Question 1

Gross domestic product (GDP)does not include:

Accepted Answer

A)  used goods sold in the current time period. 
B)  foreign produced goods. 
C)  intermediate as well as final goods. 
D)  None of the above would be included. 
A)  used goods sold in the current time period. 
B)  foreign produced goods. 
C)  intermediate as well as final goods. 
D)  None of the above would be included.

Question 2

Discuss the components of GDP using the expenditure approach.

Accepted Answer

GDP equals consumption spendin

Question 3

The circular flow model assumes:

Accepted Answer

A)  businesses and households own the factors of production. 
B)  businesses own the factors of production. 
C)  government owns the factors of production. 
D)  households own the factors of production. 
E)  firms, households, and the government own the factors of production. 
A)  businesses and households own the factors of production. 
B)  businesses own the factors of production. 
C)  government owns the factors of production. 
D)  households own the factors of production. 
E)  firms, households, and the government own the factors of production.

Question 4

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 income (PI)equals:

Accepted Answer

A)  $3,472 billion. 
B)  $3,691 billion. 
C)  $4,291 billion. 
D)  $3,384 billion. 
E)  $3,175 billion. 
A)  $3,472 billion. 
B)  $3,691 billion. 
C)  $4,291 billion. 
D)  $3,384 billion. 
E)  $3,175 billion.

Question 5

Exhibit 11-6 GDP data (billions of dollars)
 $$\begin{array} { | l | r | } 
\hline \text { Personal consumption exgenfitures } & \$ 850 \
\hline \text { Interest } & 90 \
\hline \text { Corporate profits } & 150 \
\hline \text { Government 5pending } & 400 \
\hline \text { Depreciation } & 100 \
\hline \text { Rental income } & 70 \
\hline \text { Grass private dometic investment } & 120 \
\hline \text { Compensation of emplayees } & 830 \
\hline \text { Exgarts } & 120 \
\hline \text { Imparts } & 70 \
\hline \text { Indirect business taxes } & 80 \
\hline \text { Proprietars' income } & 120 \
\hline \text { Personal income taxes } & 110 \
\hline \text { Social Security taxes } & 50 \
\hline \text { Transfer payments } & 160 \
\hline
\end{array}$$
-In Exhibit 11-6,national income (NI)equals:

Accepted Answer

A)  $2,330 billion. 
B)  $1,350 billion. 
C)  $1,320 billion. 
D)  $2,360 billion. 
E)  $1,440 billion. 
A)  $2,330 billion. 
B)  $1,350 billion. 
C)  $1,320 billion. 
D)  $2,360 billion. 
E)  $1,440 billion.

Question 6

The circular flow model represents the establishment of market value for:

Accepted Answer

A)  goods and services. 
B)  wages and salaries. 
C)  profits and rents. 
D)  all of the above. 
A)  goods and services. 
B)  wages and salaries. 
C)  profits and rents. 
D)  all of the above.

Question 7

Exhibit 11-2 Gross domestic product data
  
-Using the expenditure approach in Exhibit 11-2,gross domestic product (GDP)is:

Accepted Answer

A)  $600 billion. 
B)  $100 billion. 
C)  $500 billion. 
D)  $915 billion. 
E)  $800 billion. 
A)  $600 billion. 
B)  $100 billion. 
C)  $500 billion. 
D)  $915 billion. 
E)  $800 billion.

Question 8

Discuss how economists calculate NI,PI and DI.

Accepted Answer

GDP - depreciation = NI - prof

Question 9

Which one of the following is not a component of GDP,as measured using the expenditure approach?

Accepted Answer

A)  Personal consumption. 
B)  Exports. 
C)  Durable goods. 
D)  Government spending. 
E)  Interest. 
A)  Personal consumption. 
B)  Exports. 
C)  Durable goods. 
D)  Government spending. 
E)  Interest.

Question 10

Exhibit 11-2 Gross domestic product data
  
-As shown in Exhibit 11-2,net exports are:

Accepted Answer

A)  $50 billion. 
B)  $15 billion. 
C)  $35 billion. 
D)  $65 billion. 
A)  $50 billion. 
B)  $15 billion. 
C)  $35 billion. 
D)  $65 billion.

Question 11

Payments to households not in exchange for goods and services currently produced are:

Accepted Answer

A)  transfer payments. 
B)  government purchases. 
C)  consumption expenditures. 
D)  investment expenditures. 
A)  transfer payments. 
B)  government purchases. 
C)  consumption expenditures. 
D)  investment expenditures.

Question 12

Your purchase of a Gucci purse made in Italy would be classified as:

Accepted Answer

A)  both c and d 
B)  an investment good. 
C)  a durable good. 
D)  an import. 
E)  an export. 
A)  both c and d 
B)  an investment good. 
C)  a durable good. 
D)  an import. 
E)  an export.

Question 13

Durable and nondurable goods and services lumped together in the expenditure approach to measuring GDP are called:

Accepted Answer

A)  Personal consumption. 
B)  Gross private domestic investment. 
C)  Government spending. 
D)  Inventory. 
E)  Employee compensation. 
A)  Personal consumption. 
B)  Gross private domestic investment. 
C)  Government spending. 
D)  Inventory. 
E)  Employee compensation.

Question 14

National income (NI)is the total income earned by resource owners,including wages,rents,interest,and profits.

Accepted Answer

A) True 
 B)False

Question 15

In a given year,U.S.nominal GDP was $5,744 billion and the GDP chain price index for that year is 93.6.Real GDP is:

Accepted Answer

A)  $6,137 billion. 
B)  $5,376 billion. 
C)  $6,000 billion. 
D)  $6,376 billion. 
A)  $6,137 billion. 
B)  $5,376 billion. 
C)  $6,000 billion. 
D)  $6,376 billion.

Question 16

If you buy a commemorative Princess Diana stamp issued by the British government,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 17

GDP includes:

Accepted Answer

A)  the negative attributes from erosion and deforested landscape. 
B)  all quality improvements resulting from higher quality goods replacing inferior goods. 
C)  the cleaning-up expenses associated with pollution. 
D)  the value of leisure time. 
E)  the illegal activities related to the underground economy. 
A)  the negative attributes from erosion and deforested landscape. 
B)  all quality improvements resulting from higher quality goods replacing inferior goods. 
C)  the cleaning-up expenses associated with pollution. 
D)  the value of leisure time. 
E)  the illegal activities related to the underground economy.

Question 18

Exhibit 11-8 GDP data (billions of dollars)
 $$\begin{array} { | l | r | } 
\hline \text { Indirect business taxes } & \$ 600 \
\hline \text { Depreciation } & 950 \
\hline \text { Change in business inventaries } & 50 \
\hline \text { Compensation of employees } & 5,400 \
\hline \text { Corparate profits } & 700 \
\hline \text { Durable goads } & 600 \
\hline \text { Expurts } & 100 \
\hline \text { Social Security taxes } & 360 \
\hline \text { Transfer payments } & 300 \
\hline \text { Fixed investment } & 950 \
\hline \text { Government 5pending } & 900 \
\hline \text { Imparts } & 150 \
\hline \text { Net interest } & 500 \
\hline \text { Nondurable goods } & 2,000 \
\hline \text { Persanal taxes } & 1,000 \
\hline \text { Rental income } & 200 \
\hline \text { Services } & 4,000 \
\hline
\end{array}$$
-In Exhibit 11-8,using the expenditure approach,compute business investment spending (I).Which of the following is correct?

Accepted Answer

A)  $950 billion. 
B)  $50 billion. 
C)  $600 billion. 
D)  $1,000 billion. 
A)  $950 billion. 
B)  $50 billion. 
C)  $600 billion. 
D)  $1,000 billion.

Question 19

Which of the following best describes gross domestic product (GDP)?

Accepted Answer

A)  The market value of all inputs used to produce all final goods and services in a nation during a period of time. 
B)  The market value of all final goods and services produced in a nation during a period of time. 
C)  The quantity of all goods and services produced in a nation during a period of time. 
D)  The average price of all goods and serviced produced in a nation during a period of time. 
A)  The market value of all inputs used to produce all final goods and services in a nation during a period of time. 
B)  The market value of all final goods and services produced in a nation during a period of time. 
C)  The quantity of all goods and services produced in a nation during a period of time. 
D)  The average price of all goods and serviced produced in a nation during a period of time.

Question 20

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.

Exam 11: Gross Domestic Product

Gross domestic product (GDP)does not include:

Discuss the components of GDP using the expenditure approach.

The circular flow model assumes:

The circular flow model represents the establishment of market value for:

Exhibit 11-2 Gross domestic product data -Using the expenditure approach in Exhibit 11-2,gross domestic product (GDP)is:

Discuss how economists calculate NI,PI and DI.

Which one of the following is not a component of GDP,as measured using the expenditure approach?

Exhibit 11-2 Gross domestic product data -As shown in Exhibit 11-2,net exports are:

Payments to households not in exchange for goods and services currently produced are:

Your purchase of a Gucci purse made in Italy would be classified as:

Durable and nondurable goods and services lumped together in the expenditure approach to measuring GDP are called:

National income (NI)is the total income earned by resource owners,including wages,rents,interest,and profits.

In a given year,U.S.nominal GDP was $5,744 billion and the GDP chain price index for that year is 93.6.Real GDP is:

If you buy a commemorative Princess Diana stamp issued by the British government,the purchase is considered part of:

GDP includes:

Which of the following best describes gross domestic product (GDP)?

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?

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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