Question 1

Potential GDP is the

Accepted Answer

A)  the maximum amount of production that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation. 
B)  current value of production in the economy. 
C)  value of production when the economy is in a recession. 
D)  value of production when the economy is at a peak. 
A)  the maximum amount of production that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation. 
B)  current value of production in the economy. 
C)  value of production when the economy is in a recession. 
D)  value of production when the economy is at a peak.

Question 2

Which of the following best represents an indirect tax?

Accepted Answer

A)  federal income tax 
B)  state income tax 
C)  local property tax 
D)  sales taxes paid on goods and services 
A)  federal income tax 
B)  state income tax 
C)  local property tax 
D)  sales taxes paid on goods and services

Question 3

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

Accepted Answer

A)  $250. 
B)  $260. 
C)  $460. 
D)  some amount that cannot be determined without more information. 
A)  $250. 
B)  $260. 
C)  $460. 
D)  some amount that cannot be determined without more information.

Question 4

-A time-series graph showing total production in Japan from 1960 to 2010 shows a positive trend. It is the case that total production

Accepted Answer

A)  fell every year between 1960 and 2010. 
B)  rose every year between 1960 and 2010. 
C)  was lower in 2010 than in 1960. 
D)  was higher in 2010 than in 1960. 
A)  fell every year between 1960 and 2010. 
B)  rose every year between 1960 and 2010. 
C)  was lower in 2010 than in 1960. 
D)  was higher in 2010 than in 1960.

Question 5

Net exports is negative if

Accepted Answer

A)  the value of exports exceeds the value of imports. 
B)  the value of imports exceeds the value of exports. 
C)  the tariff payments are included in the value of imported and exported items. 
D)  too much production occurs in the exporting country during the year. 
A)  the value of exports exceeds the value of imports. 
B)  the value of imports exceeds the value of exports. 
C)  the tariff payments are included in the value of imported and exported items. 
D)  too much production occurs in the exporting country during the year.

Question 6

How does the income approach measure GDP?

Accepted Answer

The incomes approach adds the compensati

Question 7

According to the BEA, in the second quarter of 2012 business spending on equipment and software rose by 4.7 percent. Using the expenditure approach, this change increases

Accepted Answer

A)  gross private domestic investment. 
B)  government expenditure on goods and services. 
C)  net exports of goods and services. 
D)  personal consumption expenditures. 
A)  gross private domestic investment. 
B)  government expenditure on goods and services. 
C)  net exports of goods and services. 
D)  personal consumption expenditures.

Question 8

According to the article, ________ are expected to contribute ________ to China's real GDP in 2008.

Accepted Answer

A)  exports and consumption; positively 
B)  consumption and government spending; negatively 
C)  exports and investment; negatively 
D)  rental income and investment; negatively 
A)  exports and consumption; positively 
B)  consumption and government spending; negatively 
C)  exports and investment; negatively 
D)  rental income and investment; negatively

Question 9

Explain the relationship between potential GDP and real GDP in the United States since the early 1960s. You do not need to tell what happened during any specific year; just describe the general relationship.

Accepted Answer

Potential GDP has grown over t

Question 10

Which of the following expenditures associated with the production of a new high-performance SUV will be directly included in GDP?

Accepted Answer

A)  the sale of bonds to finance the construction of the assembly plant 
B)  the purchase of used welding robots to assemble to vehicles 
C)  the purchase of new tires to be installed on the new vehicles 
D)  the purchase of new machine tools to manufacture the engines 
A)  the sale of bonds to finance the construction of the assembly plant 
B)  the purchase of used welding robots to assemble to vehicles 
C)  the purchase of new tires to be installed on the new vehicles 
D)  the purchase of new machine tools to manufacture the engines

Question 11

Valuing the quantities of goods produced in consecutive years using prices in both years and then averaging the percentage changes in the value of output is part of the ________ method of calculating real GDP.

Accepted Answer

A)  base-year 
B)  moving-base-year 
C)  chain-weighted output index 
D)  fixed quantities/variable prices 
A)  base-year 
B)  moving-base-year 
C)  chain-weighted output index 
D)  fixed quantities/variable prices

Question 12

In the post-World War II period, considerable growth in total production took place in the United States. But at the same time, businesses were dumping their waste into the Great Lakes with minimal cost to themselves, significantly polluting the bodies of water as a result. This occurrence is an example where

Accepted Answer

A)  real GDP gives an overly positive view of economic welfare. 
B)  real GDP gives an overly negative view of economic welfare. 
C)  investment would have been a better measure of total production. 
D)  the pollution counts as a final good. 
A)  real GDP gives an overly positive view of economic welfare. 
B)  real GDP gives an overly negative view of economic welfare. 
C)  investment would have been a better measure of total production. 
D)  the pollution counts as a final good.

Question 13

Which of the following is TRUE regarding business cycles?
I.Cycles are predictable.
II.In each cycle, a peak follows an expansion.
III.Potential GDP fluctuates around real GDP.

Accepted Answer

A)  I and II 
B)  I and III 
C)  II and III 
D)  II only 
A)  I and II 
B)  I and III 
C)  II and III 
D)  II only

Question 14

Several adjustments must be made to net domestic product at factor cost in order to calculate GDP. One of these adjustments is adding depreciation. What is depreciation and why must it be added?

Accepted Answer

Depreciation is the wear and tear of cap

Question 15

Transfer payments are not included in GDP because

Accepted Answer

A)  their market value cannot be accurately determined. 
B)  they do not generate additional income. 
C)  they are not purchases of goods or services. 
D)  their value is included in government expenditure. 
A)  their market value cannot be accurately determined. 
B)  they do not generate additional income. 
C)  they are not purchases of goods or services. 
D)  their value is included in government expenditure.

Question 16

-Using the data in the table above, gross domestic product equals

Accepted Answer

A)  $1,920. 
B)  $1,940. 
C)  $2,150. 
D)  $2,400. 
A)  $1,920. 
B)  $1,940. 
C)  $2,150. 
D)  $2,400.

Question 17

Define and distinguish between final goods and intermediate goods.

Accepted Answer

Final goods are those goods that are pur

Question 18

Which, if any, of the following causes a country's reported GDP to be less than its total economic production?

Accepted Answer

A)  the exclusion of household production 
B)  the exclusion of government transfers 
C)  the inclusion of government expenditures 
D)  None of the above cause reported GDP to be less than total production. 
A)  the exclusion of household production 
B)  the exclusion of government transfers 
C)  the inclusion of government expenditures 
D)  None of the above cause reported GDP to be less than total production.

Question 19

-In the above figure, the distance between points S and T represents

Accepted Answer

A)  an expansion. 
B)  a trough. 
C)  a peak. 
D)  a recession. 
A)  an expansion. 
B)  a trough. 
C)  a peak. 
D)  a recession.

Question 20

Double counting (counting the same thing twice)in GDP accounting is avoided by not including

Accepted Answer

A)  net exports. 
B)  intermediate goods. 
C)  illegal activities. 
D)  depreciation. 
A)  net exports. 
B)  intermediate goods. 
C)  illegal activities. 
D)  depreciation.

Potential GDP is the

Which of the following best represents an indirect tax?

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

-A time-series graph showing total production in Japan from 1960 to 2010 shows a positive trend. It is the case that total production

Net exports is negative if

How does the income approach measure GDP?

According to the BEA, in the second quarter of 2012 business spending on equipment and software rose by 4.7 percent. Using the expenditure approach, this change increases

According to the article, are expected to contribute to China's real GDP in 2008.

Explain the relationship between potential GDP and real GDP in the United States since the early 1960s. You do not need to tell what happened during any specific year; just describe the general relationship.

Which of the following expenditures associated with the production of a new high-performance SUV will be directly included in GDP?

Valuing the quantities of goods produced in consecutive years using prices in both years and then averaging the percentage changes in the value of output is part of the ________ method of calculating real GDP.

Which of the following is TRUE regarding business cycles? I.Cycles are predictable. II.In each cycle, a peak follows an expansion. III.Potential GDP fluctuates around real GDP.

Several adjustments must be made to net domestic product at factor cost in order to calculate GDP. One of these adjustments is adding depreciation. What is depreciation and why must it be added?

Transfer payments are not included in GDP because

-Using the data in the table above, gross domestic product equals

Define and distinguish between final goods and intermediate goods.

Which, if any, of the following causes a country's reported GDP to be less than its total economic production?

-In the above figure, the distance between points S and T represents

Double counting (counting the same thing twice)in GDP accounting is avoided by not including

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

Potential GDP is the

Which of the following best represents an indirect tax?

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

-A time-series graph showing total production in Japan from 1960 to 2010 shows a positive trend. It is the case that total production

Net exports is negative if

How does the income approach measure GDP?

According to the BEA, in the second quarter of 2012 business spending on equipment and software rose by 4.7 percent. Using the expenditure approach, this change increases

According to the article, ________ are expected to contribute ________ to China's real GDP in 2008.

Explain the relationship between potential GDP and real GDP in the United States since the early 1960s. You do not need to tell what happened during any specific year; just describe the general relationship.

Which of the following expenditures associated with the production of a new high-performance SUV will be directly included in GDP?

Valuing the quantities of goods produced in consecutive years using prices in both years and then averaging the percentage changes in the value of output is part of the ________ method of calculating real GDP.

Which of the following is TRUE regarding business cycles? I.Cycles are predictable. II.In each cycle, a peak follows an expansion. III.Potential GDP fluctuates around real GDP.

Several adjustments must be made to net domestic product at factor cost in order to calculate GDP. One of these adjustments is adding depreciation. What is depreciation and why must it be added?

Transfer payments are not included in GDP because

-Using the data in the table above, gross domestic product equals

Define and distinguish between final goods and intermediate goods.

Which, if any, of the following causes a country's reported GDP to be less than its total economic production?

-In the above figure, the distance between points S and T represents

Double counting (counting the same thing twice)in GDP accounting is avoided by not including

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

According to the article, are expected to contribute to China's real GDP in 2008.