Question 1

When one converts nominal GDP to real GDP, one takes into account which of the following?

Accepted Answer

A)  changes in the population 
B)  changes in the quality of goods 
C)  changes in the distribution of income 
D)  none of the above 
A)  changes in the population 
B)  changes in the quality of goods 
C)  changes in the distribution of income 
D)  none of the above

Question 2

Many economists argue that real GDP is NOT a good measure of economic well-being because

Accepted Answer

A)  it overvalues the increases in nonmarket transactions. 
B)  it excludes Social Security payments made to retirees. 
C)  it includes the taxes we pay to the federal government. 
D)  it excludes the environmental quality of life. 
A)  it overvalues the increases in nonmarket transactions. 
B)  it excludes Social Security payments made to retirees. 
C)  it includes the taxes we pay to the federal government. 
D)  it excludes the environmental quality of life.

Question 3

The measurement system used by the U.S. government to estimate national income is

Accepted Answer

A)  the GDP deflator. 
B)  national income accounting. 
C)  the sum of financial transactions, transfer payments and secondhand goods. 
D)  the sum of consumption plus investment expenditures. 
A)  the GDP deflator. 
B)  national income accounting. 
C)  the sum of financial transactions, transfer payments and secondhand goods. 
D)  the sum of consumption plus investment expenditures.

Question 4

Which of the following is included in determining Gross Domestic Product?

Accepted Answer

A)  the purchase of a new car 
B)  the purchase of a used car 
C)  a housewife preparing breakfast 
D)  a gardener canning vegetables for consumption during the winter 
A)  the purchase of a new car 
B)  the purchase of a used car 
C)  a housewife preparing breakfast 
D)  a gardener canning vegetables for consumption during the winter

Question 5

Assume that a Ford truck sells for $30,000 in the United States and that the exchange rate is $1 = 0.8 euro. For purchasing power parity to hold, the same car in Germany should sell for

Accepted Answer

A)  24,000 euros. 
B)  30,000 euros. 
C)  36,250 euros. 
D)  37,500 euros. 
A)  24,000 euros. 
B)  30,000 euros. 
C)  36,250 euros. 
D)  37,500 euros.

Question 6

If consumption expenditures are $500, spending on fixed investment is $100, imports are $40, exports are $75, the capital consumption allowance is $25, government spending is $50, and inventories have fallen by $5, then Gross Domestic Product (GDP) is

Accepted Answer

A)  $25 greater than NDP. 
B)  $20 greater than NDP. 
C)  $50 greater than NDP. 
D)  the same as NDP. 
A)  $25 greater than NDP. 
B)  $20 greater than NDP. 
C)  $50 greater than NDP. 
D)  the same as NDP.

Question 7

Examples of nondurable consumer goods include all of the following EXCEPT

Accepted Answer

A)  a pizza delivered to your home. 
B)  a cup of coffee. 
C)  a mattress. 
D)  a movie ticket. 
A)  a pizza delivered to your home. 
B)  a cup of coffee. 
C)  a mattress. 
D)  a movie ticket.

Question 8

-According to the above table, net domestic product is

Accepted Answer

A)  $8,813 billion. 
B)  $12,603 billion. 
C)  $13,092 billion. 
D)  $13,750 billion. 
A)  $8,813 billion. 
B)  $12,603 billion. 
C)  $13,092 billion. 
D)  $13,750 billion.

Question 9

The problem with using foreign exchange rates to convert one country's GDP into dollars is that

Accepted Answer

A)  the values of currencies are not comparable. 
B)  exchange rates do not reflect differences in inflation rates. 
C)  not all goods and services are sold on world markets. 
D)  the dollar has been losing value over the last twenty years. 
A)  the values of currencies are not comparable. 
B)  exchange rates do not reflect differences in inflation rates. 
C)  not all goods and services are sold on world markets. 
D)  the dollar has been losing value over the last twenty years.

Question 10

-The value of Gross Domestic Product (GDP), when estimated by the income approach, is the sum of

Accepted Answer

A)  consumption expenditures, investment spending, and profits. 
B)  consumption, wages, rents, interest, and profits. 
C)  income earned by all factors of production, indirect business taxes, corporate income taxes, and personal income taxes. 
D)  depreciation, business income adjustments less indirect business taxes, U.S. net income earned abroad and income earned domestically by factors of production. 
A)  consumption expenditures, investment spending, and profits. 
B)  consumption, wages, rents, interest, and profits. 
C)  income earned by all factors of production, indirect business taxes, corporate income taxes, and personal income taxes. 
D)  depreciation, business income adjustments less indirect business taxes, U.S. net income earned abroad and income earned domestically by factors of production.

Question 11

The circular flow of income assumes that

Accepted Answer

A)  profit is not a cost of production. 
B)  the national income accounting approach is not an adequate way to measure the economy's performance. 
C)  goods and services flow in one direction and money payments flow in the other. 
D)  total income is the sum of the value of intermediate goods and final goods and services. 
A)  profit is not a cost of production. 
B)  the national income accounting approach is not an adequate way to measure the economy's performance. 
C)  goods and services flow in one direction and money payments flow in the other. 
D)  total income is the sum of the value of intermediate goods and final goods and services.

Question 12

Define and explain gross domestic product.

Accepted Answer

Gross domestic product is the total mark

Question 13

An decrease in Social Security contributions will make

Accepted Answer

A)  gross domestic product larger. 
B)  national income larger. 
C)  national income smaller. 
D)  personal income larger. 
A)  gross domestic product larger. 
B)  national income larger. 
C)  national income smaller. 
D)  personal income larger.

Question 14

The amount of income that households actually receive before they pay personal income taxes defines

Accepted Answer

A)  national income (NI). 
B)  personal income (PI). 
C)  disposable personal income (DPI). 
D)  net domestic product (NDP). 
A)  national income (NI). 
B)  personal income (PI). 
C)  disposable personal income (DPI). 
D)  net domestic product (NDP).

Question 15

The difference between Gross Domestic Income (GDI) and Gross Domestic Product (GDP) is that

Accepted Answer

A)  GDI is GDP less indirect business taxes and depreciation. 
B)  GDP is GDI less indirect business taxes and depreciation. 
C)  GDI is equal to GDP. 
D)  GDP is always smaller than GDI. 
A)  GDI is GDP less indirect business taxes and depreciation. 
B)  GDP is GDI less indirect business taxes and depreciation. 
C)  GDI is equal to GDP. 
D)  GDP is always smaller than GDI.

Question 16

If consumption expenditures are $120 million, net investment is $50 million, imports are $20 million, exports are $10 million, government spending on goods and services is $40 million, Social Security spending is $15 million, and sales of existing homes equals $40 million, then what is the measure of GDP?

Accepted Answer

A)  GDP = $185 million 
B)  GDP = $200 million 
C)  GDP = $225 million 
D)  GDP = $195 million 
A)  GDP = $185 million 
B)  GDP = $200 million 
C)  GDP = $225 million 
D)  GDP = $195 million

Question 17

Which of the following transactions is included in Gross Domestic Product?

Accepted Answer

A)  a Social Security check received by a retired couple 
B)  a gift card that a mother gives her son 
C)  a used textbook that one student gives another student in exchange for an iPod 
D)  tips received by a waitress who reports them to the IRS 
A)  a Social Security check received by a retired couple 
B)  a gift card that a mother gives her son 
C)  a used textbook that one student gives another student in exchange for an iPod 
D)  tips received by a waitress who reports them to the IRS

Question 18

A farmer buys seed for 15 cents that is used to grow wheat. The farmer sells the wheat to the miller for 30 cents, who makes flour. The flour is sold to the baker for 65 cents and the baker makes bread, which is sold to the grocer for 90 cents. The grocer sells the bread for $1.25. What is the value added for the miller?

Accepted Answer

A)  65 cents 
B)  45 cents 
C)  35 cents 
D)  90 cents 
A)  65 cents 
B)  45 cents 
C)  35 cents 
D)  90 cents

Question 19

If nominal Gross Domestic Product (GDP) in 2018 was $3,000 billion, and the price level index was 330 (2000 = 100), then real Gross Domestic Product (GDP) in terms of the price level in 2018 was about

Accepted Answer

A)  $105 billion. 
B)  $4,220 billion. 
C)  $909 billion. 
D)  $537 billion. 
A)  $105 billion. 
B)  $4,220 billion. 
C)  $909 billion. 
D)  $537 billion.

Question 20

The adjustment in exchange rate conversions that takes into account differences in the true cost of living across countries is called

Accepted Answer

A)  nominal purchasing power. 
B)  purchasing power parity. 
C)  raw purchasing power. 
D)  currency-adjusted purchasing power. 
A)  nominal purchasing power. 
B)  purchasing power parity. 
C)  raw purchasing power. 
D)  currency-adjusted purchasing power.

Exam 8: Measuring the Economys Performance

When one converts nominal GDP to real GDP, one takes into account which of the following?

Many economists argue that real GDP is NOT a good measure of economic well-being because

The measurement system used by the U.S. government to estimate national income is

Which of the following is included in determining Gross Domestic Product?

Assume that a Ford truck sells for $30,000 in the United States and that the exchange rate is $1 = 0.8 euro. For purchasing power parity to hold, the same car in Germany should sell for

If consumption expenditures are $500, spending on fixed investment is $100, imports are $40, exports are $75, the capital consumption allowance is $25, government spending is $50, and inventories have fallen by $5, then Gross Domestic Product (GDP) is

Examples of nondurable consumer goods include all of the following EXCEPT

-According to the above table, net domestic product is

The problem with using foreign exchange rates to convert one country's GDP into dollars is that

-The value of Gross Domestic Product (GDP), when estimated by the income approach, is the sum of

The circular flow of income assumes that

Define and explain gross domestic product.

An decrease in Social Security contributions will make

The amount of income that households actually receive before they pay personal income taxes defines

The difference between Gross Domestic Income (GDI) and Gross Domestic Product (GDP) is that

Which of the following transactions is included in Gross Domestic Product?

If nominal Gross Domestic Product (GDP) in 2018 was $3,000 billion, and the price level index was 330 (2000 = 100), then real Gross Domestic Product (GDP) in terms of the price level in 2018 was about

The adjustment in exchange rate conversions that takes into account differences in the true cost of living across countries is called

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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