Question 1

If a man marries his hired housekeeper,the value of GDP:

Accepted Answer

A)  rises. 
B)  falls. 
C)  is unchanged. 
D)  rises, but the value of GDP falls. 
A)  rises. 
B)  falls. 
C)  is unchanged. 
D)  rises, but the value of GDP falls.

Question 2

Nominal gross domestic product is based on the existing prices at which final goods are actually sold.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 11-3 Expenditure approach
  
-As shown in Exhibit 11-3,total expenditures by businesses for fixed investment (capital)and inventories is:

Accepted Answer

A)  $1,000 billion. 
B)  $100 billion. 
C)  $400 billion. 
D)  $20 billion 
E)  $75 billion. 
A)  $1,000 billion. 
B)  $100 billion. 
C)  $400 billion. 
D)  $20 billion 
E)  $75 billion.

Question 4

Gross private domestic investment does not include:

Accepted Answer

A)  spending for new houses. 
B)  spending to build up inventories. 
C)  unintentional inventory investment. 
D)  spending on employee salaries. 
E)  spending for office supplies. 
A)  spending for new houses. 
B)  spending to build up inventories. 
C)  unintentional inventory investment. 
D)  spending on employee salaries. 
E)  spending for office supplies.

Question 5

National income is equal to Gross Domestic Product minus:

Accepted Answer

A)  indirect business taxes. 
B)  depreciation. 
C)  personal taxes. 
D)  retained earnings. 
E)  consumption spending. 
A)  indirect business taxes. 
B)  depreciation. 
C)  personal taxes. 
D)  retained earnings. 
E)  consumption spending.

Question 6

Which of the following would not be included in the government consumption expenditures and gross investment (G)category of GDP?

Accepted Answer

A)  The payments made to Social Security recipients. 
B)  The expenditures made to repair a highway. 
C)  The spending for professors at state universities. 
D)  The purchase of new china for White House functions. 
A)  The payments made to Social Security recipients. 
B)  The expenditures made to repair a highway. 
C)  The spending for professors at state universities. 
D)  The purchase of new china for White House functions.

Question 7

National income is calculated by subtracting ____ from GDP:

Accepted Answer

A)  depreciation. 
B)  investment and net exports. 
C)  Social Security insurance contributions and transfer payments. 
D)  corporate and personal income taxes. 
A)  depreciation. 
B)  investment and net exports. 
C)  Social Security insurance contributions and transfer payments. 
D)  corporate and personal income taxes.

Question 8

In a given year,U.S.nominal GDP was $2,784 billion and the GDP chain price index for that year is 60.4.Real GDP is:

Accepted Answer

A)  $1,682 billion. 
B)  $4,609 billion. 
C)  $3,889 billion. 
D)  $4,000 billion. 
A)  $1,682 billion. 
B)  $4,609 billion. 
C)  $3,889 billion. 
D)  $4,000 billion.

Question 9

The lower portion of the circular flow model contains factor markets in which households provide:

Accepted Answer

A)  labor, money, and machines. 
B)  savings, spending, and investment. 
C)  natural resources, labor, and capital. 
D)  output of all final goods and services produced. 
A)  labor, money, and machines. 
B)  savings, spending, and investment. 
C)  natural resources, labor, and capital. 
D)  output of all final goods and services produced.

Question 10

Which of the following is a shortcoming of GDP?

Accepted Answer

A)  GDP measures nonmarket transactions. 
B)  GDP includes an estimate of illegal transactions. 
C)  GDP includes an estimate of the value of household services. 
D)  None of the above are true. 
A)  GDP measures nonmarket transactions. 
B)  GDP includes an estimate of illegal transactions. 
C)  GDP includes an estimate of the value of household services. 
D)  None of the above are true.

Question 11

Exhibit 11-2 Gross domestic product data
  
-As shown in Exhibit 11-2,total expenditures by households for domestically produced goods is:

Accepted Answer

A)  $500 billion. 
B)  $50 billion. 
C)  $300 billion. 
D)  $15 billion. 
A)  $500 billion. 
B)  $50 billion. 
C)  $300 billion. 
D)  $15 billion.

Question 12

Personal income equals disposable personal income plus:

Accepted Answer

A)  personal income taxes. 
B)  transfer payments. 
C)  dividend payments 
D)  personal savings. 
A)  personal income taxes. 
B)  transfer payments. 
C)  dividend payments 
D)  personal savings.

Question 13

Increased production,but not increased inflation,will result in higher:

Accepted Answer

A)  nominal GDP. 
B)  money GDP. 
C)  real GDP. 
D)  current dollar GDP. 
A)  nominal GDP. 
B)  money GDP. 
C)  real GDP. 
D)  current dollar GDP.

Question 14

In the four-sector circular flow model,households will use their incomes to do all but which one of the following?

Accepted Answer

A)  Save. 
B)  Pay taxes. 
C)  Buy domestic goods and services. 
D)  Buy imported goods and services. 
E)  Invest. 
A)  Save. 
B)  Pay taxes. 
C)  Buy domestic goods and services. 
D)  Buy imported goods and services. 
E)  Invest.

Question 15

The value of child-rearing and other household production are not included in GDP.

Accepted Answer

A) True 
 B)False

Question 16

GDP overstates the productive capacity of a country when:

Accepted Answer

A)  economic bads like pollution are produced and then must be cleaned up. 
B)  there is a sizable underground economy. 
C)  nonmarket production represents a large portion of the economy. 
D)  working conditions improve, allowing jobs to be completed safer and faster. 
A)  economic bads like pollution are produced and then must be cleaned up. 
B)  there is a sizable underground economy. 
C)  nonmarket production represents a large portion of the economy. 
D)  working conditions improve, allowing jobs to be completed safer and faster.

Question 17

Nominal GDP is greater than GDP because of the effects of inflation as measured by the GDP chain price index.

Accepted Answer

A) True 
 B)False

Question 18

Gross domestic product is equal to the market value of all final goods and services:

Accepted Answer

A)  exchanged during a period. 
B)  produced domestically during a period. 
C)  produced by the citizens of a nation during a period. 
D)  produced domestically during a period minus the depreciation of productive assets. 
A)  exchanged during a period. 
B)  produced domestically during a period. 
C)  produced by the citizens of a nation during a period. 
D)  produced domestically during a period minus the depreciation of productive assets.

Question 19

If you buy a brand new,American-made laptop computer to use for taking notes in your economics class,then it will be counted as:

Accepted Answer

A)  none of the following. 
B)  C. 
C)  I. 
D)  G. 
E)  (X - M). 
A)  none of the following. 
B)  C. 
C)  I. 
D)  G. 
E)  (X - M).

Question 20

Activities that are directly included in GDP accounts include:

Accepted Answer

A)  the value of housework done by householders. 
B)  the selling of illegal drugs. 
C)  unreported labor in sweatshops. 
D)  buying a ticket to a Dodgers-Expos game on your day off. 
A)  the value of housework done by householders. 
B)  the selling of illegal drugs. 
C)  unreported labor in sweatshops. 
D)  buying a ticket to a Dodgers-Expos game on your day off.

Exam 11: Gross Domestic Product

If a man marries his hired housekeeper,the value of GDP:

Nominal gross domestic product is based on the existing prices at which final goods are actually sold.

Exhibit 11-3 Expenditure approach -As shown in Exhibit 11-3,total expenditures by businesses for fixed investment (capital)and inventories is:

Gross private domestic investment does not include:

National income is equal to Gross Domestic Product minus:

Which of the following would not be included in the government consumption expenditures and gross investment (G)category of GDP?

National income is calculated by subtracting ____ from GDP:

In a given year,U.S.nominal GDP was $2,784 billion and the GDP chain price index for that year is 60.4.Real GDP is:

The lower portion of the circular flow model contains factor markets in which households provide:

Which of the following is a shortcoming of GDP?

Exhibit 11-2 Gross domestic product data -As shown in Exhibit 11-2,total expenditures by households for domestically produced goods is:

Personal income equals disposable personal income plus:

Increased production,but not increased inflation,will result in higher:

In the four-sector circular flow model,households will use their incomes to do all but which one of the following?

The value of child-rearing and other household production are not included in GDP.

GDP overstates the productive capacity of a country when:

Nominal GDP is greater than GDP because of the effects of inflation as measured by the GDP chain price index.

Gross domestic product is equal to the market value of all final goods and services:

If you buy a brand new,American-made laptop computer to use for taking notes in your economics class,then it will be counted as:

Activities that are directly included in GDP accounts include:

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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