Question 1

The expenditure approach values ________ and the income approach values ________.

Accepted Answer

A)  goods and services at market prices; goods and services at factor prices 
B)  only goods at market prices; only services at factor prices 
C)  goods and services at market prices; services at factor prices 
D)  goods and services at factor prices; goods and services at market prices 
E)  services only at factor prices; goods only at market prices 
A)  goods and services at market prices; goods and services at factor prices 
B)  only goods at market prices; only services at factor prices 
C)  goods and services at market prices; services at factor prices 
D)  goods and services at factor prices; goods and services at market prices 
E)  services only at factor prices; goods only at market prices

Question 2

Wobet is a small country that produces only steak and potatoes. Steaks have a price of $10 each and potatoes have a price of $1 each. Suppose that Wobet produces 10 steaks and 20 potatoes in 2010. Using ________, Wobet has GDP equal to ________.

Accepted Answer

A)  a price index; $120 
B)  market value; $120 
C)  market value; 30 units 
D)  real value; $120 
E)  a market basket; 30 units 
A)  a price index; $120 
B)  market value; $120 
C)  market value; 30 units 
D)  real value; $120 
E)  a market basket; 30 units

Question 3

In 2015, the United Nations Human Development Index ranked Australia

Accepted Answer

A)  second. 
B)  last. 
C)  third. 
D)  tenth. 
E)  first. 
A)  second. 
B)  last. 
C)  third. 
D)  tenth. 
E)  first.

Question 4

Kelly's Surf Shop orders 5,000 new surfboards at the beginning of the year but only sells 4,500 by the end of the year. How are the 500 unsold surfboards accounted for in gross domestic product?

Accepted Answer

A)  They will be included in the government spending category of GDP. 
B)  They will be included in the durable consumption category of GDP. 
C)  They will be included in the inventory investment category of GDP. 
D)  They will be included in the nondurable consumption category of GDP. 
E)  They will be included in the residential investment category of GDP. 
A)  They will be included in the government spending category of GDP. 
B)  They will be included in the durable consumption category of GDP. 
C)  They will be included in the inventory investment category of GDP. 
D)  They will be included in the nondurable consumption category of GDP. 
E)  They will be included in the residential investment category of GDP.

Question 5

A standard definition of recession is

Accepted Answer

A)  a period of time when the unemployment rate exceeds 6.5 per cent. 
B)  an increase in unemployment from one month to the next. 
C)  a period of expansion in many sectors of the economy. 
D)  an increase in GDP that lasts for at least 2 consecutive quarters. 
E)  a decrease in GDP that lasts for at least 2 consecutive quarters. 
A)  a period of time when the unemployment rate exceeds 6.5 per cent. 
B)  an increase in unemployment from one month to the next. 
C)  a period of expansion in many sectors of the economy. 
D)  an increase in GDP that lasts for at least 2 consecutive quarters. 
E)  a decrease in GDP that lasts for at least 2 consecutive quarters.

Question 6

GDP handles household production by

Accepted Answer

A)  including it in real GDP but not in nominal GDP because there are no prices paid for the work. 
B)  estimating a dollar value of the goods purchased to do housework. 
C)  ignoring it. 
D)  estimating a dollar value of the services provided. 
E)  including it in exactly the same way that all other production is included. 
A)  including it in real GDP but not in nominal GDP because there are no prices paid for the work. 
B)  estimating a dollar value of the goods purchased to do housework. 
C)  ignoring it. 
D)  estimating a dollar value of the services provided. 
E)  including it in exactly the same way that all other production is included.

Question 7

Total expenditure equals total income

Accepted Answer

A)  because firms pay out everything they receive as income to the factors of production. 
B)  only if firms sell all the goods they produce in a given time period. 
C)  if firms do not save for future investment. 
D)  only if net taxes equals government expenditures on goods and services. 
E)  if firms earn zero profit. 
A)  because firms pay out everything they receive as income to the factors of production. 
B)  only if firms sell all the goods they produce in a given time period. 
C)  if firms do not save for future investment. 
D)  only if net taxes equals government expenditures on goods and services. 
E)  if firms earn zero profit.

Question 8

In the circular flow, how are the "value of production", "income", and "expenditures" related?

Accepted Answer

A)  They have no relationship to each other. 
B)  Expenditures on GDP equal the value of production which equals income. 
C)  Once tax payments are subtracted at each stage, they are equal. 
D)  Once net exports of goods and services are subtracted from GDP, all three are equal. 
E)  Value of production always equals income but expenditures are smaller because households save some of their income and do not spend it. 
A)  They have no relationship to each other. 
B)  Expenditures on GDP equal the value of production which equals income. 
C)  Once tax payments are subtracted at each stage, they are equal. 
D)  Once net exports of goods and services are subtracted from GDP, all three are equal. 
E)  Value of production always equals income but expenditures are smaller because households save some of their income and do not spend it.

Question 9

If real GDP is greater than nominal GDP for a particular year, then

Accepted Answer

A)  prices must have fallen between the current year and the base year. 
B)  production must have increased between the current year and the base year. 
C)  production must have fallen between the current year and the base year. 
D)  prices must have risen between the current year and the base year. 
E)  prices must have fallen between the current year and the immediate past year. 
A)  prices must have fallen between the current year and the base year. 
B)  production must have increased between the current year and the base year. 
C)  production must have fallen between the current year and the base year. 
D)  prices must have risen between the current year and the base year. 
E)  prices must have fallen between the current year and the immediate past year.

Question 10

A business cycle has two turning points, which are the

Accepted Answer

A)  trough and peak. 
B)  recession and trough. 
C)  expansion and recession. 
D)  peak and expansion. 
E)  peak and recession. 
A)  trough and peak. 
B)  recession and trough. 
C)  expansion and recession. 
D)  peak and expansion. 
E)  peak and recession.

Question 11

Goods and services such as environmental quality, leisure time and household production are not included in GDP because they are not

Accepted Answer

A)  really durable goods. 
B)  for consumption. 
C)  made for profit. 
D)  bought in markets. 
E)  productive activities. 
A)  really durable goods. 
B)  for consumption. 
C)  made for profit. 
D)  bought in markets. 
E)  productive activities.

Question 12

As measured, GDP omits which of the following?
i. Illegal sales of goods and services
ii. Changes in the amount of leisure time
iii. Household production of goods and services

Accepted Answer

A)  i only 
B)  i and iii 
C)  ii and iii 
D)  i and ii 
E)  i, ii and iii 
A)  i only 
B)  i and iii 
C)  ii and iii 
D)  i and ii 
E)  i, ii and iii

Question 13

-The table above gives data for a nation. The value of the country's net exports of goods and services shows that the country's

Accepted Answer

A)  value of its imports exceeded the value of its exports. 
B)  net exports of goods and services are decreasing. 
C)  value of its imports is negative. 
D)  value of its imports must equal zero. 
E)  value of its exports exceeded the value of its imports. 
A)  value of its imports exceeded the value of its exports. 
B)  net exports of goods and services are decreasing. 
C)  value of its imports is negative. 
D)  value of its imports must equal zero. 
E)  value of its exports exceeded the value of its imports.

Question 14

If consumption was 70 per cent of GDP and investment and government expenditure were both each, then we see that

Accepted Answer

A)  GDP can be over 100 per cent because it is "gross" rather than "net." 
B)  exports must be more than imports. 
C)  we must subtract depreciation from investment so that the components of GDP do not exceed . 
D)  exports must be less than imports. 
E)  the error is due to rounding. 
A)  GDP can be over 100 per cent because it is "gross" rather than "net." 
B)  exports must be more than imports. 
C)  we must subtract depreciation from investment so that the components of GDP do not exceed . 
D)  exports must be less than imports. 
E)  the error is due to rounding.

Question 15

The National Bureau of Economic Research describes a recession as

Accepted Answer

A)  "a period of significant decline in total output, income, employment, and trade, usually lasting from six months to a year." 
B)  "a one-year period with increases in the unemployment rate." 
C)  "a decrease in the standard of living for at least one year." 
D)  "a decrease in potential GDP for at least six months." 
E)  "a decrease in real GDP for two successive quarters." 
A)  "a period of significant decline in total output, income, employment, and trade, usually lasting from six months to a year." 
B)  "a one-year period with increases in the unemployment rate." 
C)  "a decrease in the standard of living for at least one year." 
D)  "a decrease in potential GDP for at least six months." 
E)  "a decrease in real GDP for two successive quarters."

Question 16

How are final goods and services valued when measuring nominal GDP?

Accepted Answer

A)  At producer cost 
B)  At factor market prices 
C)  At foreign exchange parity 
D)  At current market prices 
E)  At base-year prices 
A)  At producer cost 
B)  At factor market prices 
C)  At foreign exchange parity 
D)  At current market prices 
E)  At base-year prices

Question 17

-The table above gives the production and prices for a small nation that produces only bread and soda. The base year is 2015. What is real GDP in 2016?

Accepted Answer

A)  $300 
B)  $210 
C)  $510 
D)  $530 
E)  $1080 
A)  $300 
B)  $210 
C)  $510 
D)  $530 
E)  $1080

Question 18

Investment is the expenditure done by

Accepted Answer

A)  the rest of the world. 
B)  firms. 
C)  governments. 
D)  savers. 
E)  Both answers A and B are correct. 
A)  the rest of the world. 
B)  firms. 
C)  governments. 
D)  savers. 
E)  Both answers A and B are correct.

Question 19

Real GDP measures the value of goods and services produced in a given year, valued using

Accepted Answer

A)  real rather than nominal prices. 
B)  prices that prevail the same year. 
C)  no prices. 
D)  future prices. 
E)  base-year prices. 
A)  real rather than nominal prices. 
B)  prices that prevail the same year. 
C)  no prices. 
D)  future prices. 
E)  base-year prices.

Question 20

Which of the following is included as investment in GDP?
i. Cars produced during the year but unsold at the end of the year.
Ii New capital equipment produced and purchased during the year.
iii. Purchases of a company's shares and bonds.

Accepted Answer

A)  i and ii 
B)  i, ii and iii 
C)  iii only 
D)  i only 
E)  ii only 
A)  i and ii 
B)  i, ii and iii 
C)  iii only 
D)  i only 
E)  ii only

The expenditure approach values and the income approach values .

Wobet is a small country that produces only steak and potatoes. Steaks have a price of $10 each and potatoes have a price of $1 each. Suppose that Wobet produces 10 steaks and 20 potatoes in 2010. Using , Wobet has GDP equal to .

In 2015, the United Nations Human Development Index ranked Australia

Kelly's Surf Shop orders 5,000 new surfboards at the beginning of the year but only sells 4,500 by the end of the year. How are the 500 unsold surfboards accounted for in gross domestic product?

A standard definition of recession is

GDP handles household production by

Total expenditure equals total income

In the circular flow, how are the "value of production", "income", and "expenditures" related?

If real GDP is greater than nominal GDP for a particular year, then

A business cycle has two turning points, which are the

Goods and services such as environmental quality, leisure time and household production are not included in GDP because they are not

As measured, GDP omits which of the following? i. Illegal sales of goods and services ii. Changes in the amount of leisure time iii. Household production of goods and services

-The table above gives data for a nation. The value of the country's net exports of goods and services shows that the country's

If consumption was 70 per cent of GDP and investment and government expenditure were both each, then we see that

The National Bureau of Economic Research describes a recession as

How are final goods and services valued when measuring nominal GDP?

-The table above gives the production and prices for a small nation that produces only bread and soda. The base year is 2015. What is real GDP in 2016?

Investment is the expenditure done by

Real GDP measures the value of goods and services produced in a given year, valued using

Which of the following is included as investment in GDP? i. Cars produced during the year but unsold at the end of the year. Ii New capital equipment produced and purchased during the year. iii. Purchases of a company's shares and bonds.

Getting Started

The Australian and Global Economies

The Economic Problem

Demand and Supply

Jobs and Unemployment

The Cpi and the Cost of Living

Economic Growth

Finance, Saving and Investment

Money, the Price Level and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 5: GDP: a Measure of Total Production and Income

The expenditure approach values ________ and the income approach values ________.

Wobet is a small country that produces only steak and potatoes. Steaks have a price of $10 each and potatoes have a price of $1 each. Suppose that Wobet produces 10 steaks and 20 potatoes in 2010. Using ________, Wobet has GDP equal to ________.

In 2015, the United Nations Human Development Index ranked Australia

Kelly's Surf Shop orders 5,000 new surfboards at the beginning of the year but only sells 4,500 by the end of the year. How are the 500 unsold surfboards accounted for in gross domestic product?

A standard definition of recession is

GDP handles household production by

Total expenditure equals total income

In the circular flow, how are the "value of production", "income", and "expenditures" related?

If real GDP is greater than nominal GDP for a particular year, then

A business cycle has two turning points, which are the

Goods and services such as environmental quality, leisure time and household production are not included in GDP because they are not

As measured, GDP omits which of the following? i. Illegal sales of goods and services ii. Changes in the amount of leisure time iii. Household production of goods and services

-The table above gives data for a nation. The value of the country's net exports of goods and services shows that the country's

If consumption was 70 per cent of GDP and investment and government expenditure were both each, then we see that

The National Bureau of Economic Research describes a recession as

How are final goods and services valued when measuring nominal GDP?

-The table above gives the production and prices for a small nation that produces only bread and soda. The base year is 2015. What is real GDP in 2016?

Investment is the expenditure done by

Real GDP measures the value of goods and services produced in a given year, valued using

Which of the following is included as investment in GDP? i. Cars produced during the year but unsold at the end of the year. Ii New capital equipment produced and purchased during the year. iii. Purchases of a company's shares and bonds.

Getting Started

The Australian and Global Economies

The Economic Problem

Demand and Supply

Jobs and Unemployment

The Cpi and the Cost of Living

Economic Growth

Finance, Saving and Investment

Money, the Price Level and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

The expenditure approach values and the income approach values .

Wobet is a small country that produces only steak and potatoes. Steaks have a price of $10 each and potatoes have a price of $1 each. Suppose that Wobet produces 10 steaks and 20 potatoes in 2010. Using , Wobet has GDP equal to .