Question 1

Which of the following are not included in GDP?

Accepted Answer

A)  Transfer payments. 
B)  Imports 
C)  Intermediate goods. 
D)  All of the above are excluded from GDP. 
A)  Transfer payments. 
B)  Imports 
C)  Intermediate goods. 
D)  All of the above are excluded from GDP.

Question 2

Which of the following is true?

Accepted Answer

A)  Real GDP equals nominal GDP divided by the current price level index, times one hundred. 
B)  In periods of inflation, real GDP growth will tend to be greater than nominal GDP growth. 
C)  In a country with a growing population, real GDP could be falling at the same time that real GDP per capita was rising. 
D)  Marrying one's housekeeper would leave reported GDP unchanged. 
A)  Real GDP equals nominal GDP divided by the current price level index, times one hundred. 
B)  In periods of inflation, real GDP growth will tend to be greater than nominal GDP growth. 
C)  In a country with a growing population, real GDP could be falling at the same time that real GDP per capita was rising. 
D)  Marrying one's housekeeper would leave reported GDP unchanged.

Question 3

The expenditure approach to measuring GDP involves adding up the purchases of final goods and services by market participants.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is included in GDP calculations?

Accepted Answer

A)  the college tuition paid to enroll in a course 
B)  a check for $50 received on your birthday 
C)  cash income received by a self-employed landscaper that is not reported to the IRS 
D)  sales revenue received from a yard sale 
A)  the college tuition paid to enroll in a course 
B)  a check for $50 received on your birthday 
C)  cash income received by a self-employed landscaper that is not reported to the IRS 
D)  sales revenue received from a yard sale

Question 5

If nominal GDP rose by 10 percent and the price index increased from 100 to 105 in a given year,real GDP:

Accepted Answer

A)  rose by 15 percent. 
B)  rose by roughly 9.5 percent. 
C)  rose by 5 percent. 
D)  fell by 5 percent. 
A)  rose by 15 percent. 
B)  rose by roughly 9.5 percent. 
C)  rose by 5 percent. 
D)  fell by 5 percent.

Question 6

Suppose that nominal GDP did not change in 2011,and real GDP decreased,relative to the year 2010.It can be concluded that:

Accepted Answer

A)  total production of goods and services in the economy did not change in 2011. 
B)  the economy experienced deflation during 2011. 
C)  the price level did not change during 2011. 
D)  total production of goods and services in the economy declined during 2011. 
A)  total production of goods and services in the economy did not change in 2011. 
B)  the economy experienced deflation during 2011. 
C)  the price level did not change during 2011. 
D)  total production of goods and services in the economy declined during 2011.

Question 7

What is the underground economy? How does it affect GDP calculations? Provide three examples of underground economy transactions.

Accepted Answer

The underground economy includes both le

Question 8

GDP equals $8 trillion.If consumption equals $5.5 trillion,investment equals $500 billion,and government spending equals $1.5 trillion,then:

Accepted Answer

A)  exports exceed imports by $500 billion. 
B)  imports exceed exports by $500 billion. 
C)  net exports equal zero. 
D)  exports exceed imports by $1 trillion. 
A)  exports exceed imports by $500 billion. 
B)  imports exceed exports by $500 billion. 
C)  net exports equal zero. 
D)  exports exceed imports by $1 trillion.

Question 9

Consumption is the purchase of goods and services by:

Accepted Answer

A)  households. 
B)  government. 
C)  business firms. 
D)  foreign buyers. 
A)  households. 
B)  government. 
C)  business firms. 
D)  foreign buyers.

Question 10

Which of the following will lead to GDP underestimating our true output?

Accepted Answer

A)  Mary begins a catering business. 
B)  James begins drawing Social Security benefits upon his retirement. 
C)  David accepts a position as a software specialist at Microsoft. 
D)  Gretchen begins an accounting and bookkeeping service in her home, accepting cash as payment, which is not reported to tax authorities. 
A)  Mary begins a catering business. 
B)  James begins drawing Social Security benefits upon his retirement. 
C)  David accepts a position as a software specialist at Microsoft. 
D)  Gretchen begins an accounting and bookkeeping service in her home, accepting cash as payment, which is not reported to tax authorities.

Question 11

Which of the following is counted as part of GDP?

Accepted Answer

A)  a bakery buying 100 pounds of cake flour 
B)  the purchase of a used Ford by a U.S. citizen 
C)  a social security payment received by a retired teacher 
D)  none of the above 
A)  a bakery buying 100 pounds of cake flour 
B)  the purchase of a used Ford by a U.S. citizen 
C)  a social security payment received by a retired teacher 
D)  none of the above

Question 12

The expenditure approach to GDP accounting includes:

Accepted Answer

A)  consumption. 
B)  investment. 
C)  net exports. 
D)  all of the above. 
A)  consumption. 
B)  investment. 
C)  net exports. 
D)  all of the above.

Question 13

Declines in business inventories enter national income accounts:

Accepted Answer

A)  negatively in the consumption category. 
B)  negatively in the investment category. 
C)  negatively in the net export category. 
D)  positively in the profits category. 
A)  negatively in the consumption category. 
B)  negatively in the investment category. 
C)  negatively in the net export category. 
D)  positively in the profits category.

Question 14

Which of the following factors that affect our well-being does GDP fail to adequately account for?

Accepted Answer

A)  changes in the quality of goods 
B)  externalities 
C)  leisure 
D)  all of the above 
A)  changes in the quality of goods 
B)  externalities 
C)  leisure 
D)  all of the above

Question 15

The expenditure category of GDP that fluctuates the most over time is investment.

Accepted Answer

A) True 
 B)False

Question 16

Which component of current U.S.GDP under the expenditure approach is most likely to be negative?

Accepted Answer

A)  consumption 
B)  government purchases 
C)  net exports 
D)  investment 
A)  consumption 
B)  government purchases 
C)  net exports 
D)  investment

Question 17

Which of the following products are not included in current U.S.GDP?

Accepted Answer

A)  a Washington apple 
B)  a Ford Mustang produced last year and sold this year 
C)  a physical examination at a California health clinic 
D)  All of the above are included in current U.S. GDP. 
A)  a Washington apple 
B)  a Ford Mustang produced last year and sold this year 
C)  a physical examination at a California health clinic 
D)  All of the above are included in current U.S. GDP.

Question 18

Which category of consumption spending tends to be the most stable over the business cycle?

Accepted Answer

A)  Nondurable consumer goods. 
B)  Durable consumer goods. 
C)  Services. 
D)  all of these categories of consumer spending are highly unstable over the business cycle. 
A)  Nondurable consumer goods. 
B)  Durable consumer goods. 
C)  Services. 
D)  all of these categories of consumer spending are highly unstable over the business cycle.

Question 19

GDP is:

Accepted Answer

A)  the total value of all consumer expenditures within a given period. 
B)  national income after taxes. 
C)  the total value of all final goods and services plus intermediate goods and services produced domestically within a given period. 
D)  the value of all final goods and services produced domestically within a given period. 
A)  the total value of all consumer expenditures within a given period. 
B)  national income after taxes. 
C)  the total value of all final goods and services plus intermediate goods and services produced domestically within a given period. 
D)  the value of all final goods and services produced domestically within a given period.

Question 20

If real GDP increased by 2% and nominal GDP increased by 1%,then output:

Accepted Answer

A)  increased and the price level increased. 
B)  increased and the price level decreased. 
C)  decreased and the price level increased. 
D)  decreased and the price level decreased. 
A)  increased and the price level increased. 
B)  increased and the price level decreased. 
C)  decreased and the price level increased. 
D)  decreased and the price level decreased.

Exam 19: Measuring Economic Performance

Which of the following are not included in GDP?

Which of the following is true?

The expenditure approach to measuring GDP involves adding up the purchases of final goods and services by market participants.

Which of the following is included in GDP calculations?

If nominal GDP rose by 10 percent and the price index increased from 100 to 105 in a given year,real GDP:

Suppose that nominal GDP did not change in 2011,and real GDP decreased,relative to the year 2010.It can be concluded that:

What is the underground economy? How does it affect GDP calculations? Provide three examples of underground economy transactions.

GDP equals $8 trillion.If consumption equals $5.5 trillion,investment equals $500 billion,and government spending equals $1.5 trillion,then:

Consumption is the purchase of goods and services by:

Which of the following will lead to GDP underestimating our true output?

Which of the following is counted as part of GDP?

The expenditure approach to GDP accounting includes:

Declines in business inventories enter national income accounts:

Which of the following factors that affect our well-being does GDP fail to adequately account for?

The expenditure category of GDP that fluctuates the most over time is investment.

Which component of current U.S.GDP under the expenditure approach is most likely to be negative?

Which of the following products are not included in current U.S.GDP?

Which category of consumption spending tends to be the most stable over the business cycle?

GDP is:

If real GDP increased by 2% and nominal GDP increased by 1%,then output:

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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