Question 1

The purchase of stocks and bonds is considered an investment expenditure for calculating GDP.

Accepted Answer

A) True 
 B)False

Question 2

Explain the difference between real GDP and nominal GDP.

Accepted Answer

Real GDP is adjusted for changes in the

Question 3

Business cycles are fluctuations of real GDP around its long-term trend.

Accepted Answer

A) True 
 B)False

Question 4

Real GDP per capita is the measure of a country's standard of living preferred by most economists.

Accepted Answer

A) True 
 B)False

Question 5

A common indicator of a recession would be negative growth in real GDP lasting more than a few months.

Accepted Answer

A) True 
 B)False

Question 6

Total spending on services in the United State has doubled since 1950.

Accepted Answer

A) True 
 B)False

Question 7

GDP is an accurate measure of both the standard of living and the distribution of income within a country.

Accepted Answer

A) True 
 B)False

Question 8

A recession can be as short as one or two months.

Accepted Answer

A) True 
 B)False

Question 9

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

Real GDP per capita is calculated as the total real GDP divided by the:

Accepted Answer

A)  GDP deflator. 
B)  nominal GDP. 
C)  total population. 
D)  price level. 
A)  GDP deflator. 
B)  nominal GDP. 
C)  total population. 
D)  price level.

Question 11

When people consume more leisure:

Accepted Answer

A)  the hours in the workweek will increase. 
B)  the nation's GDP will decrease as a result of fewer hours worked. 
C)  the nation's GDP will increase as a result of the value of leisure. 
D)  the nation's GDP will not be affected. 
A)  the hours in the workweek will increase. 
B)  the nation's GDP will decrease as a result of fewer hours worked. 
C)  the nation's GDP will increase as a result of the value of leisure. 
D)  the nation's GDP will not be affected.

Question 12

An increase in the price you pay for a haircut will:

Accepted Answer

A)  contribute to GDP as a purchase of a good. 
B)  contribute to GDP as a purchase of a service. 
C)  not contribute to GDP. 
D)  contribute to GDP only if your hair stylist is a U.S.citizen. 
A)  contribute to GDP as a purchase of a good. 
B)  contribute to GDP as a purchase of a service. 
C)  not contribute to GDP. 
D)  contribute to GDP only if your hair stylist is a U.S.citizen.

Question 13

The calculation of GDP includes:

Accepted Answer

A)  both goods and services. 
B)  goods,but not services. 
C)  services,but not goods. 
D)  neither goods nor services. 
A)  both goods and services. 
B)  goods,but not services. 
C)  services,but not goods. 
D)  neither goods nor services.

Question 14

Spending on goods imported into the United States would be included in U.S.GNP,but not in U.S.GDP.

Accepted Answer

A) True 
 B)False

Question 15

A decline in nominal GDP is the single best indicator of a recession.

Accepted Answer

A) True 
 B)False

Question 16

GDP provides a measure of:

Accepted Answer

A)  economic welfare and income equity. 
B)  well-being that includes the value of both production and leisure. 
C)  the impact of production on the environment. 
D)  various types of legally earned income. 
A)  economic welfare and income equity. 
B)  well-being that includes the value of both production and leisure. 
C)  the impact of production on the environment. 
D)  various types of legally earned income.

Question 17

Which of these goods is a final good that would be counted in GDP in the year it is produced?

Accepted Answer

A)  tomatoes used by an Italian restaurant 
B)  wood used for making furniture 
C)  an oven for installation in a bakery 
D)  a computer chip used in a laptop computer 
A)  tomatoes used by an Italian restaurant 
B)  wood used for making furniture 
C)  an oven for installation in a bakery 
D)  a computer chip used in a laptop computer

Question 18

GDP includes the:

Accepted Answer

A)  current market value of government purchases of goods and services. 
B)  sales of stocks and bonds at current market prices. 
C)  current market value of used cars. 
D)  current market value of all existing homes,regardless of when they were built. 
A)  current market value of government purchases of goods and services. 
B)  sales of stocks and bonds at current market prices. 
C)  current market value of used cars. 
D)  current market value of all existing homes,regardless of when they were built.

Question 19

Nominal GDP in the United States grew by 6.37% from 1998 to 1999.This represents an increase in production and living standards in the U.S.from 1998 to 1999.

Accepted Answer

A) True 
 B)False

Question 20

The value of a car produced and sold in 2005 and sold again in 2011 is included in:

Accepted Answer

A)  2005's GDP only. 
B)  2011's GDP only. 
C)  both 2005's GDP and 2011's GDP. 
D)  neither 2005's nor 2011's GDP. 
A)  2005's GDP only. 
B)  2011's GDP only. 
C)  both 2005's GDP and 2011's GDP. 
D)  neither 2005's nor 2011's GDP.

Exam 6: GDP and the Measurement of Progress

The purchase of stocks and bonds is considered an investment expenditure for calculating GDP.

Explain the difference between real GDP and nominal GDP.

Business cycles are fluctuations of real GDP around its long-term trend.

Real GDP per capita is the measure of a country's standard of living preferred by most economists.

A common indicator of a recession would be negative growth in real GDP lasting more than a few months.

Total spending on services in the United State has doubled since 1950.

GDP is an accurate measure of both the standard of living and the distribution of income within a country.

A recession can be as short as one or two months.

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

Real GDP per capita is calculated as the total real GDP divided by the:

When people consume more leisure:

An increase in the price you pay for a haircut will:

The calculation of GDP includes:

Spending on goods imported into the United States would be included in U.S.GNP,but not in U.S.GDP.

A decline in nominal GDP is the single best indicator of a recession.

GDP provides a measure of:

Which of these goods is a final good that would be counted in GDP in the year it is produced?

GDP includes the:

Nominal GDP in the United States grew by 6.37% from 1998 to 1999.This represents an increase in production and living standards in the U.S.from 1998 to 1999.

The value of a car produced and sold in 2005 and sold again in 2011 is included in:

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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