Question 1

After calculating net domestic product at factor cost,to calculate GDP using the income approach,in part we must add

Accepted Answer

A) wages. 
B) net operating surplus. 
C) indirect taxes and depreciation. 
D) interest,rent,and profit. 
E) subsidies. 
A) wages. 
B) net operating surplus. 
C) indirect taxes and depreciation. 
D) interest,rent,and profit. 
E) subsidies.

Question 2

-Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above.The base year is 2012.In 2013,which is larger,nominal GDP or real GDP?

Accepted Answer

A) Nominal GDP is larger. 
B) Real GDP is larger. 
C) Both are the same size. 
D) The answer is ambiguous. 
E) More information is needed to determine which is larger. 
A) Nominal GDP is larger. 
B) Real GDP is larger. 
C) Both are the same size. 
D) The answer is ambiguous. 
E) More information is needed to determine which is larger.

Question 3

If nominal GDP increases from one year to the next,then

Accepted Answer

A) production must have increased. 
B) production could have increased,decreased,or stayed the same. 
C) prices must have increased. 
D) prices and production must both have increased. 
E) prices and production must both have decreased. 
A) production must have increased. 
B) production could have increased,decreased,or stayed the same. 
C) prices must have increased. 
D) prices and production must both have increased. 
E) prices and production must both have decreased.

Question 4

If a firm does not sell all of the goods that it produces in a given time period,then the goods

Accepted Answer

A) do not count in GDP ever. 
B) do not count in GDP for that time period but always count next period. 
C) count positively in GDP as inventory investment. 
D) count negatively in GDP as inventory investment. 
E) count in GDP the period they are sold to the final user. 
A) do not count in GDP ever. 
B) do not count in GDP for that time period but always count next period. 
C) count positively in GDP as inventory investment. 
D) count negatively in GDP as inventory investment. 
E) count in GDP the period they are sold to the final user.

Question 5

Suppose GDP is $10 billion,consumption expenditure is $7 billion,investment is $2 billion,and government expenditure on goods and services is $2 billion.Net exports of goods and services must be

Accepted Answer

A) $1 billion. 
B) -$1 billion. 
C) $2 billion. 
D) -$2 billion. 
E) $10 billion. 
A) $1 billion. 
B) -$1 billion. 
C) $2 billion. 
D) -$2 billion. 
E) $10 billion.

Question 6

In order to be classified as a recession,a contraction of general economic activity must last at least

Accepted Answer

A) one year. 
B) six months. 
C) one period. 
D) one quarter. 
E) None of the above because recessions do not have a minimum length. 
A) one year. 
B) six months. 
C) one period. 
D) one quarter. 
E) None of the above because recessions do not have a minimum length.

Question 7

Measuring total production by valuing items at their market value allows us to

Accepted Answer

A) separate the value of different goods with identical prices. 
B) separate the value of different goods with different prices. 
C) add together the value of different goods that have different prices. 
D) add together the value of identical goods that have identical prices. 
E) ignore the problem that goods and services differ in how long they last. 
A) separate the value of different goods with identical prices. 
B) separate the value of different goods with different prices. 
C) add together the value of different goods that have different prices. 
D) add together the value of identical goods that have identical prices. 
E) ignore the problem that goods and services differ in how long they last.

Question 8

If both the production of goods and services increase and prices rise,then the change in nominal GDP

Accepted Answer

A) definitely understates the change in production. 
B) definitely accurately reflect the change in production. 
C) definitely overstates the change in production. 
D) either understates or might accurately reflect the change in production. 
E) More information is needed to determine how the change in nominal GDP compares to the change in production. 
A) definitely understates the change in production. 
B) definitely accurately reflect the change in production. 
C) definitely overstates the change in production. 
D) either understates or might accurately reflect the change in production. 
E) More information is needed to determine how the change in nominal GDP compares to the change in production.

Question 9

Gross Domestic Product is equal to the market value of all the final goods and services ________ in a given period of time.

Accepted Answer

A) produced within a country 
B) consumed within a country 
C) consumed by the citizens of a country 
D) produced by the citizens of a country 
E) produced and consumed within a country 
A) produced within a country 
B) consumed within a country 
C) consumed by the citizens of a country 
D) produced by the citizens of a country 
E) produced and consumed within a country

Question 10

Household production,such as baking bread at home,is not included in GDP because it

Accepted Answer

A) has better quality than the bread in the store. 
B) has lower quality than the bread in the store. 
C) does not add anything of value to GDP. 
D) does not involve a market transaction. 
E) is not really production. 
A) has better quality than the bread in the store. 
B) has lower quality than the bread in the store. 
C) does not add anything of value to GDP. 
D) does not involve a market transaction. 
E) is not really production.

Question 11

Janet calculated the GDP growth rates for France between 2012 and 2013.Using 2012 prices for both years,GDP increased 5 percent.Using 2013 prices for both years,GDP increased 1 percent.Hence the chained-price method will calculate that between these years,real GDP increased by

Accepted Answer

A) 1 percent. 
B) 3 percent. 
C) 5 percent. 
D) 6 percent. 
E) 4 percent. 
A) 1 percent. 
B) 3 percent. 
C) 5 percent. 
D) 6 percent. 
E) 4 percent.

Question 12

Although imperfect,which of the following is used as a measure of the standard of living?

Accepted Answer

A) real GDP ÷ population 
B) real GDP × population 
C) nominal GDP × population 
D) nominal GNP ÷ population 
E) nominal GNP × population 
A) real GDP ÷ population 
B) real GDP × population 
C) nominal GDP × population 
D) nominal GNP ÷ population 
E) nominal GNP × population

Question 13

In calculating GDP,we must

Accepted Answer

A) add the market value of imports and subtract the market value of exports. 
B) add the market value of exports and subtract the market value of imports. 
C) exclude net exports of goods and services (NX). 
D) add the value of the goods produced outside of the United States by American firms. 
E) subtract the market value of imports,because these goods are produced in a country other than the United States,and subtract the market value of exports,because these goods are consumed in a country other than the United States. 
A) add the market value of imports and subtract the market value of exports. 
B) add the market value of exports and subtract the market value of imports. 
C) exclude net exports of goods and services (NX). 
D) add the value of the goods produced outside of the United States by American firms. 
E) subtract the market value of imports,because these goods are produced in a country other than the United States,and subtract the market value of exports,because these goods are consumed in a country other than the United States.

Question 14

Spending on financial assets ________ counted as part of GDP ________.

Accepted Answer

A) are;because the cash exchanged represents an expenditure 
B) are not;because their purchase is not spending on goods or services 
C) are;as long as their purchase produces income 
D) are not;because interest must be paid on them 
E) may be;as long as their value increases 
A) are;because the cash exchanged represents an expenditure 
B) are not;because their purchase is not spending on goods or services 
C) are;as long as their purchase produces income 
D) are not;because interest must be paid on them 
E) may be;as long as their value increases

Question 15

Adding wages,interest,rent,and profits yields

Accepted Answer

A) gross domestic product. 
B) gross domestic product at factor cost. 
C) net domestic product at factor cost. 
D) GNP. 
E) total expenditure. 
A) gross domestic product. 
B) gross domestic product at factor cost. 
C) net domestic product at factor cost. 
D) GNP. 
E) total expenditure.

Question 16

Gross Domestic Product is the market value of all ________ produced within a country in a given period of time.

Accepted Answer

A) final goods 
B) intermediate goods 
C) final services 
D) intermediate services 
E) final goods and services 
A) final goods 
B) intermediate goods 
C) final services 
D) intermediate services 
E) final goods and services

Question 17

An example of household production excluded from GDP is

Accepted Answer

A) household cleaning services provided by Merry Maids Incorporated. 
B) child care provided by a certified nanny. 
C) tree trimming you provide at your parents' home. 
D) plumbing work completed by Joe Fix-it. 
E) lawn care provided by a local lawn care company. 
A) household cleaning services provided by Merry Maids Incorporated. 
B) child care provided by a certified nanny. 
C) tree trimming you provide at your parents' home. 
D) plumbing work completed by Joe Fix-it. 
E) lawn care provided by a local lawn care company.

Question 18

The purchase and sale of three types of legal items are not included in this year's GDP.What are these three items?

Accepted Answer

The three items are:

Question 19

The calculation of GDP excludes the value of

Accepted Answer

A) government expenditure on office supplies. 
B) households' purchases of shampoo. 
C) businesses' purchase of new machine tools. 
D) a family member painting the family home. 
E) expenditure on durable goods. 
A) government expenditure on office supplies. 
B) households' purchases of shampoo. 
C) businesses' purchase of new machine tools. 
D) a family member painting the family home. 
E) expenditure on durable goods.

Question 20

If we use GDP to measure our standard of living,then our procedure is

Accepted Answer

A) inaccurate because our standard of living does not depend only on goods and services. 
B) accurate because our standard of living depends solely on goods and services. 
C) inaccurate because our standard of living has nothing to do with goods and services. 
D) inaccurate because our standard of living only depends on used goods and services. 
E) accurate only if we use nominal GDP rather than real GDP. 
A) inaccurate because our standard of living does not depend only on goods and services. 
B) accurate because our standard of living depends solely on goods and services. 
C) inaccurate because our standard of living has nothing to do with goods and services. 
D) inaccurate because our standard of living only depends on used goods and services. 
E) accurate only if we use nominal GDP rather than real GDP.

After calculating net domestic product at factor cost,to calculate GDP using the income approach,in part we must add

-Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above.The base year is 2012.In 2013,which is larger,nominal GDP or real GDP?

If nominal GDP increases from one year to the next,then

If a firm does not sell all of the goods that it produces in a given time period,then the goods

Suppose GDP is $10 billion,consumption expenditure is $7 billion,investment is $2 billion,and government expenditure on goods and services is $2 billion.Net exports of goods and services must be

In order to be classified as a recession,a contraction of general economic activity must last at least

Measuring total production by valuing items at their market value allows us to

If both the production of goods and services increase and prices rise,then the change in nominal GDP

Gross Domestic Product is equal to the market value of all the final goods and services ________ in a given period of time.

Household production,such as baking bread at home,is not included in GDP because it

Janet calculated the GDP growth rates for France between 2012 and 2013.Using 2012 prices for both years,GDP increased 5 percent.Using 2013 prices for both years,GDP increased 1 percent.Hence the chained-price method will calculate that between these years,real GDP increased by

Although imperfect,which of the following is used as a measure of the standard of living?

In calculating GDP,we must

Spending on financial assets counted as part of GDP .

Adding wages,interest,rent,and profits yields

Gross Domestic Product is the market value of all ________ produced within a country in a given period of time.

An example of household production excluded from GDP is

The purchase and sale of three types of legal items are not included in this year's GDP.What are these three items?

The calculation of GDP excludes the value of

If we use GDP to measure our standard of living,then our procedure is

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 14: Gdp: a Measure of Total Production and Income

After calculating net domestic product at factor cost,to calculate GDP using the income approach,in part we must add

-Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above.The base year is 2012.In 2013,which is larger,nominal GDP or real GDP?

If nominal GDP increases from one year to the next,then

If a firm does not sell all of the goods that it produces in a given time period,then the goods

Suppose GDP is $10 billion,consumption expenditure is $7 billion,investment is $2 billion,and government expenditure on goods and services is $2 billion.Net exports of goods and services must be

In order to be classified as a recession,a contraction of general economic activity must last at least

Measuring total production by valuing items at their market value allows us to

If both the production of goods and services increase and prices rise,then the change in nominal GDP

Gross Domestic Product is equal to the market value of all the final goods and services ________ in a given period of time.

Household production,such as baking bread at home,is not included in GDP because it

Janet calculated the GDP growth rates for France between 2012 and 2013.Using 2012 prices for both years,GDP increased 5 percent.Using 2013 prices for both years,GDP increased 1 percent.Hence the chained-price method will calculate that between these years,real GDP increased by

Although imperfect,which of the following is used as a measure of the standard of living?

In calculating GDP,we must

Spending on financial assets ________ counted as part of GDP ________.

Adding wages,interest,rent,and profits yields

Gross Domestic Product is the market value of all ________ produced within a country in a given period of time.

An example of household production excluded from GDP is

The purchase and sale of three types of legal items are not included in this year's GDP.What are these three items?

The calculation of GDP excludes the value of

If we use GDP to measure our standard of living,then our procedure is

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Spending on financial assets counted as part of GDP .