Question 1

Which of the following represents the factor income approach to splitting GDP?

Accepted Answer

A)  GDP = wages + profit. 
B)  GDP = wages + rent + interest. 
C)  GDP = wages + rent + profit. 
D)  GDP = wages + rent + interest + profit. 
A)  GDP = wages + profit. 
B)  GDP = wages + rent + interest. 
C)  GDP = wages + rent + profit. 
D)  GDP = wages + rent + interest + profit.

Question 2

A large part of what government does is transfer money from one citizen to another citizen.

Accepted Answer

A) True 
 B)False

Question 3

Business cycles are fluctuations of real GDP around its long-term trend.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a final good and should be included in GDP?

Accepted Answer

A)  antivirus software preloaded on computers 
B)  computer chips 
C)  notebook computers 
D)  power cords packaged with new computers 
A)  antivirus software preloaded on computers 
B)  computer chips 
C)  notebook computers 
D)  power cords packaged with new computers

Question 5

In 2010, real GDP was $13.2 trillion and the GDP deflator was 110.6. What was nominal GDP for that year?

Accepted Answer

A)  $14.6 trillion 
B)  $14.3 trillion 
C)  $12.1 trillion 
D)  $11.9 trillion 
A)  $14.6 trillion 
B)  $14.3 trillion 
C)  $12.1 trillion 
D)  $11.9 trillion

Question 6

Which of the following is counted as part of GDP?

Accepted Answer

A)  The government sends a social security check to a retiree. 
B)  Bob mows his lawn. 
C)  Helen takes a day off to clean her house. 
D)  A state government hires workers to repave the streets. 
A)  The government sends a social security check to a retiree. 
B)  Bob mows his lawn. 
C)  Helen takes a day off to clean her house. 
D)  A state government hires workers to repave the streets.

Question 7

According to the national spending approach, which of the following is counted in investment?

Accepted Answer

A)  A restaurant buys a new wood-fired oven for baking pizzas. 
B)  A college graduate buys a new car after graduation. 
C)  A student pays for tuition at a university. 
D)  A retiree buys newly issued U.S. government bonds 
A)  A restaurant buys a new wood-fired oven for baking pizzas. 
B)  A college graduate buys a new car after graduation. 
C)  A student pays for tuition at a university. 
D)  A retiree buys newly issued U.S. government bonds

Question 8

Which of these goods is a final good that would be counted in GDP in the year it is produced?

Accepted Answer

A)  tomatoes used by an Italian restaurant 
B)  wood used for making furniture 
C)  an oven for installation in a bakery 
D)  a computer chip used in a laptop computer 
A)  tomatoes used by an Italian restaurant 
B)  wood used for making furniture 
C)  an oven for installation in a bakery 
D)  a computer chip used in a laptop computer

Question 9

Use the following to answer questions: Table: Wheat and Corn $$\begin{array} { l c c c c } 
\hline \text { Year } & \begin{array} { l } 
\text { Price of Wheat } \
\text { (per bushel) }
\end{array} & \begin{array} { l } 
\text { Quantity of Wheat } \
\text { (million bushels) }
\end{array} & \begin{array} { l } 
\text { Price of Corn } \
\text { (per bushel) }
\end{array} & \begin{array} { l } 
\text { Quantity of Corn } \
\text { (million tons) }
\end{array} \
\hline 2005 & \$ 56 & 1,250 & \$ 44 & 940 \
2006 & 64 & 1,360 & 52 & 1,050 \
2007 & 72 & 1,420 & 55 & 1,120 \
2008 & 80 & 1,500 & 62 & 1,260 \
\hline
\end{array}$$
-(Table: Wheat and Corn) Consider a country that produces only wheat and corn. Based on the data in the table, the country's nominal GDP for year 2008 is:

Accepted Answer

A)  $111,360 million. 
B)  $141,640 million. 
C)  $163,840 million. 
D)  $198,120 million. 
A)  $111,360 million. 
B)  $141,640 million. 
C)  $163,840 million. 
D)  $198,120 million.

Question 10

Which of the following would most likely NOT be counted in GDP?

Accepted Answer

A)  The legal sale of marijuana for medical purposes in the State of California. 
B)  You build a shed in your back yard to store your lawn mower. 
C)  An outside company is hired to clean up a chemical spill at a local factory. 
D)  The fee you pay to snorkel with manatees while on vacation in Florida. 
A)  The legal sale of marijuana for medical purposes in the State of California. 
B)  You build a shed in your back yard to store your lawn mower. 
C)  An outside company is hired to clean up a chemical spill at a local factory. 
D)  The fee you pay to snorkel with manatees while on vacation in Florida.

Question 11

How often is GDP reported for the U.S. economy?

Accepted Answer

A)  weekly 
B)  monthly 
C)  quarterly 
D)  annually 
A)  weekly 
B)  monthly 
C)  quarterly 
D)  annually

Question 12

An increase in the price you pay for a haircut will:

Accepted Answer

A)  contribute to GDP as a purchase of a good. 
B)  contribute to GDP as a purchase of a service. 
C)  not contribute to GDP. 
D)  contribute to GDP only if your hair stylist is a U.S. citizen. 
A)  contribute to GDP as a purchase of a good. 
B)  contribute to GDP as a purchase of a service. 
C)  not contribute to GDP. 
D)  contribute to GDP only if your hair stylist is a U.S. citizen.

Question 13

Real GDP per capita is the measure of a country's standard of living preferred by most economists.

Accepted Answer

A) True 
 B)False

Question 14

GDP measures the total production in a country.

Accepted Answer

A) True 
 B)False

Question 15

Orrin mines iron ore, which he sells to Thorin, who turns iron ore into steel. The steel is sold to Gorin, who turns the steel into battle axes. The battle axes are sold by a merchant in the city to adventurers. Which of the following would be considered a final good?

Accepted Answer

A)  the iron ore 
B)  the steel 
C)  the battle axes sold to the merchant 
D)  the battle axes sold to the adventurers 
A)  the iron ore 
B)  the steel 
C)  the battle axes sold to the merchant 
D)  the battle axes sold to the adventurers

Question 16

Social Security benefits paid to current retirees is an example of a transfer payment that would NOT be included in GDP.

Accepted Answer

A) True 
 B)False

Question 17

Which statement is NOT true about net exports?

Accepted Answer

A)  Net exports will be negative if imports exceed exports. 
B)  Spending on imports in the United States cannot contribute to the GDP of other nations. 
C)  Spending on imports in the United States contributes to U.S. GDP. 
D)  Foreign spending on U.S. exports contributes to U.S. GDP. 
A)  Net exports will be negative if imports exceed exports. 
B)  Spending on imports in the United States cannot contribute to the GDP of other nations. 
C)  Spending on imports in the United States contributes to U.S. GDP. 
D)  Foreign spending on U.S. exports contributes to U.S. GDP.

Question 18

A recession is a significant, widespread decline in real income and employment.

Accepted Answer

A) True 
 B)False

Question 19

Real GDP is calculated using the same prices in all years.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would NOT be included in the calculation of GDP as a government purchase?

Accepted Answer

A)  military payrolls 
B)  distribution of food stamps 
C)  purchase of 100 new C-5A aircraft 
D)  hiring 1,000 workers to build a new interstate roadway 
A)  military payrolls 
B)  distribution of food stamps 
C)  purchase of 100 new C-5A aircraft 
D)  hiring 1,000 workers to build a new interstate roadway

Which of the following represents the factor income approach to splitting GDP?

A large part of what government does is transfer money from one citizen to another citizen.

Business cycles are fluctuations of real GDP around its long-term trend.

Which of the following is a final good and should be included in GDP?

In 2010, real GDP was $13.2 trillion and the GDP deflator was 110.6. What was nominal GDP for that year?

Which of the following is counted as part of GDP?

According to the national spending approach, which of the following is counted in investment?

Which of these goods is a final good that would be counted in GDP in the year it is produced?

Which of the following would most likely NOT be counted in GDP?

How often is GDP reported for the U.S. economy?

An increase in the price you pay for a haircut will:

Real GDP per capita is the measure of a country's standard of living preferred by most economists.

GDP measures the total production in a country.

Orrin mines iron ore, which he sells to Thorin, who turns iron ore into steel. The steel is sold to Gorin, who turns the steel into battle axes. The battle axes are sold by a merchant in the city to adventurers. Which of the following would be considered a final good?

Social Security benefits paid to current retirees is an example of a transfer payment that would NOT be included in GDP.

Which statement is NOT true about net exports?

A recession is a significant, widespread decline in real income and employment.

Real GDP is calculated using the same prices in all years.

Which of the following would NOT be included in the calculation of GDP as a government purchase?

The Big Ideas

The Power of Trade and Comparative Advantage

Supply and Demand

Equilibrium: How Supply and Demand Determine Prices

Price Ceilings and Floors

The Wealth of Nations and Economic Growth

Growth, Capital Accumulation and the Economics of Ideas: Catching up Vs the Cutting Edge

Saving, Investment, and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations: Aggregate Demand and Supply

Transmission and Amplification Mechanisms

The Federal Reserve System and Open Market Operations

Monetary Policy

The Federal Budget: Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

Exam 6: GDP and the Measurement of Progress

Which of the following represents the factor income approach to splitting GDP?

A large part of what government does is transfer money from one citizen to another citizen.

Business cycles are fluctuations of real GDP around its long-term trend.

Which of the following is a final good and should be included in GDP?

In 2010, real GDP was $13.2 trillion and the GDP deflator was 110.6. What was nominal GDP for that year?

Which of the following is counted as part of GDP?

According to the national spending approach, which of the following is counted in investment?

Which of these goods is a final good that would be counted in GDP in the year it is produced?

Which of the following would most likely NOT be counted in GDP?

How often is GDP reported for the U.S. economy?

An increase in the price you pay for a haircut will:

Real GDP per capita is the measure of a country's standard of living preferred by most economists.

GDP measures the total production in a country.

Orrin mines iron ore, which he sells to Thorin, who turns iron ore into steel. The steel is sold to Gorin, who turns the steel into battle axes. The battle axes are sold by a merchant in the city to adventurers. Which of the following would be considered a final good?

Social Security benefits paid to current retirees is an example of a transfer payment that would NOT be included in GDP.

Which statement is NOT true about net exports?

A recession is a significant, widespread decline in real income and employment.

Real GDP is calculated using the same prices in all years.

Which of the following would NOT be included in the calculation of GDP as a government purchase?

The Big Ideas

The Power of Trade and Comparative Advantage

Supply and Demand

Equilibrium: How Supply and Demand Determine Prices

Price Ceilings and Floors

The Wealth of Nations and Economic Growth

Growth, Capital Accumulation and the Economics of Ideas: Catching up Vs the Cutting Edge

Saving, Investment, and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations: Aggregate Demand and Supply

Transmission and Amplification Mechanisms

The Federal Reserve System and Open Market Operations

Monetary Policy

The Federal Budget: Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters