Question 1

In the definition of GDP,"market value" refers to

Accepted Answer

A)  valuing production in production units. 
B)  not counting intermediate products. 
C)  valuing production according to the market price. 
D)  when the production took place. 
A)  valuing production in production units. 
B)  not counting intermediate products. 
C)  valuing production according to the market price. 
D)  when the production took place.

Question 2

Which of the following items is NOT part of government expenditure on goods and services in the GDP accounts?

Accepted Answer

A)  gasoline purchases for government car pools 
B)  Social Security expenditures 
C)  new computer hardware for use by the IRS 
D)  drapes to brighten up the president's office 
A)  gasoline purchases for government car pools 
B)  Social Security expenditures 
C)  new computer hardware for use by the IRS 
D)  drapes to brighten up the president's office

Question 3

An U.S.firm buys a new industrial sewing machine from a company located in France.Which of the following is true?
I. U.S.net exports decrease.
II. U.S.investment increases.

Accepted Answer

A)  only I 
B)  only II 
C)  both I and II 
D)  neither I nor II 
A)  only I 
B)  only II 
C)  both I and II 
D)  neither I nor II

Question 4

Last year in the country of Nerf imports equaled exports.Nerf's GDP was $500 million,its consumer expenditure was $380 million,and its investment was $20 million.Nerf's government expenditure on goods and services were ________.

Accepted Answer

A)  $100 million 
B)  $900 million 
C)  $500 million 
D)  zero 
A)  $100 million 
B)  $900 million 
C)  $500 million 
D)  zero

Question 5

Personal consumption expenditures include

Accepted Answer

A)  expenditures by households on goods and services produced only in the United States. 
B)  expenditures by households on goods and services produced in the United States and the rest of the world. 
C)  the purchase of new homes. 
D)  the purchase of used goods and new goods. 
A)  expenditures by households on goods and services produced only in the United States. 
B)  expenditures by households on goods and services produced in the United States and the rest of the world. 
C)  the purchase of new homes. 
D)  the purchase of used goods and new goods.

Question 6

The circular flow of income shows that

Accepted Answer

A)  households transact only in the goods market. 
B)  governments purchase goods and services. 
C)  firms generally are the demanders in the goods markets and suppliers in the factor markets. 
D)  None of the above answers is correct. 
A)  households transact only in the goods market. 
B)  governments purchase goods and services. 
C)  firms generally are the demanders in the goods markets and suppliers in the factor markets. 
D)  None of the above answers is correct.

Question 7

How does the income approach measure GDP?

Accepted Answer

The incomes approach adds the compensati

Question 8

Real GDP decreases during

Accepted Answer

A)  the movement from trough to peak. 
B)  the movement from below potential GDP back to potential GDP. 
C)  the movement from peak to trough. 
D)  a decrease in unemployment. 
A)  the movement from trough to peak. 
B)  the movement from below potential GDP back to potential GDP. 
C)  the movement from peak to trough. 
D)  a decrease in unemployment.

Question 9

Rental income includes

Accepted Answer

A)  the payment for the use of land. 
B)  the payment for the use of all rented inputs. 
C)  no income from rental housing because most houses are occupied by their owners. 
D)  Both answers A and B are correct. 
A)  the payment for the use of land. 
B)  the payment for the use of all rented inputs. 
C)  no income from rental housing because most houses are occupied by their owners. 
D)  Both answers A and B are correct.

Question 10

"German economic growth slowed ...Economic growth slowed to 0.3 percent from 0.5 percent. Expansion was driven by exports...(and) household consumption added ...to growth. As unemployment declines and disposable incomes increase,household spending may also gain momentum. www.bloomberg.com,August 23,2007
We can conclude that the German economy

Accepted Answer

A)  is at the peak of the business cycle. 
B)  has entered the expansion phase of the business cycle. 
C)  has slowed due to a decline in investment or government spending. 
D)  is in the recession phase of the business cycle. 
A)  is at the peak of the business cycle. 
B)  has entered the expansion phase of the business cycle. 
C)  has slowed due to a decline in investment or government spending. 
D)  is in the recession phase of the business cycle.

Question 11

If a measure of real GDP could include the value of leisure time,measured real GDP would increase.

Accepted Answer

A) True 
 B)False

Question 12

The chain-weighted output index method of calculating real GDP compares

Accepted Answer

A)  compares the quantities of goods produced in consecutive years using prices in both years and averaging the percentage changes in the value of output. 
B)  quantities produced in different years using prices from a year chosen as a reference period. 
C)  quantities produced in different years with the prices that prevailed during the year in which the output was produced. 
D)  prices at different points in time using a sample of goods that is representative of goods purchased by households. 
A)  compares the quantities of goods produced in consecutive years using prices in both years and averaging the percentage changes in the value of output. 
B)  quantities produced in different years using prices from a year chosen as a reference period. 
C)  quantities produced in different years with the prices that prevailed during the year in which the output was produced. 
D)  prices at different points in time using a sample of goods that is representative of goods purchased by households.

Question 13

According to the BEA,in the second quarter of 2012 state and local government spending on goods and services changed by -1.4 percent.Using the expenditure approach,this change leads to

Accepted Answer

A)  a decrease in government expenditure on goods and services. 
B)  no change in GDP because only federal government expenditures are included in GDP. 
C)  a decrease in gross private domestic investment. 
D)  no change in GDP because state and local government expenditure is always canceled out by federal government expenditure. 
A)  a decrease in government expenditure on goods and services. 
B)  no change in GDP because only federal government expenditures are included in GDP. 
C)  a decrease in gross private domestic investment. 
D)  no change in GDP because state and local government expenditure is always canceled out by federal government expenditure.

Question 14

In the national income accounts,net interest is the total interest payments received by households on loans made by them minus

Accepted Answer

A)  interest received from households' ownership of government bonds. 
B)  interest payments made by households on their own borrowing. 
C)  interest payments made by households to foreign lenders. 
D)  taxes paid by households on their interest income. 
A)  interest received from households' ownership of government bonds. 
B)  interest payments made by households on their own borrowing. 
C)  interest payments made by households to foreign lenders. 
D)  taxes paid by households on their interest income.

Question 15

All of the following are components of the expenditure approach to measuring GDP EXCEPT

Accepted Answer

A)  Shaniq's purchase of a meal at the Olive Garden in Atlanta. 
B)  a Senator from Iowa being paid the monthly salary. 
C)  the army buying new M1 Abram tanks. 
D)  Ford Motor Company buying new Dell computers for use in its marketing department in Dearborn, Michigan. 
A)  Shaniq's purchase of a meal at the Olive Garden in Atlanta. 
B)  a Senator from Iowa being paid the monthly salary. 
C)  the army buying new M1 Abram tanks. 
D)  Ford Motor Company buying new Dell computers for use in its marketing department in Dearborn, Michigan.

Question 16

In any year,real GDP

Accepted Answer

A)  must always be less than potential GDP. 
B)  might be greater or less than potential GDP. 
C)  will be greater than potential GDP if the inflation rate is positive. 
D)  always equals potential GDP. 
A)  must always be less than potential GDP. 
B)  might be greater or less than potential GDP. 
C)  will be greater than potential GDP if the inflation rate is positive. 
D)  always equals potential GDP.

Question 17

Gross private domestic investment is all purchases of newly produced business capital goods and buildings

Accepted Answer

A)  minus the change in business inventories. 
B)  plus the change in business inventories plus residential construction. 
C)  plus fixed investment minus inventory investment. 
D)  plus purchases of capital goods produced in previous years to replace any depreciated capital goods. 
A)  minus the change in business inventories. 
B)  plus the change in business inventories plus residential construction. 
C)  plus fixed investment minus inventory investment. 
D)  plus purchases of capital goods produced in previous years to replace any depreciated capital goods.

Question 18

Net investment equals

Accepted Answer

A)  gross investment + depreciation. 
B)  depreciation + addition to inventories. 
C)  savings - depreciation. 
D)  gross investment - depreciation. 
A)  gross investment + depreciation. 
B)  depreciation + addition to inventories. 
C)  savings - depreciation. 
D)  gross investment - depreciation.

Question 19

Inflation climbed steadily from 1952 to 1972.A time-series graph with inflation on the vertical axis and time (in years) on the horizontal axis would show

Accepted Answer

A)  the rate of inflation as a horizontal line. 
B)  that inflation was following a decreasing trend line. 
C)  that inflation had a positive trend. 
D)  that inflation had a negative trend. 
A)  the rate of inflation as a horizontal line. 
B)  that inflation was following a decreasing trend line. 
C)  that inflation had a positive trend. 
D)  that inflation had a negative trend.

Question 20

The circular flow shows that aggregate spending is larger than aggregate income because people save.

Accepted Answer

A) True 
 B)False

In the definition of GDP,"market value" refers to

Which of the following items is NOT part of government expenditure on goods and services in the GDP accounts?

An U.S.firm buys a new industrial sewing machine from a company located in France.Which of the following is true? I. U.S.net exports decrease. II. U.S.investment increases.

Last year in the country of Nerf imports equaled exports.Nerf's GDP was $500 million,its consumer expenditure was $380 million,and its investment was $20 million.Nerf's government expenditure on goods and services were ________.

Personal consumption expenditures include

The circular flow of income shows that

How does the income approach measure GDP?

Real GDP decreases during

Rental income includes

If a measure of real GDP could include the value of leisure time,measured real GDP would increase.

The chain-weighted output index method of calculating real GDP compares

According to the BEA,in the second quarter of 2012 state and local government spending on goods and services changed by -1.4 percent.Using the expenditure approach,this change leads to

In the national income accounts,net interest is the total interest payments received by households on loans made by them minus

All of the following are components of the expenditure approach to measuring GDP EXCEPT

In any year,real GDP

Gross private domestic investment is all purchases of newly produced business capital goods and buildings

Net investment equals

Inflation climbed steadily from 1952 to 1972.A time-series graph with inflation on the vertical axis and time (in years) on the horizontal axis would show

The circular flow shows that aggregate spending is larger than aggregate income because people save.

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

In the definition of GDP,"market value" refers to

Which of the following items is NOT part of government expenditure on goods and services in the GDP accounts?

An U.S.firm buys a new industrial sewing machine from a company located in France.Which of the following is true? I. U.S.net exports decrease. II. U.S.investment increases.

Last year in the country of Nerf imports equaled exports.Nerf's GDP was $500 million,its consumer expenditure was $380 million,and its investment was $20 million.Nerf's government expenditure on goods and services were ________.

Personal consumption expenditures include

The circular flow of income shows that

How does the income approach measure GDP?

Real GDP decreases during

Rental income includes

If a measure of real GDP could include the value of leisure time,measured real GDP would increase.

The chain-weighted output index method of calculating real GDP compares

According to the BEA,in the second quarter of 2012 state and local government spending on goods and services changed by -1.4 percent.Using the expenditure approach,this change leads to

In the national income accounts,net interest is the total interest payments received by households on loans made by them minus

All of the following are components of the expenditure approach to measuring GDP EXCEPT

In any year,real GDP

Gross private domestic investment is all purchases of newly produced business capital goods and buildings

Net investment equals

Inflation climbed steadily from 1952 to 1972.A time-series graph with inflation on the vertical axis and time (in years) on the horizontal axis would show

The circular flow shows that aggregate spending is larger than aggregate income because people save.

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