Question 1

Government expenditures for Social Security and unemployment insurance are, for GDP accounting purposes, considered:

Accepted Answer

A) transfers, and are included in government spending as part of GDP. 
B) transfers, and are not included in government spending as part of GDP. 
C) purchases, and are included in government spending as part of GDP. 
D) purchases, and are not included in government spending as part of GDP. 
A) transfers, and are included in government spending as part of GDP. 
B) transfers, and are not included in government spending as part of GDP. 
C) purchases, and are included in government spending as part of GDP. 
D) purchases, and are not included in government spending as part of GDP.

Question 2

Which of the following would increase this year's GDP?

Accepted Answer

A) A mother quits her job to take care of her newborn child 
B) A commission charged by your broker when you sold 100 shares of Borden stock 
C) A $10,000 inheritance from Aunt Mary 
D) Receipts from a yard sale 
A) A mother quits her job to take care of her newborn child 
B) A commission charged by your broker when you sold 100 shares of Borden stock 
C) A $10,000 inheritance from Aunt Mary 
D) Receipts from a yard sale

Question 3

Suppose both nominal GDP and real GDP increase. It can be concluded that:

Accepted Answer

A) output rose. 
B) the price level rose. 
C) both output and the price level rose. 
D) both output and the price level rose, but output rose at a faster rate. 
A) output rose. 
B) the price level rose. 
C) both output and the price level rose. 
D) both output and the price level rose, but output rose at a faster rate.

Question 4

For the purposes of calculating GDP using the expenditure approach, which of the following is not included in the government purchases account?

Accepted Answer

A) Government purchases of pencils 
B) The payroll of the federal government 
C) Welfare payments to the poor 
D) The government's purchase of a computer 
A) Government purchases of pencils 
B) The payroll of the federal government 
C) Welfare payments to the poor 
D) The government's purchase of a computer

Question 5

Comparisons of per capita gross domestic product (GDP)between countries:

Accepted Answer

A) do not necessarily provide a good measure of relative living standards. 
B) provide an accurate gauge by which to judge living standards. 
C) provide information about both market and nonmarket productive capacities. 
D) are misleading because GDP isn't always consumption plus investment plus government spending plus net exports. 
A) do not necessarily provide a good measure of relative living standards. 
B) provide an accurate gauge by which to judge living standards. 
C) provide information about both market and nonmarket productive capacities. 
D) are misleading because GDP isn't always consumption plus investment plus government spending plus net exports.

Question 6

Double counting in the national income accounts will occur if GDP is computed by summing up:

Accepted Answer

A) final output sales. 
B) value added. 
C) all sales. 
D) the income earned by a country's residents. 
A) final output sales. 
B) value added. 
C) all sales. 
D) the income earned by a country's residents.

Question 7

A change in business inventories is:

Accepted Answer

A) not counted in GDP because it does not represent final sales. 
B) counted in GDP as investment. 
C) counted in GDP as consumption. 
D) counted in GDP as net exports. 
A) not counted in GDP because it does not represent final sales. 
B) counted in GDP as investment. 
C) counted in GDP as consumption. 
D) counted in GDP as net exports.

Question 8

What is net foreign factor income,and how can we use it to determine whether GNP or GDP is larger?

Accepted Answer

Net foreign factor income is the income

Question 9

What are the four expenditure components of GDP?

Accepted Answer

The four expenditure components of GDP a

Question 10

GDP is a:

Accepted Answer

A) stock concept and refers to the market value of all output sold. 
B) stock concept and refers to the market value of final output. 
C) flow concept and refers to the market value of all output sold. 
D) flow concept and refers to the market value of final output. 
A) stock concept and refers to the market value of all output sold. 
B) stock concept and refers to the market value of final output. 
C) flow concept and refers to the market value of all output sold. 
D) flow concept and refers to the market value of final output.

Question 11

Which of the following is not a part of U.S. GDP?

Accepted Answer

A) The payments for an insurance policy on an old BMW sold by a U.S. company 
B) The value of a BMW imported from Germany 
C) The value of a BMW produced in the United States 
D) The commissions earned by a BMW dealership in the United States 
A) The payments for an insurance policy on an old BMW sold by a U.S. company 
B) The value of a BMW imported from Germany 
C) The value of a BMW produced in the United States 
D) The commissions earned by a BMW dealership in the United States

Question 12

Answer all of the following questions concerning GDP growth.
(a)Nominal GDP increases from $5 trillion to $5.5 trillion while the price level increases by 10%.Has real income increased?
(b)Nominal GDP increases from $6 trillion to $6.8 trillion while real GDP increases from $6 trillion to $6.2 trillion.What happened to the price level?
(c)Nominal GDP increases from $7 trillion to $8 trillion while real GDP increases from $7 trillion to $7.5 trillion.By what percent did real income change?

Accepted Answer

(a)No,real income has not increased.To s

Question 13

In comparing the per capita GDPs of two countries, purchasing power parity adjusts for differences in:

Accepted Answer

A) exchange rates. 
B) nonmarket activities. 
C) populations. 
D) prices. 
A) exchange rates. 
B) nonmarket activities. 
C) populations. 
D) prices.

Question 14

When real wealth increases:

Accepted Answer

A) the economy can produce more goods and services than it did before. 
B) asset inflation results as market prices rise. 
C) society is worse off because asset prices have risen. 
D) housing and other assets will experience a "bubble" in prices. 
A) the economy can produce more goods and services than it did before. 
B) asset inflation results as market prices rise. 
C) society is worse off because asset prices have risen. 
D) housing and other assets will experience a "bubble" in prices.

Question 15

A genuine progress indicator (GPI)attempts to:

Accepted Answer

A) adjust GDP so that it more accurately measures changes in economic activity. 
B) develop a new measure that focuses entirely on noneconomic activity. 
C) not incorporate any measure of economic activity. 
D) adjust GDP so that it reflects more than just the level of economic activity. 
A) adjust GDP so that it more accurately measures changes in economic activity. 
B) develop a new measure that focuses entirely on noneconomic activity. 
C) not incorporate any measure of economic activity. 
D) adjust GDP so that it reflects more than just the level of economic activity.

Question 16

If the market prices of publicly traded stocks and bonds rise, while the productive capacity of those assets has not increased, which of the following has occurred?

Accepted Answer

A) Nominal wealth has increased. 
B) Real wealth has increased. 
C) Nominal wealth has increased, but real wealth has decreased. 
D) Tangible wealth must have declined in value. 
A) Nominal wealth has increased. 
B) Real wealth has increased. 
C) Nominal wealth has increased, but real wealth has decreased. 
D) Tangible wealth must have declined in value.

Question 17

Net foreign factor income is the:

Accepted Answer

A) income earned from the domestic economy by foreign factors. 
B) income earned abroad by domestic factors. 
C) difference between the income earned abroad by domestic factors and the income earned domestically by foreign factors. 
D) difference between the value of a country's exports and imports. 
A) income earned from the domestic economy by foreign factors. 
B) income earned abroad by domestic factors. 
C) difference between the income earned abroad by domestic factors and the income earned domestically by foreign factors. 
D) difference between the value of a country's exports and imports.

Question 18

You've been given the following data:
 $\begin{array}{|l|l|}
\hline \text { Net non-business interest income } & 27 \
\hline \text { Government purchases } & 600 \
\hline \text { Gross private investment } & 500 \
\hline \text { Depreciation } & 10 \
\hline \text { Net exports } & -50 \
\hline \text { Personal consumption } & 2,500 \
\hline \text { Foreign factor income earned domestically } & 320 \
\hline \begin{array}{l}
\text { Income from foreign domestic factor } \
\text { sources }
\end{array} & 300 \
\hline
\end{array}$ On the basis of these data calculate GDP,NDP,and GNP.

Accepted Answer

(1)GDP = C + I + G + (X - M)=

Question 19

If U.S. imports of goods and services exceed exports, U.S.:

Accepted Answer

A) GDP is less than the sum of consumption, investment, and government purchases. 
B) GDP exceeds the sum of consumption, investment, and government purchases. 
C) net exports are positive. 
D) GDP equals the sum of consumption, investment, and government purchases. 
A) GDP is less than the sum of consumption, investment, and government purchases. 
B) GDP exceeds the sum of consumption, investment, and government purchases. 
C) net exports are positive. 
D) GDP equals the sum of consumption, investment, and government purchases.

Question 20

If the real interest rate is 2 percent and inflation rate is 1 percent, what is the nominal interest rate?

Accepted Answer

A) 0 percent 
B) 1 percent 
C) 2 percent 
D) 3 percent 
A) 0 percent 
B) 1 percent 
C) 2 percent 
D) 3 percent

Exam 25: Measuring and Describing the Aggregate Economy

Government expenditures for Social Security and unemployment insurance are, for GDP accounting purposes, considered:

Which of the following would increase this year's GDP?

Suppose both nominal GDP and real GDP increase. It can be concluded that:

For the purposes of calculating GDP using the expenditure approach, which of the following is not included in the government purchases account?

Comparisons of per capita gross domestic product (GDP)between countries:

Double counting in the national income accounts will occur if GDP is computed by summing up:

A change in business inventories is:

What is net foreign factor income,and how can we use it to determine whether GNP or GDP is larger?

What are the four expenditure components of GDP?

GDP is a:

Which of the following is not a part of U.S. GDP?

In comparing the per capita GDPs of two countries, purchasing power parity adjusts for differences in:

When real wealth increases:

A genuine progress indicator (GPI)attempts to:

If the market prices of publicly traded stocks and bonds rise, while the productive capacity of those assets has not increased, which of the following has occurred?

Net foreign factor income is the:

If U.S. imports of goods and services exceed exports, U.S.:

If the real interest rate is 2 percent and inflation rate is 1 percent, what is the nominal interest rate?

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