Question 1

Gross domestic product is the value of all final goods and services produced within a country during a given period of time.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is included in GDP?

Accepted Answer

A)  a U.S. company purchasing stock of a foreign company 
B)  a foreign company purchasing stock of a U.S. company 
C)  a U.S. company purchasing stock of another U.S. company 
D)  None of the above. 
A)  a U.S. company purchasing stock of a foreign company 
B)  a foreign company purchasing stock of a U.S. company 
C)  a U.S. company purchasing stock of another U.S. company 
D)  None of the above.

Question 3

How do pollution and crime affect GDP?

Accepted Answer

Pollution and crime are entire

Question 4

The era of Prohibition began in 1920 when the Volstead Act was passed to implement the Eighteenth Amendment to the Constitution,which prohibited the production and sale of liquor and beer.In 1920 much of this activity went underground,and Al Capone became a leading illegal entrepreneur.Assuming the amount of liquor and beer produced stayed the same,what was the effect of the Volstead Act on the GDP in 1920?

Accepted Answer

A)  GDP would have declined, since activities in the underground economy are not included. 
B)  GDP would have remained the same, since only the organization producing the goods changed. 
C)  GDP would have increased, because production in the underground economy increased. 
D)  Real GDP would have increased, while nominal GDP would have decreased. 
A)  GDP would have declined, since activities in the underground economy are not included. 
B)  GDP would have remained the same, since only the organization producing the goods changed. 
C)  GDP would have increased, because production in the underground economy increased. 
D)  Real GDP would have increased, while nominal GDP would have decreased.

Question 5

The most volatile GDP category under the expenditure approach is:

Accepted Answer

A)  wages and salaries. 
B)  investment. 
C)  consumption. 
D)  government purchases. 
A)  wages and salaries. 
B)  investment. 
C)  consumption. 
D)  government purchases.

Question 6

The dollar value of stocks and bonds traded in a given year:

Accepted Answer

A)  is included in the calculation of GDP. 
B)  have no influence on GDP. 
C)  is included in the calculation of private investment. 
D)  is not included in GDP, but the broker commissions involved are included in GDP. 
A)  is included in the calculation of GDP. 
B)  have no influence on GDP. 
C)  is included in the calculation of private investment. 
D)  is not included in GDP, but the broker commissions involved are included in GDP.

Question 7

Which of the following is subtracted from gross national product to arrive at the net national product?

Accepted Answer

A)  net income of foreigners 
B)  depreciation 
C)  indirect business taxes 
D)  transfer payments 
A)  net income of foreigners 
B)  depreciation 
C)  indirect business taxes 
D)  transfer payments

Question 8

Nominal GDP is $10,000 billion in 2011,but real GDP is only $9,000.It follows that:

Accepted Answer

A)  the GDP deflator is equal to 111. 
B)  the GDP deflator is equal to 100. 
C)  the GDP deflator is equal to 90. 
D)  prices must have decreased relative to the base year. 
A)  the GDP deflator is equal to 111. 
B)  the GDP deflator is equal to 100. 
C)  the GDP deflator is equal to 90. 
D)  prices must have decreased relative to the base year.

Question 9

Differentiate between personal income and disposable personal income.

Accepted Answer

Personal income measures the a

Question 10

Which of the following is a problem with using real GDP as a measure of economic well-being?

Accepted Answer

A)  It fails to measure the value of leisure. 
B)  It fails to measure the underground economy. 
C)  It does not factor in externalities. 
D)  all of the above 
A)  It fails to measure the value of leisure. 
B)  It fails to measure the underground economy. 
C)  It does not factor in externalities. 
D)  all of the above

Question 11

Exhibit 19-1   Refer to Exhibit 19-1.What conclusion regarding exports and imports can be arrived at looking at the data provided?

Accepted Answer

A)  Exports exceeded imports. 
B)  Imports exceeded exports. 
C)  Exports equaled imports. 
D)  Data insufficient to arrive at any conclusion. 
A)  Exports exceeded imports. 
B)  Imports exceeded exports. 
C)  Exports equaled imports. 
D)  Data insufficient to arrive at any conclusion.

Question 12

Real GDP accurately reflects both the quantity and quality of goods and services.

Accepted Answer

A) True 
 B)False

Question 13

If the GDP deflator decreases from one year to the next,it can be concluded that the economy has experienced:

Accepted Answer

A)  stagnation. 
B)  stagflation. 
C)  inflation. 
D)  deflation. 
A)  stagnation. 
B)  stagflation. 
C)  inflation. 
D)  deflation.

Question 14

If Jim pays $1000 to John:

Accepted Answer

A)  GDP will increase by $1000. 
B)  GDP will increase, but we cannot determine by what amount. 
C)  nominal GDP will increase, but we cannot be sure if real GDP will increase or decrease. 
D)  we need more information in order to determine whether or how much GDP will change. 
A)  GDP will increase by $1000. 
B)  GDP will increase, but we cannot determine by what amount. 
C)  nominal GDP will increase, but we cannot be sure if real GDP will increase or decrease. 
D)  we need more information in order to determine whether or how much GDP will change.

Question 15

National income:

Accepted Answer

A)  is a measure of the income earned by owners of resources used in making final goods and services. 
B)  is a measure of the income received by persons after taxes. 
C)  equals aggregate income minus the statistical discrepancy. 
D)  equals GDP minus depreciation. 
A)  is a measure of the income earned by owners of resources used in making final goods and services. 
B)  is a measure of the income received by persons after taxes. 
C)  equals aggregate income minus the statistical discrepancy. 
D)  equals GDP minus depreciation.

Question 16

Why has nominal GDP increased historically more rapidly than real GDP in the United States?

Accepted Answer

A)  because of inflation 
B)  because of deflation 
C)  because of statistical discrepancies 
D)  because of high interest rates 
A)  because of inflation 
B)  because of deflation 
C)  because of statistical discrepancies 
D)  because of high interest rates

Question 17

The flour used in the pizza you bought for dinner last night is considered a final good.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not included in the investment category under the expenditure approach to GDP accounting?

Accepted Answer

A)  newly constructed residential housing 
B)  factory buildings 
C)  stocks and bonds 
D)  additions to inventory 
A)  newly constructed residential housing 
B)  factory buildings 
C)  stocks and bonds 
D)  additions to inventory

Question 19

Which of the following is a problem with using real GDP as a measure of economic well-being?

Accepted Answer

A)  It does not account for inflation. 
B)  It does not account for production within the household. 
C)  It does not account for production by foreign firms producing inside the U.S. 
D)  all of the above 
A)  It does not account for inflation. 
B)  It does not account for production within the household. 
C)  It does not account for production by foreign firms producing inside the U.S. 
D)  all of the above

Question 20

Net exports are defined as:

Accepted Answer

A)  exports plus imports. 
B)  exports minus imports. 
C)  imports minus exports. 
D)  exports plus imports minus tariffs. 
A)  exports plus imports. 
B)  exports minus imports. 
C)  imports minus exports. 
D)  exports plus imports minus tariffs.

Exam 19: Measuring Economic Performance

Gross domestic product is the value of all final goods and services produced within a country during a given period of time.

Which of the following is included in GDP?

How do pollution and crime affect GDP?

The most volatile GDP category under the expenditure approach is:

The dollar value of stocks and bonds traded in a given year:

Which of the following is subtracted from gross national product to arrive at the net national product?

Nominal GDP is $10,000 billion in 2011,but real GDP is only $9,000.It follows that:

Differentiate between personal income and disposable personal income.

Which of the following is a problem with using real GDP as a measure of economic well-being?

Exhibit 19-1 Refer to Exhibit 19-1.What conclusion regarding exports and imports can be arrived at looking at the data provided?

Real GDP accurately reflects both the quantity and quality of goods and services.

If the GDP deflator decreases from one year to the next,it can be concluded that the economy has experienced:

If Jim pays $1000 to John:

National income:

Why has nominal GDP increased historically more rapidly than real GDP in the United States?

The flour used in the pizza you bought for dinner last night is considered a final good.

Which of the following is not included in the investment category under the expenditure approach to GDP accounting?

Which of the following is a problem with using real GDP as a measure of economic well-being?

Net exports are defined as:

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

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