Question 1

Explain how GDP is measured according to the expenditure and income approaches.

Accepted Answer

GDP is measured using the expenditure ap

Question 2

Looking at the components of the income approach we see that

Accepted Answer

A)  compensation of employees is the largest category. 
B)  consumption is the largest category. 
C)  profits are the largest category. 
D)  rental income is the largest category. 
A)  compensation of employees is the largest category. 
B)  consumption is the largest category. 
C)  profits are the largest category. 
D)  rental income is the largest category.

Question 3

The following data are estimates describing Ireland's economy in 2006 and 2007 (in millions of euros, in constant prices):
2006	2007
Consumption	84,000	89,000
Government expenditure	24,000	26,000
Investment	48,000	48,000
Exports	142,000	151,000
Imports	123,000	128,000
Subsidies	1,800	1,900
Taxes	500	500
In 2007, Ireland's net exports was ________ million euros.

Accepted Answer

A)  23,000 
B)  -23,000 
C)  279,000 
D)  149,100 
A)  23,000 
B)  -23,000 
C)  279,000 
D)  149,100

Question 4

"Life expectancy is exceptionally high in Japan. Scores for political freedom and civil liberties approach those of peer countries in Europe...equality of opportunity is extremely weak. The country also possesses one of the longer working weeks." Japan's GDP was estimated to be $4.2 trillion (purchasing power parity) and the population was 127.4 million.
"Driven by its attractive climate, Brazil performs substantially better on Life Satisfaction than Material Wealth. High international demand for Brazil's commodities and raw materials has produced a sustained economic expansion since 2004, which in turn has led to job creation, wage growth and relatively low inflation. Brazilians report that they control their own lives to a substantial degree." Brazil's GDP was estimated to be $1.7 trillion (purchasing power parity) and 190 million in 2006.
www.prosperity.com
-According to the article, we can conclude that the standard of living

Accepted Answer

A)  is higher in Brazil because its citizens feel more control over their lives and have experienced job and wage growth. 
B)  is higher in Japan because their life expectancy is longer. 
C)  is higher in Japan because its GDP is higher. 
D)  might be higher in Japan because it has a higher per capita real GDP but other factors such as Brazilians' satisfaction with their lives and economic growth should be considered when determining economic well-being. 
A)  is higher in Brazil because its citizens feel more control over their lives and have experienced job and wage growth. 
B)  is higher in Japan because their life expectancy is longer. 
C)  is higher in Japan because its GDP is higher. 
D)  might be higher in Japan because it has a higher per capita real GDP but other factors such as Brazilians' satisfaction with their lives and economic growth should be considered when determining economic well-being.

Question 5

In the circular flow diagram, aggregate expenditure includes

Accepted Answer

A)  consumption expenditure, saving, investment and government expenditure. 
B)  consumption expenditure, saving, investment and net exports. 
C)  consumption expenditure, investment, government expenditure and net exports. 
D)  consumption expenditure, saving, government expenditure and net exports. 
A)  consumption expenditure, saving, investment and government expenditure. 
B)  consumption expenditure, saving, investment and net exports. 
C)  consumption expenditure, investment, government expenditure and net exports. 
D)  consumption expenditure, saving, government expenditure and net exports.

Question 6

It is estimated that in 2007, Mexico had a population of 110 million and Brazil had a population of 190 million. At the same time, Mexico's GDP was $1 trillion while Brazil's was $1.31 trillion. These data show that

Accepted Answer

A)  Brazil had a healthier economy than did Mexico. 
B)  Mexico's GDP per person was lower than was Brazil's GDP per person in 2007. 
C)  Mexico's GDP per person was $9090 in 2007. 
D)  Brazil's GDP per person was $5300 in 2007. 
A)  Brazil had a healthier economy than did Mexico. 
B)  Mexico's GDP per person was lower than was Brazil's GDP per person in 2007. 
C)  Mexico's GDP per person was $9090 in 2007. 
D)  Brazil's GDP per person was $5300 in 2007.

Question 7

Explain how underground economic activity affects measurement of GDP.

Accepted Answer

The underground economy is transactions

Question 8

The difference between gross investment and net investment is

Accepted Answer

A)  inflation. 
B)  depreciation. 
C)  initial capital. 
D)  consumption. 
A)  inflation. 
B)  depreciation. 
C)  initial capital. 
D)  consumption.

Question 9

-Using the data in the above table, net private domestic investment equals

Accepted Answer

A)  $210. 
B)  $260. 
C)  $510. 
D)  some amount that cannot be determined without more information. 
A)  $210. 
B)  $260. 
C)  $510. 
D)  some amount that cannot be determined without more information.

Question 10

Business cycles

Accepted Answer

A)  are more volatile during a Republican administration. 
B)  are unpredictable due to political upheavals and global markets. 
C)  follow a pattern of trough, expansion, peak and recession. 
D)  are all identical in duration over the last century. 
A)  are more volatile during a Republican administration. 
B)  are unpredictable due to political upheavals and global markets. 
C)  follow a pattern of trough, expansion, peak and recession. 
D)  are all identical in duration over the last century.

Question 11

Real GDP measures the

Accepted Answer

A)  total profits earned by all businesses valued using prices from a single year. 
B)  changes in the prices of output measured in dollars. 
C)  general upward drift in prices. 
D)  value of total production linked to prices of a single year. 
A)  total profits earned by all businesses valued using prices from a single year. 
B)  changes in the prices of output measured in dollars. 
C)  general upward drift in prices. 
D)  value of total production linked to prices of a single year.

Question 12

When gross investment is greater than depreciation, then the nation's capital stock increased.

Accepted Answer

A) True 
 B)False

Question 13

In any year, real GDP

Accepted Answer

A)  must always be less than potential GDP. 
B)  might be greater or less than potential GDP. 
C)  will always be greater than potential GDP because of the tendency of nations to incur inflation. 
D)  always equals potential GDP. 
A)  must always be less than potential GDP. 
B)  might be greater or less than potential GDP. 
C)  will always be greater than potential GDP because of the tendency of nations to incur inflation. 
D)  always equals potential GDP.

Question 14

Use the information in the table above to calculate the value of net exports.

Accepted Answer

A)  $10 million 
B)  $0 
C)  -$10 million 
D)  $30 million 
A)  $10 million 
B)  $0 
C)  -$10 million 
D)  $30 million

Question 15

-The above table shows data from the GDP accounts of Hypothetica. Hypothetica's GDP is ________ billion.

Accepted Answer

A)  $270 
B)  $210 
C)  $190 
D)  $160 
A)  $270 
B)  $210 
C)  $190 
D)  $160

Question 16

Which of the following is a final good?

Accepted Answer

A)  the memory chips in your new smart phone 
B)  a share of IBM stock 
C)  flour purchased at the store to bake cookies 
D)  flour used by the bakery to bake cookies 
A)  the memory chips in your new smart phone 
B)  a share of IBM stock 
C)  flour purchased at the store to bake cookies 
D)  flour used by the bakery to bake cookies

Question 17

Transfer payments

Accepted Answer

A)  are included in the government expenditure category in gross domestic product. 
B)  refer to all payments made to households by governments. 
C)  refer to payments made by the government that are not made to purchase a good or service. 
D)  are made by households to firms in exchange for goods and services. 
A)  are included in the government expenditure category in gross domestic product. 
B)  refer to all payments made to households by governments. 
C)  refer to payments made by the government that are not made to purchase a good or service. 
D)  are made by households to firms in exchange for goods and services.

Question 18

-Using the data in the above table, what is the value of national saving?

Accepted Answer

A)  $1,202 billion 
B)  $2,837 billion 
C)  $1,053 billion 
D)  -$85 billion 
A)  $1,202 billion 
B)  $2,837 billion 
C)  $1,053 billion 
D)  -$85 billion

Question 19

Which of the following would lead GDP to overstate economic welfare?

Accepted Answer

A)  the existence of home-cooked meals 
B)  restaurant workers that under-report tip income 
C)  a self-employed CPA who takes a longer than normal vacation 
D)  electric utilities that switch to burning coal because of higher natural gas prices and thereby create more acid rain pollution 
A)  the existence of home-cooked meals 
B)  restaurant workers that under-report tip income 
C)  a self-employed CPA who takes a longer than normal vacation 
D)  electric utilities that switch to burning coal because of higher natural gas prices and thereby create more acid rain pollution

Question 20

GDP equals

Accepted Answer

A)  aggregate expenditure. 
B)  aggregate income. 
C)  the value of the aggregate production in a country during a given time period. 
D)  all of the above. 
A)  aggregate expenditure. 
B)  aggregate income. 
C)  the value of the aggregate production in a country during a given time period. 
D)  all of the above.

Explain how GDP is measured according to the expenditure and income approaches.

Looking at the components of the income approach we see that

In the circular flow diagram, aggregate expenditure includes

It is estimated that in 2007, Mexico had a population of 110 million and Brazil had a population of 190 million. At the same time, Mexico's GDP was $1 trillion while Brazil's was $1.31 trillion. These data show that

Explain how underground economic activity affects measurement of GDP.

The difference between gross investment and net investment is

-Using the data in the above table, net private domestic investment equals

Business cycles

Real GDP measures the

When gross investment is greater than depreciation, then the nation's capital stock increased.

In any year, real GDP

Use the information in the table above to calculate the value of net exports.

-The above table shows data from the GDP accounts of Hypothetica. Hypothetica's GDP is ________ billion.

Which of the following is a final good?

Transfer payments

-Using the data in the above table, what is the value of national saving?

Which of the following would lead GDP to overstate economic welfare?

GDP equals

What Is Economics?

The Economic Problem

Demand and Supply

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 4: Measuring GDP and Economic Growth

Explain how GDP is measured according to the expenditure and income approaches.

Looking at the components of the income approach we see that

In the circular flow diagram, aggregate expenditure includes

It is estimated that in 2007, Mexico had a population of 110 million and Brazil had a population of 190 million. At the same time, Mexico's GDP was $1 trillion while Brazil's was $1.31 trillion. These data show that

Explain how underground economic activity affects measurement of GDP.

The difference between gross investment and net investment is

-Using the data in the above table, net private domestic investment equals

Business cycles

Real GDP measures the

When gross investment is greater than depreciation, then the nation's capital stock increased.

In any year, real GDP

Use the information in the table above to calculate the value of net exports.

-The above table shows data from the GDP accounts of Hypothetica. Hypothetica's GDP is ________ billion.

Which of the following is a final good?

Transfer payments

-Using the data in the above table, what is the value of national saving?

Which of the following would lead GDP to overstate economic welfare?

GDP equals

What Is Economics?

The Economic Problem

Demand and Supply

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters