Question 1

Large amounts of nonmarket production and illegal activities mean that a lot of Latin American countries are actually richer than their GDP suggests.

Accepted Answer

A) True 
 B)False

Question 2

According to the national spending approach, net exports must be subtracted from all other spending in the economy in the calculation of GDP.

Accepted Answer

A) True 
 B)False

Question 3

Would a significant decline in the economic activity of construction workers qualify as a recession?

Accepted Answer

A recession is defined as a significant,

Question 4

Real GDP for the year 2000 (measured in 2005 dollars) is equal to:

Accepted Answer

A)  2000 prices × 2000 quantities. 
B)  2005 prices × 2000 quantities. 
C)  2000 prices × 2005 quantities. 
D)  2005 prices × 2005 quantities. 
A)  2000 prices × 2000 quantities. 
B)  2005 prices × 2000 quantities. 
C)  2000 prices × 2005 quantities. 
D)  2005 prices × 2005 quantities.

Question 5

Use the following to answer question 40:
Table: Prices and Quantities in a 4-Good Economy $$\begin{array} { l c c } 
\hline \text { Product } & \text { Price } & \text { Quantity } \
\hline \text { Shovels } & \$ 20 & 50 \
\text { Books } & 50 & 100 \
\text { Tomatoes } & 1 & 500 \
\text { Pizzas } & 10 & 120 \
\hline
\end{array}$$
-(Table: Prices and Quantities in a 4-Good Economy) Suppose an economy produces only the four goods listed in this table. What is the GDP in this country?

Accepted Answer

A)  $6,200 
B)  $6,700 
C)  $7,200 
D)  $7,700 
A)  $6,200 
B)  $6,700 
C)  $7,200 
D)  $7,700

Question 6

A recession is a period of significant, widespread declines in:

Accepted Answer

A)  real income and employment. 
B)  real income and unemployment. 
C)  exports and imports. 
D)  inflation and unemployment. 
A)  real income and employment. 
B)  real income and unemployment. 
C)  exports and imports. 
D)  inflation and unemployment.

Question 7

Real GDP per capita is calculated as the total real GDP divided by the:

Accepted Answer

A)  GDP deflator. 
B)  nominal GDP. 
C)  total population. 
D)  price level. 
A)  GDP deflator. 
B)  nominal GDP. 
C)  total population. 
D)  price level.

Question 8

When GDP is calculated, goods are valued using:

Accepted Answer

A)  the cost of all inputs used in the production. 
B)  the consumer price index. 
C)  the producer price index. 
D)  the current market price. 
A)  the cost of all inputs used in the production. 
B)  the consumer price index. 
C)  the producer price index. 
D)  the current market price.

Question 9

Which of the following would NOT be included in GDP for the United States?

Accepted Answer

A)  Toyota, a Japanese car company, producing cars in the United States. 
B)  an immigrant from Mexico working legally in the United States as a nanny for a U.S. family 
C)  Chrysler manufacturing cars in the United States that are not sold during the production year 
D)  Matt purchasing an antique desk for his new home office 
A)  Toyota, a Japanese car company, producing cars in the United States. 
B)  an immigrant from Mexico working legally in the United States as a nanny for a U.S. family 
C)  Chrysler manufacturing cars in the United States that are not sold during the production year 
D)  Matt purchasing an antique desk for his new home office

Question 10

Government purchases of goods and services are the largest component of GDP in the national spending approach.

Accepted Answer

A) True 
 B)False

Question 11

The GDP deflator is a price index that can be used to measure:

Accepted Answer

A)  changes in the standard of living. 
B)  inflation. 
C)  changes in population. 
D)  changes in GDP. 
A)  changes in the standard of living. 
B)  inflation. 
C)  changes in population. 
D)  changes in GDP.

Question 12

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 GDP deflator for 2008 (using 2005 prices for the calculation of real GDP) is:

Accepted Answer

A) 100. 
B) 116. 
C) 127. 
D)  142. 
A) 100. 
B) 116. 
C) 127. 
D)  142.

Question 13

Which of the following would be included in 2011's GDP?

Accepted Answer

A)  the resale of a house built in 2005 
B)  the sale of bonds 
C)  the sale of stocks 
D)  the real estate agent's commission on the resale of a house built in 2005 
A)  the resale of a house built in 2005 
B)  the sale of bonds 
C)  the sale of stocks 
D)  the real estate agent's commission on the resale of a house built in 2005

Question 14

Most economists prefer _____ as the best indicator of current economic performance.

Accepted Answer

A)  the GDP deflator 
B)  consumer spending 
C)  nominal GDP growth 
D)  real GDP growth 
A)  the GDP deflator 
B)  consumer spending 
C)  nominal GDP growth 
D)  real GDP growth

Question 15

Which of the following is NOT included in the consumption component of GDP?

Accepted Answer

A)  monthly rent for a two-bedroom apartment 
B)  spending on health care 
C)  payment for college tuition 
D)  the purchase of a new house 
A)  monthly rent for a two-bedroom apartment 
B)  spending on health care 
C)  payment for college tuition 
D)  the purchase of a new house

Question 16

The difference between a final good and an intermediate good is that:

Accepted Answer

A)  final goods are not counted as part of GDP. 
B)  intermediate goods are of lower quality than final goods. 
C)  an intermediate good is sold for use as a component in a final good. 
D)  a final good is sold for use as a component of an intermediate good. 
A)  final goods are not counted as part of GDP. 
B)  intermediate goods are of lower quality than final goods. 
C)  an intermediate good is sold for use as a component in a final good. 
D)  a final good is sold for use as a component of an intermediate good.

Question 17

List the different components of spending used to calculate GDP using the national spending approach, and give an example of each type of spending.

Accepted Answer

The national spending approach measures

Question 18

Economists call private spending on the tools, plant, and equipment used to produce future output:

Accepted Answer

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

Question 19

When a German firm produces a vehicle in the United States, the production is part of:

Accepted Answer

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

Question 20

What is the term for GDP when price changes are NOT included in its calculation?

Accepted Answer

A)  annual GDP 
B)  nominal GDP 
C)  real GDP 
D)  aggregate GDP 
A)  annual GDP 
B)  nominal GDP 
C)  real GDP 
D)  aggregate GDP

Large amounts of nonmarket production and illegal activities mean that a lot of Latin American countries are actually richer than their GDP suggests.

According to the national spending approach, net exports must be subtracted from all other spending in the economy in the calculation of GDP.

Would a significant decline in the economic activity of construction workers qualify as a recession?

Real GDP for the year 2000 (measured in 2005 dollars) is equal to:

A recession is a period of significant, widespread declines in:

Real GDP per capita is calculated as the total real GDP divided by the:

When GDP is calculated, goods are valued using:

Which of the following would NOT be included in GDP for the United States?

Government purchases of goods and services are the largest component of GDP in the national spending approach.

The GDP deflator is a price index that can be used to measure:

Which of the following would be included in 2011's GDP?

Most economists prefer _____ as the best indicator of current economic performance.

Which of the following is NOT included in the consumption component of GDP?

The difference between a final good and an intermediate good is that:

List the different components of spending used to calculate GDP using the national spending approach, and give an example of each type of spending.

Economists call private spending on the tools, plant, and equipment used to produce future output:

When a German firm produces a vehicle in the United States, the production is part of:

What is the term for GDP when price changes are NOT included in its calculation?

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

Large amounts of nonmarket production and illegal activities mean that a lot of Latin American countries are actually richer than their GDP suggests.

According to the national spending approach, net exports must be subtracted from all other spending in the economy in the calculation of GDP.

Would a significant decline in the economic activity of construction workers qualify as a recession?

Real GDP for the year 2000 (measured in 2005 dollars) is equal to:

A recession is a period of significant, widespread declines in:

Real GDP per capita is calculated as the total real GDP divided by the:

When GDP is calculated, goods are valued using:

Which of the following would NOT be included in GDP for the United States?

Government purchases of goods and services are the largest component of GDP in the national spending approach.

The GDP deflator is a price index that can be used to measure:

Which of the following would be included in 2011's GDP?

Most economists prefer _____ as the best indicator of current economic performance.

Which of the following is NOT included in the consumption component of GDP?

The difference between a final good and an intermediate good is that:

List the different components of spending used to calculate GDP using the national spending approach, and give an example of each type of spending.

Economists call private spending on the tools, plant, and equipment used to produce future output:

When a German firm produces a vehicle in the United States, the production is part of:

What is the term for GDP when price changes are NOT included in its calculation?

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