Question 1

Marie grows vegetables in her garden to feed her family.The vegetables she grows are not counted in GDP because

Accepted Answer

A) they were not produced for the marketplace. 
B) they are an intermediate good, which Marie will process further. 
C) the vegetables have no value. 
D) it reduces the amount of vegetables she will buy from shops. 
A) they were not produced for the marketplace. 
B) they are an intermediate good, which Marie will process further. 
C) the vegetables have no value. 
D) it reduces the amount of vegetables she will buy from shops. A

Question 2

The three sources of income for the household are

Accepted Answer

A) taxes, subsidies from the government, and rent. 
B) wages, rent, and profit. 
C) wages, rent, and subsidies from the government. 
D) wages, rebates, and rent. 
A) taxes, subsidies from the government, and rent. 
B) wages, rent, and profit. 
C) wages, rent, and subsidies from the government. 
D) wages, rebates, and rent. B

Question 3

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy.Explain briefly the various parts of the diagram.

Accepted Answer

This diagram should duplicate the essential characteristics of the diagram in the text, with an explanation of the meaning of each flow and each market.It is important that the student understands that the inner loop represents the flow of real goods and services and that the outer loop represents the corresponding flow of payments.

Question 4

Which of the following statements about GDP is correct?

Accepted Answer

A) GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services. 
B) Money continuously flows from households to firms and then back to households, and GDP measures this flow of money. 
C) GDP is generally regarded as the best single measure of a society's economic well-being. 
D) All of the above are correct. 
A) GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services. 
B) Money continuously flows from households to firms and then back to households, and GDP measures this flow of money. 
C) GDP is generally regarded as the best single measure of a society's economic well-being. 
D) All of the above are correct.

Question 5

If nominal GDP in one year exceeds nominal GDP in the previous year, then the production of output

Accepted Answer

A) must have fallen. 
B) must have risen. 
C) must have stayed the same. 
D) may have risen, fallen, or stayed the same because there is not enough information to determine what happened to real output. 
A) must have fallen. 
B) must have risen. 
C) must have stayed the same. 
D) may have risen, fallen, or stayed the same because there is not enough information to determine what happened to real output.

Question 6

Households play what role(s) in the circular-flow diagram?

Accepted Answer

A) Purchasers of factors of production and sellers of services. 
B) Purchasers of factors of production and sellers of goods. 
C) Purchasers of goods and services only. 
D) Purchasers of goods and services and sellers of factors of production. 
A) Purchasers of factors of production and sellers of services. 
B) Purchasers of factors of production and sellers of goods. 
C) Purchasers of goods and services only. 
D) Purchasers of goods and services and sellers of factors of production.

Question 7

Gross domestic product measures

Accepted Answer

A) income and expenditures. 
B) income but not expenditures. 
C) expenditures but not income. 
D) neither income nor expenditures. 
A) income and expenditures. 
B) income but not expenditures. 
C) expenditures but not income. 
D) neither income nor expenditures.

Question 8

You find that your salary for the year is higher this year than it was last year.Does that mean that your real income has increased? Explain carefully.

Accepted Answer

Real income is nominal income adjusted f

Question 9

Wages are an example of a transfer payment because there is a transfer of payment from the firm to the worker.

Accepted Answer

A) True 
 B)False

Question 10

The value of plant and equipment worn out in the process of manufacturing goods and services is measured by

Accepted Answer

A) intermediate production. 
B) Net National Product. 
C) investment. 
D) depreciation. 
E) consumption. 
A) intermediate production. 
B) Net National Product. 
C) investment. 
D) depreciation. 
E) consumption.

Question 11

Expenditures on a nation's domestic production

Accepted Answer

A) is less than its domestic production. 
B) are equal to its domestic production. 
C) are greater than its domestic production. 
D) could be less than, equal to, or greater than its domestic production. 
A) is less than its domestic production. 
B) are equal to its domestic production. 
C) are greater than its domestic production. 
D) could be less than, equal to, or greater than its domestic production.

Question 12

GDP is defined as the market value of all final goods and services produced within a country in a given period of time.In spite of this definition, some production is left out of GDP.Explain why some final goods and services are not included.

Accepted Answer

GDP excludes some products because they

Question 13

Figure 1
 
$\begin{array}{ccccc}
\text { Year } & \begin{array}{c}
\text { Price of } \
\text { pens }
\end{array} & \begin{array}{c}
\text { Quantity of } \
\text { pens }
\end{array} & \text { Price of books } & \begin{array}{c}
\text { Quantity of } \
\text { books }
\end{array} \
\hline 2013 & \text { R57 } & 100 & \text { R190 } & 50 \
2014 & \text { R57 } & 120 & \text { R228 } & 70 \
2015 & \text { R76 } & 120 & \text { R266 } & 70
\end{array}$
-Refer to Figure 1.What is the value of real GDP for 2014?

Accepted Answer

A) R15 200 
B) R20 140 
C) R21 660 
D) R22 800 
E) R27 740 
A) R15 200 
B) R20 140 
C) R21 660 
D) R22 800 
E) R27 740

Question 14

Real GDP is measured in ________ prices while nominal GDP is measured in ________ prices.

Accepted Answer

A) Foreign; domestic 
B) Current year; base year 
C) Domestic; foreign 
D) Base year; current year 
E) Intermediate; final 
A) Foreign; domestic 
B) Current year; base year 
C) Domestic; foreign 
D) Base year; current year 
E) Intermediate; final

Question 15

Because every transaction has a buyer and a seller,

Accepted Answer

A) GDP is more closely associated with an economy's income than it is with an economy's expenditure. 
B) every transaction contributes equally to an economy's income and to its expenditure. 
C) the number of firms must be equal to the number of households in a simple circular-flow diagram. 
D) firms' profits are necessarily zero in a simple circular-flow diagram. 
A) GDP is more closely associated with an economy's income than it is with an economy's expenditure. 
B) every transaction contributes equally to an economy's income and to its expenditure. 
C) the number of firms must be equal to the number of households in a simple circular-flow diagram. 
D) firms' profits are necessarily zero in a simple circular-flow diagram.

Question 16

Gross Domestic Product is the sum of the market value of

Accepted Answer

A) intermediate goods. 
B) final goods and services. 
C) manufactured goods. 
D) inferior goods and services. 
E) normal goods and services. 
A) intermediate goods. 
B) final goods and services. 
C) manufactured goods. 
D) inferior goods and services. 
E) normal goods and services.

Question 17

Assume that between two periods, GDP of a European country measured in current prices fell from €96 billion to €48 billion.Over the same period, the relevant price index fell from 100 to 75.
a.What was the percentage decline in nominal GDP during the period?
b.What was the percentage decline in real GDP during this period? Show your work.

Accepted Answer

a.GDP measured in current prices is nomi

Question 18

Describe the main components of GDP.

Accepted Answer

GDP is divided among four components of

Question 19

Cigarettes should be valued in GDP at r₁7.50 per pack, even though r₁5.00 of that price is tax, because the buyers paid r₁7.50 per pack.

Accepted Answer

A) True 
 B)False

Question 20

SA Gross Domestic Product (in contrast to Gross National Product) measures the production and income of

Accepted Answer

A) South African-owned firms no matter where they are located in the world. 
B) None of these answers. 
C) the domestic service sector only. 
D) people and factories located within the borders of the SA. 
E) the domestic manufacturing sector only. 
A) South African-owned firms no matter where they are located in the world. 
B) None of these answers. 
C) the domestic service sector only. 
D) people and factories located within the borders of the SA. 
E) the domestic manufacturing sector only.

Marie grows vegetables in her garden to feed her family.The vegetables she grows are not counted in GDP because

The three sources of income for the household are

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy.Explain briefly the various parts of the diagram.

Which of the following statements about GDP is correct?

If nominal GDP in one year exceeds nominal GDP in the previous year, then the production of output

Households play what role(s) in the circular-flow diagram?

Gross domestic product measures

You find that your salary for the year is higher this year than it was last year.Does that mean that your real income has increased? Explain carefully.

Wages are an example of a transfer payment because there is a transfer of payment from the firm to the worker.

The value of plant and equipment worn out in the process of manufacturing goods and services is measured by

Expenditures on a nation's domestic production

GDP is defined as the market value of all final goods and services produced within a country in a given period of time.In spite of this definition, some production is left out of GDP.Explain why some final goods and services are not included.

Figure 1 Year Price of pens Quantity of pens Price of books Quantity of books 2013 R57 100 R190 50 2014 R57 120 R228 70 2015 R76 120 R266 70 -Refer to Figure 1.What is the value of real GDP for 2014?

Real GDP is measured in prices while nominal GDP is measured in prices.

Because every transaction has a buyer and a seller,

Gross Domestic Product is the sum of the market value of

Describe the main components of GDP.

Cigarettes should be valued in GDP at r₁7.50 per pack, even though r₁5.00 of that price is tax, because the buyers paid r₁7.50 per pack.

SA Gross Domestic Product (in contrast to Gross National Product) measures the production and income of

What Is Economics

Thinking Like an Economist

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

Filters

Exam 3: Measuring a Nations Well-Being

Marie grows vegetables in her garden to feed her family.The vegetables she grows are not counted in GDP because

The three sources of income for the household are

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy.Explain briefly the various parts of the diagram.

Which of the following statements about GDP is correct?

If nominal GDP in one year exceeds nominal GDP in the previous year, then the production of output

Households play what role(s) in the circular-flow diagram?

Gross domestic product measures

You find that your salary for the year is higher this year than it was last year.Does that mean that your real income has increased? Explain carefully.

Wages are an example of a transfer payment because there is a transfer of payment from the firm to the worker.

The value of plant and equipment worn out in the process of manufacturing goods and services is measured by

Expenditures on a nation's domestic production

GDP is defined as the market value of all final goods and services produced within a country in a given period of time.In spite of this definition, some production is left out of GDP.Explain why some final goods and services are not included.

Figure 1 Year Price of pens Quantity of pens Price of books Quantity of books 2013 R57 100 R190 50 2014 R57 120 R228 70 2015 R76 120 R266 70 -Refer to Figure 1.What is the value of real GDP for 2014?

Real GDP is measured in ________ prices while nominal GDP is measured in ________ prices.

Because every transaction has a buyer and a seller,

Gross Domestic Product is the sum of the market value of

Describe the main components of GDP.

Cigarettes should be valued in GDP at r₁7.50 per pack, even though r₁5.00 of that price is tax, because the buyers paid r₁7.50 per pack.

SA Gross Domestic Product (in contrast to Gross National Product) measures the production and income of

What Is Economics

Thinking Like an Economist

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

Filters

Real GDP is measured in prices while nominal GDP is measured in prices.