Question 1

Which of the following would be included in the GDP of the United States?

Accepted Answer

A) Boeing builds a plane in Seattle that is sold to Air Canada. 
B) General Motors produces a car in Germany that is sold in Michigan. 
C) Nestle produces a candy bar in Switzerland that is sold in San Francisco. 
D) Planet Hollywood serves customers in a restaurant in Hong Kong. 
A) Boeing builds a plane in Seattle that is sold to Air Canada. 
B) General Motors produces a car in Germany that is sold in Michigan. 
C) Nestle produces a candy bar in Switzerland that is sold in San Francisco. 
D) Planet Hollywood serves customers in a restaurant in Hong Kong.

Question 2

When the production process extends over more than one year, the value of the final product is:

Accepted Answer

A) included in GDP for the year in which production began. 
B) included in GDP for the year in which production was completed. 
C) allocated to GDP in each year according to the value added in that year. 
D) allocated equally to GDP in each year. 
A) included in GDP for the year in which production began. 
B) included in GDP for the year in which production was completed. 
C) allocated to GDP in each year according to the value added in that year. 
D) allocated equally to GDP in each year.

Question 3

A measure of GDP in which quantities produced are valued at current-year prices is called:

Accepted Answer

A) real GDP. 
B) nominal GDP. 
C) base GDP. 
D) physical GDP. 
A) real GDP. 
B) nominal GDP. 
C) base GDP. 
D) physical GDP.

Question 4

If total output is calculated by adding up the market value of goods and services produced, then more expensive items:

Accepted Answer

A) receive the same weight as cheaper items. 
B) receive a greater weight than cheaper items. 
C) receive a smaller weight than cheaper items. 
D) are double counted. 
A) receive the same weight as cheaper items. 
B) receive a greater weight than cheaper items. 
C) receive a smaller weight than cheaper items. 
D) are double counted.

Question 5

An economy produces 500,000 tables valued at $100 each. Households purchase 100,000 tables, of which 50,000 are imported. Businesses purchase 200,000 domestically produced tables, the government purchases 100,000 domestically produced tables, and 50,000 domestically produced tables are sold abroad. At the end of the year, the table manufacturers hold the unsold tables in inventory. What is value of GDP?

Accepted Answer

A) $5 million 
B) $40 million 
C) $50 million 
D) $95 million 
A) $5 million 
B) $40 million 
C) $50 million 
D) $95 million

Question 6

Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process:  
$$\begin{array} { | l | c | r | } 
\hline { \text { Name of Campany } } & \text { Revenues } & \text { Cast af Pur chased Inguts } \
\hline \text { Citrus Growers Irc. } & \$ 0.75 & \mathbf { 0 } \
\hline \text { Florida Jarn Cormparty } & \$ 2.00 & \$ 0.75 \
\hline \text { The Comer Store } & \$ 2.50 & \$ 2.00 \
\hline
\end{array}$$  
If the oranges were grown and the jam produced in the year 2017, but the marmalade was sold at The Corner Store in the year 2018, what is the contribution of these transactions to GDP in the year 2018?

Accepted Answer

A) $0.00 
B) $0.50 
C) $2.00 
D) $2.50 
A) $0.00 
B) $0.50 
C) $2.00 
D) $2.50

Question 7

The value of final goods and services equals:

Accepted Answer

A) total business profits. 
B) the sum of the value added by all firms. 
C) total business spending. 
D) the sum of revenues from all sales. 
A) total business profits. 
B) the sum of the value added by all firms. 
C) total business spending. 
D) the sum of revenues from all sales.

Question 8

The length of an unemployment spell is called its:

Accepted Answer

A) rate. 
B) duration. 
C) cycle. 
D) period. 
A) rate. 
B) duration. 
C) cycle. 
D) period.

Question 9

Data for an economy show that the unemployment rate is 6 percent, the participation rate is 60 percent, and 200 million people 16 years or older are not in the labor force. How many people are in the working-age population in this economy?

Accepted Answer

A) 333 million 
B) 500 million 
C) 800 million 
D) 1.20 billion 
A) 333 million 
B) 500 million 
C) 800 million 
D) 1.20 billion

Question 10

The value of intermediate goods is excluded from the measurement of GDP in order to:

Accepted Answer

A) adjust for inflation. 
B) avoid double counting. 
C) index economic activity. 
D) measure GDP in constant prices. 
A) adjust for inflation. 
B) avoid double counting. 
C) index economic activity. 
D) measure GDP in constant prices.

Question 11

In recent years, the Bureau of Labor Statistics has released special unemployment rates that include estimates of the number of discouraged and part-time workers that indicate the:

Accepted Answer

A) problem of discouraged workers is insignificant, but the number of part-time workers is significant. 
B) problem of part-time workers is insignificant, but the number of discouraged workers is significant. 
C) problem of discouraged workers and part-time workers is fairly significant. 
D) problem of discouraged workers and part-time workers is decreasing. 
A) problem of discouraged workers is insignificant, but the number of part-time workers is significant. 
B) problem of part-time workers is insignificant, but the number of discouraged workers is significant. 
C) problem of discouraged workers and part-time workers is fairly significant. 
D) problem of discouraged workers and part-time workers is decreasing.

Question 12

Suppose that the total production of an economy consists of 10 oranges and 5 candy bars, each orange sells for $0.20, and each candy bar sells for $1.00. Which expression of the output of this economy is most consistent with the concept of GDP?

Accepted Answer

A) This economy produces two-thirds oranges and one-third candy bars. 
B) This economy produces food valued at $1.20. 
C) This economy produces 15 food items. 
D) This economy produces $7.00 worth of food. 
A) This economy produces two-thirds oranges and one-third candy bars. 
B) This economy produces food valued at $1.20. 
C) This economy produces 15 food items. 
D) This economy produces $7.00 worth of food.

Question 13

Assume an economy produces only hamburgers and hot dogs and the base year is 2016.  
  Given the data in the table above, what is the value of nominal GDP in 2017?

Accepted Answer

A) $ 5,000 
B) $ 7,000 
C) $10,500 
D) $15,000 
A) $ 5,000 
B) $ 7,000 
C) $10,500 
D) $15,000

Question 14

In a country with 200 million people aged 16 years and older, 120 million are in the labor force, and 114 million are employed, what is the unemployment rate?

Accepted Answer

A) 4 percent 
B) 5 percent 
C) 6 percent 
D) 7 percent 
A) 4 percent 
B) 5 percent 
C) 6 percent 
D) 7 percent

Question 15

An economy produces only 500,000 tables valued at $100 each. Of these, 100,000 are sold to consumers, 200,000 are sold to businesses, 100,000 are sold to the government, and 50,000 are sold abroad. No tables are imported. At the end of the year, the table manufacturers hold the unsold tables in inventory. What is the value of GDP?

Accepted Answer

A) $5 million 
B) $40 million 
C) $45 million 
D) $50 million 
A) $5 million 
B) $40 million 
C) $45 million 
D) $50 million

Question 16

Peg's Manicure Manor did 4,000 sets of nails in 2015 and 4,500 sets of nails in 2016. The price of a set of nails was $20 in 2015 and $22 in 2016. If 2015 is the base year, Peg's contribution to nominal GDP in 2015 was ________ and in 2016 was ________.

Accepted Answer

A) $80,000; $88,000 
B) $80,000; $90,000 
C) $80,000; $99,000 
D) $88,000; $90,000 
A) $80,000; $88,000 
B) $80,000; $90,000 
C) $80,000; $99,000 
D) $88,000; $90,000

Question 17

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:  
$$\begin{array} { | l | c | c | } 
\hline { \text { Name of Campany } } & \text { Revenues } & \text { Cast af Pur chased Inguts } \
\hline \text { Fulton Farrily Farm } & \$ 0.50 & \mathbf { 0 } \
\hline \text { DeLux Popconl Co. } & \$ 2.50 & \$ 0.50 \
\hline \text { Friendly Groceries } & \$ 4.00 & \$ 2.50
\end{array}$$  
What is the value added of Friendly Groceries?

Accepted Answer

A) $1.50 
B) $2.50 
C) $3.50 
D) $4.00 
A) $1.50 
B) $2.50 
C) $3.50 
D) $4.00

Question 18

Government purchases include spending by federal, state, and local governments on:

Accepted Answer

A) consumer durables, nondurables, and services. 
B) stocks, bonds, and other financial instruments. 
C) capital goods, residential housing, and changes in inventories. 
D) final goods and services. 
A) consumer durables, nondurables, and services. 
B) stocks, bonds, and other financial instruments. 
C) capital goods, residential housing, and changes in inventories. 
D) final goods and services.

Question 19

People who say that they would like to have a job, but have not made an effort to find a job in the past four weeks, are called ________ workers.

Accepted Answer

A) unemployed 
B) involuntary part-time 
C) discouraged 
D) chronically unemployed 
A) unemployed 
B) involuntary part-time 
C) discouraged 
D) chronically unemployed

Question 20

In 2018, Pete Rich purchases a 1642 painting by Rembrandt for $20 million. He also pays a one percent commission to the auction house that sold the painting. What is the contribution of these transactions to GDP in the year 2018?

Accepted Answer

A) $0 
B) $200,000 
C) $2 million 
D) $20.2 million 
A) $0 
B) $200,000 
C) $2 million 
D) $20.2 million

Exam 17: Measuring Economic Activity: GDP and Unemployment

Which of the following would be included in the GDP of the United States?

When the production process extends over more than one year, the value of the final product is:

A measure of GDP in which quantities produced are valued at current-year prices is called:

If total output is calculated by adding up the market value of goods and services produced, then more expensive items:

The value of final goods and services equals:

The length of an unemployment spell is called its:

Data for an economy show that the unemployment rate is 6 percent, the participation rate is 60 percent, and 200 million people 16 years or older are not in the labor force. How many people are in the working-age population in this economy?

The value of intermediate goods is excluded from the measurement of GDP in order to:

In recent years, the Bureau of Labor Statistics has released special unemployment rates that include estimates of the number of discouraged and part-time workers that indicate the:

Suppose that the total production of an economy consists of 10 oranges and 5 candy bars, each orange sells for $0.20, and each candy bar sells for $1.00. Which expression of the output of this economy is most consistent with the concept of GDP?

Assume an economy produces only hamburgers and hot dogs and the base year is 2016. Given the data in the table above, what is the value of nominal GDP in 2017?

In a country with 200 million people aged 16 years and older, 120 million are in the labor force, and 114 million are employed, what is the unemployment rate?

Peg's Manicure Manor did 4,000 sets of nails in 2015 and 4,500 sets of nails in 2016. The price of a set of nails was $20 in 2015 and $22 in 2016. If 2015 is the base year, Peg's contribution to nominal GDP in 2015 was ________ and in 2016 was ________.

Government purchases include spending by federal, state, and local governments on:

People who say that they would like to have a job, but have not made an effort to find a job in the past four weeks, are called ________ workers.

In 2018, Pete Rich purchases a 1642 painting by Rembrandt for $20 million. He also pays a one percent commission to the auction house that sold the painting. What is the contribution of these transactions to GDP in the year 2018?

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

An Introduction to Behavioral Economics

Externalities, Property Rights, and the Environment

The Economics of Information

Labor Markets, Poverty, and Income Distribution

Public Goods and Tax Policy

International Trade and Trade Policy

Macroeconomics: The Birds Eye View of the Economy

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

The Labor Market: Workers, Wages, and Unemployment

Saving and Capital Formation

Money Prices and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economic Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: The Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Exchange Rates and the Open Economy

Filters

Peg's Manicure Manor did 4,000 sets of nails in 2015 and 4,500 sets of nails in 2016. The price of a set of nails was $20 in 2015 and $22 in 2016. If 2015 is the base year, Peg's contribution to nominal GDP in 2015 was and in 2016 was .