Question 1

Suppose you buy a new Ford Fusion. The tires that come with the car are

Accepted Answer

A)  final goods. 
B)  intermediate goods. 
C)  transfer goods. 
D)  financial goods. 
A)  final goods. 
B)  intermediate goods. 
C)  transfer goods. 
D)  financial goods.

Question 2

The two main methods of measuring GDP are

Accepted Answer

A)  the income approach and the expenditure approach. 
B)  the income approach and the receipts approach. 
C)  the goods approach and the services approach. 
D)  the saving approach and the investment approach. 
A)  the income approach and the expenditure approach. 
B)  the income approach and the receipts approach. 
C)  the goods approach and the services approach. 
D)  the saving approach and the investment approach.

Question 3

A good goes through three stages of production. The value added at stage 1 is $3; the value added at stage 2 is $5; the value added at stage 3 is $2. What is the retail price of the good?

Accepted Answer

A)  $2 
B)  $10 
C)  $20 
D)  Cannot be determined based on the information given. 
A)  $2 
B)  $10 
C)  $20 
D)  Cannot be determined based on the information given.

Question 4

Between two years, GDP at constant prices increased by 5 percent while GDP at current prices increased by 8 percent. Based on this information, the price level

Accepted Answer

A)  increased by 3 percent. 
B)  increased by 13 percent. 
C)  decreased by 3 percent. 
D)  decreased by 13 percent. 
A)  increased by 3 percent. 
B)  increased by 13 percent. 
C)  decreased by 3 percent. 
D)  decreased by 13 percent.

Question 5

Gross Domestic Product (GDP) is

Accepted Answer

A)  the total wholesale value of all final goods and services produced by factors of production owned by citizens of a nation. 
B)  the total market value of all services produced by factors of production located within a nation's borders. 
C)  the total market value of all goods produced within a nation's borders. 
D)  the total market value of all final goods and services produced by factors of production located within a nation's borders. 
A)  the total wholesale value of all final goods and services produced by factors of production owned by citizens of a nation. 
B)  the total market value of all services produced by factors of production located within a nation's borders. 
C)  the total market value of all goods produced within a nation's borders. 
D)  the total market value of all final goods and services produced by factors of production located within a nation's borders.

Question 6

Which of the following is included when measuring Gross Domestic Product (GDP)?

Accepted Answer

A)  The value of services of durable goods purchased in previous years 
B)  The value of leisure time 
C)  The value of services provided by homemakers 
D)  The rental income received by a landlord 
A)  The value of services of durable goods purchased in previous years 
B)  The value of leisure time 
C)  The value of services provided by homemakers 
D)  The rental income received by a landlord

Question 7

Which of the following would most likely be defined as a final good or service?

Accepted Answer

A)  iron ore 
B)  wheat 
C)  a personal computer 
D)  lumber 
A)  iron ore 
B)  wheat 
C)  a personal computer 
D)  lumber

Question 8

Suppose Gross Domestic Product (GDP) figures were changed to reflect household production. How would the size of household production relative to Gross Domestic Product (GDP) have changed over the last fifty years?

Accepted Answer

The relative size of household productio

Question 9

Gross domestic product is

Accepted Answer

A)  NDP plus net exports. 
B)  NDP plus taxes. 
C)  NDP plus depreciation. 
D)  NDP less changes in inventories. 
A)  NDP plus net exports. 
B)  NDP plus taxes. 
C)  NDP plus depreciation. 
D)  NDP less changes in inventories.

Question 10

In the simple circular flow model,

Accepted Answer

A)  households spend the income they receive from labor services but save the income they receive from selling the other factors of production. 
B)  businesses buy labor services from households, but supply other factors of production themselves. 
C)  households spend their entire income on consumer products. 
D)  profits are a type of income that is not received by households. 
A)  households spend the income they receive from labor services but save the income they receive from selling the other factors of production. 
B)  businesses buy labor services from households, but supply other factors of production themselves. 
C)  households spend their entire income on consumer products. 
D)  profits are a type of income that is not received by households.

Question 11

The value of total output and total income in the simple circular flow model

Accepted Answer

A)  are measures of the economy's level of savings. 
B)  include only intermediate goods. 
C)  are equal to each other. 
D)  are related in the sense that national income is less than national product. 
A)  are measures of the economy's level of savings. 
B)  include only intermediate goods. 
C)  are equal to each other. 
D)  are related in the sense that national income is less than national product.

Question 12

Measuring total aggregate production in constant dollars uses which of the following measures?

Accepted Answer

A)  real personal income 
B)  real gross domestic product 
C)  nominal gross domestic product 
D)  nominal net domestic product 
A)  real personal income 
B)  real gross domestic product 
C)  nominal gross domestic product 
D)  nominal net domestic product

Question 13

Gross Domestic Product is best defined as

Accepted Answer

A)  the total market value of all final goods and services produced during a year by factors of production located within a nation's borders. 
B)  the total market value of all intermediate goods and services produced during a year by factors of production located within a nation's borders. 
C)  the value added to all goods produced in an economy during a year. 
D)  the total market value of all final goods and services that exist in an economy at a given point in time. 
A)  the total market value of all final goods and services produced during a year by factors of production located within a nation's borders. 
B)  the total market value of all intermediate goods and services produced during a year by factors of production located within a nation's borders. 
C)  the value added to all goods produced in an economy during a year. 
D)  the total market value of all final goods and services that exist in an economy at a given point in time.

Question 14

Suppose that in 2011, nominal Gross Domestic Product (GDP) for the economy of Chiconia was $10 trillion and the Gross Domestic Product (GDP) price index was 200.0. What is Chiconia's real Gross Domestic Product (GDP) in 2011?

Accepted Answer

A)  $5 trillion 
B)  $10 trillion 
C)  $20 trillion 
D)  $200 trillion 
A)  $5 trillion 
B)  $10 trillion 
C)  $20 trillion 
D)  $200 trillion

Question 15

Per capita real Gross Domestic Product (GDP)

Accepted Answer

A)  does not tell us the welfare level in the country. 
B)  tells us the overall welfare conditions of all the country's citizens. 
C)  gives only the welfare of the country's corporations. 
D)  gives only the welfare of the richest areas of the country. 
A)  does not tell us the welfare level in the country. 
B)  tells us the overall welfare conditions of all the country's citizens. 
C)  gives only the welfare of the country's corporations. 
D)  gives only the welfare of the richest areas of the country.

Question 16

In calculating GDP, your tuition expenditures at college are classified as

Accepted Answer

A)  consumer expenditures on services. 
B)  consumer expenditures on goods. 
C)  consumer expenditures on durable goods. 
D)  investment spending. 
A)  consumer expenditures on services. 
B)  consumer expenditures on goods. 
C)  consumer expenditures on durable goods. 
D)  investment spending.

Question 17

Which of the following would NOT be included in consumption expenditures when calculating GDP?

Accepted Answer

A)  an individual's purchase of a new car 
B)  an individual's purchase of medical services 
C)  an individual's purchase of newly issued shares of IBM stock 
D)  an individual's purchase of legal services 
A)  an individual's purchase of a new car 
B)  an individual's purchase of medical services 
C)  an individual's purchase of newly issued shares of IBM stock 
D)  an individual's purchase of legal services

Question 18

Of the following, which country has the highest annual real GDP per capita according to the International Monetary Fund and World Bank?

Accepted Answer

A)  China 
B)  Italy 
C)  United States 
D)  Brazil 
A)  China 
B)  Italy 
C)  United States 
D)  Brazil

Question 19

Total income

Accepted Answer

A)  is the yearly amount earned by owners of the nation's resources. 
B)  includes only wages received by workers. 
C)  includes only wages and interest payments. 
D)  excludes profits. 
A)  is the yearly amount earned by owners of the nation's resources. 
B)  includes only wages received by workers. 
C)  includes only wages and interest payments. 
D)  excludes profits.

Question 20

Which of the following items is excluded from GDP?

Accepted Answer

A)  Services a barber performs in cutting hair 
B)  Production and sale of hair-cutting equipment 
C)  Services a barber performs in repairing his own hair-cutting equipment 
D)  The construction of a new barbershop 
A)  Services a barber performs in cutting hair 
B)  Production and sale of hair-cutting equipment 
C)  Services a barber performs in repairing his own hair-cutting equipment 
D)  The construction of a new barbershop

Exam 8: Measuring the Economys Performance

Suppose you buy a new Ford Fusion. The tires that come with the car are

The two main methods of measuring GDP are

A good goes through three stages of production. The value added at stage 1 is $3; the value added at stage 2 is $5; the value added at stage 3 is $2. What is the retail price of the good?

Between two years, GDP at constant prices increased by 5 percent while GDP at current prices increased by 8 percent. Based on this information, the price level

Gross Domestic Product (GDP) is

Which of the following is included when measuring Gross Domestic Product (GDP)?

Which of the following would most likely be defined as a final good or service?

Suppose Gross Domestic Product (GDP) figures were changed to reflect household production. How would the size of household production relative to Gross Domestic Product (GDP) have changed over the last fifty years?

Gross domestic product is

In the simple circular flow model,

The value of total output and total income in the simple circular flow model

Measuring total aggregate production in constant dollars uses which of the following measures?

Gross Domestic Product is best defined as

Suppose that in 2011, nominal Gross Domestic Product (GDP) for the economy of Chiconia was $10 trillion and the Gross Domestic Product (GDP) price index was 200.0. What is Chiconia's real Gross Domestic Product (GDP) in 2011?

Per capita real Gross Domestic Product (GDP)

In calculating GDP, your tuition expenditures at college are classified as

Which of the following would NOT be included in consumption expenditures when calculating GDP?

Of the following, which country has the highest annual real GDP per capita according to the International Monetary Fund and World Bank?

Total income

Which of the following items is excluded from GDP?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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