Question 1

Gross domestic product (GDP) understates total economic activity because it ignores household production of goods and services.

Accepted Answer

A) True 
 B)False

Question 2

Gross domestic product (GDP) figures tend to understate the quantity of goods and services available because:

Accepted Answer

A)  GDP excludes the value of goods produced at home. 
B)  many items are counted twice or more in the intermediate stages of production. 
C)  more women are entering the labor force. 
D)  firms often add less to inventories than they planned to. 
E)  exports are subtracted from GDP but imports are not added. 
A)  GDP excludes the value of goods produced at home. 
B)  many items are counted twice or more in the intermediate stages of production. 
C)  more women are entering the labor force. 
D)  firms often add less to inventories than they planned to. 
E)  exports are subtracted from GDP but imports are not added.

Question 3

Suppose the real gross domestic product (GDP) equals $100 billion this year and the nominal gross domestic product (GDP) is $200 billion. This implies that the price level has increased by _____.

Accepted Answer

A)  $200 billion 
B)  50 percent 
C)  $100 billion 
D)  100 percent 
E)  200 percent 
A)  $200 billion 
B)  50 percent 
C)  $100 billion 
D)  100 percent 
E)  200 percent

Question 4

If a firm hires labor for $6,000, pays rent of $2,000, buys raw materials for $10,000 from another firm, earns profits of $800, and sells its output for $25,000, the value added by the firm is _____.

Accepted Answer

A)  $6,200 
B)  $9,000 
C)  $15,000 
D)  $18,000 
E)  $18,800 
A)  $6,200 
B)  $9,000 
C)  $15,000 
D)  $18,000 
E)  $18,800

Question 5

Gross domestic product (GDP) is not a perfect measure of welfare because it:

Accepted Answer

A)  treats a dollar spent on guns the same as a dollar spent on education. 
B)  treats a dollar spent on exports the same as a dollar spent on imports. 
C)  double counts the value of leisure time. 
D)  double counts depreciation. 
E)  counts illegal activities in the underground economy. 
A)  treats a dollar spent on guns the same as a dollar spent on education. 
B)  treats a dollar spent on exports the same as a dollar spent on imports. 
C)  double counts the value of leisure time. 
D)  double counts depreciation. 
E)  counts illegal activities in the underground economy.

Question 6

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005. The real GDP _____ between 2004 and 2005.

Accepted Answer

A)  increased by about $5 billion 
B)  decreased by about $5 billion 
C)  remained almost constant 
D)  increased by about $2 billion 
E)  decreased by about $2 billion 
A)  increased by about $5 billion 
B)  decreased by about $5 billion 
C)  remained almost constant 
D)  increased by about $2 billion 
E)  decreased by about $2 billion

Question 7

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005. The real GDP _____ between 2001 and 2002.

Accepted Answer

A)  increased by slightly less than $10 billion 
B)  decreased by slightly more than $5 billion 
C)  remained constant 
D)  increased by only about $1 billion 
E)  increased more than $20 billion 
A)  increased by slightly less than $10 billion 
B)  decreased by slightly more than $5 billion 
C)  remained constant 
D)  increased by only about $1 billion 
E)  increased more than $20 billion

Question 8

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005. The real GDP _____ between 2002 and 2005.

Accepted Answer

A)  increased more than $5 billion 
B)  decreased more than $5 billion 
C)  increased by less than $1 billion 
D)  decreased by less than $1 billion 
E)  remained constant 
A)  increased more than $5 billion 
B)  decreased more than $5 billion 
C)  increased by less than $1 billion 
D)  decreased by less than $1 billion 
E)  remained constant

Question 9

Rhonda sells a house she has owned for 15 years and starts living in a rented apartment. To make it more marketable, she buys carpeting that she has professionally installed and buys wallpaper that her daughter hangs. Which items would be included in this year's gross domestic product (GDP)?

Accepted Answer

A)  The sale price of the house 
B)  The cost of transporting all her furnitures to the new apartment 
C)  The opportunity cost of Rhonda's daughter's time 
D)  The opportunity cost of Rhonda's time 
E)  The purchase price for carpet and wallpaper, and the installation fee for the carpet 
A)  The sale price of the house 
B)  The cost of transporting all her furnitures to the new apartment 
C)  The opportunity cost of Rhonda's daughter's time 
D)  The opportunity cost of Rhonda's time 
E)  The purchase price for carpet and wallpaper, and the installation fee for the carpet

Question 10

Depreciation refers to a decrease in the value of a durable good caused by:

Accepted Answer

A)  an increase in the price level. 
B)  changes in the interest rate. 
C)  wear and tear over time. 
D)  changes in tax laws. 
E)  a decrease in its resale value. 
A)  an increase in the price level. 
B)  changes in the interest rate. 
C)  wear and tear over time. 
D)  changes in tax laws. 
E)  a decrease in its resale value.

Question 11

Real gross domestic product (GDP) shows:

Accepted Answer

A)  total spending on intermediate goods and services. 
B)  constant dollar GDP. 
C)  net domestic product. 
D)  nominal GDP adjusted for taxes. 
E)  domestic income. 
A)  total spending on intermediate goods and services. 
B)  constant dollar GDP. 
C)  net domestic product. 
D)  nominal GDP adjusted for taxes. 
E)  domestic income.

Question 12

Inventories help manufacturers cope with unexpected changes in the supply of their resources or in the demand for their products.

Accepted Answer

A) True 
 B)False

Question 13

If the real gross domestic product (GDP) for the base year is $3 trillion, then the nominal gross domestic product (GDP) for that year is _____.

Accepted Answer

A)  −$.03 trillion 
B)  $0.3 trillion 
C)  $3 trillion 
D)  $30 trillion 
E)  $300 trillion 
A)  −$.03 trillion 
B)  $0.3 trillion 
C)  $3 trillion 
D)  $30 trillion 
E)  $300 trillion

Question 14

Gross domestic product ( GDP) does not reflect many things that individuals do for themselves.

Accepted Answer

A) True 
 B)False

Question 15

The nominal gross domestic product (GDP) for a country was $1,000 in 2003 and $1,500 in 2004. The GDP price index was 100 in 2003 and 150 in 2004. Between 2003 and 2004, real GDP _____.

Accepted Answer

A)  increased by $500 
B)  increased by $333 
C)  increased by $50 
D)  remained the same 
E)  decreased by $50 
A)  increased by $500 
B)  increased by $333 
C)  increased by $50 
D)  remained the same 
E)  decreased by $50

Question 16

If a firm's inventory decreases, the gross domestic product (GDP) also decreases.

Accepted Answer

A) True 
 B)False

Question 17

The value added at all stages of production sums to the market value of the final good, and the value added for all final goods sums to GDP based on the income approach.

Accepted Answer

A) True 
 B)False

Question 18

An increase in household production will increase gross domestic product (GDP).

Accepted Answer

A) True 
 B)False

Question 19

If the consumer price index (CPI) is 160 one year and 175 the next, the annual rate of inflation as measured by the CPI is approximately _____.

Accepted Answer

A)  4.5 percent 
B)  8.6 percent 
C)  9.4 percent 
D)  15 percent 
E)  175 percent 
A)  4.5 percent 
B)  8.6 percent 
C)  9.4 percent 
D)  15 percent 
E)  175 percent

Question 20

The circular flow model shows the flow of:

Accepted Answer

A)  money in the economy. 
B)  financial assets in the economy. 
C)  goods and services in the product market. 
D)  resources and money in the economy. 
E)  resources through the resource markets and their allocation in the product market. 
A)  money in the economy. 
B)  financial assets in the economy. 
C)  goods and services in the product market. 
D)  resources and money in the economy. 
E)  resources through the resource markets and their allocation in the product market.

Gross domestic product (GDP) understates total economic activity because it ignores household production of goods and services.

Gross domestic product (GDP) figures tend to understate the quantity of goods and services available because:

Suppose the real gross domestic product (GDP) equals $100 billion this year and the nominal gross domestic product (GDP) is $200 billion. This implies that the price level has increased by _____.

If a firm hires labor for $6,000, pays rent of $2,000, buys raw materials for $10,000 from another firm, earns profits of $800, and sells its output for $25,000, the value added by the firm is _____.

Gross domestic product (GDP) is not a perfect measure of welfare because it:

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005. The real GDP _____ between 2004 and 2005.

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005. The real GDP _____ between 2001 and 2002.

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005. The real GDP _____ between 2002 and 2005.

Rhonda sells a house she has owned for 15 years and starts living in a rented apartment. To make it more marketable, she buys carpeting that she has professionally installed and buys wallpaper that her daughter hangs. Which items would be included in this year's gross domestic product (GDP)?

Depreciation refers to a decrease in the value of a durable good caused by:

Real gross domestic product (GDP) shows:

Inventories help manufacturers cope with unexpected changes in the supply of their resources or in the demand for their products.

If the real gross domestic product (GDP) for the base year is $3 trillion, then the nominal gross domestic product (GDP) for that year is _____.

Gross domestic product ( GDP) does not reflect many things that individuals do for themselves.

The nominal gross domestic product (GDP) for a country was $1,000 in 2003 and $1,500 in 2004. The GDP price index was 100 in 2003 and 150 in 2004. Between 2003 and 2004, real GDP _____.

If a firm's inventory decreases, the gross domestic product (GDP) also decreases.

The value added at all stages of production sums to the market value of the final good, and the value added for all final goods sums to GDP based on the income approach.

An increase in household production will increase gross domestic product (GDP).

If the consumer price index (CPI) is 160 one year and 175 the next, the annual rate of inflation as measured by the CPI is approximately _____.

The circular flow model shows the flow of:

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

Gross domestic product (GDP) understates total economic activity because it ignores household production of goods and services.

Gross domestic product (GDP) figures tend to understate the quantity of goods and services available because:

Suppose the real gross domestic product (GDP) equals $100 billion this year and the nominal gross domestic product (GDP) is $200 billion. This implies that the price level has increased by _____.

If a firm hires labor for $6,000, pays rent of $2,000, buys raw materials for $10,000 from another firm, earns profits of $800, and sells its output for $25,000, the value added by the firm is _____.

Gross domestic product (GDP) is not a perfect measure of welfare because it:

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005. The real GDP _____ between 2004 and 2005.

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005. The real GDP _____ between 2001 and 2002.

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005. The real GDP _____ between 2002 and 2005.

Rhonda sells a house she has owned for 15 years and starts living in a rented apartment. To make it more marketable, she buys carpeting that she has professionally installed and buys wallpaper that her daughter hangs. Which items would be included in this year's gross domestic product (GDP)?

Depreciation refers to a decrease in the value of a durable good caused by:

Real gross domestic product (GDP) shows:

Inventories help manufacturers cope with unexpected changes in the supply of their resources or in the demand for their products.

If the real gross domestic product (GDP) for the base year is $3 trillion, then the nominal gross domestic product (GDP) for that year is _____.

Gross domestic product ( GDP) does not reflect many things that individuals do for themselves.

The nominal gross domestic product (GDP) for a country was $1,000 in 2003 and $1,500 in 2004. The GDP price index was 100 in 2003 and 150 in 2004. Between 2003 and 2004, real GDP _____.

If a firm's inventory decreases, the gross domestic product (GDP) also decreases.

The value added at all stages of production sums to the market value of the final good, and the value added for all final goods sums to GDP based on the income approach.

An increase in household production will increase gross domestic product (GDP).

If the consumer price index (CPI) is 160 one year and 175 the next, the annual rate of inflation as measured by the CPI is approximately _____.

The circular flow model shows the flow of:

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