Question 1

When GDP per capita goes up by 10 percent:

Accepted Answer

A)  everyone's income goes up by 10 percent. 
B)  only the most wealthy peoples' incomes will go up by 10 percent. 
C)  no one's income goes up by 10 percent. 
D)  the distribution of the increase in income may vary. 
A)  everyone's income goes up by 10 percent. 
B)  only the most wealthy peoples' incomes will go up by 10 percent. 
C)  no one's income goes up by 10 percent. 
D)  the distribution of the increase in income may vary.

Question 2

The calculation of GDP includes:

Accepted Answer

A)  neither final goods nor intermediate goods. 
B)  only intermediate goods. 
C)  only final goods. 
D)  both intermediate and final goods. 
A)  neither final goods nor intermediate goods. 
B)  only intermediate goods. 
C)  only final goods. 
D)  both intermediate and final goods.

Question 3

A car produced by the Japanese company Honda in a plant located in Ohio would be included in:

Accepted Answer

A)  U.S. GDP, but not U.S. GNP. 
B)  U.S. GNP, but not U.S. GDP. 
C)  both U.S. GDP and U.S. GNP. 
D)  neither U.S. GDP nor U.S. GNP. 
A)  U.S. GDP, but not U.S. GNP. 
B)  U.S. GNP, but not U.S. GDP. 
C)  both U.S. GDP and U.S. GNP. 
D)  neither U.S. GDP nor U.S. GNP.

Question 4

In the past 100 years, there has been a decline in the use of unpaid child labor on family farms. Therefore:

Accepted Answer

A)  changes in GDP overstate the true increase in production over the past 100 years. 
B)  changes in GDP understate the true increase in production over the past 100 years. 
C)  there has been no change in GDP over the past 100 years. 
D)  there has been no change in production over the past 100 years. 
A)  changes in GDP overstate the true increase in production over the past 100 years. 
B)  changes in GDP understate the true increase in production over the past 100 years. 
C)  there has been no change in GDP over the past 100 years. 
D)  there has been no change in production over the past 100 years.

Question 5

A recession is typically defined as any decrease in real GDP.

Accepted Answer

A) True 
 B)False

Question 6

GDP in the United States was $14,119 billion in 2009, and grew to $14,660.4 billion in 2010. This represents an annual growth rate of:

Accepted Answer

A)  $541.4 billion. 
B)  1.04%. 
C)  3.7%. 
D)  3.8%. 
A)  $541.4 billion. 
B)  1.04%. 
C)  3.7%. 
D)  3.8%.

Question 7

Increases in real GDP are considered the best measure of increases in living standards, because they measure:

Accepted Answer

A)  only increases in prices. 
B)  only increases in production. 
C)  both increases in prices and increases in production. 
D)  only increases in the cost of living. 
A)  only increases in prices. 
B)  only increases in production. 
C)  both increases in prices and increases in production. 
D)  only increases in the cost of living.

Question 8

Use the following to answer questions: Table: Data from Europia $$\begin{array} { l c } 
\hline \text { Account } & \text { Amount } \
\hline \text { Consumption expenditures } & \$ 9,000 \
\text { Business profits } & 2,500 \
\text { Exports } & 800 \
\text { Imports } & 1,000 \
\text { Wages and Salaries } & 8,000 \
\text { Government purchases } & 3,000 \
\text { Rent receipts } & 500 \
\text { Investment expenditures } & 2,000 \
\hline
\end{array}$$
-(Table: Data from Europia) Based on the data in the table, what is GDP in the economy of Europia?

Accepted Answer

A)  $13,000 
B)  $13,800 
C)  $14,800 
D)  $15,800 
A)  $13,000 
B)  $13,800 
C)  $14,800 
D)  $15,800

Question 9

If in 2010 nominal GDP was $220 million and real GDP was $200 million, the GDP deflator in 2010 was:

Accepted Answer

A) 88. 
B) 91. 
C) 100. 
D) 110. 
A) 88. 
B) 91. 
C) 100. 
D) 110.

Question 10

If real GDP grows by 3% and the GDP deflator grows by 2%, then nominal GDP must grow by 5%.

Accepted Answer

A) True 
 B)False

Question 11

Using the national spending approach to measuring GDP, if Tyler buys 50 shares of Apple stock, it is included in GDP as part of:

Accepted Answer

A)  consumption. 
B)  investment. 
C)  government purchases. 
D)  nothing; it is not included as part of GDP. 
A)  consumption. 
B)  investment. 
C)  government purchases. 
D)  nothing; it is not included as part of GDP.

Question 12

Which of the following is NOT considered a government purchase?

Accepted Answer

A)  new rifles for the military 
B)  unemployment checks 
C)  salaries for public school teachers 
D)  levees built by the Army Corps of Engineers 
A)  new rifles for the military 
B)  unemployment checks 
C)  salaries for public school teachers 
D)  levees built by the Army Corps of Engineers

Question 13

Which approach measures GDP by adding together wages, rent, interest, and profit earnings?

Accepted Answer

A)  the national spending approach 
B)  the factor income approach 
C)  the product approach 
D)  the value-added approach 
A)  the national spending approach 
B)  the factor income approach 
C)  the product approach 
D)  the value-added approach

Question 14

Which of the following is the best definition of a recession?

Accepted Answer

A)  A period of two consecutive quarters of declines in the level of real GDP. 
B)  A period of significant, widespread decline in real income and employment lasting more than a few months. 
C)  A decline in the stock market of 10% or more over a period of one year. 
D)  A period of increasing unemployment rates lasting more than a year. 
A)  A period of two consecutive quarters of declines in the level of real GDP. 
B)  A period of significant, widespread decline in real income and employment lasting more than a few months. 
C)  A decline in the stock market of 10% or more over a period of one year. 
D)  A period of increasing unemployment rates lasting more than a year.

Question 15

Which of the following government outlays is a transfer payment that would NOT be included in GDP?

Accepted Answer

A)  The Veteran's Administration pays a doctor to care for a wounded veteran. 
B)  The National Security Agency builds a new building for its headquarters. 
C)  The Social Security program sends a monthly payment to a senior citizen. 
D)  The Defense Department buys a new aircraft carrier. 
A)  The Veteran's Administration pays a doctor to care for a wounded veteran. 
B)  The National Security Agency builds a new building for its headquarters. 
C)  The Social Security program sends a monthly payment to a senior citizen. 
D)  The Defense Department buys a new aircraft carrier.

Question 16

If you accept a job in Mexico after college, your income will be part of GNP in:

Accepted Answer

A)  Mexico only. 
B)  the United States only. 
C)  both Mexico and the United States. 
D)  neither Mexico nor the United States. 
A)  Mexico only. 
B)  the United States only. 
C)  both Mexico and the United States. 
D)  neither Mexico nor the United States.

Question 17

Which of the following activities is NOT considered an investment for calculating GDP?

Accepted Answer

A)  A farmer buys a new tractor. 
B)  An investor purchases 100 shares of IBM stock. 
C)  A family builds a new house. 
D)  A college builds a new lab. 
A)  A farmer buys a new tractor. 
B)  An investor purchases 100 shares of IBM stock. 
C)  A family builds a new house. 
D)  A college builds a new lab.

Question 18

A sound system produced by a supplier to Ford Motor Company is an example of:

Accepted Answer

A)  an inferior good. 
B)  a final good. 
C)  a public good. 
D)  an intermediate good. 
A)  an inferior good. 
B)  a final good. 
C)  a public good. 
D)  an intermediate good.

Question 19

Use the following to answer question 322:
Table: Select Components of GDP $$\begin{array} { l r } 
\hline \text { Component of GDP } & \text { Amount } \
\hline \text { Consumption } & \$ 375.56 \
\text { Investment } & 115.68 \
\text { Wages and salaries } & 394.80 \
\text { Rent } & 100.20 \
\text { Government purchases } & 180 \
\text { Interest } & 66 \
\text { Exports } & 100 \
\text { Imports } & 120 \
\hline
\end{array}$$
-(Table: Select Components of GDP) Use the information in this table to answer the following questions:
A) What is GDP according to the national spending approach?
B) What is the dollar amount of profit earned in this economy?

Accepted Answer

(A) The spending approach is Y = C + I +

Question 20

Which of the following would NOT be included in this year's GDP for the United States?

Accepted Answer

A)  A U.S. business spends $100 million to build a new factory in South Carolina. 
B)  The U.S. government distributes $10 million in social security payments. 
C)  A foreign country purchases $2 billion worth of U.S. exports. 
D)  U.S. consumers spend $40 million on domestically produced medical services. 
A)  A U.S. business spends $100 million to build a new factory in South Carolina. 
B)  The U.S. government distributes $10 million in social security payments. 
C)  A foreign country purchases $2 billion worth of U.S. exports. 
D)  U.S. consumers spend $40 million on domestically produced medical services.

When GDP per capita goes up by 10 percent:

The calculation of GDP includes:

A car produced by the Japanese company Honda in a plant located in Ohio would be included in:

In the past 100 years, there has been a decline in the use of unpaid child labor on family farms. Therefore:

A recession is typically defined as any decrease in real GDP.

GDP in the United States was $14,119 billion in 2009, and grew to $14,660.4 billion in 2010. This represents an annual growth rate of:

Increases in real GDP are considered the best measure of increases in living standards, because they measure:

If in 2010 nominal GDP was $220 million and real GDP was $200 million, the GDP deflator in 2010 was:

If real GDP grows by 3% and the GDP deflator grows by 2%, then nominal GDP must grow by 5%.

Using the national spending approach to measuring GDP, if Tyler buys 50 shares of Apple stock, it is included in GDP as part of:

Which of the following is NOT considered a government purchase?

Which approach measures GDP by adding together wages, rent, interest, and profit earnings?

Which of the following is the best definition of a recession?

Which of the following government outlays is a transfer payment that would NOT be included in GDP?

If you accept a job in Mexico after college, your income will be part of GNP in:

Which of the following activities is NOT considered an investment for calculating GDP?

A sound system produced by a supplier to Ford Motor Company is an example of:

Which of the following would NOT be included in this year's GDP for 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

When GDP per capita goes up by 10 percent:

The calculation of GDP includes:

A car produced by the Japanese company Honda in a plant located in Ohio would be included in:

In the past 100 years, there has been a decline in the use of unpaid child labor on family farms. Therefore:

A recession is typically defined as any decrease in real GDP.

GDP in the United States was $14,119 billion in 2009, and grew to $14,660.4 billion in 2010. This represents an annual growth rate of:

Increases in real GDP are considered the best measure of increases in living standards, because they measure:

If in 2010 nominal GDP was $220 million and real GDP was $200 million, the GDP deflator in 2010 was:

If real GDP grows by 3% and the GDP deflator grows by 2%, then nominal GDP must grow by 5%.

Using the national spending approach to measuring GDP, if Tyler buys 50 shares of Apple stock, it is included in GDP as part of:

Which of the following is NOT considered a government purchase?

Which approach measures GDP by adding together wages, rent, interest, and profit earnings?

Which of the following is the best definition of a recession?

Which of the following government outlays is a transfer payment that would NOT be included in GDP?

If you accept a job in Mexico after college, your income will be part of GNP in:

Which of the following activities is NOT considered an investment for calculating GDP?

A sound system produced by a supplier to Ford Motor Company is an example of:

Which of the following would NOT be included in this year's GDP for 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