Question 1

Because pollution reduces economic welfare, on this count real GDP as measured

Accepted Answer

A)  decreases as pollution increases. 
B)  increases to take into account the expenditures that will be made in the future to clean up the pollution. 
C)  overstates economic welfare. 
D)  understates economic welfare.

Question 2

Net investment equals gross investment minus depreciation.

Accepted Answer

A) True 
 B)False

Question 3

Suppose Mail Boxes Etc. buys a new copier for its store for $1000. A year later, when the firm wants to upgrade to a new copier, it finds that the old copier is only worth $750. Over the year the copier was used, ________ has occurred.

Accepted Answer

A)  replacement investment 
B)  gross investment 
C)  depreciation 
D)  net investment

Question 4

Consumption expenditure is the payment by households for consumption of

Accepted Answer

A)  goods but not services. 
B)  services but not goods. 
C)  goods and services. 
D)  services and for saving.

Question 5

To calculate GDP using the expenditure approach, in part it is necessary to add exports and subtract imports.

Accepted Answer

A) True 
 B)False

Question 6

"Life expectancy is exceptionally high in Japan. Scores for political freedom and civil liberties approach those of peer countries in Europe...equality of opportunity is extremely weak. The country also possesses one of the longer working weeks." Japan's GDP was estimated to be $4.2 trillion (purchasing power parity) and the population was 127.4 million.
"Driven by its attractive climate, Brazil performs substantially better on Life Satisfaction than Material Wealth. High international demand for Brazil's commodities and raw materials has produced a sustained economic expansion since 2004, which in turn has led to job creation, wage growth and relatively low inflation. Brazilians report that they control their own lives to a substantial degree." Brazil's GDP was estimated to be $1.7 trillion (purchasing power parity) and 190 million in 2006.
www.prosperity.com
-According to the article, we can conclude that the standard of living

Accepted Answer

A)  is higher in Brazil because its citizens feel more control over their lives and have experienced job and wage growth. 
B)  is higher in Japan because their life expectancy is longer. 
C)  is higher in Japan because its GDP is higher. 
D)  might be higher in Japan because it has a higher per capita real GDP but other factors such as Brazilians' satisfaction with their lives and economic growth should be considered when determining economic well-being.

Question 7

What is a recession?

Accepted Answer

The answer of What is a recession?...

Question 8

A trough is the

Accepted Answer

A)  lower turning point of a business cycle when an expansion begins. 
B)  lower turning point of a business cycle when a recession begins. 
C)  upper turning point of a business cycle when an expansion begins. 
D)  upper turning point of a business cycle when a recession begins.

Question 9

What is the distinction between gross investment and net investment?

Accepted Answer

The answer of What is the distinction between gross investment...

Question 10

Business cycles are

Accepted Answer

A)  irregular, with some having two recessions and no expansion. 
B)  predictable, with a recession following a trough. 
C)  unpredictable, but always have two phases and two turning points. 
D)  unpredictable, and don't always have two phases and two turning points.

Question 11

In the expenditure approach to GDP, the largest component is

Accepted Answer

A)  government expenditure on goods and services. 
B)  personal consumption expenditures. 
C)  gross private domestic investment. 
D)  net exports.

Question 12

A common definition of a recession is a period of time

Accepted Answer

A)  of at least 6 months during which real GDP decreases. 
B)  with an increase in real economic output from the previous period. 
C)  with no change in real GDP. 
D)  with no change in the dollar (money) value of economic output.

Question 13

Pollution is a by-product of some production processes, so on this count real GDP as measured

Accepted Answer

A)  is adjusted downward to take into account the pollution. 
B)  is adjusted upward to take into account the expenditures that will be made in the future to clean up the pollution. 
C)  tends to overstate economic welfare. 
D)  tends to understate economic welfare.

Question 14

Net investment equals

Accepted Answer

A)  capital stock minus depreciation. 
B)  gross investment minus depreciation. 
C)  the total quantity of plant, equipment and buildings. 
D)  gross investment/depreciation.

Question 15

According to the BEA, in the second quarter of 2012 nominal GDP rose by 3.3 percent and real GDP rose by 1.7 percent. The difference between the change in nominal GDP and the change in real GDP could be explained by

Accepted Answer

A)  an increase in prices of final goods and services produced. 
B)  a decrease in prices of final goods and services produced. 
C)  an increase in quantity of final goods and services produced. 
D)  a decrease in quantity of final goods and services produced.

Question 16

An expansion occurs when the level of real GDP is

Accepted Answer

A)  increasing. 
B)  decreasing. 
C)  at a cyclical peak. 
D)  at a cyclical trough.

Question 17

The components of the expenditure approach to measuring GDP include all of the following EXCEPT

Accepted Answer

A)  net exports. 
B)  government expenditure on goods and services. 
C)  investment. 
D)  the implicit payments for unpaid household work.

Question 18

Gross private domestic investment is all purchases of newly produced business capital goods and buildings

Accepted Answer

A)  minus the change in business inventories. 
B)  plus the change in business inventories plus residential construction. 
C)  plus fixed investment minus inventory investment. 
D)  plus purchases of capital goods produced in previous years to replace any depreciated capital goods.

Question 19

To calculate GDP when using the income approach, you must add indirect business taxes and depreciation.

Accepted Answer

A) True 
 B)False

Question 20

If Ford sells 200 Explorers for a total of $400,000 to Germany, while the United States imports 100 BMWs for a total of $500,000 from Germany

Accepted Answer

A)  U.S. GDP increases because it sells more Explorers. 
B)  U.S. GDP decreases because net exports are negative. 
C)  Germany's GDP decreases. 
D)  U.S. net exports is positive.

Exam 4: Measuring Gdp and Economic Growth

Because pollution reduces economic welfare, on this count real GDP as measured

Net investment equals gross investment minus depreciation.

Suppose Mail Boxes Etc. buys a new copier for its store for $1000. A year later, when the firm wants to upgrade to a new copier, it finds that the old copier is only worth $750. Over the year the copier was used, ________ has occurred.

Consumption expenditure is the payment by households for consumption of

To calculate GDP using the expenditure approach, in part it is necessary to add exports and subtract imports.

What is a recession?

A trough is the

What is the distinction between gross investment and net investment?

Business cycles are

In the expenditure approach to GDP, the largest component is

A common definition of a recession is a period of time

Pollution is a by-product of some production processes, so on this count real GDP as measured

Net investment equals

According to the BEA, in the second quarter of 2012 nominal GDP rose by 3.3 percent and real GDP rose by 1.7 percent. The difference between the change in nominal GDP and the change in real GDP could be explained by

An expansion occurs when the level of real GDP is

The components of the expenditure approach to measuring GDP include all of the following EXCEPT

Gross private domestic investment is all purchases of newly produced business capital goods and buildings

To calculate GDP when using the income approach, you must add indirect business taxes and depreciation.

If Ford sells 200 Explorers for a total of $400,000 to Germany, while the United States imports 100 BMWs for a total of $500,000 from Germany