Question 1

Spending on goods imported into the United States would be included in U.S. GNP, but not in U.S. GDP.

Accepted Answer

A) True 
 B)False

Question 2

In the factor income approach, income to owners of capital is called interest.

Accepted Answer

A) True 
 B)False

Question 3

A nominal variable is one that:

Accepted Answer

A)  uses prices at the time of sale. 
B)  uses the cost of production. 
C)  has not been adjusted for inflation. 
D)  includes a correction for inflation. 
A)  uses prices at the time of sale. 
B)  uses the cost of production. 
C)  has not been adjusted for inflation. 
D)  includes a correction for inflation.

Question 4

GDP is the market value of all final goods and services produced by a country's permanent residents, wherever located, in a year.

Accepted Answer

A) True 
 B)False

Question 5

The most volatile spending component of GDP in the United States is:

Accepted Answer

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

Question 6

List and briefly discuss the various components of the national spending approach to calculating GDP.

Accepted Answer

The national spending approach to GDP is

Question 7

National wealth refers to the value of a nation's entire stock of:

Accepted Answer

A)  physical assets accumulated over time. 
B)  physical assets produced in a given year. 
C)  financial assets accumulated over time. 
D)  financial assets sold in a given year. 
A)  physical assets accumulated over time. 
B)  physical assets produced in a given year. 
C)  financial assets accumulated over time. 
D)  financial assets sold in a given year.

Question 8

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

Accepted Answer

A)  8.3%. 
B)  15.7%. 
C)  25.2%. 
D)  27%. 
A)  8.3%. 
B)  15.7%. 
C)  25.2%. 
D)  27%.

Question 9

Nonpriced production is not included in GDP because these activities do not contribute to economic activity.

Accepted Answer

A) True 
 B)False

Question 10

Use the following to answer question 313:
Table: Gross Domestic Product $$\begin{array} { l l l } 
\hline 2000 & \text { GDP in 2000 dollars } & \text { \$15 trillion } \
1995 & \text { GDP in 2000 dollars } & \$ 13.8 \text { trillion } \
1995 & \text { GDP in 1995 dollars } & \$ 12.4 \text { trillion } \
\hline
\end{array}$$
-(Table: Gross Domestic Product) Use the information in this table to answer the following questions:
A) What is nominal GDP for the year 2000?
B) How much did nominal GDP grow between the year 1995 and the year 2000?
C) How much did real GDP grow between the year 1995 and the year 2000, in 2000 dollars?

Accepted Answer

(A) The nominal GDP for the year 2000 is

Question 11

GDP measures the total income in a country.

Accepted Answer

A) True 
 B)False

Question 12

What makes a bigger contribution to GDP, 12 million cars sold at $28,000 each or 20 million computers sold at $1,000 each?

Accepted Answer

A)  12 million cars 
B)  20 million computers 
C)  Both make the same contribution. 
D)  It is impossible to say without knowing the costs of production. 
A)  12 million cars 
B)  20 million computers 
C)  Both make the same contribution. 
D)  It is impossible to say without knowing the costs of production.

Question 13

GDP does not count production in the underground economy.

Accepted Answer

A) True 
 B)False

Question 14

Nominal GDP will grow faster than real GDP only when there is inflation.

Accepted Answer

A) True 
 B)False

Question 15

The sale of sugar will contribute to GDP when the buyer is:

Accepted Answer

A)  Krispy Kreme Doughnuts. 
B)  a mother who is baking cookies at home. 
C)  a Mexican food restaurant. 
D)  a grocery store chain. 
A)  Krispy Kreme Doughnuts. 
B)  a mother who is baking cookies at home. 
C)  a Mexican food restaurant. 
D)  a grocery store chain.

Question 16

Nonmarket production is not counted in GDP because these activities:

Accepted Answer

A)  are not priced. 
B)  are considered intermediate goods. 
C)  do not contribute to economic activity. 
D)  happen inside the home. 
A)  are not priced. 
B)  are considered intermediate goods. 
C)  do not contribute to economic activity. 
D)  happen inside the home.

Question 17

GDP provides a measure of:

Accepted Answer

A)  economic welfare and income equity. 
B)  well-being that includes the value of both production and leisure. 
C)  the impact of production on the environment. 
D)  various types of legally earned income. 
A)  economic welfare and income equity. 
B)  well-being that includes the value of both production and leisure. 
C)  the impact of production on the environment. 
D)  various types of legally earned income.

Question 18

The presence of illegal and off-the-books activities causes measured GDP to be:

Accepted Answer

A)  overstated. 
B)  understated. 
C)  correctly stated. 
D)  more volatile. 
A)  overstated. 
B)  understated. 
C)  correctly stated. 
D)  more volatile.

Question 19

The most common measure of the size of an economy is:

Accepted Answer

A)  its national wealth. 
B)  its GDP. 
C)  its GDP per capita. 
D)  its population. 
A)  its national wealth. 
B)  its GDP. 
C)  its GDP per capita. 
D)  its population.

Question 20

Real GDP per capita in China is higher than real GDP per capita in the United States.

Accepted Answer

A) True 
 B)False

Spending on goods imported into the United States would be included in U.S. GNP, but not in U.S. GDP.

In the factor income approach, income to owners of capital is called interest.

A nominal variable is one that:

GDP is the market value of all final goods and services produced by a country's permanent residents, wherever located, in a year.

The most volatile spending component of GDP in the United States is:

List and briefly discuss the various components of the national spending approach to calculating GDP.

National wealth refers to the value of a nation's entire stock of:

Nonpriced production is not included in GDP because these activities do not contribute to economic activity.

GDP measures the total income in a country.

What makes a bigger contribution to GDP, 12 million cars sold at $28,000 each or 20 million computers sold at $1,000 each?

GDP does not count production in the underground economy.

Nominal GDP will grow faster than real GDP only when there is inflation.

The sale of sugar will contribute to GDP when the buyer is:

Nonmarket production is not counted in GDP because these activities:

GDP provides a measure of:

The presence of illegal and off-the-books activities causes measured GDP to be:

The most common measure of the size of an economy is:

Real GDP per capita in China is higher than real GDP per capita in the United States.

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

Spending on goods imported into the United States would be included in U.S. GNP, but not in U.S. GDP.

In the factor income approach, income to owners of capital is called interest.

A nominal variable is one that:

GDP is the market value of all final goods and services produced by a country's permanent residents, wherever located, in a year.

The most volatile spending component of GDP in the United States is:

List and briefly discuss the various components of the national spending approach to calculating GDP.

National wealth refers to the value of a nation's entire stock of:

Nonpriced production is not included in GDP because these activities do not contribute to economic activity.

GDP measures the total income in a country.

What makes a bigger contribution to GDP, 12 million cars sold at $28,000 each or 20 million computers sold at $1,000 each?

GDP does not count production in the underground economy.

Nominal GDP will grow faster than real GDP only when there is inflation.

The sale of sugar will contribute to GDP when the buyer is:

Nonmarket production is not counted in GDP because these activities:

GDP provides a measure of:

The presence of illegal and off-the-books activities causes measured GDP to be:

The most common measure of the size of an economy is:

Real GDP per capita in China is higher than real GDP per capita in the United States.

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