Question 1

Nominal gross domestic product (GDP) is measured in terms of the _____.

Accepted Answer

A)  current-year prices 
B)  base-year prices 
C)  export of goods and services 
D)  amount of taxes collected 
E)  hours of employment 
A)  current-year prices 
B)  base-year prices 
C)  export of goods and services 
D)  amount of taxes collected 
E)  hours of employment A

Question 2

The gross domestic product (GDP) of an economy for a particular year is likely to increase if _____.

Accepted Answer

A)  workers go on longer vacations during that year 
B)  the length of an average work week decreases 
C)  homeowners hire lawn care services rather than maintaining the lawns themselves 
D)  people cook food at home instead of buying restaurant meals 
E)  the sale of illegal drugs increases 
A)  workers go on longer vacations during that year 
B)  the length of an average work week decreases 
C)  homeowners hire lawn care services rather than maintaining the lawns themselves 
D)  people cook food at home instead of buying restaurant meals 
E)  the sale of illegal drugs increases C

Question 3

Which of the following would be excluded from the gross domestic product (GDP)?

Accepted Answer

A)  The mayor of a city hiring more workers to improve the sanitation of the city 
B)  The sale of mobiles decreasing significantly 
C)  The government reducing welfare benefits 
D)  A homemaker spending $20 taking the family out to lunch instead of cooking food , 
E)  A consumer having his pickup truck tuned up at the local garage 
A)  The mayor of a city hiring more workers to improve the sanitation of the city 
B)  The sale of mobiles decreasing significantly 
C)  The government reducing welfare benefits 
D)  A homemaker spending $20 taking the family out to lunch instead of cooking food , 
E)  A consumer having his pickup truck tuned up at the local garage C

Question 4

Which of the following is included as government purchases in gross domestic product (GDP)?

Accepted Answer

A)  Social Security payments to elderly citizens 
B)  Welfare benefits distributed to the poor 
C)  Outright grants from government to recipients 
D)  Payments to clerical workers hired by government 
E)  Unemployment compensation benefits 
A)  Social Security payments to elderly citizens 
B)  Welfare benefits distributed to the poor 
C)  Outright grants from government to recipients 
D)  Payments to clerical workers hired by government 
E)  Unemployment compensation benefits

Question 5

When a firm produces and sells a refrigerator worth $1,000, its contribution to the gross domestic product (GDP) on the income side is measured by:

Accepted Answer

A)  the price paid by the consumer. 
B)  the investment made by the firm to manufacture the refrigerator. 
C)  the stock of inventories used by the firm to manufacture the refrigerator. 
D)  the cost of raw materials used by the firm to manufacture the refrigerator. 
E)  the sum of the wages, interest, and rent paid by the firm's owners and the profit of the firm. 
A)  the price paid by the consumer. 
B)  the investment made by the firm to manufacture the refrigerator. 
C)  the stock of inventories used by the firm to manufacture the refrigerator. 
D)  the cost of raw materials used by the firm to manufacture the refrigerator. 
E)  the sum of the wages, interest, and rent paid by the firm's owners and the profit of the firm.

Question 6

If the nominal gross domestic product (GDP) for a particular year is $4 trillion and the real GDP for that year is $3 trillion, then the GDP price index is 133.

Accepted Answer

A) True 
 B)False

Question 7

If real gross domestic product (GDP) for a particular year is $5 trillion and the GDP price index for that year is 136, the nominal gross domestic product (GDP) for that year is _____.

Accepted Answer

A)  $3.7 trillion 
B)  $4 trillion 
C)  $6.8 trillion 
D)  $27 trillion 
E)  $68 trillion 
A)  $3.7 trillion 
B)  $4 trillion 
C)  $6.8 trillion 
D)  $27 trillion 
E)  $68 trillion

Question 8

Which of the following would be included in this year's gross domestic product (GDP)?

Accepted Answer

A)  One hundred shares of IBM stock that Tony sold this May 
B)  A used car that Tracey sold to Justin 
C)  George's purchase of a fishing rod and reel at a garage sale 
D)  Sharon giving Dennis $20 as a reward for finding her ring 
E)  A bucket of Kentucky Fried Chicken that Kate bought this July 
A)  One hundred shares of IBM stock that Tony sold this May 
B)  A used car that Tracey sold to Justin 
C)  George's purchase of a fishing rod and reel at a garage sale 
D)  Sharon giving Dennis $20 as a reward for finding her ring 
E)  A bucket of Kentucky Fried Chicken that Kate bought this July

Question 9

Which of the following would be included in the calculation of gross domestic product (GDP)?

Accepted Answer

A)  The value of a used automobile purchased by Jim 
B)  The sale price of a new house purchased by Joe 
C)  The receipt of $100 in food stamps by Sandy 
D)  The $200 that Kurt spends on the purchase of bonds 
E)  The amount of money that Laurie receives as unemployment benefit after losing her job 
A)  The value of a used automobile purchased by Jim 
B)  The sale price of a new house purchased by Joe 
C)  The receipt of $100 in food stamps by Sandy 
D)  The $200 that Kurt spends on the purchase of bonds 
E)  The amount of money that Laurie receives as unemployment benefit after losing her job

Question 10

Which of the following will be excluded from the measurement of gross domestic product (GDP)?

Accepted Answer

A)  The market value of automobiles purchased by the federal government 
B)  The market value of California wine purchased by a Canadian firm 
C)  The payment of employees' medical insurance 
D)  The market value of computers purchased by state governments 
E)  The market value of transactions in the underground economy 
A)  The market value of automobiles purchased by the federal government 
B)  The market value of California wine purchased by a Canadian firm 
C)  The payment of employees' medical insurance 
D)  The market value of computers purchased by state governments 
E)  The market value of transactions in the underground economy

Question 11

A net increase in inventories is considered as investment for the current year.

Accepted Answer

A) True 
 B)False

Question 12

Marianne and Laura are both homemakers with children. When Laura starts to work as an unpaid volunteer at a hospital, she hires Marianne to care for her young child. In this context, the gross domestic product (GDP) will _____.

Accepted Answer

A)  increase 
B)  decrease 
C)  remain unaffected 
D)  increase if Marianne cares for the child better than Laura 
E)  increase if Laura treats patients with more sincerity than the other volunteers 
A)  increase 
B)  decrease 
C)  remain unaffected 
D)  increase if Marianne cares for the child better than Laura 
E)  increase if Laura treats patients with more sincerity than the other volunteers

Question 13

Gross private domestic investment consists of _____.

Accepted Answer

A)  spending by individual households on automobiles and durable goods 
B)  spending by businesses on labor resources 
C)  net additions to business inventories 
D)  spending by government on welfare benefits 
E)  spending by households on stocks and bonds 
A)  spending by individual households on automobiles and durable goods 
B)  spending by businesses on labor resources 
C)  net additions to business inventories 
D)  spending by government on welfare benefits 
E)  spending by households on stocks and bonds

Question 14

We can conclude that there has been inflation since the base year if the GDP price index in the current year is _____.

Accepted Answer

A)  10 
B)  equal to zero 
C)  20 
D)  greater than 100 
E)  negative 
A)  10 
B)  equal to zero 
C)  20 
D)  greater than 100 
E)  negative

Question 15

A farmer grows wheat and sells it to a bakery for $5. The bakery uses the wheat to bake bread and sells it to a distributor for $20. The distributor sells the bread to a supermarket for $30, which then sells the bread to customers for $50. Which of the following is true?

Accepted Answer

A)  The value added by the distributor is $30. 
B)  The value added by the supermarket is more than that added by the bakery. 
C)  GDP rises by $50 plus the value added at each stage of production. 
D)  Counting the value added at each stage instead of counting the final selling price creates a problem of double counting. 
E)  The value added by the farmer is $20 because the wheat, which is worth $5, is necessary for each of the three remaining stages of production. 
A)  The value added by the distributor is $30. 
B)  The value added by the supermarket is more than that added by the bakery. 
C)  GDP rises by $50 plus the value added at each stage of production. 
D)  Counting the value added at each stage instead of counting the final selling price creates a problem of double counting. 
E)  The value added by the farmer is $20 because the wheat, which is worth $5, is necessary for each of the three remaining stages of production.

Question 16

Which of the following is an example of an injection into the circular flow of income and expenditure?

Accepted Answer

A)  Government spending 
B)  Imports 
C)  Disposable income 
D)  Net taxes 
E)  Saving 
A)  Government spending 
B)  Imports 
C)  Disposable income 
D)  Net taxes 
E)  Saving

Question 17

Which of the following would be included in the gross domestic product (GDP)?

Accepted Answer

A)  The monthly telephone bill paid by Mr. Jones 
B)  The corporate stock purchased by Steven 
C)  The used limousine purchased by Harold 
D)  The bricks purchased by a construction company to build a house 
E)  The $300 George saved because he painted his own garage 
A)  The monthly telephone bill paid by Mr. Jones 
B)  The corporate stock purchased by Steven 
C)  The used limousine purchased by Harold 
D)  The bricks purchased by a construction company to build a house 
E)  The $300 George saved because he painted his own garage

Question 18

In the double-entry bookkeeping system used to track the economy, _____.

Accepted Answer

A)  the value of aggregate output equals the aggregate income paid for the resources used to produce that output 
B)  government spending on transfer payment is recorded 
C)  the earnings of all shareholders in the economy from the sale of shares are recorded 
D)  inventories are counted twice, once as investment and once as output 
E)  i ntermediate goods are counted twice, once as a type of output themselves and once as part of the final output 
A)  the value of aggregate output equals the aggregate income paid for the resources used to produce that output 
B)  government spending on transfer payment is recorded 
C)  the earnings of all shareholders in the economy from the sale of shares are recorded 
D)  inventories are counted twice, once as investment and once as output 
E)  i ntermediate goods are counted twice, once as a type of output themselves and once as part of the final output

Question 19

Which of the following statements is true regarding leakages and injections?

Accepted Answer

A)  Government transfer payments must equal taxes because one is a leakage and the other is an injection. 
B)  Imports must equal exports since both are leakages. 
C)  Government purchases, investment, and exports are leakages from the circular flow of income and expenditure. 
D)  Savings and net taxes are leakages from the circular flow of income and expenditure. 
E)  Net taxes are an injection into the circular flow, while exports are a leakage. 
A)  Government transfer payments must equal taxes because one is a leakage and the other is an injection. 
B)  Imports must equal exports since both are leakages. 
C)  Government purchases, investment, and exports are leakages from the circular flow of income and expenditure. 
D)  Savings and net taxes are leakages from the circular flow of income and expenditure. 
E)  Net taxes are an injection into the circular flow, while exports are a leakage.

Question 20

Transfer payments are an injection into the circular flow of income and expenditure model.

Accepted Answer

A) True 
 B)False

Nominal gross domestic product (GDP) is measured in terms of the _____.

The gross domestic product (GDP) of an economy for a particular year is likely to increase if _____.

Which of the following would be excluded from the gross domestic product (GDP)?

Which of the following is included as government purchases in gross domestic product (GDP)?

When a firm produces and sells a refrigerator worth $1,000, its contribution to the gross domestic product (GDP) on the income side is measured by:

If the nominal gross domestic product (GDP) for a particular year is $4 trillion and the real GDP for that year is $3 trillion, then the GDP price index is 133.

If real gross domestic product (GDP) for a particular year is $5 trillion and the GDP price index for that year is 136, the nominal gross domestic product (GDP) for that year is _____.

Which of the following would be included in this year's gross domestic product (GDP)?

Which of the following would be included in the calculation of gross domestic product (GDP)?

Which of the following will be excluded from the measurement of gross domestic product (GDP)?

A net increase in inventories is considered as investment for the current year.

Marianne and Laura are both homemakers with children. When Laura starts to work as an unpaid volunteer at a hospital, she hires Marianne to care for her young child. In this context, the gross domestic product (GDP) will _____.

Gross private domestic investment consists of _____.

We can conclude that there has been inflation since the base year if the GDP price index in the current year is _____.

A farmer grows wheat and sells it to a bakery for $5. The bakery uses the wheat to bake bread and sells it to a distributor for $20. The distributor sells the bread to a supermarket for $30, which then sells the bread to customers for $50. Which of the following is true?

Which of the following is an example of an injection into the circular flow of income and expenditure?

Which of the following would be included in the gross domestic product (GDP)?

In the double-entry bookkeeping system used to track the economy, _____.

Which of the following statements is true regarding leakages and injections?

Transfer payments are an injection into the circular flow of income and expenditure model.

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 6: Tracking the U S Economy

Nominal gross domestic product (GDP) is measured in terms of the _____.

The gross domestic product (GDP) of an economy for a particular year is likely to increase if _____.

Which of the following would be excluded from the gross domestic product (GDP)?

Which of the following is included as government purchases in gross domestic product (GDP)?

When a firm produces and sells a refrigerator worth $1,000, its contribution to the gross domestic product (GDP) on the income side is measured by:

If the nominal gross domestic product (GDP) for a particular year is $4 trillion and the real GDP for that year is $3 trillion, then the GDP price index is 133.

If real gross domestic product (GDP) for a particular year is $5 trillion and the GDP price index for that year is 136, the nominal gross domestic product (GDP) for that year is _____.

Which of the following would be included in this year's gross domestic product (GDP)?

Which of the following would be included in the calculation of gross domestic product (GDP)?

Which of the following will be excluded from the measurement of gross domestic product (GDP)?

A net increase in inventories is considered as investment for the current year.

Marianne and Laura are both homemakers with children. When Laura starts to work as an unpaid volunteer at a hospital, she hires Marianne to care for her young child. In this context, the gross domestic product (GDP) will _____.

Gross private domestic investment consists of _____.

We can conclude that there has been inflation since the base year if the GDP price index in the current year is _____.

A farmer grows wheat and sells it to a bakery for $5. The bakery uses the wheat to bake bread and sells it to a distributor for $20. The distributor sells the bread to a supermarket for $30, which then sells the bread to customers for $50. Which of the following is true?

Which of the following is an example of an injection into the circular flow of income and expenditure?

Which of the following would be included in the gross domestic product (GDP)?

In the double-entry bookkeeping system used to track the economy, _____.

Which of the following statements is true regarding leakages and injections?

Transfer payments are an injection into the circular flow of income and expenditure model.

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters