Question 1

-Refer to the above table. The value of the GDP deflator in 2009 is

Accepted Answer

A)  121.2. 
B)  122.1. 
C)  122.9. 
D)  uncertain without more information. 
A)  121.2. 
B)  122.1. 
C)  122.9. 
D)  uncertain without more information.

Question 2

Given the following data, calculate the GDP. wages = $500 government spending= $2,500 private investment = $2,100
Rent= $100 consumer spending= $7,800 net exports = $-400

Accepted Answer

A)  GDP = $11,400 
B)  GDP = $12,000 
C)  GDP = $12,400 
D)  GDP = $13,000 
A)  GDP = $11,400 
B)  GDP = $12,000 
C)  GDP = $12,400 
D)  GDP = $13,000

Question 3

The most accurate way to compare standards of living throughout the world is to look at

Accepted Answer

A)  total Gross Domestic Product (GDP). 
B)  GNP. 
C)  purchasing power parity. 
D)  foreign exchange rates. 
A)  total Gross Domestic Product (GDP). 
B)  GNP. 
C)  purchasing power parity. 
D)  foreign exchange rates.

Question 4

-According to the above table, Gross Domestic Product (GDP) is

Accepted Answer

A)  $2,190. 
B)  $2,840. 
C)  $2,465. 
D)  $2,750. 
A)  $2,190. 
B)  $2,840. 
C)  $2,465. 
D)  $2,750.

Question 5

Which one of the following statements about GDP is true?

Accepted Answer

A)  GDP can be calculated using the income approach. 
B)  The value of household production is excluded from GDP. 
C)  GDP can be calculated using the expenditures approach. 
D)  all of the above. 
A)  GDP can be calculated using the income approach. 
B)  The value of household production is excluded from GDP. 
C)  GDP can be calculated using the expenditures approach. 
D)  all of the above.

Question 6

GDP

Accepted Answer

A)  is a stock measure since it represents the total market value. 
B)  is a flow measure since it represents the value of a flow of production over a year's period. 
C)  is neither a stock or flow measure since it is measured in dollars. 
D)  could be either a stock or flow measure depending upon whether it is measured in dollars or units of production. 
A)  is a stock measure since it represents the total market value. 
B)  is a flow measure since it represents the value of a flow of production over a year's period. 
C)  is neither a stock or flow measure since it is measured in dollars. 
D)  could be either a stock or flow measure depending upon whether it is measured in dollars or units of production.

Question 7

The adjustment in exchange rate conversions that takes into account differences in the true cost of living across countries is called

Accepted Answer

A)  nominal purchasing power. 
B)  purchasing power parity. 
C)  raw purchasing power. 
D)  currency-adjusted purchasing power. 
A)  nominal purchasing power. 
B)  purchasing power parity. 
C)  raw purchasing power. 
D)  currency-adjusted purchasing power.

Question 8

National income is equal to

Accepted Answer

A)  Gross Domestic Product (GDP) plus depreciation and indirect business taxes. 
B)  the sum of all factor payments to resource owners. 
C)  Gross Domestic Product (GDP) minus indirect business taxes. 
D)  Gross Domestic Product (GDP) minus NDP. 
A)  Gross Domestic Product (GDP) plus depreciation and indirect business taxes. 
B)  the sum of all factor payments to resource owners. 
C)  Gross Domestic Product (GDP) minus indirect business taxes. 
D)  Gross Domestic Product (GDP) minus NDP.

Question 9

Which of the following is NOT included in the calculation of Gross Domestic Product (GDP)?

Accepted Answer

A)  The purchase of a raincoat by Mr. Z 
B)  Mrs. T's use of a lawyer 
C)  Mr. J's purchase of a share of General Motors stock 
D)  All of these would be included 
A)  The purchase of a raincoat by Mr. Z 
B)  Mrs. T's use of a lawyer 
C)  Mr. J's purchase of a share of General Motors stock 
D)  All of these would be included

Question 10

What is the proper formula for computing the GDP using the expenditure approach?

Accepted Answer

A)  S + I + G + X 
B)  C + I + G + X 
C)  C + O + G + S 
D)  0.5(w + r) + k 
A)  S + I + G + X 
B)  C + I + G + X 
C)  C + O + G + S 
D)  0.5(w + r) + k

Question 11

If deflation is occurring and nominal Gross Domestic Product (GDP) is increasing over time, then real Gross Domestic Product (GDP) is

Accepted Answer

A)  decreasing. 
B)  increasing at the same rate as nominal Gross Domestic Product (GDP). 
C)  increasing more slowly than nominal Gross Domestic Product (GDP). 
D)  increasing faster than nominal Gross Domestic Product (GDP). 
A)  decreasing. 
B)  increasing at the same rate as nominal Gross Domestic Product (GDP). 
C)  increasing more slowly than nominal Gross Domestic Product (GDP). 
D)  increasing faster than nominal Gross Domestic Product (GDP).

Question 12

Transfer payments are included in

Accepted Answer

A)  gross domestic product. 
B)  net domestic product. 
C)  national income. 
D)  personal income. 
A)  gross domestic product. 
B)  net domestic product. 
C)  national income. 
D)  personal income.

Question 13

An increase in net exports

Accepted Answer

A)  causes GDP to increase. 
B)  causes GDP to decrease. 
C)  causes an increase in imports of the same size. 
D)  can cause GDP to either increase or decrease, depending on whether the exports are durable or nondurable. 
A)  causes GDP to increase. 
B)  causes GDP to decrease. 
C)  causes an increase in imports of the same size. 
D)  can cause GDP to either increase or decrease, depending on whether the exports are durable or nondurable.

Question 14

Which of the following is included in government expenditures when measuring GDP?

Accepted Answer

A)  Social Security payments 
B)  Unemployment expenditures 
C)  Goods imported into the United States 
D)  The President's income 
A)  Social Security payments 
B)  Unemployment expenditures 
C)  Goods imported into the United States 
D)  The President's income

Question 15

Which one of the following is NOT included in GDP?

Accepted Answer

A)  The federal government pays a defense contractor to develop a new weapons system. 
B)  You volunteer to organize a neighborhood watch group on your block. 
C)  You pay your monthly apartment rent. 
D)  A mail-order firm constructs a new warehouse in Kansas as a central distribution facility. 
A)  The federal government pays a defense contractor to develop a new weapons system. 
B)  You volunteer to organize a neighborhood watch group on your block. 
C)  You pay your monthly apartment rent. 
D)  A mail-order firm constructs a new warehouse in Kansas as a central distribution facility.

Question 16

A farmer buys seed for 15 cents that is used to grow wheat. The farmer sells the wheat to the miller for 30 cents, who makes flour. The flour is sold to the baker for 60 cents and the baker makes bread, which is sold to the grocer for 90 cents. The grocer sells the bread for $1.25. What is the value added for the grocer?

Accepted Answer

A)  15 cents 
B)  30 cents 
C)  35 cents 
D)  $1.25 
A)  15 cents 
B)  30 cents 
C)  35 cents 
D)  $1.25

Question 17

The components of GDP using the expenditure method are

Accepted Answer

A)  consumption expenditures, investment expenditures, and government expenditures. 
B)  consumption expenditures, investment expenditures, government expenditures, and net exports. 
C)  wages and interest. 
D)  wages, interest, rents ,and profits. 
A)  consumption expenditures, investment expenditures, and government expenditures. 
B)  consumption expenditures, investment expenditures, government expenditures, and net exports. 
C)  wages and interest. 
D)  wages, interest, rents ,and profits.

Question 18

The farmer pays 20 cents for the seed that is sold to the miller for 35 cents; the miller makes flour and sells it to the baker for 55 cents. The baker makes bread and sells it to the grocery store for 80 cents and the store sells it to consumers for $1.00. The contribution to Gross Domestic Product (GDP) is

Accepted Answer

A)  $2.90. 
B)  $1.90. 
C)  $1. 
D)  20 cents. 
A)  $2.90. 
B)  $1.90. 
C)  $1. 
D)  20 cents.

Question 19

The total market value of the nation's annual final products produced domestically best defines the

Accepted Answer

A)  GDP. 
B)  GNP. 
C)  CPI. 
D)  PPI. 
A)  GDP. 
B)  GNP. 
C)  CPI. 
D)  PPI.

Question 20

Which of the following transactions is included in the GDP?

Accepted Answer

A)  paying a lawyer to create a family trust 
B)  giving your friend $20 
C)  selling your 2004 Toyota Camry 
D)  cleaning your house 
A)  paying a lawyer to create a family trust 
B)  giving your friend $20 
C)  selling your 2004 Toyota Camry 
D)  cleaning your house

Exam 8: Measuring the Economys Performance

-Refer to the above table. The value of the GDP deflator in 2009 is

Given the following data, calculate the GDP. wages = $500 government spending= $2,500 private investment = $2,100 Rent= $100 consumer spending= $7,800 net exports = $-400

The most accurate way to compare standards of living throughout the world is to look at

-According to the above table, Gross Domestic Product (GDP) is

Which one of the following statements about GDP is true?

GDP

The adjustment in exchange rate conversions that takes into account differences in the true cost of living across countries is called

National income is equal to

Which of the following is NOT included in the calculation of Gross Domestic Product (GDP)?

What is the proper formula for computing the GDP using the expenditure approach?

If deflation is occurring and nominal Gross Domestic Product (GDP) is increasing over time, then real Gross Domestic Product (GDP) is

Transfer payments are included in

An increase in net exports

Which of the following is included in government expenditures when measuring GDP?

Which one of the following is NOT included in GDP?

The components of GDP using the expenditure method are

The total market value of the nation's annual final products produced domestically best defines the

Which of the following transactions is included in the 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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