Question 1

The existence of the underground economy causes gross domestic product (GDP) statistics to _____.

Accepted Answer

A)  understate the true volume of economic activity 
B)  overstate the aggregate price level in the economy 
C)  overstate the standard of living 
D)  overstate the profit of firms 
E)  understate government spending in an economy 
A)  understate the true volume of economic activity 
B)  overstate the aggregate price level in the economy 
C)  overstate the standard of living 
D)  overstate the profit of firms 
E)  understate government spending in an economy

Question 2

The price index in the base year always equals_____.

Accepted Answer

A)  0 
B)  10 
C)  100 
D)  1 
E)  0.01 
A)  0 
B)  10 
C)  100 
D)  1 
E)  0.01

Question 3

Jimmy Earl, a farmer, sells $20 worth of peanuts to a factory that manufactures peanut butter, which sells it for $45. Which of the following is true?

Accepted Answer

A)  Total value added is $65. 
B)  The value of final sales is $65. 
C)  The value of final sales is $25. 
D)  Total value added is $25. 
E)  Total value added is $45. 
A)  Total value added is $65. 
B)  The value of final sales is $65. 
C)  The value of final sales is $25. 
D)  Total value added is $25. 
E)  Total value added is $45.

Question 4

If nominal gross domestic product (GDP) for a particular year is $6 trillion and real gross domestic product (GDP) for that year is $5 trillion, then the GDP price index for that year is _____.

Accepted Answer

A)  1.2 
B)  17 
C)  20 
D)  83 
E)  120 
A)  1.2 
B)  17 
C)  20 
D)  83 
E)  120

Question 5

Depreciation refers to:

Accepted Answer

A)  the value of leisure goods. 
B)  changes in exchange rates. 
C)  income that we earn but do not receive. 
D)  investment undertaken merely to replace worn-out capital. 
E)  the effects of government subsidy programs. 
A)  the value of leisure goods. 
B)  changes in exchange rates. 
C)  income that we earn but do not receive. 
D)  investment undertaken merely to replace worn-out capital. 
E)  the effects of government subsidy programs.

Question 6

The U.S. Department of Commerce has been developing so-called "green accounting" to:

Accepted Answer

A)  include the value of leisure in the gross domestic product (GDP) of the country. 
B)  register the impact of pollution and natural resource depletion. 
C)  value the output of new firms. 
D)  illustrate the difference between nominal GDP and real GDP. 
E)  measure the value of the output produced by inexperienced workers. 
A)  include the value of leisure in the gross domestic product (GDP) of the country. 
B)  register the impact of pollution and natural resource depletion. 
C)  value the output of new firms. 
D)  illustrate the difference between nominal GDP and real GDP. 
E)  measure the value of the output produced by inexperienced workers.

Question 7

To determine the consumer price index (CPI), _____.

Accepted Answer

A)  the values of the current market basket at current and base-year prices need to be known 
B)  the values of the base-year market basket at current and base-year prices need to be known 
C)  the values of the current market basket at current prices and the base-year market basket at base-year prices need to be known 
D)  only the current market basket at base-year prices needs to be known 
E)  only the current market basket at current prices needs to be known 
A)  the values of the current market basket at current and base-year prices need to be known 
B)  the values of the base-year market basket at current and base-year prices need to be known 
C)  the values of the current market basket at current prices and the base-year market basket at base-year prices need to be known 
D)  only the current market basket at base-year prices needs to be known 
E)  only the current market basket at current prices needs to be known

Question 8

One of the limitations of the national income accounting system is:

Accepted Answer

A)  valuing all output at its market price regardless of its contribution to society's economic welfare. 
B)  placing a market value on all negative externalities. 
C)  accurately measuring the value of leisure time. 
D)  double counting food produced on a farm for family consumption. 
E)  ignoring government production of goods and services. 
A)  valuing all output at its market price regardless of its contribution to society's economic welfare. 
B)  placing a market value on all negative externalities. 
C)  accurately measuring the value of leisure time. 
D)  double counting food produced on a farm for family consumption. 
E)  ignoring government production of goods and services.

Question 9

If the consumer price index (CPI) rises over a year from 220 to 230, then the inflation rate is 10 percent.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true of the gross domestic product (GDP) of a nation?

Accepted Answer

A)  I t can be measured by the stock of consumer goods in a nation at a particular point in time. 
B)  It can be measured by the stock of capital goods in a nation at a particular point in time. 
C)  It can be measured either by calculating the total spending on production or the total income from that production. 
D)  It is the sum of total spending on production and total income from that production. 
E)  It can be measured from the stock of wealth in the nation. 
A)  I t can be measured by the stock of consumer goods in a nation at a particular point in time. 
B)  It can be measured by the stock of capital goods in a nation at a particular point in time. 
C)  It can be measured either by calculating the total spending on production or the total income from that production. 
D)  It is the sum of total spending on production and total income from that production. 
E)  It can be measured from the stock of wealth in the nation.

Question 11

The gross domestic product (GDP) of a country measures the _____.

Accepted Answer

A)  market value of all intermediate goods and services produced by resources located within the country 
B)  market value of all goods and services produced by resources located outside the country 
C)  market value of all final goods and services produced by resources located within the country 
D)  value added to the economy by intermediate goods and services minus original cost 
E)  value of the total sales of financial assets 
A)  market value of all intermediate goods and services produced by resources located within the country 
B)  market value of all goods and services produced by resources located outside the country 
C)  market value of all final goods and services produced by resources located within the country 
D)  value added to the economy by intermediate goods and services minus original cost 
E)  value of the total sales of financial assets

Question 12

Which of the following actions will decrease the gross domestic product (GDP)?

Accepted Answer

A)  Tom's alarm clock breaks, so he buys a new one. 
B)  Tom buys a new alarm clock because he tends to sleep through the first alarm. 
C)  Tom's alarm clock breaks. He now oversleeps and has to buy a cup of coffee on the way to work instead of making it at home. 
D)  Tom gets fired for being late often after his alarm clock breaks. 
E)  Tom sells his broken alarm clock and uses the money to buy some French fries. 
A)  Tom's alarm clock breaks, so he buys a new one. 
B)  Tom buys a new alarm clock because he tends to sleep through the first alarm. 
C)  Tom's alarm clock breaks. He now oversleeps and has to buy a cup of coffee on the way to work instead of making it at home. 
D)  Tom gets fired for being late often after his alarm clock breaks. 
E)  Tom sells his broken alarm clock and uses the money to buy some French fries.

Question 13

In order to convert nominal gross domestic product (GDP) to real gross domestic product (GDP), we must divide:

Accepted Answer

A)  real GDP by the price index. 
B)  nominal GDP by the price index. 
C)  the price index by nominal GDP. 
D)  the price index by real GDP. 
E)  nominal GDP by 100. 
A)  real GDP by the price index. 
B)  nominal GDP by the price index. 
C)  the price index by nominal GDP. 
D)  the price index by real GDP. 
E)  nominal GDP by 100.

Question 14

Disposable income equals personal income minus net taxes.

Accepted Answer

A) True 
 B)False

Question 15

The immediate effect of a purchase of a government bond on the gross domestic product (GDP) is_____.

Accepted Answer

A)  a decrease in consumption 
B)  an increase in government spending 
C)  an increase in investment 
D)  a decrease in investment 
E)  nonexistent, since no real goods and services have been produced 
A)  a decrease in consumption 
B)  an increase in government spending 
C)  an increase in investment 
D)  a decrease in investment 
E)  nonexistent, since no real goods and services have been produced

Question 16

Which of the following is a problem associated with gross domestic product (GDP) as a measure of social welfare?

Accepted Answer

A)  It includes many nonmarket activities. 
B)  It takes into account the value of only those goods which are widely used. 
C)  It takes into account the cost of environmental damage caused by pollution. 
D)  It includes intermediate goods as a separate entry. 
E)  It excludes the value of leisure time. 
A)  It includes many nonmarket activities. 
B)  It takes into account the value of only those goods which are widely used. 
C)  It takes into account the cost of environmental damage caused by pollution. 
D)  It includes intermediate goods as a separate entry. 
E)  It excludes the value of leisure time.

Question 17

A fixed-weight price index uses a process that adjusts the weights continuously year by year.

Accepted Answer

A) True 
 B)False

Question 18

If the nominal gross domestic product (GDP) for a year is $5.4 trillion, and the real gross domestic product (GDP) for the same year is $3.6 trillion, the GDP price index is _____.

Accepted Answer

A)  0.667 
B)  150 
C)  66.67 
D)  50 
E)  33.33 
A)  0.667 
B)  150 
C)  66.67 
D)  50 
E)  33.33

Question 19

A GDP price index of 100 for a year implies that:

Accepted Answer

A)  there has been no inflation during the year. 
B)  the price level is three times what it was in the base year. 
C)  the price level is one hundred times what it was in the base year. 
D)  the price level is double what it was in the base year. 
E)  the inflation rate has been 100 percent per year since the base year. 
A)  there has been no inflation during the year. 
B)  the price level is three times what it was in the base year. 
C)  the price level is one hundred times what it was in the base year. 
D)  the price level is double what it was in the base year. 
E)  the inflation rate has been 100 percent per year since the base year.

Question 20

If consumption = $5,000; investment = $800, government purchases = $700, exports = $30, imports = $60, and transfer payments = $340, then _____.

Accepted Answer

A)  GDP = $7,400 
B)  GDP = $7,740 
C)  GDP = $3,140 
D)  GDP = $6,470 
E)  GDP = $6,840 
A)  GDP = $7,400 
B)  GDP = $7,740 
C)  GDP = $3,140 
D)  GDP = $6,470 
E)  GDP = $6,840

The existence of the underground economy causes gross domestic product (GDP) statistics to _____.

The price index in the base year always equals_____.

Jimmy Earl, a farmer, sells $20 worth of peanuts to a factory that manufactures peanut butter, which sells it for $45. Which of the following is true?

If nominal gross domestic product (GDP) for a particular year is $6 trillion and real gross domestic product (GDP) for that year is $5 trillion, then the GDP price index for that year is _____.

Depreciation refers to:

The U.S. Department of Commerce has been developing so-called "green accounting" to:

To determine the consumer price index (CPI), _____.

One of the limitations of the national income accounting system is:

If the consumer price index (CPI) rises over a year from 220 to 230, then the inflation rate is 10 percent.

Which of the following is true of the gross domestic product (GDP) of a nation?

The gross domestic product (GDP) of a country measures the _____.

Which of the following actions will decrease the gross domestic product (GDP)?

In order to convert nominal gross domestic product (GDP) to real gross domestic product (GDP), we must divide:

Disposable income equals personal income minus net taxes.

The immediate effect of a purchase of a government bond on the gross domestic product (GDP) is_____.

Which of the following is a problem associated with gross domestic product (GDP) as a measure of social welfare?

A fixed-weight price index uses a process that adjusts the weights continuously year by year.

If the nominal gross domestic product (GDP) for a year is $5.4 trillion, and the real gross domestic product (GDP) for the same year is $3.6 trillion, the GDP price index is _____.

A GDP price index of 100 for a year implies that:

If consumption = $5,000; investment = $800, government purchases = $700, exports = $30, imports = $60, and transfer payments = $340, then _____.

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

The existence of the underground economy causes gross domestic product (GDP) statistics to _____.

The price index in the base year always equals_____.

Jimmy Earl, a farmer, sells $20 worth of peanuts to a factory that manufactures peanut butter, which sells it for $45. Which of the following is true?

If nominal gross domestic product (GDP) for a particular year is $6 trillion and real gross domestic product (GDP) for that year is $5 trillion, then the GDP price index for that year is _____.

Depreciation refers to:

The U.S. Department of Commerce has been developing so-called "green accounting" to:

To determine the consumer price index (CPI), _____.

One of the limitations of the national income accounting system is:

If the consumer price index (CPI) rises over a year from 220 to 230, then the inflation rate is 10 percent.

Which of the following is true of the gross domestic product (GDP) of a nation?

The gross domestic product (GDP) of a country measures the _____.

Which of the following actions will decrease the gross domestic product (GDP)?

In order to convert nominal gross domestic product (GDP) to real gross domestic product (GDP), we must divide:

Disposable income equals personal income minus net taxes.

The immediate effect of a purchase of a government bond on the gross domestic product (GDP) is_____.

Which of the following is a problem associated with gross domestic product (GDP) as a measure of social welfare?

A fixed-weight price index uses a process that adjusts the weights continuously year by year.

If the nominal gross domestic product (GDP) for a year is $5.4 trillion, and the real gross domestic product (GDP) for the same year is $3.6 trillion, the GDP price index is _____.

A GDP price index of 100 for a year implies that:

If consumption = $5,000; investment = $800, government purchases = $700, exports = $30, imports = $60, and transfer payments = $340, then _____.

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