Question 1

Since 1950,the portion of U.S.GDP created by services has:

Accepted Answer

A)  remained relatively constant. 
B)  fallen by a half. 
C)  more than doubled. 
D)  increased slightly. 
A)  remained relatively constant. 
B)  fallen by a half. 
C)  more than doubled. 
D)  increased slightly. C

Question 2

Economists call household spending on final goods and services:

Accepted Answer

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

Question 3

According to the national spending approach,education is classified as a consumption expenditure when splitting GDP.

Accepted Answer

A) True 
 B)False  True

Question 4

Large amounts of nonmarket production and illegal activities mean that a lot of Latin American countries are actually richer than their GDP suggests.

Accepted Answer

A) True 
 B)False

Question 5

A computer chip is one example of a final good.

Accepted Answer

A) True 
 B)False

Question 6

Which of these transactions occurring in 2011 would contribute to GDP for 2011?

Accepted Answer

A)  A contractor sells a new house which was built in 2009. 
B)  Mario sells his used car for a profit. 
C)  Sally buys $10,000 worth of U.S.government bonds as an investment. 
D)  Boeing sells a 787 aircraft produced in 2011 to a Korean airline. 
A)  A contractor sells a new house which was built in 2009. 
B)  Mario sells his used car for a profit. 
C)  Sally buys $10,000 worth of U.S.government bonds as an investment. 
D)  Boeing sells a 787 aircraft produced in 2011 to a Korean airline.

Question 7

The difference between a final good and an intermediate good is that:

Accepted Answer

A)  final goods are not counted as part of GDP. 
B)  intermediate goods are of lower quality than final goods. 
C)  an intermediate good is sold for use as a component in a final good. 
D)  a final good is sold for use as a component of an intermediate good. 
A)  final goods are not counted as part of GDP. 
B)  intermediate goods are of lower quality than final goods. 
C)  an intermediate good is sold for use as a component in a final good. 
D)  a final good is sold for use as a component of an intermediate good.

Question 8

Gross domestic product (GDP)differs from gross national product (GNP)in that:

Accepted Answer

A)  GNP measures the production of a country's permanent residents and property wherever in the world they are located. 
B)  GNP measures the production of both permanent residents and foreign workers within a country's borders. 
C)  GNP measures the production of a country's permanent residents and property within a country's borders. 
D)  GNP measures only the production of foreign workers within a country's borders. 
A)  GNP measures the production of a country's permanent residents and property wherever in the world they are located. 
B)  GNP measures the production of both permanent residents and foreign workers within a country's borders. 
C)  GNP measures the production of a country's permanent residents and property within a country's borders. 
D)  GNP measures only the production of foreign workers within a country's borders.

Question 9

If pressed to choose a single indicator of changing living standards,most economists would probably choose real GDP growth per capita.

Accepted Answer

A) True 
 B)False

Question 10

Birmingham Steel sells steel to Winston Golf Club Manufacturers for $300,000.Winston sells its golf clubs to Academy Sports for $1,000,000.Academy Sports sells Winston golf clubs for $1,500,000.How much is added to GDP?

Accepted Answer

A)  $1,000,000 
B)  $1,500,000 
C)  $2,500,000 
D)  $2,800,000 
A)  $1,000,000 
B)  $1,500,000 
C)  $2,500,000 
D)  $2,800,000

Question 11

Which of the following would NOT be included in the calculation of GDP as a government purchase?

Accepted Answer

A)  military payrolls 
B)  distribution of food stamps 
C)  purchase of 100 new C-5A aircraft 
D)  hiring 1,000 workers to build a new interstate roadway 
A)  military payrolls 
B)  distribution of food stamps 
C)  purchase of 100 new C-5A aircraft 
D)  hiring 1,000 workers to build a new interstate roadway

Question 12

It is possible for net exports to be a negative value.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following would be included in 2011's GDP?

Accepted Answer

A)  the resale of a house built in 2005 
B)  the sale of bonds 
C)  the sale of stocks 
D)  the real estate agent's commission on the resale of a house built in 2005 
A)  the resale of a house built in 2005 
B)  the sale of bonds 
C)  the sale of stocks 
D)  the real estate agent's commission on the resale of a house built in 2005

Question 14

The value of a country's GDP exceeds that of the country's GNP if the value of the:

Accepted Answer

A)  country's exports exceeds the value of its imports. 
B)  country's imports exceed the value of its exports. 
C)  output produced by foreign workers in the country exceeds the value of output produced by the country's permanent residents in other countries. 
D)  output produced by the country's permanent residents produced in other countries exceeds the value of output produced by foreign workers in the country. 
A)  country's exports exceeds the value of its imports. 
B)  country's imports exceed the value of its exports. 
C)  output produced by foreign workers in the country exceeds the value of output produced by the country's permanent residents in other countries. 
D)  output produced by the country's permanent residents produced in other countries exceeds the value of output produced by foreign workers in the country.

Question 15

A recession can be concentrated in one geographical part of the economy,even while other parts of the economy flourish.

Accepted Answer

A) True 
 B)False

Question 16

When comparing living standards across time,one should use nominal GDP rather than real GDP.

Accepted Answer

A) True 
 B)False

Question 17

Social Security benefits paid to current retirees is an example of government purchases that would be included in GDP.

Accepted Answer

A) True 
 B)False

Question 18

Jeff buys a used truck from a rental agency to make deliveries from his new furniture store.Would this purchase be included in GDP? If so,would it be consumption or investment spending?

Accepted Answer

Since the truck is used,it would not be

Question 19

Suppose a doctor spends half of the year in the United States and the other half in Canada and works in both places.How does his production get allocated between U.S.and Canadian GNP?

Accepted Answer

A)  Half of the doctor's income counts toward U.S.GNP and half toward Canadian GNP. 
B)  It depends on whether the doctor is a permanent resident of the United States or Canada. 
C)  The full income gets counted in both U.S.GNP and Canadian GNP. 
D)  The value of the services produced in the United States gets counted in U.S.GNP and the value of the services produced in Canada gets counted in Canadian GNP. 
A)  Half of the doctor's income counts toward U.S.GNP and half toward Canadian GNP. 
B)  It depends on whether the doctor is a permanent resident of the United States or Canada. 
C)  The full income gets counted in both U.S.GNP and Canadian GNP. 
D)  The value of the services produced in the United States gets counted in U.S.GNP and the value of the services produced in Canada gets counted in Canadian GNP.

Question 20

GDP measures the total spending on final goods and services in a country.

Accepted Answer

A) True 
 B)False

Exam 6: GDP and the Measurement of Progress

Since 1950,the portion of U.S.GDP created by services has:

Economists call household spending on final goods and services:

According to the national spending approach,education is classified as a consumption expenditure when splitting GDP.

Large amounts of nonmarket production and illegal activities mean that a lot of Latin American countries are actually richer than their GDP suggests.

A computer chip is one example of a final good.

Which of these transactions occurring in 2011 would contribute to GDP for 2011?

The difference between a final good and an intermediate good is that:

Gross domestic product (GDP)differs from gross national product (GNP)in that:

If pressed to choose a single indicator of changing living standards,most economists would probably choose real GDP growth per capita.

Birmingham Steel sells steel to Winston Golf Club Manufacturers for $300,000.Winston sells its golf clubs to Academy Sports for $1,000,000.Academy Sports sells Winston golf clubs for $1,500,000.How much is added to GDP?

Which of the following would NOT be included in the calculation of GDP as a government purchase?

It is possible for net exports to be a negative value.

Which of the following would be included in 2011's GDP?

The value of a country's GDP exceeds that of the country's GNP if the value of the:

A recession can be concentrated in one geographical part of the economy,even while other parts of the economy flourish.

When comparing living standards across time,one should use nominal GDP rather than real GDP.

Social Security benefits paid to current retirees is an example of government purchases that would be included in GDP.

Jeff buys a used truck from a rental agency to make deliveries from his new furniture store.Would this purchase be included in GDP? If so,would it be consumption or investment spending?

Suppose a doctor spends half of the year in the United States and the other half in Canada and works in both places.How does his production get allocated between U.S.and Canadian GNP?

GDP measures the total spending on final goods and services in a country.

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

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