Question 1

A farmer's purchase of a new tractor counts as consumption in the national spending approach to measuring GDP.

Accepted Answer

A) True 
 B)False

Question 2

GDP is the market value of all final goods and services produced within a country in a year.

Accepted Answer

A) True 
 B)False

Question 3

The causes of business cycles are well understood and as such their beginning and ending points are easily predicted.

Accepted Answer

A) True 
 B)False

Question 4

In general,during any given year:

Accepted Answer

A)  GDP in the United States will exceed wealth in the United States. 
B)  wealth in the United States will exceed GDP in the United States. 
C)  U.S.wealth and U.S.GDP will be approximately equal. 
D)  U.S.wealth and U.S.GDP will be unrelated. 
A)  GDP in the United States will exceed wealth in the United States. 
B)  wealth in the United States will exceed GDP in the United States. 
C)  U.S.wealth and U.S.GDP will be approximately equal. 
D)  U.S.wealth and U.S.GDP will be unrelated.

Question 5

GDP:

Accepted Answer

A)  is a measure of national wealth. 
B)  measures the stock of assets,while national wealth measures production in a year. 
C)  measures production in a year,while national wealth measures a stock of assets. 
D)  is usually higher than national wealth. 
A)  is a measure of national wealth. 
B)  measures the stock of assets,while national wealth measures production in a year. 
C)  measures production in a year,while national wealth measures a stock of assets. 
D)  is usually higher than national wealth.

Question 6

Which of the following would NOT be included in this year's GDP?

Accepted Answer

A)  Tom and Amy pay $75 for a meal in a restaurant. 
B)  Sarah pays her accountant $200 to do her taxes. 
C)  Jim mows his neighbor's lawn as a favor. 
D)  Megan buys a new Coach purse. 
A)  Tom and Amy pay $75 for a meal in a restaurant. 
B)  Sarah pays her accountant $200 to do her taxes. 
C)  Jim mows his neighbor's lawn as a favor. 
D)  Megan buys a new Coach purse.

Question 7

Personal consumption expenditure is the largest spending component in GDP.

Accepted Answer

A) True 
 B)False

Question 8

The cost of hiring an outside company to clean up a chemical spill at a local factory will not be reflected in GDP.

Accepted Answer

A) True 
 B)False

Question 9

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 GDP?

Accepted Answer

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

Question 10

Which of these services most likely would NOT be counted in GDP?

Accepted Answer

A)  You hire a real estate agent to sell a house you have owned for 10 years. 
B)  You pay commission to the salesperson on the purchase of a used car. 
C)  You pay your neighbor's teenage son to cut your grass while you are away on vacation. 
D)  You hire a painting company to paint your 10-year old house. 
A)  You hire a real estate agent to sell a house you have owned for 10 years. 
B)  You pay commission to the salesperson on the purchase of a used car. 
C)  You pay your neighbor's teenage son to cut your grass while you are away on vacation. 
D)  You hire a painting company to paint your 10-year old house.

Question 11

Economic growth has been the normal state of affairs throughout most of human history.

Accepted Answer

A) True 
 B)False

Question 12

On your first day of a summer internship with a pharmaceutical sales company,your boss explains how the company is in the midst of examining its sales data over the past 25 years to identify trends of growth and decline.She asks for your opinion on whether the company should use real or nominal sales data.What would you say?

Accepted Answer

To determine whether the quantity of sal

Question 13

Transfer payments are not included in government purchases.

Accepted Answer

A) True 
 B)False

Question 14

Economists call the value of exports minus imports:

Accepted Answer

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

Question 15

Net exports will be negative if imports exceed exports.

Accepted Answer

A) True 
 B)False

Question 16

Prostitution is legal in Nevada and illegal everywhere else in the United States.Therefore,prostitution is counted as part of GDP if it occurs in Nevada,but not elsewhere.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The portion of women in the workforce has nearly doubled since 1950.As a result,fewer mothers are providing services inside the home.How has this trend affected GDP?

Accepted Answer

A)  This trend has had no predictable effect on GDP. 
B)  The GDP in 1950 is underestimated relative to today. 
C)  The GDP in 1950 is overestimated relative to today. 
D)  The share of GDP attributable to women has declined. 
A)  This trend has had no predictable effect on GDP. 
B)  The GDP in 1950 is underestimated relative to today. 
C)  The GDP in 1950 is overestimated relative to today. 
D)  The share of GDP attributable to women has declined.

Question 19

Explain the difference between real GDP and nominal GDP.

Accepted Answer

Real GDP is adjusted

Question 20

Since 1982,recessions have become less frequent.

Accepted Answer

A) True 
 B)False

A farmer's purchase of a new tractor counts as consumption in the national spending approach to measuring GDP.

GDP is the market value of all final goods and services produced within a country in a year.

The causes of business cycles are well understood and as such their beginning and ending points are easily predicted.

In general,during any given year:

GDP:

Which of the following would NOT be included in this year's GDP?

Personal consumption expenditure is the largest spending component in GDP.

The cost of hiring an outside company to clean up a chemical spill at a local factory will not be reflected in GDP.

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 GDP?

Which of these services most likely would NOT be counted in GDP?

Economic growth has been the normal state of affairs throughout most of human history.

Transfer payments are not included in government purchases.

Economists call the value of exports minus imports:

Net exports will be negative if imports exceed exports.

Prostitution is legal in Nevada and illegal everywhere else in the United States.Therefore,prostitution is counted as part of GDP if it occurs in Nevada,but not elsewhere.

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

The portion of women in the workforce has nearly doubled since 1950.As a result,fewer mothers are providing services inside the home.How has this trend affected GDP?

Explain the difference between real GDP and nominal GDP.

Since 1982,recessions have become less frequent.

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

Filters

Exam 6: GDP and the Measurement of Progress

A farmer's purchase of a new tractor counts as consumption in the national spending approach to measuring GDP.

GDP is the market value of all final goods and services produced within a country in a year.

The causes of business cycles are well understood and as such their beginning and ending points are easily predicted.

In general,during any given year:

GDP:

Which of the following would NOT be included in this year's GDP?

Personal consumption expenditure is the largest spending component in GDP.

The cost of hiring an outside company to clean up a chemical spill at a local factory will not be reflected in GDP.

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 GDP?

Which of these services most likely would NOT be counted in GDP?

Economic growth has been the normal state of affairs throughout most of human history.

Transfer payments are not included in government purchases.

Economists call the value of exports minus imports:

Net exports will be negative if imports exceed exports.

Prostitution is legal in Nevada and illegal everywhere else in the United States.Therefore,prostitution is counted as part of GDP if it occurs in Nevada,but not elsewhere.

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

The portion of women in the workforce has nearly doubled since 1950.As a result,fewer mothers are providing services inside the home.How has this trend affected GDP?

Explain the difference between real GDP and nominal GDP.

Since 1982,recessions have become less frequent.

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

Filters