Question 1

When economists speak of changes in GDP measured in constant dollars,they mean that:

Accepted Answer

A)  money GDP is constant. 
B)  the price level is constant. 
C)  a price index has been used to adjust money GDP for the effects of inflation. 
D)  the growth rate of money GDP has been adjusted for changes in population. 
A)  money GDP is constant. 
B)  the price level is constant. 
C)  a price index has been used to adjust money GDP for the effects of inflation. 
D)  the growth rate of money GDP has been adjusted for changes in population.

Question 2

The sum of payments made to resource owners for the use of their resources is:

Accepted Answer

A)  Gross Domestic Product. 
B)  Net Domestic Product. 
C)  National Income. 
D)  Personal Income. 
E)  Disposable personal income. 
A)  Gross Domestic Product. 
B)  Net Domestic Product. 
C)  National Income. 
D)  Personal Income. 
E)  Disposable personal income.

Question 3

Personal consumption expenditures are the largest component of GDP.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  Purchase of a new lawnmower. 
B)  Purchase of a silver cup previously sold new in 1950. 
C)  Purchase of a ticket to the latest movie. 
D)  All of the above would be counted in GDP. 
A)  Purchase of a new lawnmower. 
B)  Purchase of a silver cup previously sold new in 1950. 
C)  Purchase of a ticket to the latest movie. 
D)  All of the above would be counted in GDP.

Question 5

Why is it important to distinguish nominal GDP from real GDP?

Accepted Answer

A distinction between nominal GDP and re

Question 6

Using the expenditure approach,GDP equals:

Accepted Answer

A)  C + I + G + (X - M). 
B)  C + I + G + (X + M). 
C)  C + I - G + (X - M). 
D)  C + I + G - (X - M). 
A)  C + I + G + (X - M). 
B)  C + I + G + (X + M). 
C)  C + I - G + (X - M). 
D)  C + I + G - (X - M).

Question 7

If the GDP chain price index in a given year is less than 100,real GDP in that year would be greater than nominal GDP.

Accepted Answer

A) True 
 B)False

Question 8

Which one of the following statements is true?

Accepted Answer

A)  Money flows from households to firms for resources. 
B)  Money flows from households to foreign economies for exports. 
C)  Money flows from government to firms for resources. 
D)  Money flows from foreign economies to firms for imports. 
E)  Money flows from firms to households for resources. 
A)  Money flows from households to firms for resources. 
B)  Money flows from households to foreign economies for exports. 
C)  Money flows from government to firms for resources. 
D)  Money flows from foreign economies to firms for imports. 
E)  Money flows from firms to households for resources.

Question 9

Personal consumption expenditures is the smallest component of total spending.

Accepted Answer

A) True 
 B)False

Question 10

The income that people earn in resource or factor markets is called:

Accepted Answer

A)  national income. 
B)  personal income. 
C)  disposable personal income. 
D)  transfer payments. 
E)  net national product. 
A)  national income. 
B)  personal income. 
C)  disposable personal income. 
D)  transfer payments. 
E)  net national product.

Question 11

Depreciation or consumption of fixed capital depreciation measures:

Accepted Answer

A)  net investment less gross investment. 
B)  the loss of productive ability due to capital intensive production. 
C)  capital that is wasted in the production process. 
D)  the value of existing capital stock used up in the production process. 
E)  the decline in the value of inventories caused by inflation. 
A)  net investment less gross investment. 
B)  the loss of productive ability due to capital intensive production. 
C)  capital that is wasted in the production process. 
D)  the value of existing capital stock used up in the production process. 
E)  the decline in the value of inventories caused by inflation.

Question 12

Exhibit 11-4
  
-Refer to Exhibit 11-4.Between Year 1 and Year 2,the general level of prices increased by approximately:

Accepted Answer

A)  16.7 percent. 
B)  33.3 percent. 
C)  66.7 percent. 
D)  133.3 percent. 
A)  16.7 percent. 
B)  33.3 percent. 
C)  66.7 percent. 
D)  133.3 percent.

Question 13

Exhibit 11-5 GDP data (billions of dollars)
 $$\begin{array} { | l | r | } 
\hline \text { Personal consumption exgenfitures } & \$ 5,207 \
\hline \text { Interest } & 425 \
\hline \text { Corporate profits } & 735 \
\hline \text { Government 5pending } & 1,406 \
\hline \text { Depreciation } & 830 \
\hline \text { Rental income } & 146 \
\hline \text { Grass private dometic investment } & 1,116 \
\hline \text { Compensation of emplayees } & 4,426 \
\hline \text { Exparts } & 870 \
\hline \text { Imparts } & 965 \
\hline \text { Indirect business taxes } & 553 \
\hline \text { Proprietars' income } & 520 \
\hline \text { Personal taxes } & 886 \
\hline \text { Social Security taxes } & 432 \
\hline \text { Transfer payments } & 376 \
\hline
\end{array}$$
-In Exhibit 11-5,disposable personal income (DI)is:

Accepted Answer

A)  $5,127 billion. 
B)  $5,608 billion. 
C)  $6,254 billion. 
D)  $6,495 billion. 
E)  $7,082 billion. 
A)  $5,127 billion. 
B)  $5,608 billion. 
C)  $6,254 billion. 
D)  $6,495 billion. 
E)  $7,082 billion.

Question 14

If you buy a book of U.S.postage stamps to use to mail love letters to your sweetheart,the purchase is considered part of:

Accepted Answer

A)  C. 
B)  I. 
C)  G. 
D)  X. 
E)  M. 
A)  C. 
B)  I. 
C)  G. 
D)  X. 
E)  M.

Question 15

Exhibit 11-7 GDP data (billions of dollars)
 $$\begin{array} { | l | r | } 
\hline \text { Depreciation } & \$ 438 \
\hline \text { Compensation af employees } & 2,000 \
\hline \text { Rental income } & 100 \
\hline \text { Net interest } & 300 \
\hline \text { Corparate profits } & 700 \
\hline \text { Sacial Security taxes } & 519 \
\hline \text { Transfer payments } & 650 \
\hline \text { Personal consumption exgenditures } & 2,582 \
\hline \text { Grass Private Domestic Investment } & 669 \
\hline \text { Government 5pending } & 815 \
\hline \text { Net exparts } & - 7 a \
\hline \text { Personal taxes } & 590 \
\hline \text { Indirect business taxes } & 450 \
\hline
\end{array}$$
-In Exhibit 11-7,personal disposable personal income (DI)equals:

Accepted Answer

A)  $2,882 billion. 
B)  $3,101 billion. 
C)  $2,794 billion. 
D)  $3,701 billion. 
E)  $4,588 billion. 
A)  $2,882 billion. 
B)  $3,101 billion. 
C)  $2,794 billion. 
D)  $3,701 billion. 
E)  $4,588 billion.

Question 16

Exhibit 11-5 GDP data (billions of dollars)
 $$\begin{array} { | l | r | } 
\hline \text { Personal consumption exgenfitures } & \$ 5,207 \
\hline \text { Interest } & 425 \
\hline \text { Corporate profits } & 735 \
\hline \text { Government 5pending } & 1,406 \
\hline \text { Depreciation } & 830 \
\hline \text { Rental income } & 146 \
\hline \text { Grass private dometic investment } & 1,116 \
\hline \text { Compensation of emplayees } & 4,426 \
\hline \text { Exparts } & 870 \
\hline \text { Imparts } & 965 \
\hline \text { Indirect business taxes } & 553 \
\hline \text { Proprietars' income } & 520 \
\hline \text { Personal taxes } & 886 \
\hline \text { Social Security taxes } & 432 \
\hline \text { Transfer payments } & 376 \
\hline
\end{array}$$
-In Exhibit 11-5,personal income (PI)is:

Accepted Answer

A)  $6,254 billion. 
B)  $6,495 billion. 
C)  $6,013 billion. 
D)  $7,082 billion. 
E)  $7,637 billion. 
A)  $6,254 billion. 
B)  $6,495 billion. 
C)  $6,013 billion. 
D)  $7,082 billion. 
E)  $7,637 billion.

Question 17

Which of the following expenditures would be included in GDP for this year?

Accepted Answer

A)  The purchase of a new car. 
B)  The purchase of a new tire by General Motors for a new car. 
C)  The purchase of a used car. 
D)  All of the above would be included. 
A)  The purchase of a new car. 
B)  The purchase of a new tire by General Motors for a new car. 
C)  The purchase of a used car. 
D)  All of the above would be included.

Question 18

Exhibit 11-1
  
-Refer to Exhibit 11-1.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 19

Which of the following would not be included in the gross private domestic investment (I)category of GDP?

Accepted Answer

A)  A bakery's purchase of a new oven. 
B)  A retailer's additions to its inventories. 
C)  Newly built residential construction. 
D)  A bank's purchase of a U.S. Treasury bond. 
A)  A bakery's purchase of a new oven. 
B)  A retailer's additions to its inventories. 
C)  Newly built residential construction. 
D)  A bank's purchase of a U.S. Treasury bond.

Question 20

GDP:

Accepted Answer

A)  is the dollar value of all the final goods and services produced within the borders of a nation. 
B)  includes intermediate and final goods and services. 
C)  minus an allowance for depreciation of fixed capital equals GNP. 
D)  is a less-than-perfect measure of social well-being because it does not include exports and imports. 
E)  all of the above. 
A)  is the dollar value of all the final goods and services produced within the borders of a nation. 
B)  includes intermediate and final goods and services. 
C)  minus an allowance for depreciation of fixed capital equals GNP. 
D)  is a less-than-perfect measure of social well-being because it does not include exports and imports. 
E)  all of the above.

Exam 11: Gross Domestic Product

When economists speak of changes in GDP measured in constant dollars,they mean that:

The sum of payments made to resource owners for the use of their resources is:

Personal consumption expenditures are the largest component of GDP.

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

Why is it important to distinguish nominal GDP from real GDP?

Using the expenditure approach,GDP equals:

If the GDP chain price index in a given year is less than 100,real GDP in that year would be greater than nominal GDP.

Which one of the following statements is true?

Personal consumption expenditures is the smallest component of total spending.

The income that people earn in resource or factor markets is called:

Depreciation or consumption of fixed capital depreciation measures:

Exhibit 11-4 -Refer to Exhibit 11-4.Between Year 1 and Year 2,the general level of prices increased by approximately:

If you buy a book of U.S.postage stamps to use to mail love letters to your sweetheart,the purchase is considered part of:

Which of the following expenditures would be included in GDP for this year?

Exhibit 11-1 -Refer to Exhibit 11-1.What is this country's gross domestic product?

Which of the following would not be included in the gross private domestic investment (I)category of GDP?

GDP:

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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