditure,and GDP?

Accepted Answer

They are all equal.The value of producti

Question 20

Define gross investment and net investment.Discuss the relationship between gross investment and net investment.

Accepted Answer

Gross investment is the total amount spe

Business cycles are

Intermediate goods are excluded from GDP because

Gross private domestic investment is a component of which approach to measuring GDP?

Component Amount (billions of dollars) Net taxes 1,635 Personal consumption 5,566 expenditure Depreciation 622 Government expenditure 1,784 Gross investment 1,234 Exports 957 Imports 1,138 Household saving 1,202 -Using the data in the above table,what is the value of net exports?

-In the above figure,which point represents an economy which is at the peak part of a business cycle?

Potential GDP

If Ford sells 200 Explorers for a total of $400,000 to Germany,while the United States imports 100 BMWs for a total of $500,000 from Germany,

Two reasons why valuing goods at their market prices is different than valuing them at their factor costs include

Which of the following is NOT a reason that real GDP is a poor measure of a nation's economic welfare?

The business cycle refers to

The maximum amount of production that can be produced while avoiding shortages of labor,capital,land,and entrepreneurship that would bring rising inflation is called

A trough is the

How are changes in inventory treated in GDP?

It is estimated that in 2007,Mexico had a population of 110 million and Brazil had a population of 190 million. At the same time,Mexico's GDP was $1 trillion while Brazil's was $1.31 trillion.These data show that

Which of the following is NOT part of GDP calculated using the expenditure approach?

Which of the following is not a component of the incomes approach to GDP?

A time-series graph showing total production in Japan from 1960 to 2010 shows a positive trend.It is the case that total production

If we compare the four sources of spending in the economy we see that

What is the relationship shown by the circular flow among income,total expenditure,and GDP?

Define gross investment and net investment.Discuss the relationship between gross investment and net investment.

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

Business cycles are

Intermediate goods are excluded from GDP because

Gross private domestic investment is a component of which approach to measuring GDP?

Component Amount (billions of dollars) Net taxes 1,635 Personal consumption 5,566 expenditure Depreciation 622 Government expenditure 1,784 Gross investment 1,234 Exports 957 Imports 1,138 Household saving 1,202 -Using the data in the above table,what is the value of net exports?

-In the above figure,which point represents an economy which is at the peak part of a business cycle?

Potential GDP

If Ford sells 200 Explorers for a total of $400,000 to Germany,while the United States imports 100 BMWs for a total of $500,000 from Germany,

Two reasons why valuing goods at their market prices is different than valuing them at their factor costs include

Which of the following is NOT a reason that real GDP is a poor measure of a nation's economic welfare?

The business cycle refers to

The maximum amount of production that can be produced while avoiding shortages of labor,capital,land,and entrepreneurship that would bring rising inflation is called

A trough is the

How are changes in inventory treated in GDP?

It is estimated that in 2007,Mexico had a population of 110 million and Brazil had a population of 190 million. At the same time,Mexico's GDP was $1 trillion while Brazil's was $1.31 trillion.These data show that

Which of the following is NOT part of GDP calculated using the expenditure approach?

Which of the following is not a component of the incomes approach to GDP?

A time-series graph showing total production in Japan from 1960 to 2010 shows a positive trend.It is the case that total production

If we compare the four sources of spending in the economy we see that

What is the relationship shown by the circular flow among income,total expenditure,and GDP?

Define gross investment and net investment.Discuss the relationship between gross investment and net investment.

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