Question 1

Define real and nominal GDP and explain why the growth of real GDP is more important to society than the growth in nominal GDP?

Accepted Answer

Nominal GDP is total output produced in

Question 2

The $400 dividend check a stockholder receives is included in aggregate accounting as:

Accepted Answer

A) profits. 
B) rents. 
C) employee compensation. 
D) interest. 
A) profits. 
B) rents. 
C) employee compensation. 
D) interest.

Question 3

Real GDP is calculated by:

Accepted Answer

A) multiplying nominal GDP by the appropriate price index times 100. 
B) multiplying nominal GDP by the inflation rate times 100. 
C) dividing nominal GDP by the appropriate price index times 100. 
D) dividing nominal GDP by the inflation rate times 100. 
A) multiplying nominal GDP by the appropriate price index times 100. 
B) multiplying nominal GDP by the inflation rate times 100. 
C) dividing nominal GDP by the appropriate price index times 100. 
D) dividing nominal GDP by the inflation rate times 100.

Question 4

If asset price inflation has occurred,which has changed: real wealth,nominal wealth or both?

Accepted Answer

In the case of asset price inf

Question 5

Given the following information, we can infer that aggregate income equals: $$\begin{array} { |l | r| } 
\hline \text { Profits } & \$ 100 \
\hline \text { Rent } & \$ 150 \
\hline \text { Compensation to employees } & \$ 500 \
\hline \text { Interest } & \$ 150 \
\hline \text { Taxes } & \$ 100 \
\hline \text { Transfer payments } & \$ 50 \
\hline
\end{array}$$

Accepted Answer

A) $700. 
B) $750. 
C) $900. 
D) $950. 
A) $700. 
B) $750. 
C) $900. 
D) $950.

Question 6

T-accounts reflects double-entry bookkeeping that keeps income and production equal.

Accepted Answer

A) True 
 B)False

Question 7

If the nominal interest rate is 2 percent and inflation is 3 percent, the real interest rate is:

Accepted Answer

A) −1 percent. 
B) 0 percent. 
C) 1 percent. 
D) 2 percent. 
A) −1 percent. 
B) 0 percent. 
C) 1 percent. 
D) 2 percent.

Question 8

What are the net exports using the table shown? $$\begin{array} { | l | c | } 
\hline & \text { In billims uf dollars } \
\hline \text { Consurngtion } & 3,600 \
\hline \text { Irvestment } & 800 \
\hline \text { Transfer payments } & 750 \
\hline \text { Government Purchases } & 1,000 \
\hline \text { Exports } & 650 \
\hline \text { Imports } & 450 \
\hline \text { Net foreign factor incorne } & - 30 \
\hline
\end{array}$$

Accepted Answer

A) 170 
B) 200 
C) 450 
D) 650 
A) 170 
B) 200 
C) 450 
D) 650

Question 9

The largest expenditure component of GDP is:

Accepted Answer

A) consumption. 
B) investment. 
C) net exports. 
D) government spending. 
A) consumption. 
B) investment. 
C) net exports. 
D) government spending.

Question 10

There are two possible ways to avoid counting intermediate goods (i.e. ,double counting)in calculating GDP.Identify each of them and discuss each briefly.

Accepted Answer

The two ways to avoid double counting in

Question 11

Real GDP and per capita real output are two indicators used by the government to measure economic growth.Define them,and explain why growth of per capita real output is a more accurate measurement of the growth in the economic welfare of individuals.

Accepted Answer

(1)Real Gross Domestic Product (Real GDP

Question 12

Day laborers who are in the United States illegally and work off the books are:

Accepted Answer

A) part of the nonmarket transactions that are omitted from GDP. 
B) part of the underground economy, which is not measured in GDP. 
C) one of the items included in the genuine progress indicator. 
D) production by noncitizens, which is included in GNP but not in GDP. 
A) part of the nonmarket transactions that are omitted from GDP. 
B) part of the underground economy, which is not measured in GDP. 
C) one of the items included in the genuine progress indicator. 
D) production by noncitizens, which is included in GNP but not in GDP.

Question 13

Using the expenditure approach, gross domestic product equals:

Accepted Answer

A) gross national product. 
B) gross national product minus net exports. 
C) the sum of consumption, investment, government purchases. 
D) the sum of consumption, investment, government purchases, and net exports. 
A) gross national product. 
B) gross national product minus net exports. 
C) the sum of consumption, investment, government purchases. 
D) the sum of consumption, investment, government purchases, and net exports.

Question 14

An increase in nominal GDP implies an increase in:

Accepted Answer

A) the price level. 
B) output. 
C) both the price level and output. 
D) either the price level or output or both. 
A) the price level. 
B) output. 
C) both the price level and output. 
D) either the price level or output or both.

Question 15

What is inflation?

Accepted Answer

Inflation

Question 16

If a firm sells bonds on the capital market, the amount the firm must pay for the use of those funds is counted in aggregate accounting as:

Accepted Answer

A) interest. 
B) rents. 
C) employee compensation. 
D) profits. 
A) interest. 
B) rents. 
C) employee compensation. 
D) profits.

Question 17

Refer to the table below. What is the economy's gross domestic product? $$\begin{array}{| l | c| } 
\hline &\text { In trillims of dollars }\
\hline \text { Consurngtion } & 5.2 \
\hline \text { Irnvestment } &  2.7 \
\hline \text { Government Purchases } &2.6 \
\hline \text { Transfer payments } & 0.6  \
\hline \text { Exports } & 0.6 \
\hline \text { Imports } & 0.6 \
\hline
\end{array}$$

Accepted Answer

A) $10.5 trillion 
B) $11.1 trillion 
C) $11.7 trillion 
D) $12.3 trillion 
A) $10.5 trillion 
B) $11.1 trillion 
C) $11.7 trillion 
D) $12.3 trillion

Question 18

Which of the following is a flow concept?

Accepted Answer

A) Body weight 
B) Wealth 
C) Gallons of water in a pool 
D) Expenditures 
A) Body weight 
B) Wealth 
C) Gallons of water in a pool 
D) Expenditures

Question 19

Why are economists so often skeptical of replacing GDP as a measure of well-being?

Accepted Answer

A) Economists see little wrong, other than measurement errors, in the way GDP is computed. 
B) The alternatives involve value judgments about social goals that some or many economists find controversial. 
C) Economists think that the alternatives cannot take changes in price level into account in an acceptable manner. 
D) Economists believe that only market activity can be and should be measured. 
A) Economists see little wrong, other than measurement errors, in the way GDP is computed. 
B) The alternatives involve value judgments about social goals that some or many economists find controversial. 
C) Economists think that the alternatives cannot take changes in price level into account in an acceptable manner. 
D) Economists believe that only market activity can be and should be measured.

Question 20

Net domestic product:

Accepted Answer

A) is a better measure of output than gross domestic product because it controls for depreciation. 
B) is a worse measure of output than gross domestic product because it is distorted by depreciation. 
C) cannot be computed since economists have no measure of depreciation. 
D) increases as depreciation increases. 
A) is a better measure of output than gross domestic product because it controls for depreciation. 
B) is a worse measure of output than gross domestic product because it is distorted by depreciation. 
C) cannot be computed since economists have no measure of depreciation. 
D) increases as depreciation increases.

Exam 25: Measuring and Describing the Aggregate Economy

Define real and nominal GDP and explain why the growth of real GDP is more important to society than the growth in nominal GDP?

The $400 dividend check a stockholder receives is included in aggregate accounting as:

Real GDP is calculated by:

If asset price inflation has occurred,which has changed: real wealth,nominal wealth or both?

Given the following information, we can infer that aggregate income equals: Profits \ 100 Rent \ 150 Compensation to employees \ 500 Interest \ 150 Taxes \ 100 Transfer payments \ 50

T-accounts reflects double-entry bookkeeping that keeps income and production equal.

If the nominal interest rate is 2 percent and inflation is 3 percent, the real interest rate is:

What are the net exports using the table shown? In billims uf dollars Consurngtion 3,600 Irvestment 800 Transfer payments 750 Government Purchases 1,000 Exports 650 Imports 450 Net foreign factor incorne -30

The largest expenditure component of GDP is:

There are two possible ways to avoid counting intermediate goods (i.e. ,double counting)in calculating GDP.Identify each of them and discuss each briefly.

Real GDP and per capita real output are two indicators used by the government to measure economic growth.Define them,and explain why growth of per capita real output is a more accurate measurement of the growth in the economic welfare of individuals.

Day laborers who are in the United States illegally and work off the books are:

Using the expenditure approach, gross domestic product equals:

An increase in nominal GDP implies an increase in:

What is inflation?

If a firm sells bonds on the capital market, the amount the firm must pay for the use of those funds is counted in aggregate accounting as:

Refer to the table below. What is the economy's gross domestic product? In trillims of dollars Consurngtion 5.2 Irnvestment 2.7 Government Purchases 2.6 Transfer payments 0.6 Exports 0.6 Imports 0.6

Which of the following is a flow concept?

Why are economists so often skeptical of replacing GDP as a measure of well-being?

Net domestic product:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

Filters