Question 1

A business cycle refers to the

Accepted Answer

A)  continued expansion in Real GDP. 
B)  recurrent swings (up and down) in Real GDP. 
C)  continued decline in Real GDP. 
D)  period when Real GDP grows at unusually high rates. 
E)  none of the above 
A)  continued expansion in Real GDP. 
B)  recurrent swings (up and down) in Real GDP. 
C)  continued decline in Real GDP. 
D)  period when Real GDP grows at unusually high rates. 
E)  none of the above B

Question 2

The best reason economists take only final goods and services into account when calculating GDP is that

Accepted Answer

A)  this is the way things have always been done. 
B)  they want to avoid the problem of final counting. 
C)  they want to avoid the problem of double counting. 
D)  this is the only way things can be done. 
A)  this is the way things have always been done. 
B)  they want to avoid the problem of final counting. 
C)  they want to avoid the problem of double counting. 
D)  this is the only way things can be done. C

Question 3

National income equals

Accepted Answer

A)  wages + salaries + corporate profits + net income. 
B)  compensation of employees + proprietors' income + corporate profits + rental income + net interest. 
C)  compensation of employees + proprietors' income + indirect business taxes + rental income + net interest. 
D)  the monetary value of fringe benefits + tips + wages + profits + salaries. 
E)  none of the above 
A)  wages + salaries + corporate profits + net income. 
B)  compensation of employees + proprietors' income + corporate profits + rental income + net interest. 
C)  compensation of employees + proprietors' income + indirect business taxes + rental income + net interest. 
D)  the monetary value of fringe benefits + tips + wages + profits + salaries. 
E)  none of the above B

Question 4

A recession is always part of a

Accepted Answer

A)  contraction. 
B)  recovery. 
C)  detraction. 
D)  remission. 
A)  contraction. 
B)  recovery. 
C)  detraction. 
D)  remission.

Question 5

In 1820,the country with the highest per capita GDP was

Accepted Answer

A)  Australia. 
B)  the United States. 
C)  Austria. 
D)  Germany. 
E)  the Netherlands. 
A)  Australia. 
B)  the United States. 
C)  Austria. 
D)  Germany. 
E)  the Netherlands.

Question 6

"Economic growth" has occurred if the

Accepted Answer

A)  inflation rate between this year and last year is zero or less. 
B)  GDP this year exceeds the Real GDP this year. 
C)  unemployment rate this year is above the natural rate of unemployment. 
D)  Real GDP this year exceeds the Real GDP of last year. 
A)  inflation rate between this year and last year is zero or less. 
B)  GDP this year exceeds the Real GDP this year. 
C)  unemployment rate this year is above the natural rate of unemployment. 
D)  Real GDP this year exceeds the Real GDP of last year.

Question 7

An economy produces 10X,20Y,and 30Z in a year.Base-year prices for these goods are $1,$2,and $3,respectively.Current-year prices for these goods are $2,$3,and $4,respectively.What is Real GDP?

Accepted Answer

A)  $180 
B)  $200 
C)  $140 
D)  $240 
E)  none of the above 
A)  $180 
B)  $200 
C)  $140 
D)  $240 
E)  none of the above

Question 8

Which of the following statements is false?

Accepted Answer

A)  The market value of all nonmarket goods is omitted from GDP. 
B)  The sale of used goods is omitted from GDP. 
C)  The market value of a person mowing his or her own lawn is omitted from GDP. 
D)  If a good is produced but not sold, it is included in GDP. 
A)  The market value of all nonmarket goods is omitted from GDP. 
B)  The sale of used goods is omitted from GDP. 
C)  The market value of a person mowing his or her own lawn is omitted from GDP. 
D)  If a good is produced but not sold, it is included in GDP.

Question 9

List and describe four of the six categories of economic exchanges that are omitted from GDP calculations. Explain why these transactions are not included in GDP and give an example of each to help support your answer.

Accepted Answer

Certain nonmarket goods and services are

Question 10

Exhibit 7-2
  
-Refer to Exhibit 7-2.Assuming that 1990 is the base year,Real GDP in 2012 is

Accepted Answer

A)  $49. 
B)  $51. 
C)  $86. 
D)  $92. 
E)  not possible to calculate without the CPI. 
A)  $49. 
B)  $51. 
C)  $86. 
D)  $92. 
E)  not possible to calculate without the CPI.

Question 11

Which of the following goods is an intermediate good?

Accepted Answer

A)  lettuce that a restaurant buys to put on sandwiches 
B)  tires that a car company buys to put on the cars it produces 
C)  a television set that Chi-Mai buys to put in her college dorm room 
D)  a and b 
E)  b and c 
A)  lettuce that a restaurant buys to put on sandwiches 
B)  tires that a car company buys to put on the cars it produces 
C)  a television set that Chi-Mai buys to put in her college dorm room 
D)  a and b 
E)  b and c

Question 12

Which of the following is always a characteristic of the contraction phase of the business cycle?

Accepted Answer

A)  lower unemployment rates 
B)  a decline in Real GDP 
C)  higher inflation rates 
D)  a decline in GDP 
E)  all of the above 
A)  lower unemployment rates 
B)  a decline in Real GDP 
C)  higher inflation rates 
D)  a decline in GDP 
E)  all of the above

Question 13

Business firms make which of the following two types of investment?

Accepted Answer

A)  foreign investment and domestic investment 
B)  fixed investment and capital investment 
C)  investment in stocks and investment in bonds 
D)  investment in new capital goods and investment in used capital goods to replace "worn-out" capital goods 
E)  fixed investment and inventory investment 
A)  foreign investment and domestic investment 
B)  fixed investment and capital investment 
C)  investment in stocks and investment in bonds 
D)  investment in new capital goods and investment in used capital goods to replace "worn-out" capital goods 
E)  fixed investment and inventory investment

Question 14

Disposable income is

Accepted Answer

A)  equal to GDP minus the capital consumption allowance. 
B)  that portion of personal income that can be used for consumption and saving. 
C)  the sum of all payments to suppliers of the factors of production. 
D)  the amount of income that individuals actually receive. 
E)  another term for personal income. 
A)  equal to GDP minus the capital consumption allowance. 
B)  that portion of personal income that can be used for consumption and saving. 
C)  the sum of all payments to suppliers of the factors of production. 
D)  the amount of income that individuals actually receive. 
E)  another term for personal income.

Question 15

Real GDP is the value of all __________ goods and services produced in a given year in __________ prices.

Accepted Answer

A)  intermediate; that year's 
B)  intermediate; base-year 
C)  final; that year's 
D)  final; base-year 
A)  intermediate; that year's 
B)  intermediate; base-year 
C)  final; that year's 
D)  final; base-year

Question 16

Exhibit 7-2
  
-Refer to Exhibit 7-2.GDP in 1990 is

Accepted Answer

A)  $49. 
B)  $51. 
C)  $86. 
D)  $92. 
E)  impossible to calculate without the CPI. 
A)  $49. 
B)  $51. 
C)  $86. 
D)  $92. 
E)  impossible to calculate without the CPI.

Question 17

An example of income "earned-but-not-received" is corporate dividends.

Accepted Answer

A) True 
 B)False

Question 18

The sale of __________ goods is omitted from current GDP because __________.

Accepted Answer

A)  intermediate goods; these goods do not constitute production 
B)  used goods; these goods were counted in an earlier year 
C)  illegal; these goods do not constitute economic value 
D)  b and c 
E)  a, b, and c 
A)  intermediate goods; these goods do not constitute production 
B)  used goods; these goods were counted in an earlier year 
C)  illegal; these goods do not constitute economic value 
D)  b and c 
E)  a, b, and c

Question 19

You have data for compensation of employees,proprietors' income,rental income,and net interest.Can you compute national income?

Accepted Answer

A)  Yes. 
B)  No, since data on indirect business taxes are missing. 
C)  No, since data on corporate profits is missing. 
D)  No, since data on the capital consumption allowance is missing. 
E)  No, since net interest has not been adjusted for profits. 
A)  Yes. 
B)  No, since data on indirect business taxes are missing. 
C)  No, since data on corporate profits is missing. 
D)  No, since data on the capital consumption allowance is missing. 
E)  No, since net interest has not been adjusted for profits.

Question 20

In 1820 the country with the highest per capita GDP was ______________________. In 1900 the country that ranked #1 in terms of per capita GDP was ___________________ and fifty years later the top ranking was held by _________________________.

Accepted Answer

A)  the Netherlands; New Zealand; the United States. 
B)  the Netherlands; Australia; Switzerland. 
C)  the United States; the United States; the United States. 
D)  Austria; Australia; New Zealand. 
A)  the Netherlands; New Zealand; the United States. 
B)  the Netherlands; Australia; Switzerland. 
C)  the United States; the United States; the United States. 
D)  Austria; Australia; New Zealand.

Exam 7: Macroeconomic Measurements: GDP and Real GDP

A business cycle refers to the

The best reason economists take only final goods and services into account when calculating GDP is that

National income equals

A recession is always part of a

In 1820,the country with the highest per capita GDP was

"Economic growth" has occurred if the

An economy produces 10X,20Y,and 30Z in a year.Base-year prices for these goods are $1,$2,and $3,respectively.Current-year prices for these goods are $2,$3,and $4,respectively.What is Real GDP?

Which of the following statements is false?

List and describe four of the six categories of economic exchanges that are omitted from GDP calculations. Explain why these transactions are not included in GDP and give an example of each to help support your answer.

Exhibit 7-2 -Refer to Exhibit 7-2.Assuming that 1990 is the base year,Real GDP in 2012 is

Which of the following goods is an intermediate good?

Which of the following is always a characteristic of the contraction phase of the business cycle?

Business firms make which of the following two types of investment?

Disposable income is

Real GDP is the value of all __________ goods and services produced in a given year in __________ prices.

Exhibit 7-2 -Refer to Exhibit 7-2.GDP in 1990 is

An example of income "earned-but-not-received" is corporate dividends.

The sale of __________ goods is omitted from current GDP because __________.

You have data for compensation of employees,proprietors' income,rental income,and net interest.Can you compute national income?

In 1820 the country with the highest per capita GDP was ______________________. In 1900 the country that ranked #1 in terms of per capita GDP was ___________________ and fifty years later the top ranking was held by _________________________.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

Real GDP is the value of all goods and services produced in a given year in prices.

The sale of goods is omitted from current GDP because .

In 1820 the country with the highest per capita GDP was ____________. In 1900 the country that ranked #1 in terms of per capita GDP was _ and fifty years later the top ranking was held by _________________.