Question 1

Which of the following is a main limitation of GDP?

Accepted Answer

A)  GDP figures are grossly inaccurate due to sampling errors. 
B)  The real definition of what is and is not included in GDP is unclear. 
C)  GDP is not a good measure of a nation's overall welfare. 
D)  GDP includes some products, which by their very nature are bad products, such as military weapons. 
A)  GDP figures are grossly inaccurate due to sampling errors. 
B)  The real definition of what is and is not included in GDP is unclear. 
C)  GDP is not a good measure of a nation's overall welfare. 
D)  GDP includes some products, which by their very nature are bad products, such as military weapons.

Question 2

-Using the above table, the Net Domestic Product (NDP) for the country is

Accepted Answer

A)  662. 
B)  84. 
C)  328. 
D)  338. 
A)  662. 
B)  84. 
C)  328. 
D)  338.

Question 3

Which of the following transactions would NOT contribute to the GDP?

Accepted Answer

A)  the purchase of 100 shares of General Motors stock 
B)  the purchase of a new Chevrolet automobile 
C)  the purchase of a package of chewing gum from the convenience store 
D)  the purchase of gasoline for your automobile 
A)  the purchase of 100 shares of General Motors stock 
B)  the purchase of a new Chevrolet automobile 
C)  the purchase of a package of chewing gum from the convenience store 
D)  the purchase of gasoline for your automobile

Question 4

Suppose Country A and Country B each have the same real Gross Domestic Product (GDP), equal to $440 billion. Country A has 100 million people and Country B has 175 million people. In this situation, per capita real Gross Domestic Product (GDP) is

Accepted Answer

A)  the same in both countries. 
B)  higher in Country A. 
C)  higher in Country B. 
D)  an irrelevant factor. 
A)  the same in both countries. 
B)  higher in Country A. 
C)  higher in Country B. 
D)  an irrelevant factor.

Question 5

Suppose that for the economy of Springfield, we have the following information for 2013: consumption expenditures = $4,000; wages = $3,500; gross private domestic investment = $1,300; government expenditures = $2,000; exports = $900; imports = $1,100. Using the expenditure approach what would the Gross Domestic Product (GDP) be for Springfield in 2013?

Accepted Answer

A)  $6,200 
B)  $7,100 
C)  $7,500 
D)  $10,600 
E)  $12,800 
A)  $6,200 
B)  $7,100 
C)  $7,500 
D)  $10,600 
E)  $12,800

Question 6

-Refer to the above table. Real GDP for year 2007 was

Accepted Answer

A)  $4819.6 billion. 
B)  $5222.2 billion. 
C)  $4617.3 billion. 
D)  uncertain without more information. 
A)  $4819.6 billion. 
B)  $5222.2 billion. 
C)  $4617.3 billion. 
D)  uncertain without more information.

Question 7

Measurement of economic values after adjustments have been made for changes in the average of prices between years in known as

Accepted Answer

A)  the price index. 
B)  a deflator. 
C)  nominal values. 
D)  real values. 
A)  the price index. 
B)  a deflator. 
C)  nominal values. 
D)  real values.

Question 8

Which of the following is included in GDP?

Accepted Answer

A)  A computer manufacturer produces and sells a computer. 
B)  A woman mows her own yard and trims her own hedges. 
C)  An individual smuggles illegal drugs into the country and sells them. 
D)  An illegal gambling operation profits from secret betting activities. 
A)  A computer manufacturer produces and sells a computer. 
B)  A woman mows her own yard and trims her own hedges. 
C)  An individual smuggles illegal drugs into the country and sells them. 
D)  An illegal gambling operation profits from secret betting activities.

Question 9

Which of the following will be included in this year's GDP?

Accepted Answer

A)  a Pablo Picasso (1881-1973) painting purchased this year by the art museum 
B)  the purchase of a used textbook by your friend 
C)  the purchase of 100 shares of IBM stock through your broker 
D)  the purchase of an insurance policy for a used car 
A)  a Pablo Picasso (1881-1973) painting purchased this year by the art museum 
B)  the purchase of a used textbook by your friend 
C)  the purchase of 100 shares of IBM stock through your broker 
D)  the purchase of an insurance policy for a used car

Question 10

-Refer to the above figure. The top two arrows of the figure refer to the product markets. The bottom arrows refer to the factor markets. Which arrow represents the final consumer goods and services?

Accepted Answer

A)  Arrow A 
B)  Arrow B 
C)  Arrow C 
D)  Arrow D 
A)  Arrow A 
B)  Arrow B 
C)  Arrow C 
D)  Arrow D

Question 11

One of the principles behind the concept of the circular flow is that

Accepted Answer

A)  in every economic exchange, the seller receives exactly the same amount that the buyer spends. 
B)  in every economic exchange, the seller receives less than the amount that the buyer spends. 
C)  the seller of goods receives exactly the same amount that the buyer spends, but the seller of resources receives less than the buyer spends. 
D)  in exchange involving products, the seller receives less than the amount the buyer spends, but in resource markets the seller receives more than the buyer spends. 
A)  in every economic exchange, the seller receives exactly the same amount that the buyer spends. 
B)  in every economic exchange, the seller receives less than the amount that the buyer spends. 
C)  the seller of goods receives exactly the same amount that the buyer spends, but the seller of resources receives less than the buyer spends. 
D)  in exchange involving products, the seller receives less than the amount the buyer spends, but in resource markets the seller receives more than the buyer spends.

Question 12

Gross domestic income can be defined as

Accepted Answer

A)  the sum of all incomes earned by all factors of production in a year. 
B)  the sum of all incomes earned by individuals. 
C)  the sum of all profits earned by businesses in a year. 
D)  the sum of all profits earned minus depreciation. 
A)  the sum of all incomes earned by all factors of production in a year. 
B)  the sum of all incomes earned by individuals. 
C)  the sum of all profits earned by businesses in a year. 
D)  the sum of all profits earned minus depreciation.

Question 13

Which of the following is part of gross private domestic investment?

Accepted Answer

A)  Purchases of stocks and bonds 
B)  A decline in consumer debt 
C)  Purchases of hamburgers for a family dinner 
D)  A positive change in business inventories 
A)  Purchases of stocks and bonds 
B)  A decline in consumer debt 
C)  Purchases of hamburgers for a family dinner 
D)  A positive change in business inventories

Question 14

In the circular flow model, profits are considered to be

Accepted Answer

A)  a subtraction from the Gross Domestic Product (GDP). 
B)  a cost of doing business. 
C)  equal to zero, or else the circular flow would be out of balance. 
D)  a form of interest payment. 
A)  a subtraction from the Gross Domestic Product (GDP). 
B)  a cost of doing business. 
C)  equal to zero, or else the circular flow would be out of balance. 
D)  a form of interest payment.

Question 15

All of the following statements are correct EXCEPT

Accepted Answer

A)  NDP = Gross Domestic Product (GDP) - depreciation (capital consumption allowance). 
B)  NI = NDP + indirect business taxes. 
C)  Net exports = total exports - total imports. 
D)  Gross Domestic Product (GDP) = NDP + capital consumption allowance (depreciation). 
A)  NDP = Gross Domestic Product (GDP) - depreciation (capital consumption allowance). 
B)  NI = NDP + indirect business taxes. 
C)  Net exports = total exports - total imports. 
D)  Gross Domestic Product (GDP) = NDP + capital consumption allowance (depreciation).

Question 16

In the circular flow model,

Accepted Answer

A)  households demand goods and services which are supplied by firms, and the firms demand resources that are supplied by intermediate firms. 
B)  households demand goods and services that are supplied by firms, while supplying resources that are demanded by firms. 
C)  households buy goods and services and firms supply goods. Resources are supplied by other firms. 
D)  households buy goods and services while firms sell goods and services. Firms obtain labor from households, capital from government, and raw materials from firms. 
A)  households demand goods and services which are supplied by firms, and the firms demand resources that are supplied by intermediate firms. 
B)  households demand goods and services that are supplied by firms, while supplying resources that are demanded by firms. 
C)  households buy goods and services and firms supply goods. Resources are supplied by other firms. 
D)  households buy goods and services while firms sell goods and services. Firms obtain labor from households, capital from government, and raw materials from firms.

Question 17

Which of the following spending components makes up the largest percentage of Gross Domestic Product (GDP)?

Accepted Answer

A)  Consumption expenditures 
B)  Government expenditures 
C)  Gross private domestic investment expenditures 
D)  Expenditures on net exports of goods and services 
A)  Consumption expenditures 
B)  Government expenditures 
C)  Gross private domestic investment expenditures 
D)  Expenditures on net exports of goods and services

Question 18

Which of the following transactions would NOT be included in GDP?

Accepted Answer

A)  the purchase of 100 shares of newly issued Microsoft stock 
B)  the purchase of a newly issued government bond 
C)  the purchase of previously issued corporate bond 
D)  all of the above 
A)  the purchase of 100 shares of newly issued Microsoft stock 
B)  the purchase of a newly issued government bond 
C)  the purchase of previously issued corporate bond 
D)  all of the above

Question 19

Which of the following are examples of the gross private domestic investment component of Gross Domestic Product (GDP)? I. The purchase of production machinery
II) An increase in finished goods inventory

Accepted Answer

A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II

Question 20

Which of the following statements is FALSE?

Accepted Answer

A)  The value of total income is equal in value to total output because profit is a cost of production. 
B)  In the circular flow model, households sell factor services to businesses in return for factor payments. 
C)  Businesses sell goods and services to households who use their income to pay for them. 
D)  Total income is always greater than total output. 
A)  The value of total income is equal in value to total output because profit is a cost of production. 
B)  In the circular flow model, households sell factor services to businesses in return for factor payments. 
C)  Businesses sell goods and services to households who use their income to pay for them. 
D)  Total income is always greater than total output.

Exam 8: Measuring the Economys Performance

Which of the following is a main limitation of GDP?

-Using the above table, the Net Domestic Product (NDP) for the country is

Which of the following transactions would NOT contribute to the GDP?

Suppose Country A and Country B each have the same real Gross Domestic Product (GDP), equal to $440 billion. Country A has 100 million people and Country B has 175 million people. In this situation, per capita real Gross Domestic Product (GDP) is

-Refer to the above table. Real GDP for year 2007 was

Measurement of economic values after adjustments have been made for changes in the average of prices between years in known as

Which of the following is included in GDP?

Which of the following will be included in this year's GDP?

-Refer to the above figure. The top two arrows of the figure refer to the product markets. The bottom arrows refer to the factor markets. Which arrow represents the final consumer goods and services?

One of the principles behind the concept of the circular flow is that

Gross domestic income can be defined as

Which of the following is part of gross private domestic investment?

In the circular flow model, profits are considered to be

All of the following statements are correct EXCEPT

In the circular flow model,

Which of the following spending components makes up the largest percentage of Gross Domestic Product (GDP)?

Which of the following transactions would NOT be included in GDP?

Which of the following are examples of the gross private domestic investment component of Gross Domestic Product (GDP)? I. The purchase of production machinery II) An increase in finished goods inventory

Which of the following statements is FALSE?

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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