Question 1

What is meant by "GDP"? What are the four expenditure components of GDP and what is included in each of these components?

Accepted Answer

GDP or gross domestic product is the tot

Question 2

The total market value of all final goods and services produced in a country in a year is:

Accepted Answer

A) NNP. 
B) GNP. 
C) NDP. 
D) GDP. 
A) NNP. 
B) GNP. 
C) NDP. 
D) GDP.

Question 3

The difference between nominal GDP and real GDP is that:

Accepted Answer

A) real GDP adjusts the value of goods for changes in the price level and nominal GDP does not. 
B) nominal GDP adjusts the value of goods for changes in the price level and real GDP does not. 
C) real GDP accounts for foreign production in a country and nominal GDP does not. 
D) nominal GDP accounts for foreign production in a country and real GDP does not. 
A) real GDP adjusts the value of goods for changes in the price level and nominal GDP does not. 
B) nominal GDP adjusts the value of goods for changes in the price level and real GDP does not. 
C) real GDP accounts for foreign production in a country and nominal GDP does not. 
D) nominal GDP accounts for foreign production in a country and real GDP does not.

Question 4

If there are only two goods in the economy, one whose price rises by 8 percent and one by 10 percent, it is possible that inflation is:

Accepted Answer

A) 2 percent. 
B) 8 percent. 
C) 10 percent. 
D) 9 percent. 
A) 2 percent. 
B) 8 percent. 
C) 10 percent. 
D) 9 percent.

Question 5

If real income rises from $5 trillion to $5.3 trillion while the price level increases by 10 percent, it follows that nominal income:

Accepted Answer

A) doesn't change. 
B) rises by 6 percent. 
C) rises by 10 percent. 
D) rises by 16 percent. 
A) doesn't change. 
B) rises by 6 percent. 
C) rises by 10 percent. 
D) rises by 16 percent.

Question 6

Refer to the table shown. $\begin{array} {| l | c| } 
\hline & \text { In trillims of dallars } \
\hline \text { Consumption } & 3.5 \
\hline \text { Irvestment } & 1.2 \
\hline \text { Government Purchases } &  1.8 \
\hline \text { Exports } &  0.6 \
\hline \text { Imports } & 0.4\
\hline
\end{array}$ What are the economy's net exports?

Accepted Answer

A) ?$0.4 trillion 
B) $0.2 trillion 
C) $1.0 trillion 
D) ?$0.2 trillion 
A) ?$0.4 trillion 
B) $0.2 trillion 
C) $1.0 trillion 
D) ?$0.2 trillion

Question 7

If the percent change in real GDP is 5 percent and inflation rate is 1 percent, what is the percent change in nominal GDP?

Accepted Answer

A) 0 percent. 
B) 2 percent. 
C) 4 percent. 
D) 6 percent. 
A) 0 percent. 
B) 2 percent. 
C) 4 percent. 
D) 6 percent.

Question 8

Which of the following statements about aggregate accounting is false?

Accepted Answer

A) It provides a way of measuring total, or aggregate, production. 
B) It provides a way of measuring how much a nation is producing and consuming. 
C) It did not exist before the 1930s because economists focused on microeconomics before the 1930s. 
D) It is the best way to measure social welfare for an economy. 
A) It provides a way of measuring total, or aggregate, production. 
B) It provides a way of measuring how much a nation is producing and consuming. 
C) It did not exist before the 1930s because economists focused on microeconomics before the 1930s. 
D) It is the best way to measure social welfare for an economy.

Question 9

Nominal output has increased from $600 billion to $720 billion.The GDP deflator has risen by 10%.By what dollar amount has real output risen?

Accepted Answer

Use the formula real output =

Question 10

Determine the amount contributed to GDP from the sale of 200,000 copies of an album.Base your answer on the following information:
The artist receives $3 per album in royalties.
The producer sells each album to wholesalers for $10.
Wholesalers sold the album to retailers for an average price of $12 per album.
Retailers sold 200,000 album s to consumers for $15 per album.
Demonstrate how the value-added approach equals the final sales approach.

Accepted Answer

The amount contributed to GDP from the s

Question 11

If the CPI in year 2 equals 110 and the CPI in year 3 equals 121, it can be concluded that consumer prices:

Accepted Answer

A) rose from year 2 to year 3 by 11 percent. 
B) rose from year 2 to year 3 by 21 percent. 
C) rose from year 2 to year 3 by 10 percent. 
D) are the same in year 2 as in the base year. 
A) rose from year 2 to year 3 by 11 percent. 
B) rose from year 2 to year 3 by 21 percent. 
C) rose from year 2 to year 3 by 10 percent. 
D) are the same in year 2 as in the base year.

Question 12

Why is the definition of profit the key to explaining the equality between aggregate income and aggregate production?

Accepted Answer

The definition of profit is the key to e

Question 13

If nominal GDP is $14 trillion and real GDP is $12 trillion, the GDP deflator is:

Accepted Answer

A) 86. 
B) 117. 
C) 112. 
D) 114. 
A) 86. 
B) 117. 
C) 112. 
D) 114.

Question 14

If the price of housing (which accounts for 40 percent of total expenditures in the CPI basket), rises by 5 percent in one year while the prices of all other goods remain constant, by how much will the CPI rise?

Accepted Answer

A) 2 percent 
B) 5 percent 
C) 10 percent 
D) 40 percent 
A) 2 percent 
B) 5 percent 
C) 10 percent 
D) 40 percent

Question 15

Gross domestic product (GDP)can be calculated using either the expenditure method or the income method.

Accepted Answer

A) True 
 B)False

Question 16

What is national income accounting and why is it useful?

Accepted Answer

National income accounting is a set of r

Question 17

Explain the difference between real and nominal output.Explain how they are related.

Accepted Answer

Real output is the total amount of goods

Question 18

Double-entry bookkeeping implies that:

Accepted Answer

A) profits cannot be negative because profit equals the value of final output less costs. 
B) profits fill the gap between the sum of employee compensation, rents and interest on the one hand and the value of final output on the other hand. 
C) aggregate income net of profits is less than the value of final output because profit can add or take away from final output. 
D) aggregate income net of profits is greater than the value of final output because profit can add or take away from final output. 
A) profits cannot be negative because profit equals the value of final output less costs. 
B) profits fill the gap between the sum of employee compensation, rents and interest on the one hand and the value of final output on the other hand. 
C) aggregate income net of profits is less than the value of final output because profit can add or take away from final output. 
D) aggregate income net of profits is greater than the value of final output because profit can add or take away from final output.

Question 19

According to the aggregate accounting identity:

Accepted Answer

A) GNP equals GDP. 
B) aggregate income equals aggregate production. 
C) assets equal liabilities. 
D) supply equals demand. 
A) GNP equals GDP. 
B) aggregate income equals aggregate production. 
C) assets equal liabilities. 
D) supply equals demand.

Question 20

Great Basin National Park, the only national park wholly within the borders of Nevada, occupies 77,180 acres and contains 42 known caves. About 90,000 people visit the park each year. It has 25 permanent staff who, with the seasonal staff, collect $280,00 in fees a year, mostly for the 2,400 cave tours. The park also has about 80 volunteers who contribute 9,400 hours of work a year. Because the park surveys for springs in the 25 watersheds, the park service does not burn any acreage, which is part of standard maintenance in some parks. Some of the data are flow measurements and some are stock measurements. An example of a flow measurement is:

Accepted Answer

A) staff positions in the park. 
B) acres in the park. 
C) cave tours given. 
D) caves in the park. 
A) staff positions in the park. 
B) acres in the park. 
C) cave tours given. 
D) caves in the park.

Exam 25: Measuring and Describing the Aggregate Economy

What is meant by "GDP"? What are the four expenditure components of GDP and what is included in each of these components?

The total market value of all final goods and services produced in a country in a year is:

The difference between nominal GDP and real GDP is that:

If there are only two goods in the economy, one whose price rises by 8 percent and one by 10 percent, it is possible that inflation is:

If real income rises from $5 trillion to $5.3 trillion while the price level increases by 10 percent, it follows that nominal income:

Refer to the table shown. In trillims of dallars Consumption 3.5 Irvestment 1.2 Government Purchases 1.8 Exports 0.6 Imports 0.4 What are the economy's net exports?

If the percent change in real GDP is 5 percent and inflation rate is 1 percent, what is the percent change in nominal GDP?

Which of the following statements about aggregate accounting is false?

Nominal output has increased from $600 billion to $720 billion.The GDP deflator has risen by 10%.By what dollar amount has real output risen?

If the CPI in year 2 equals 110 and the CPI in year 3 equals 121, it can be concluded that consumer prices:

Why is the definition of profit the key to explaining the equality between aggregate income and aggregate production?

If nominal GDP is $14 trillion and real GDP is $12 trillion, the GDP deflator is:

If the price of housing (which accounts for 40 percent of total expenditures in the CPI basket), rises by 5 percent in one year while the prices of all other goods remain constant, by how much will the CPI rise?

Gross domestic product (GDP)can be calculated using either the expenditure method or the income method.

What is national income accounting and why is it useful?

Explain the difference between real and nominal output.Explain how they are related.

Double-entry bookkeeping implies that:

According to the aggregate accounting identity:

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

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