Question 1

In the national income accounts, the purchase of a new house counts as

Accepted Answer

A)  consumption expenditure. 
B)  investment. 
C)  a transfer. 
D)  an addition to inventory. 
A)  consumption expenditure. 
B)  investment. 
C)  a transfer. 
D)  an addition to inventory.

Question 2

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
Which of the following is TRUE regarding Ireland's economy?

Accepted Answer

A)  The change in GDP from 2006 to 2007 represented a peak in the business cycle. 
B)  GDP decreased from 2006 to 2007. 
C)  Net exports decreased from 2006 to 2007. 
D)  Consumption was 48 percent of Ireland's GDP in 2007. 
A)  The change in GDP from 2006 to 2007 represented a peak in the business cycle. 
B)  GDP decreased from 2006 to 2007. 
C)  Net exports decreased from 2006 to 2007. 
D)  Consumption was 48 percent of Ireland's GDP in 2007.

Question 3

The circular flow shows that the household sector earns its income by

Accepted Answer

A)  selling factors of production. 
B)  buying factors of production. 
C)  selling goods and services. 
D)  selling financial assets. 
A)  selling factors of production. 
B)  buying factors of production. 
C)  selling goods and services. 
D)  selling financial assets.

Question 4

-Nominal GDP is

Accepted Answer

A)  real GDP adjusted for price changes. 
B)  GDP valued at prices of that year. 
C)  GDP valued at constant prices. 
D)  real GDP valued at base year prices. 
A)  real GDP adjusted for price changes. 
B)  GDP valued at prices of that year. 
C)  GDP valued at constant prices. 
D)  real GDP valued at base year prices.

Question 5

Which of the following purchases is included in personal consumption expenditures when determining gross domestic product?

Accepted Answer

A)  purchase of a new house because of the arrival of a new baby 
B)  purchase of a new office building 
C)  vacation expenses for a spring trip to Fort Lauderdale 
D)  purchases of jeans to add to a store's inventory 
A)  purchase of a new house because of the arrival of a new baby 
B)  purchase of a new office building 
C)  vacation expenses for a spring trip to Fort Lauderdale 
D)  purchases of jeans to add to a store's inventory

Question 6

Gross investment equals net investment plus

Accepted Answer

A)  capital. 
B)  capital gains. 
C)  depreciation. 
D)  dividends paid to the owners of the company. 
A)  capital. 
B)  capital gains. 
C)  depreciation. 
D)  dividends paid to the owners of the company.

Question 7

-The income approach to measuring GDP sums together

Accepted Answer

A)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and depreciation. 
B)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracts subsidies paid by the government. 
C)  the sales of each firm in the economy. 
D)  the costs of each firm in the economy and then subtracts indirect business taxes and depreciation. 
A)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and depreciation. 
B)  compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracts subsidies paid by the government. 
C)  the sales of each firm in the economy. 
D)  the costs of each firm in the economy and then subtracts indirect business taxes and depreciation.

Question 8

The underground economy means that GDP will overstate the actual level of economic welfare.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is included in the government expenditure component of the expenditure approach to GDP?

Accepted Answer

A)  state government expenditure on local schools 
B)  transfer payments 
C)  changes in inventories 
D)  taxes 
A)  state government expenditure on local schools 
B)  transfer payments 
C)  changes in inventories 
D)  taxes

Question 10

Transfer payments are not part of government expenditure on goods and services because transfer payments

Accepted Answer

A)  are not predictable given the nature of their appropriation and allocation. 
B)  do not represent the purchase of a final good or service. 
C)  are not always spent on goods produced in the U.S. 
D)  The premise of the question is incorrect because transfer payments are part of government purchases of goods and services. 
A)  are not predictable given the nature of their appropriation and allocation. 
B)  do not represent the purchase of a final good or service. 
C)  are not always spent on goods produced in the U.S. 
D)  The premise of the question is incorrect because transfer payments are part of government purchases of goods and services.

Question 11

What are the categories of total expenditure?

Accepted Answer

There are four categories: Consumption e

Question 12

What is a business cycle?

Accepted Answer

The business cycle is the recurrent but

Question 13

-The table above shows Japan's real GDP between 1991 to 2001.
a)Draw a figure with Japan's real GDP from 1991 to 2001.
b)In the previous 30 years, the growth rate of Japan's potential GDP was 6 percent a year. On your graph, show the path that potential GDP would have followed if its GDP in 1991 was equal to potential GDP and the growth rate of potential GDP had been maintained in 1991-2001.
c)Show the Lucas wedge on your figure.

Accepted Answer

@#IMG-DLM& 
a)See the figure above.
b)Potential GD

Question 14

Total output and total income in the circular flow model

Accepted Answer

A)  are measures of the economy's level of savings. 
B)  include only intermediate goods. 
C)  are equal to each other. 
D)  are related because national income is less than national product. 
A)  are measures of the economy's level of savings. 
B)  include only intermediate goods. 
C)  are equal to each other. 
D)  are related because national income is less than national product.

Question 15

Real GDP decreases during

Accepted Answer

A)  the movement from trough to peak. 
B)  the movement from below potential GDP back to potential GDP. 
C)  the movement from peak to trough. 
D)  a decrease in unemployment. 
A)  the movement from trough to peak. 
B)  the movement from below potential GDP back to potential GDP. 
C)  the movement from peak to trough. 
D)  a decrease in unemployment.

In the national income accounts, the purchase of a new house counts as

The circular flow shows that the household sector earns its income by

-Nominal GDP is

Which of the following purchases is included in personal consumption expenditures when determining gross domestic product?

Gross investment equals net investment plus

-The income approach to measuring GDP sums together

The underground economy means that GDP will overstate the actual level of economic welfare.

Which of the following is included in the government expenditure component of the expenditure approach to GDP?

Transfer payments are not part of government expenditure on goods and services because transfer payments

What are the categories of total expenditure?

What is a business cycle?

Total output and total income in the circular flow model

Real GDP decreases during

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

In the national income accounts, the purchase of a new house counts as

The circular flow shows that the household sector earns its income by

-Nominal GDP is

Which of the following purchases is included in personal consumption expenditures when determining gross domestic product?

Gross investment equals net investment plus

-The income approach to measuring GDP sums together

The underground economy means that GDP will overstate the actual level of economic welfare.

Which of the following is included in the government expenditure component of the expenditure approach to GDP?

Transfer payments are not part of government expenditure on goods and services because transfer payments

What are the categories of total expenditure?

What is a business cycle?

Total output and total income in the circular flow model

Real GDP decreases during

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