Question 1

Government purchases consist of the total dollar amount(s) spent on goods and services by the

Accepted Answer

A) federal government only. 
B) state governments only. 
C) local governments only. 
D) state and local governments, but not the federal government. 
E) federal, state, and local governments. 
A) federal government only. 
B) state governments only. 
C) local governments only. 
D) state and local governments, but not the federal government. 
E) federal, state, and local governments.

Question 2

Which of the following illustrates double counting?

Accepted Answer

A) The total market value of the steel used to produce a car and the total market value of the car itself are summed. 
B) The total market value of tennis rackets and the total market value of tennis balls are summed. 
C) The total market value of picture frames and the total market value of camera film are summed. 
D) The total market value of eyeglasses and the total market value of carpet are summed. 
E) b and c 
A) The total market value of the steel used to produce a car and the total market value of the car itself are summed. 
B) The total market value of tennis rackets and the total market value of tennis balls are summed. 
C) The total market value of picture frames and the total market value of camera film are summed. 
D) The total market value of eyeglasses and the total market value of carpet are summed. 
E) b and c

Question 3

Which of the following is counted in GDP?

Accepted Answer

A) the trading of 100 shares of Microsoft stock 
B) the services of a real estate broker 
C) government transfer payments 
D) the sale of a used car 
E) none of the above 
A) the trading of 100 shares of Microsoft stock 
B) the services of a real estate broker 
C) government transfer payments 
D) the sale of a used car 
E) none of the above

Question 4

Investment equals inventory investment added to

Accepted Answer

A) business purchases of new capital goods. 
B) purchases of new residential housing. 
C) fixed investment. 
D) business purchases of new capital goods and purchases of new residential housing. 
E) either c or d 
A) business purchases of new capital goods. 
B) purchases of new residential housing. 
C) fixed investment. 
D) business purchases of new capital goods and purchases of new residential housing. 
E) either c or d

Question 5

The base year is the year

Accepted Answer

A) in which prices are unstable. 
B) in which prices are lowest. 
C) in which prices are highest. 
D) that serves as a reference point or benchmark. 
E) in which nominal output is largest. 
A) in which prices are unstable. 
B) in which prices are lowest. 
C) in which prices are highest. 
D) that serves as a reference point or benchmark. 
E) in which nominal output is largest.

Question 6

Some economists argue that GDP overstates overall economic welfare because it does not include the impact of bads such as pollution.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is true?

Accepted Answer

A) Indirect business taxes are a component of national income because when added to the other components of national income, the sum must equal GDP. 
B) Indirect business taxes must be subtracted from national income to yield a figure equal to GDP. 
C) Indirect business taxes are a part of national income because they are considered a payment to a factor of production. 
D) Indirect business taxes are not part of national income because they are not considered a payment to a factor of production. 
A) Indirect business taxes are a component of national income because when added to the other components of national income, the sum must equal GDP. 
B) Indirect business taxes must be subtracted from national income to yield a figure equal to GDP. 
C) Indirect business taxes are a part of national income because they are considered a payment to a factor of production. 
D) Indirect business taxes are not part of national income because they are not considered a payment to a factor of production.

Question 8

Net domestic product equals gross domestic product minus the capital consumption allowance.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would definitely not be included in the measurement of GDP?

Accepted Answer

A) value of the services of a painter who paints your garage 
B) value of the services of a person who mows his or her own lawn 
C) value of the services of a maid who cleans your house 
D) value of the services of a plumber who fixes your kitchen sink 
A) value of the services of a painter who paints your garage 
B) value of the services of a person who mows his or her own lawn 
C) value of the services of a maid who cleans your house 
D) value of the services of a plumber who fixes your kitchen sink

Question 10

Gross Domestic Product is computed by using

Accepted Answer

A) base-year prices. 
B) wholesale prices. 
C) previous-year prices. 
D) current-year prices. 
A) base-year prices. 
B) wholesale prices. 
C) previous-year prices. 
D) current-year prices.

Question 11

Corporate profits can be broken into three categories: dividends, undistributed profits, and corporate profits taxes.

Accepted Answer

A) True 
 B)False

Question 12

Exhibit 7-1
  
-Refer to Exhibit 7-1. What is the value of disposable income?

Accepted Answer

A) $3,618 
B) $4,795 
C) $3,727 
D) $4,207 
E) $4,017 
A) $3,618 
B) $4,795 
C) $3,727 
D) $4,207 
E) $4,017

Question 13

If in the process of calculating GDP, the market value of all intermediate goods is added to the market value of all final goods, this would

Accepted Answer

A) overstate the actual value of GDP. 
B) produce the correct value of GDP. 
C) understate the actual value of GDP. 
D) avoid the possible error of double counting. 
A) overstate the actual value of GDP. 
B) produce the correct value of GDP. 
C) understate the actual value of GDP. 
D) avoid the possible error of double counting.

Question 14

Exhibit 7-5
Economic Data for Country Z
  
-Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 2 and year 3?

Accepted Answer

A) -3.0% 
B) 2.6% 
C) 14.0% 
D) -2.2% 
A) -3.0% 
B) 2.6% 
C) 14.0% 
D) -2.2%

Question 15

Which of the following does GDP omit?

Accepted Answer

A) Jack purchases $2,300 worth of stock in company X. 
B) Bob mows his lawn and washes and irons his shirts. 
C) Helen receives $4,000 a year in Social Security payments. 
D) a and b 
E) a, b, and c 
A) Jack purchases $2,300 worth of stock in company X. 
B) Bob mows his lawn and washes and irons his shirts. 
C) Helen receives $4,000 a year in Social Security payments. 
D) a and b 
E) a, b, and c

Question 16

Exhibit 7-5
Economic Data for Country Z
  
-Refer to Exhibit 7-5. During year 3, Country Z experienced economic _____________ and _________________.

Accepted Answer

A) decline; deflation (falling price level) 
B) growth; inflation (rising price level) 
C) growth; deflation (falling price level) 
D) decline; inflation (rising price level) 
A) decline; deflation (falling price level) 
B) growth; inflation (rising price level) 
C) growth; deflation (falling price level) 
D) decline; inflation (rising price level)

Question 17

An economy produces 10X, 20Y, and 30Z in a year. Base-year prices for these goods are $1, $2, and $3, respectively. Current-year prices for these goods are $2, $3, and $4, respectively. What is Real GDP?

Accepted Answer

A) $180 
B) $200 
C) $140 
D) $240 
E) none of the above 
A) $180 
B) $200 
C) $140 
D) $240 
E) none of the above

Question 18

A transfer payment is a payment to a person that is made in return for goods and services supplied.

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 7-5
Economic Data for Country Z
  
-Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 1 and year 2?

Accepted Answer

A) 7.3% 
B) 8.3% 
C) 5.3% 
D) 6.8% 
A) 7.3% 
B) 8.3% 
C) 5.3% 
D) 6.8%

Question 20

Why do economists prefer to compare Real GDP figures for various years instead of GDP figures?

Accepted Answer

A) Because when GDP in one year is higher than in another year, there is no way to tell why it is higher.Is it because output is higher, prices are higher, etc.? This is not the case with Real GDP.If Real GDP is higher in one year than in another year, it is because output is higher. 
B) Because when GDP in one year is higher than in another year, there is no way of knowing if the quality of goods produced is higher in one year than the other.This is not the case with Real GDP.If Real GDP is higher in one year than in another year, it is because the quality of the goods produced is higher. 
C) Actually the question is incorrect.Economists prefer to compare GDP figures instead of Real GDP figures. 
D) Because Real GDP is easier to compute than GDP. 
E) Because when GDP in one year is higher than in another year, there is no way to tell if the quality of life is higher in one year than the other.This is not the case with Real GDP.If Real GDP is higher in one year than in another year, it is because the quality of life is higher. 
A) Because when GDP in one year is higher than in another year, there is no way to tell why it is higher.Is it because output is higher, prices are higher, etc.? This is not the case with Real GDP.If Real GDP is higher in one year than in another year, it is because output is higher. 
B) Because when GDP in one year is higher than in another year, there is no way of knowing if the quality of goods produced is higher in one year than the other.This is not the case with Real GDP.If Real GDP is higher in one year than in another year, it is because the quality of the goods produced is higher. 
C) Actually the question is incorrect.Economists prefer to compare GDP figures instead of Real GDP figures. 
D) Because Real GDP is easier to compute than GDP. 
E) Because when GDP in one year is higher than in another year, there is no way to tell if the quality of life is higher in one year than the other.This is not the case with Real GDP.If Real GDP is higher in one year than in another year, it is because the quality of life is higher.

Exam 7: Macroeconomic Measurements Part II Gdp and Real Gdp

Government purchases consist of the total dollar amount(s) spent on goods and services by the

Which of the following illustrates double counting?

Which of the following is counted in GDP?

Investment equals inventory investment added to

The base year is the year

Some economists argue that GDP overstates overall economic welfare because it does not include the impact of bads such as pollution.

Which of the following statements is true?

Net domestic product equals gross domestic product minus the capital consumption allowance.

Which of the following would definitely not be included in the measurement of GDP?

Gross Domestic Product is computed by using

Corporate profits can be broken into three categories: dividends, undistributed profits, and corporate profits taxes.

Exhibit 7-1 -Refer to Exhibit 7-1. What is the value of disposable income?

If in the process of calculating GDP, the market value of all intermediate goods is added to the market value of all final goods, this would

Exhibit 7-5 Economic Data for Country Z -Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 2 and year 3?

Which of the following does GDP omit?

Exhibit 7-5 Economic Data for Country Z -Refer to Exhibit 7-5. During year 3, Country Z experienced economic _____________ and _________________.

An economy produces 10X, 20Y, and 30Z in a year. Base-year prices for these goods are $1, $2, and $3, respectively. Current-year prices for these goods are $2, $3, and $4, respectively. What is Real GDP?

A transfer payment is a payment to a person that is made in return for goods and services supplied.

Exhibit 7-5 Economic Data for Country Z -Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 1 and year 2?

Why do economists prefer to compare Real GDP figures for various years instead of GDP figures?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

Exhibit 7-5 Economic Data for Country Z -Refer to Exhibit 7-5. During year 3, Country Z experienced economic _ and _____.