Question 1

The size of the underground economy would tend to increase if the government of a country

Accepted Answer

A) decreased government regulations on businesses. 
B) increased income tax rates. 
C) legalized prostitution. 
D) legalized marijuana. 
A) decreased government regulations on businesses. 
B) increased income tax rates. 
C) legalized prostitution. 
D) legalized marijuana.

Question 2

If real GDP in 2011 (using 2002 prices)is lower than nominal GDP of 2010,then

Accepted Answer

A) prices in 2011 are lower than prices in 2010. 
B) nominal GDP in 2011 equals nominal GDP in 2010. 
C) prices in 2011 are higher than prices in 2010. 
D) real GDP in 2011 is larger than real GDP in 2010. 
A) prices in 2011 are lower than prices in 2010. 
B) nominal GDP in 2011 equals nominal GDP in 2010. 
C) prices in 2011 are higher than prices in 2010. 
D) real GDP in 2011 is larger than real GDP in 2010.

Question 3

Which of the following would be directly counted in GDP in 2012?

Accepted Answer

A) kitchen cabinets purchased from Home Depot in 2012 to be installed in a house built in 1997 
B) kitchen cabinets built in 1887,extracted from the 1887 home,and installed in a brand new country-style home 
C) kitchen cabinets built in 1887,extracted from the 1887 home,and installed in a farm house built in 1950 
D) none of the above 
A) kitchen cabinets purchased from Home Depot in 2012 to be installed in a house built in 1997 
B) kitchen cabinets built in 1887,extracted from the 1887 home,and installed in a brand new country-style home 
C) kitchen cabinets built in 1887,extracted from the 1887 home,and installed in a farm house built in 1950 
D) none of the above

Question 4

Since real GDP is adjusted for inflation and nominal GDP is not,nominal GDP must always be higher than real GDP.Do you agree or disagree? Why?

Accepted Answer

Disagree.It depends on whether the year

Question 5

Depreciation is

Accepted Answer

A) the value of worn-out equipment,machinery,and buildings. 
B) the value of the decrease in business inventory stocks. 
C) the value of the addition to the capital stock. 
D) the decline in the value of the stock market,net of dividends. 
A) the value of worn-out equipment,machinery,and buildings. 
B) the value of the decrease in business inventory stocks. 
C) the value of the addition to the capital stock. 
D) the decline in the value of the stock market,net of dividends.

Question 6

If prices rise on average in the U.S.economy,the purchasing power of a dollar declines.

Accepted Answer

A) True 
 B)False

Question 7

Increases in real GDP would understate the well-being of a country over time if,over that time period,the

Accepted Answer

A) crime rate increased. 
B) percentage of people addicted to illegal drugs increased. 
C) amount of pollution decreased. 
D) average hours worked per week decreased. 
A) crime rate increased. 
B) percentage of people addicted to illegal drugs increased. 
C) amount of pollution decreased. 
D) average hours worked per week decreased.

Question 8

In the circular flow model,the value of total production for an economy ________ the value of total expenditures on final goods and services.

Accepted Answer

A) equals 
B) is greater than 
C) is less than 
D) may be greater than or less than 
A) equals 
B) is greater than 
C) is less than 
D) may be greater than or less than

Question 9

In calculating gross domestic product,the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced.This means that the BEA

Accepted Answer

A) simply counts the total number of goods produced in the market place and then adds them up. 
B) values goods at their market prices,multiplies them by the quantity produced,and then adds them up. 
C) simply counts the total number of goods and services produced in the marketplace and then adds them up. 
D) values goods and services at their market prices,multiplies them by the quantity produced,and then adds them up. 
A) simply counts the total number of goods produced in the market place and then adds them up. 
B) values goods at their market prices,multiplies them by the quantity produced,and then adds them up. 
C) simply counts the total number of goods and services produced in the marketplace and then adds them up. 
D) values goods and services at their market prices,multiplies them by the quantity produced,and then adds them up.

Question 10

Macroeconomics,as opposed to microeconomics,includes the study of what determines the

Accepted Answer

A) average price levels of goods and services in the economy. 
B) price charged for laptop computers by Dell. 
C) wages paid to employees by Dell. 
D) quantity of Dell employees. 
A) average price levels of goods and services in the economy. 
B) price charged for laptop computers by Dell. 
C) wages paid to employees by Dell. 
D) quantity of Dell employees.

Question 11

Macroeconomics seeks to understand

Accepted Answer

A) economic growth,business cycles,and inflation. 
B) industry sales,marketing strategies and corporate growth. 
C) product demand,product cost,and profit maximization. 
D) public choices,private choices,and consumer maximization. 
A) economic growth,business cycles,and inflation. 
B) industry sales,marketing strategies and corporate growth. 
C) product demand,product cost,and profit maximization. 
D) public choices,private choices,and consumer maximization.

Question 12

People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power.If inflation and income grow at the same rate,is this complaint valid? Explain carefully.

Accepted Answer

If inflation and income grow at the same

Question 13

The total value of production from Ford's manufacturing plant in Cologne,Germany would be included in Germany's gross national product.

Accepted Answer

A) True 
 B)False

Question 14

Suppose that nominal GDP in 2011 was less than real GDP in 2011.Given this information,we know for certain that

Accepted Answer

A) the price level in 2011 was greater than the price level in the base year. 
B) the price level in 2011 was less than the price level in the base year. 
C) real GDP in 2011 was less than real GDP in the base year. 
D) real GDP in 2011 was greater than real GDP in the base year. 
A) the price level in 2011 was greater than the price level in the base year. 
B) the price level in 2011 was less than the price level in the base year. 
C) real GDP in 2011 was less than real GDP in the base year. 
D) real GDP in 2011 was greater than real GDP in the base year.

Question 15

During a business cycle expansion,total production ________ and total employment ________.

Accepted Answer

A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases

Question 16

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?

Accepted Answer

A) Avocado prices rise due to a late frost in California. 
B) The United Auto Workers sign a contract raising wages and benefits 7% over the next 3 years. 
C) Real GDP grows by 2.3% in the second quarter. 
D) Airlines raise ticket prices in response to rising fuel costs. 
A) Avocado prices rise due to a late frost in California. 
B) The United Auto Workers sign a contract raising wages and benefits 7% over the next 3 years. 
C) Real GDP grows by 2.3% in the second quarter. 
D) Airlines raise ticket prices in response to rising fuel costs.

Question 17

If the GDP deflator is less than 100,which will be higher: nominal GDP or real GDP? Why?

Accepted Answer

Real GDP will be higher.The GD

Question 18

The U.S.work week has declined from 60 hours in 1890 to 40 hours today.The impact of the decline in working hours

Accepted Answer

A) increases U.S.GDP and increases the well-being of a typical working person in the U.S. 
B) increases U.S.GDP and decreases the well-being of a typical working person in the U.S. 
C) decreases U.S.GDP and increases the well-being of a typical working person in the U.S. 
D) decreases U.S.GDP and decreases the well-being of a typical working person in the U.S. 
A) increases U.S.GDP and increases the well-being of a typical working person in the U.S. 
B) increases U.S.GDP and decreases the well-being of a typical working person in the U.S. 
C) decreases U.S.GDP and increases the well-being of a typical working person in the U.S. 
D) decreases U.S.GDP and decreases the well-being of a typical working person in the U.S.

Question 19

Real GDP will increase

Accepted Answer

A) only if the price level rises. 
B) only if the price level falls. 
C) only if the quantity of final goods and services produced rises. 
D) if either the price level rises or the quantity of final goods and services produced rises. 
A) only if the price level rises. 
B) only if the price level falls. 
C) only if the quantity of final goods and services produced rises. 
D) if either the price level rises or the quantity of final goods and services produced rises.

Question 20

What are the differences between national income,personal income,and disposable personal income?

Accepted Answer

National income is the total income rece

The size of the underground economy would tend to increase if the government of a country

If real GDP in 2011 (using 2002 prices)is lower than nominal GDP of 2010,then

Which of the following would be directly counted in GDP in 2012?

Since real GDP is adjusted for inflation and nominal GDP is not,nominal GDP must always be higher than real GDP.Do you agree or disagree? Why?

Depreciation is

If prices rise on average in the U.S.economy,the purchasing power of a dollar declines.

Increases in real GDP would understate the well-being of a country over time if,over that time period,the

In the circular flow model,the value of total production for an economy ________ the value of total expenditures on final goods and services.

In calculating gross domestic product,the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced.This means that the BEA

Macroeconomics,as opposed to microeconomics,includes the study of what determines the

Macroeconomics seeks to understand

People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power.If inflation and income grow at the same rate,is this complaint valid? Explain carefully.

The total value of production from Ford's manufacturing plant in Cologne,Germany would be included in Germany's gross national product.

Suppose that nominal GDP in 2011 was less than real GDP in 2011.Given this information,we know for certain that

During a business cycle expansion,total production and total employment .

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?

If the GDP deflator is less than 100,which will be higher: nominal GDP or real GDP? Why?

The U.S.work week has declined from 60 hours in 1890 to 40 hours today.The impact of the decline in working hours

Real GDP will increase

What are the differences between national income,personal income,and disposable personal income?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 12: GDP: Measuring Total Production and Income

The size of the underground economy would tend to increase if the government of a country

If real GDP in 2011 (using 2002 prices)is lower than nominal GDP of 2010,then

Which of the following would be directly counted in GDP in 2012?

Since real GDP is adjusted for inflation and nominal GDP is not,nominal GDP must always be higher than real GDP.Do you agree or disagree? Why?

Depreciation is

If prices rise on average in the U.S.economy,the purchasing power of a dollar declines.

Increases in real GDP would understate the well-being of a country over time if,over that time period,the

In the circular flow model,the value of total production for an economy ________ the value of total expenditures on final goods and services.

In calculating gross domestic product,the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced.This means that the BEA

Macroeconomics,as opposed to microeconomics,includes the study of what determines the

Macroeconomics seeks to understand

People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power.If inflation and income grow at the same rate,is this complaint valid? Explain carefully.

The total value of production from Ford's manufacturing plant in Cologne,Germany would be included in Germany's gross national product.

Suppose that nominal GDP in 2011 was less than real GDP in 2011.Given this information,we know for certain that

During a business cycle expansion,total production ________ and total employment ________.

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?

If the GDP deflator is less than 100,which will be higher: nominal GDP or real GDP? Why?

The U.S.work week has declined from 60 hours in 1890 to 40 hours today.The impact of the decline in working hours

Real GDP will increase

What are the differences between national income,personal income,and disposable personal income?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

During a business cycle expansion,total production and total employment .