Question 1

Discuss four reasons that explain why GDP is not a perfect measure of economic activity in a country.

Accepted Answer

Four reasons are: the failure to include

Question 2

Use the following to answer questions: Table: GDP Data $$\begin{array} { l l } 
\hline \text { 2000 GDP in } 2000 \text { dollars } & \$ 11.6 \text { trillion } \
1995 \text { GDP in } 2000 \text { dollars } & \$ 10 \text { trillion } \
1995 \text { GDP in } 1995 \text { dollars } & \$ 8.8 \text { trillion }
\end{array}$$
-(Table: GDP Data) Using the GDP data in the table, how much did nominal GDP grow between 1995 and 2000?

Accepted Answer

A)  -14.5% 
B)  16% 
C)  13.63% 
D)  31.8% 
A)  -14.5% 
B)  16% 
C)  13.63% 
D)  31.8%

Question 3

China has a larger economy than the United Kingdom (Great Britain), but the British are still better off in terms of living standards.

Accepted Answer

A) True 
 B)False

Question 4

Which transaction will be included in GDP?

Accepted Answer

A)  the purchase of a used bicycle on Ebay 
B)  the purchase of a home built in 1957 
C)  the purchase of a real estate agent's services 
D)  the purchase of 1,000 shares of IBM stock 
A)  the purchase of a used bicycle on Ebay 
B)  the purchase of a home built in 1957 
C)  the purchase of a real estate agent's services 
D)  the purchase of 1,000 shares of IBM stock

Question 5

A recession can be as short as one or two months.

Accepted Answer

A) True 
 B)False

Question 6

List and briefly discuss the various components of the factor income approach to calculating GDP.

Accepted Answer

The factor income approach to GDP is rep

Question 7

Spending on goods imported into the U.S. is included in GDP for:

Accepted Answer

A)  the United States. 
B)  the country that produced the goods. 
C)  both the United States and the country that produced the goods. 
D)  no country. 
A)  the United States. 
B)  the country that produced the goods. 
C)  both the United States and the country that produced the goods. 
D)  no country.

Question 8

A set of tires installed on a vehicle in an automobile factory is counted as:

Accepted Answer

A)  a final good and its market price is part of GDP. 
B)  a final good and its market price is not part of GDP. 
C)  an intermediate good and its market price is part of GDP. 
D)  an intermediate good and its market price is not part of GDP. 
A)  a final good and its market price is part of GDP. 
B)  a final good and its market price is not part of GDP. 
C)  an intermediate good and its market price is part of GDP. 
D)  an intermediate good and its market price is not part of GDP.

Question 9

Prostitution is legal in Nevada and illegal everywhere else in the United States. Therefore, prostitution is counted as part of GDP if it occurs in Nevada, but not elsewhere.

Accepted Answer

A) True 
 B)False

Question 10

Anuradha is a recent immigrant from India. She currently works as a software programmer in California's Silicon Valley. Are her earnings counted in India's GDP or America's GDP? What about GNP?

Accepted Answer

GNP counts the earnings of a country's c

Question 11

Economists call household spending on final goods and services:

Accepted Answer

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

Question 12

GNP 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 13

Gross domestic product is the market value of all:

Accepted Answer

A)  goods and services sold within a country in a year. 
B)  final goods and services produced within a country in a year. 
C)  goods and services produced within a country in a year. 
D)  final goods and services produced by a country's permanent residents, wherever located, in a year. 
A)  goods and services sold within a country in a year. 
B)  final goods and services produced within a country in a year. 
C)  goods and services produced within a country in a year. 
D)  final goods and services produced by a country's permanent residents, wherever located, in a year.

Question 14

Transfer payments are not included in government purchases.

Accepted Answer

A) True 
 B)False

Question 15

A country's GDP (in billions) was $5,690 in 2010 and $5,899 in 2011. What is the growth rate of GDP?

Accepted Answer

A)  1.03% 
B)  3.54% 
C)  3.67% 
D)  9.64% 
A)  1.03% 
B)  3.54% 
C)  3.67% 
D)  9.64%

Question 16

Economists prefer using real GDP because, other things held constant, increases in _____ represent true increases in the standard of living.

Accepted Answer

A)  production 
B)  prices 
C)  inflation 
D)  consumer spending 
A)  production 
B)  prices 
C)  inflation 
D)  consumer spending

Question 17

Jeff buys a used truck from a rental agency to make deliveries from his new furniture store. Would this purchase be included in GDP? If so, would it be consumption or investment spending?

Accepted Answer

Since the truck is used, it would not be

Question 18

None of the income components of GDP (based on the factor income approach) can be negative values.

Accepted Answer

A) True 
 B)False

Question 19

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 price of goods sold in 2008 and 2009. What is the nominal GDP in 2009?

Accepted Answer

A)  $20,134 
B)  $21,134 
C)  $26,260 
D)  $31,400 
A)  $20,134 
B)  $21,134 
C)  $26,260 
D)  $31,400

Question 20

The value of a car produced by Ford (an American company) in a factory located in Europe would be included in U.S. GNP.

Accepted Answer

A) True 
 B)False

Discuss four reasons that explain why GDP is not a perfect measure of economic activity in a country.

Use the following to answer questions: Table: GDP Data 2000 GDP in 2000 dollars \ 11.6 trillion 1995 GDP in 2000 dollars \ 10 trillion 1995 GDP in 1995 dollars \ 8.8 trillion -(Table: GDP Data) Using the GDP data in the table, how much did nominal GDP grow between 1995 and 2000?

China has a larger economy than the United Kingdom (Great Britain), but the British are still better off in terms of living standards.

Which transaction will be included in GDP?

A recession can be as short as one or two months.

List and briefly discuss the various components of the factor income approach to calculating GDP.

Spending on goods imported into the U.S. is included in GDP for:

A set of tires installed on a vehicle in an automobile factory is counted as:

Prostitution is legal in Nevada and illegal everywhere else in the United States. Therefore, prostitution is counted as part of GDP if it occurs in Nevada, but not elsewhere.

Anuradha is a recent immigrant from India. She currently works as a software programmer in California's Silicon Valley. Are her earnings counted in India's GDP or America's GDP? What about GNP?

Economists call household spending on final goods and services:

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

Gross domestic product is the market value of all:

Transfer payments are not included in government purchases.

A country's GDP (in billions) was $5,690 in 2010 and $5,899 in 2011. What is the growth rate of GDP?

Economists prefer using real GDP because, other things held constant, increases in _____ represent true increases in the standard of living.

Jeff buys a used truck from a rental agency to make deliveries from his new furniture store. Would this purchase be included in GDP? If so, would it be consumption or investment spending?

None of the income components of GDP (based on the factor income approach) can be negative values.

The value of a car produced by Ford (an American company) in a factory located in Europe would be included in U.S. GNP.

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

Discuss four reasons that explain why GDP is not a perfect measure of economic activity in a country.

Use the following to answer questions: Table: GDP Data 2000 GDP in 2000 dollars \ 11.6 trillion 1995 GDP in 2000 dollars \ 10 trillion 1995 GDP in 1995 dollars \ 8.8 trillion -(Table: GDP Data) Using the GDP data in the table, how much did nominal GDP grow between 1995 and 2000?

China has a larger economy than the United Kingdom (Great Britain), but the British are still better off in terms of living standards.

Which transaction will be included in GDP?

A recession can be as short as one or two months.

List and briefly discuss the various components of the factor income approach to calculating GDP.

Spending on goods imported into the U.S. is included in GDP for:

A set of tires installed on a vehicle in an automobile factory is counted as:

Prostitution is legal in Nevada and illegal everywhere else in the United States. Therefore, prostitution is counted as part of GDP if it occurs in Nevada, but not elsewhere.

Anuradha is a recent immigrant from India. She currently works as a software programmer in California's Silicon Valley. Are her earnings counted in India's GDP or America's GDP? What about GNP?

Economists call household spending on final goods and services:

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

Gross domestic product is the market value of all:

Transfer payments are not included in government purchases.

A country's GDP (in billions) was $5,690 in 2010 and $5,899 in 2011. What is the growth rate of GDP?

Economists prefer using real GDP because, other things held constant, increases in _____ represent true increases in the standard of living.

Jeff buys a used truck from a rental agency to make deliveries from his new furniture store. Would this purchase be included in GDP? If so, would it be consumption or investment spending?

None of the income components of GDP (based on the factor income approach) can be negative values.

The value of a car produced by Ford (an American company) in a factory located in Europe would be included in U.S. GNP.

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