Question 1

GDP includes the:

Accepted Answer

A)  current market value of government purchases of goods and services. 
B)  sales of stocks and bonds at current market prices. 
C)  current market value of used cars. 
D)  current market value of all existing homes, regardless of when they were built. 
A)  current market value of government purchases of goods and services. 
B)  sales of stocks and bonds at current market prices. 
C)  current market value of used cars. 
D)  current market value of all existing homes, regardless of when they were built.

Question 2

Use the following to answer questions: Table: Three-Good Economy II $$\begin{array} { l c c c c } 
\hline \text { Product } & \text { Quantity (2008) } & \text { Price (2008) } & \text { Quantity (2009) } & \text { Price (2009) } \
\hline \text { Computers } & 30 & \$ 1,000 & 28 & \$ 995 \
\text { Pizzas } & 100 & 10 & 150 & 15 \
\text { Burgers } & 200 & 200 & 210 & 20 \
\hline
\end{array}$$
-(Table: Three-Good Economy II) 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 2008 prices are used in the calculation of real GDP, then nominal GDP in 2009 is _____ and real GDP in 2009 is _____.

Accepted Answer

A)  $34,310; $33,700 
B)  $35,350; $34,310 
C)  $33,700; $35,000 
D)  $35,000; $33,700 
A)  $34,310; $33,700 
B)  $35,350; $34,310 
C)  $33,700; $35,000 
D)  $35,000; $33,700

Question 3

GDP calculations account for:

Accepted Answer

A)  medical services. 
B)  leisure. 
C)  pollution. 
D)  the distribution of income. 
A)  medical services. 
B)  leisure. 
C)  pollution. 
D)  the distribution of income.

Question 4

A computer chip sold to Dell is an example of:

Accepted Answer

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

Question 5

Economists call the value of exports minus imports:

Accepted Answer

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

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The calculation of GDP includes:

Accepted Answer

A)  both goods and services. 
B)  goods, but not services. 
C)  services, but not goods. 
D)  neither goods nor services. 
A)  both goods and services. 
B)  goods, but not services. 
C)  services, but not goods. 
D)  neither goods nor services.

Question 8

A farmer's purchase of a new tractor counts as consumption in the national spending approach to measuring GDP.

Accepted Answer

A) True 
 B)False

Question 9

Gross domestic product (GDP) is the market value of:

Accepted Answer

A)  all final goods and services produced within a country in a year. 
B)  both intermediate and final goods and services produced within a country in a year. 
C)  all final goods, but not services produced within a country in a year. 
D)  both intermediate and final goods, but not services produced within a country in a year. 
A)  all final goods and services produced within a country in a year. 
B)  both intermediate and final goods and services produced within a country in a year. 
C)  all final goods, but not services produced within a country in a year. 
D)  both intermediate and final goods, but not services produced within a country in a year.

Question 10

Use the following to answer questions: Table: Three-Good Economy II $$\begin{array} { l c c c c } 
\hline \text { Product } & \text { Quantity (2008) } & \text { Price (2008) } & \text { Quantity (2009) } & \text { Price (2009) } \
\hline \text { Computers } & 30 & \$ 1,000 & 28 & \$ 995 \
\text { Pizzas } & 100 & 10 & 150 & 15 \
\text { Burgers } & 200 & 200 & 210 & 20 \
\hline
\end{array}$$
-(Table: Three-Good Economy II) 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. What is the growth rate of real GDP in 2009 if 2009 prices are used in the calculation of real GDP?

Accepted Answer

A)  -3.71% 
B)  -2.94% 
C)  -1.97% 
D)  1.00% 
A)  -3.71% 
B)  -2.94% 
C)  -1.97% 
D)  1.00%

Question 11

The factor income approach to calculating GDP states that GDP is equal to:

Accepted Answer

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

Question 12

In 2010, nominal GDP was $14.6 trillion and the GDP deflator was 110.6. What was real GDP for that year?

Accepted Answer

A)  $16.1 trillion 
B)  $14.3 trillion 
C)  $13.2 trillion 
D)  $12.1 trillion 
A)  $16.1 trillion 
B)  $14.3 trillion 
C)  $13.2 trillion 
D)  $12.1 trillion

Question 13

Since World War II, the long-term average rate of real GDP growth in the United States has been about:

Accepted Answer

A)  1.35%. 
B)  3.25%. 
C)  6.5%. 
D)  13.5%. 
A)  1.35%. 
B)  3.25%. 
C)  6.5%. 
D)  13.5%.

Question 14

The largest 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 15

What data are needed to calculate GDP?

Accepted Answer

A)  only the quantities of goods and services produced 
B)  only the prices of goods and services produced 
C)  both quantities and prices of goods and services produced 
D)  only the costs of producing goods and services 
A)  only the quantities of goods and services produced 
B)  only the prices of goods and services produced 
C)  both quantities and prices of goods and services produced 
D)  only the costs of producing goods and services

Question 16

The purchase of stocks and bonds is considered an investment expenditure for calculating GDP.

Accepted Answer

A) True 
 B)False

Question 17

Real GDP is equal to nominal GDP adjusted for changes in prices over time.

Accepted Answer

A) True 
 B)False

Question 18

Most economists prefer _____ as the best indicator of changing living standards in a country.

Accepted Answer

A)  real GDP growth per capita 
B)  real GDP growth 
C)  real GDP per capita 
D)  real GDP 
A)  real GDP growth per capita 
B)  real GDP growth 
C)  real GDP per capita 
D)  real GDP

Question 19

The national spending approach classifies all of the spending in a nation as consumption, investment, government purchases, or net exports.

Accepted Answer

A) True 
 B)False

Question 20

A common indicator of a recession would be negative growth in real GDP lasting more than a few months.

Accepted Answer

A) True 
 B)False

GDP includes the:

GDP calculations account for:

A computer chip sold to Dell is an example of:

Economists call the value of exports minus imports:

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

The calculation of GDP includes:

A farmer's purchase of a new tractor counts as consumption in the national spending approach to measuring GDP.

Gross domestic product (GDP) is the market value of:

The factor income approach to calculating GDP states that GDP is equal to:

In 2010, nominal GDP was $14.6 trillion and the GDP deflator was 110.6. What was real GDP for that year?

Since World War II, the long-term average rate of real GDP growth in the United States has been about:

The largest spending component of GDP in the United States is:

What data are needed to calculate GDP?

The purchase of stocks and bonds is considered an investment expenditure for calculating GDP.

Real GDP is equal to nominal GDP adjusted for changes in prices over time.

Most economists prefer _____ as the best indicator of changing living standards in a country.

The national spending approach classifies all of the spending in a nation as consumption, investment, government purchases, or net exports.

A common indicator of a recession would be negative growth in real GDP lasting more than a few months.

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

GDP includes the:

GDP calculations account for:

A computer chip sold to Dell is an example of:

Economists call the value of exports minus imports:

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

The calculation of GDP includes:

A farmer's purchase of a new tractor counts as consumption in the national spending approach to measuring GDP.

Gross domestic product (GDP) is the market value of:

The factor income approach to calculating GDP states that GDP is equal to:

In 2010, nominal GDP was $14.6 trillion and the GDP deflator was 110.6. What was real GDP for that year?

Since World War II, the long-term average rate of real GDP growth in the United States has been about:

The largest spending component of GDP in the United States is:

What data are needed to calculate GDP?

The purchase of stocks and bonds is considered an investment expenditure for calculating GDP.

Real GDP is equal to nominal GDP adjusted for changes in prices over time.

Most economists prefer _____ as the best indicator of changing living standards in a country.

The national spending approach classifies all of the spending in a nation as consumption, investment, government purchases, or net exports.

A common indicator of a recession would be negative growth in real GDP lasting more than a few months.

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