Question 1

If pressed to choose a single indicator of changing living standards, most economists would probably choose nominal GDP growth per capita.

Accepted Answer

A) True 
 B)False

Question 2

Use the following to answer questions: Table: Economic Data $$\begin{array} { l c } 
\hline \text { Component of GDP } & \text { Amount } \
\hline \text { Consumption } & \$ 875.5 \
\text { Investment } & 415.5 \
\text { Wages and salaries } & 794.8 \
\text { Rent } & 300.2 \
\text { Profit } & 391 \
\text { Government Purchases } & 380 \
\text { Interest } & 345 \
\text { Exports } & 520 \
\text { Imports } & 360 \
\hline
\end{array}$$
-(Table: Economic Data) Based on the data in the table, what is the GDP for this economy, based on the national spending approach?

Accepted Answer

A)  $1,831 
B)  $2,120.5 
C)  $2,191 
D)  $2,551 
A)  $1,831 
B)  $2,120.5 
C)  $2,191 
D)  $2,551

Question 3

If nominal GDP in 2007 is $5.43 (in trillions) and in 2008 the level of nominal GDP rises to $6.11 (in trillions), what is the growth rate of nominal GDP?

Accepted Answer

A)  -11.1% 
B)  -12.5% 
C)  11.1% 
D)  12.5% 
A)  -11.1% 
B)  -12.5% 
C)  11.1% 
D)  12.5%

Question 4

None of the spending components of GDP (based on the national spending approach) can be negative values.

Accepted Answer

A) True 
 B)False

Question 5

Use the following to answer questions: Table: iPhones $$\begin{array} { l c c } 
\hline \text { Year } & \text { Quantity produced } & \text { Price } \
\hline 2000 & 100 & \$ 100 \
2010 & 90 & 110 \
\hline
\end{array}$$
-(Table: iPhones) This table shows data for a country producing only iPhones. Its real GDP in 2010 (in 2000 dollars) is:

Accepted Answer

A)  $9,000. 
B)  $9,900. 
C)  $10,000. 
D)  $10,800. 
A)  $9,000. 
B)  $9,900. 
C)  $10,000. 
D)  $10,800.

Question 6

Use the following to answer questions: Table: Three-Good Economy I $$\begin{array} { l c c c c } 
\hline \text { Product } & \text { Quantity (2008) } & \text { Price (2008) } & \text { Quantity (2009) } & \text { Price (2009) } \
\hline \text { Computers } & 25 & \$ 800.00 & 30 & \$ 1,000.00 \
\text { Pizzas } & 90 & 9.00 & 100 & 10.00 \
\text { Burgers } & 180 & 1.80 & 200 & 2.00 \
\hline
\end{array}$$
-(Table: Three-Good Economy I) Suppose an economy produces only the three final goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. If prices in 2008 are used to calculate real GDP, what is the growth rate of real GDP in 2009?

Accepted Answer

A)  4% 
B)  19.5% 
C)  24.3% 
D)  48.6% 
A)  4% 
B)  19.5% 
C)  24.3% 
D)  48.6%

Question 7

The national spending approach to calculating GDP states that GDP is equal to:

Accepted Answer

A)  consumption + investment + government spending + net exports. 
B)  wages + rent + interest + profit. 
C)  wages + profit. 
D)  consumption + investment + government spending + net exports - imports. 
A)  consumption + investment + government spending + net exports. 
B)  wages + rent + interest + profit. 
C)  wages + profit. 
D)  consumption + investment + government spending + net exports - imports.

Question 8

Increases in _____ are considered the best measure of increases in living standards because they measure only increases in production.

Accepted Answer

A)  national wealth 
B)  consumer spending 
C)  nominal GDP 
D)  real GDP 
A)  national wealth 
B)  consumer spending 
C)  nominal GDP 
D)  real GDP

Question 9

A real 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 10

GNP is the market value of all final goods and services produced:

Accepted Answer

A)  within a country's borders in a year. 
B)  within a country's borders over time. 
C)  by a country's permanent residents within the country's borders in a year. 
D)  by a country's permanent residents, wherever they are located, in a year. 
A)  within a country's borders in a year. 
B)  within a country's borders over time. 
C)  by a country's permanent residents within the country's borders in a year. 
D)  by a country's permanent residents, wherever they are located, in a year.

Question 11

Between 1993 and 2003, Guatemala experienced real GDP growth of about 3.6% a year. Over that same period, population grew at 2.8% a year, so real GDP per capita in Guatemala grew at:

Accepted Answer

A)  0.8% a year. 
B)  2.8% a year. 
C)  3.2% a year. 
D)  6.4% a year. 
A)  0.8% a year. 
B)  2.8% a year. 
C)  3.2% a year. 
D)  6.4% a year.

Question 12

The measure of GDP that has been adjusted for changes in prices is called:

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

Question 13

The purchase of a new home is considered an investment expenditure.

Accepted Answer

A) True 
 B)False

Question 14

Why are transfer payments not counted as part of GDP?

Accepted Answer

A)  Transfer payments do not involve the purchase of a final good or service. 
B)  Transfer payments are not spent within the United States. 
C)  Spending by the unemployed and senior citizens is not included in GDP. 
D)  Transfer payments are not counted because they must ultimately be paid back. 
A)  Transfer payments do not involve the purchase of a final good or service. 
B)  Transfer payments are not spent within the United States. 
C)  Spending by the unemployed and senior citizens is not included in GDP. 
D)  Transfer payments are not counted because they must ultimately be paid back.

Question 15

Use the following to answer questions: Table: Components of GDP $$\begin{array} { l r } 
\hline \text { Private investment } & \$ 1,640 \text { billion } \
\text { Government spending } & 2,872 \text { billion } \
\text { Profits } & 1,565 \text { billion } \
\text { Consumption spending } & 9,913 \text { billion } \
\text { Wages } & 3,574 \text { billion } \
\text { Exports } & 1,520 \text { billion } \
\text { Imports } & 1,890 \text { billion } \
\hline
\end{array}$$
-(Table: Components of GDP) Use the data in this table to calculate GDP.

Accepted Answer

A)  $11,171 billion 
B)  $14,055 billion 
C)  $15,945 billion 
D)  $19,519 billion 
A)  $11,171 billion 
B)  $14,055 billion 
C)  $15,945 billion 
D)  $19,519 billion

Question 16

If a country's nominal GDP increases by 5% between two years while its GDP deflator increases by 4%, the country's real GDP:

Accepted Answer

A)  increases by 9%. 
B)  increases by 1%. 
C)  decreases by 1%. 
D)  decreases by 9%. 
A)  increases by 9%. 
B)  increases by 1%. 
C)  decreases by 1%. 
D)  decreases by 9%.

Question 17

A decline in nominal GDP is the single best indicator of a recession.

Accepted Answer

A) True 
 B)False

Question 18

GDP:

Accepted Answer

A)  is a measure of national wealth. 
B)  measures the stock of assets, while national wealth measures production in a year. 
C)  measures production in a year, while national wealth measures a stock of assets. 
D)  is usually higher than national wealth. 
A)  is a measure of national wealth. 
B)  measures the stock of assets, while national wealth measures production in a year. 
C)  measures production in a year, while national wealth measures a stock of assets. 
D)  is usually higher than national wealth.

Question 19

According to the national spending approach, education is classified as a consumption expenditure when splitting GDP.

Accepted Answer

A) True 
 B)False

Question 20

To avoid double accounting, the value of:

Accepted Answer

A)  final goods only are included in GDP. 
B)  intermediate goods only are included in GDP. 
C)  both final good and intermediate goods are included in GDP. 
D)  neither final goods nor intermediate goods are included in GDP. 
A)  final goods only are included in GDP. 
B)  intermediate goods only are included in GDP. 
C)  both final good and intermediate goods are included in GDP. 
D)  neither final goods nor intermediate goods are included in GDP.

If pressed to choose a single indicator of changing living standards, most economists would probably choose nominal GDP growth per capita.

If nominal GDP in 2007 is $5.43 (in trillions) and in 2008 the level of nominal GDP rises to $6.11 (in trillions), what is the growth rate of nominal GDP?

None of the spending components of GDP (based on the national spending approach) can be negative values.

Use the following to answer questions: Table: iPhones Year Quantity produced Price 2000 100 \ 100 2010 90 110 -(Table: iPhones) This table shows data for a country producing only iPhones. Its real GDP in 2010 (in 2000 dollars) is:

The national spending approach to calculating GDP states that GDP is equal to:

Increases in _____ are considered the best measure of increases in living standards because they measure only increases in production.

A real variable is one that:

GNP is the market value of all final goods and services produced:

Between 1993 and 2003, Guatemala experienced real GDP growth of about 3.6% a year. Over that same period, population grew at 2.8% a year, so real GDP per capita in Guatemala grew at:

The measure of GDP that has been adjusted for changes in prices is called:

The purchase of a new home is considered an investment expenditure.

Why are transfer payments not counted as part of GDP?

If a country's nominal GDP increases by 5% between two years while its GDP deflator increases by 4%, the country's real GDP:

A decline in nominal GDP is the single best indicator of a recession.

GDP:

According to the national spending approach, education is classified as a consumption expenditure when splitting GDP.

To avoid double accounting, the value of:

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

If pressed to choose a single indicator of changing living standards, most economists would probably choose nominal GDP growth per capita.

If nominal GDP in 2007 is $5.43 (in trillions) and in 2008 the level of nominal GDP rises to $6.11 (in trillions), what is the growth rate of nominal GDP?

None of the spending components of GDP (based on the national spending approach) can be negative values.

Use the following to answer questions: Table: iPhones Year Quantity produced Price 2000 100 \ 100 2010 90 110 -(Table: iPhones) This table shows data for a country producing only iPhones. Its real GDP in 2010 (in 2000 dollars) is:

The national spending approach to calculating GDP states that GDP is equal to:

Increases in _____ are considered the best measure of increases in living standards because they measure only increases in production.

A real variable is one that:

GNP is the market value of all final goods and services produced:

Between 1993 and 2003, Guatemala experienced real GDP growth of about 3.6% a year. Over that same period, population grew at 2.8% a year, so real GDP per capita in Guatemala grew at:

The measure of GDP that has been adjusted for changes in prices is called:

The purchase of a new home is considered an investment expenditure.

Why are transfer payments not counted as part of GDP?

If a country's nominal GDP increases by 5% between two years while its GDP deflator increases by 4%, the country's real GDP:

A decline in nominal GDP is the single best indicator of a recession.

GDP:

According to the national spending approach, education is classified as a consumption expenditure when splitting GDP.

To avoid double accounting, the value of:

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