Question 1

GDP counts only final goods and services because this

Accepted Answer

A)  method avoids including any goods that are produced this year and sold next year. 
B)  method avoids double counting of goods going through several stages of production. 
C)  amount can be more easily determined in the marketplace. 
D)  method avoids understating the value of GDP produced during a given year.

Question 2

Explain how underground economic activity affects measurement of GDP.

Accepted Answer

The answer of Explain how underground economic activity affects measurement...

Question 3

-In the above figure,consumption expenditure is shown by flow

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  F.

Question 4

"If country A has a higher level of real GDP per person than country B,then people in Country A must enjoy a higher standard of economic welfare than people in Country B." Is this statement true or false and explain your answer.

Accepted Answer

The answer of "If country A has a higher level...

Question 5

Depreciation is defined as the

Accepted Answer

A)  decrease in the stock of capital due to wear and tear. 
B)  increase in the stock of capital due to investment by firms. 
C)  increase in the stock of capital due to wear and tear. 
D)  decrease in the stock of capital due to investment by firms.

Question 6

A trend shows

Accepted Answer

A)  the degree of correlation between two variables. 
B)  the general tendency for a variable to rise or fall. 
C)  the scale used to measure to variables. 
D)  the increases in one variable.

Question 7

According to the BEA,in the second quarter of 2012 federal government spending on goods and services changed by -0.1 percent.This decrease could have been caused by a decrease in spending on

Accepted Answer

A)  national defense. 
B)  Social Security. 
C)  interest payments on the national debt. 
D)  unemployment benefits.

Question 8

Phases and turning points of the business cycle are expansion,peak,recession and trough.

Accepted Answer

A) True 
 B)False

Question 9

List and discuss various types of goods and services omitted from measured GDP.

Accepted Answer

The answer of List and discuss various types of goods...

Question 10

Which of the following is TRUE regarding real GDP?
I. Real GDP is the value of the total production of the country's farms,factories,shops,and offices.
II. Real GDP rises whenever inflation occurs.
III. Real GDP does not measure all that is produced.

Accepted Answer

A)  I and II 
B)  I and III 
C)  II and III 
D)  I, II and III

Question 11

The omission of household production causes actual economic production to be underestimated.

Accepted Answer

A) True 
 B)False

Question 12

-Using the above figure,during which of the following periods does the price of crude oil have a downward trend?

Accepted Answer

A)  May to July 
B)  May to November 
C)  July to October 
D)  October to December

Question 13

What term is used to describe the lowest point of a business cycle?

Accepted Answer

A)  peak 
B)  trough 
C)  expansion 
D)  recession

Question 14

Recessions are commonly defined to occur

Accepted Answer

A)  whenever unemployment increases. 
B)  when growth in real GDP decreases for two consecutive quarters. 
C)  when growth in real GDP is negative for two consecutive quarters. 
D)  when the unemployment rate exceeds 6 percent.

Question 15

Define and discuss GDP.

Accepted Answer

The answer of Define and discuss GDP....

Question 16

An example of "investment" in computing real GDP using the expenditure approach is the purchase of

Accepted Answer

A)  a new set of tools by an auto mechanic, for use in repairing cars. 
B)  100 shares of IBM stock. 
C)  a 100 year old house by a married couple. 
D)  computer chips by Dell to put in their personal computers.

Question 17

A graph shows the wages of factory workers.The slope of the line is positive for periods when the wage rate is

Accepted Answer

A)  falling. 
B)  rising. 
C)  high but not rising any higher. 
D)  low.

Question 18

The largest component of GDP is

Accepted Answer

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

Question 19

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 20

Several adjustments must be made to net domestic product at factor cost in order to calculate GDP.One of these adjustments is adding depreciation.What is depreciation and why must it be added?

Accepted Answer

The answer of Several adjustments must be made to net...

Exam 4: Measuring GDP and Economic Growth