Question 1

Economists call spending by all levels of government 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.

Question 2

According to the national spending approach,net exports must be subtracted from all other spending in the economy in the calculation of GDP.

Accepted Answer

A) True 
 B)False

Question 3

GNP is the market value of all final goods and services produced by a country's permanent residents,wherever located,in a year.

Accepted Answer

A) True 
 B)False

Question 4

Nominal GDP measures the value of production in current-year prices.

Accepted Answer

A) True 
 B)False

Question 5

The most common measure of the size of an economy is:

Accepted Answer

A)  its national wealth. 
B)  its GDP. 
C)  its GDP per capita. 
D)  its population. 
A)  its national wealth. 
B)  its GDP. 
C)  its GDP per capita. 
D)  its population.

Question 6

The value of a car produced by Ford (an American company)in a factory located in Europe would be included in U.S.GNP.

Accepted Answer

A) True 
 B)False

Question 7

The factor income approach splits GDP into wages,profit,interest,and rent.

Accepted Answer

A) True 
 B)False

Question 8

If real GDP grows by 3% and the GDP deflator grows by 2%,then nominal GDP must grow by 5%.

Accepted Answer

A) True 
 B)False

Question 9

If you accept a job in Mexico after college,your income will be part of GNP in:

Accepted Answer

A)  Mexico only. 
B)  the United States only. 
C)  both Mexico and the United States. 
D)  neither Mexico nor the United States. 
A)  Mexico only. 
B)  the United States only. 
C)  both Mexico and the United States. 
D)  neither Mexico nor the United States.

Question 10

The market value of all final goods and services produced within a given country in a year divided by the country's population is:

Accepted Answer

A)  GNP. 
B)  GNP per capita. 
C)  GDP. 
D)  GDP per capita. 
A)  GNP. 
B)  GNP per capita. 
C)  GDP. 
D)  GDP per capita.

Question 11

Environmental damage caused by pollution leaked into a river by a local factory will negatively impact GDP.

Accepted Answer

A) True 
 B)False

Question 12

National wealth and GDP are two names for the same thing.

Accepted Answer

A) True 
 B)False

Question 13

In nations that have large underground,or illegal,sectors:

Accepted Answer

A)  GDP will overestimate total production in the economy. 
B)  GDP will underestimate total production in the economy. 
C)  GDP will provide an accurate account of production in the economy. 
D)  poverty will be significantly greater than in countries with fewer illegal market activities. 
A)  GDP will overestimate total production in the economy. 
B)  GDP will underestimate total production in the economy. 
C)  GDP will provide an accurate account of production in the economy. 
D)  poverty will be significantly greater than in countries with fewer illegal market activities.

Question 14

You sell your old bedroom set to your roommate for $1,800 and buy new custom-built furniture for $6,000.How much is added to GDP?

Accepted Answer

A)  $1,800 
B)  $4,200 
C)  $6,000 
D)  $7,800 
A)  $1,800 
B)  $4,200 
C)  $6,000 
D)  $7,800

Question 15

Which of the following would NOT be included in the calculation of GDP as an investment expenditure?

Accepted Answer

A)  A contractor purchases a new circular saw. 
B)  Ford Motor Company builds a new manufacturing plant. 
C)  Your community college spends $200,000 to upgrade its computer labs. 
D)  You purchase $5,000 in shares of Apple stock. 
A)  A contractor purchases a new circular saw. 
B)  Ford Motor Company builds a new manufacturing plant. 
C)  Your community college spends $200,000 to upgrade its computer labs. 
D)  You purchase $5,000 in shares of Apple stock.

Question 16

Growing tomatoes in your back yard and making salsa for a Super Bowl party you are hosting will NOT be reflected in GDP.

Accepted Answer

A) True 
 B)False

Question 17

The value of a car produced by Kia (a South Korean company)in a factory located in Tennessee would be included in U.S.GDP.

Accepted Answer

A) True 
 B)False

Question 18

Suppose you spent $10,000 in 2010 remodeling your house,which you originally built for $200,000 in 2000.As a result,GDP in 2010 would:

Accepted Answer

A)  not change. 
B)  increase by $10,000. 
C)  increase by $200,000. 
D)  increase by $210,000. 
A)  not change. 
B)  increase by $10,000. 
C)  increase by $200,000. 
D)  increase by $210,000.

Question 19

The calculation of GDP includes:

Accepted Answer

A)  neither final goods nor intermediate goods. 
B)  only intermediate goods. 
C)  only final goods. 
D)  both intermediate and final goods. 
A)  neither final goods nor intermediate goods. 
B)  only intermediate goods. 
C)  only final goods. 
D)  both intermediate and final goods.

Question 20

According to the national spending approach,imports must be subtracted from all other spending in the economy in the calculation of GDP.

Accepted Answer

A) True 
 B)False

Exam 6: GDP and the Measurement of Progress

Economists call spending by all levels of government on final goods and services:

According to the national spending approach,net exports must be subtracted from all other spending in the economy in the calculation of GDP.

GNP is the market value of all final goods and services produced by a country's permanent residents,wherever located,in a year.

Nominal GDP measures the value of production in current-year prices.

The most common measure of the size of an economy is:

The value of a car produced by Ford (an American company)in a factory located in Europe would be included in U.S.GNP.

The factor income approach splits GDP into wages,profit,interest,and rent.

If real GDP grows by 3% and the GDP deflator grows by 2%,then nominal GDP must grow by 5%.

If you accept a job in Mexico after college,your income will be part of GNP in:

The market value of all final goods and services produced within a given country in a year divided by the country's population is:

Environmental damage caused by pollution leaked into a river by a local factory will negatively impact GDP.

National wealth and GDP are two names for the same thing.

In nations that have large underground,or illegal,sectors:

You sell your old bedroom set to your roommate for $1,800 and buy new custom-built furniture for $6,000.How much is added to GDP?

Which of the following would NOT be included in the calculation of GDP as an investment expenditure?

Growing tomatoes in your back yard and making salsa for a Super Bowl party you are hosting will NOT be reflected in GDP.

The value of a car produced by Kia (a South Korean company)in a factory located in Tennessee would be included in U.S.GDP.

Suppose you spent $10,000 in 2010 remodeling your house,which you originally built for $200,000 in 2000.As a result,GDP in 2010 would:

The calculation of GDP includes:

According to the national spending approach,imports must be subtracted from all other spending in the economy in the calculation of GDP.

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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