Question 1

The circular flow model shows the flow of:

Accepted Answer

A) products from households to businesses and the flow of resources from businesses to households. 
B) products from households to businesses and the flow of productive resources from households to businesses. 
C) products from businesses to households and the flow of money from households to businesses. 
D) products from businesses to households and the flow of productive resources from households to businesses. 
A) products from households to businesses and the flow of resources from businesses to households. 
B) products from households to businesses and the flow of productive resources from households to businesses. 
C) products from businesses to households and the flow of money from households to businesses. 
D) products from businesses to households and the flow of productive resources from households to businesses.

Question 2

Because of transactions which take place in the underground economy,the:

Accepted Answer

A) GDP calculation tends to overstate the actual value of goods sold in the economy. 
B) GDP calculation tends to accurately portray the value of goods sold in the economy. 
C) GDP calculation tends to understate the actual value of goods sold in the economy. 
D) value of the GDP calculation will be equal to the value of the national income calculation. 
E) value of the GDP calculation through the expenditure approach will be greater than the value calculated through the income approach. 
A) GDP calculation tends to overstate the actual value of goods sold in the economy. 
B) GDP calculation tends to accurately portray the value of goods sold in the economy. 
C) GDP calculation tends to understate the actual value of goods sold in the economy. 
D) value of the GDP calculation will be equal to the value of the national income calculation. 
E) value of the GDP calculation through the expenditure approach will be greater than the value calculated through the income approach.

Question 3

GDP ignores:

Accepted Answer

A) the value of mowing your lawn if you hired someone to do it. 
B) the value of cleaning your clothes if you took them to the laundry. 
C) the value of driving your kids to school if you hired a taxi to do it. 
D) the value of the air quality in your neighborhood. 
A) the value of mowing your lawn if you hired someone to do it. 
B) the value of cleaning your clothes if you took them to the laundry. 
C) the value of driving your kids to school if you hired a taxi to do it. 
D) the value of the air quality in your neighborhood.

Question 4

Which of the following increases GDP?

Accepted Answer

A) More people walk to work rather than drive cars. 
B) Increase in car accidents. 
C) Farm families grow more for themselves than for the market. 
D) Neither the price nor the quantity of television sets changes, but the quality of sets improves. 
A) More people walk to work rather than drive cars. 
B) Increase in car accidents. 
C) Farm families grow more for themselves than for the market. 
D) Neither the price nor the quantity of television sets changes, but the quality of sets improves.

Question 5

A country's current account balance is:

Accepted Answer

A) the total values of a country's export of goods and services minus its import of goods and services and minus its net income paid overseas. 
B) the total values of a country's export of goods and services plus its import of goods and services and minus its net income paid overseas. 
C) the total values of a country's export of goods and services minus its import of goods and services and plus its net income paid overseas. 
D) the total values of a country's export of goods and services minus its import of goods. 
A) the total values of a country's export of goods and services minus its import of goods and services and minus its net income paid overseas. 
B) the total values of a country's export of goods and services plus its import of goods and services and minus its net income paid overseas. 
C) the total values of a country's export of goods and services minus its import of goods and services and plus its net income paid overseas. 
D) the total values of a country's export of goods and services minus its import of goods.

Question 6

Household consumption expenditures include:

Accepted Answer

A) investment expenditure. 
B) used goods and services. 
C) durable goods, non-durable goods, and services. 
D) voluntary services. 
A) investment expenditure. 
B) used goods and services. 
C) durable goods, non-durable goods, and services. 
D) voluntary services.

Question 7

If the underground economy were included in GDP,GDP would:

Accepted Answer

A) grow. 
B) decline. 
C) stay the same. 
D) Not possible to determine. 
A) grow. 
B) decline. 
C) stay the same. 
D) Not possible to determine.

Question 8

Net national product is:

Accepted Answer

A) NDP minus depreciation. 
B) GDP minus depreciation. 
C) NDP minus net income paid overseas. 
D) GNP minus net income paid overseas. 
A) NDP minus depreciation. 
B) GDP minus depreciation. 
C) NDP minus net income paid overseas. 
D) GNP minus net income paid overseas.

Question 9

GDP data provide _____ information as to whether a small fraction of the population consumes most of a country's GDP or whether consumption is evenly divided.

Accepted Answer

A) no 
B) a little 
C) a lot of 
D) interesting 
E) exciting 
A) no 
B) a little 
C) a lot of 
D) interesting 
E) exciting

Question 10

GDP underestimates our economic wellbeing because:

Accepted Answer

A) it includes the value of work done by nannies. 
B) it ignores the distribution of products. 
C) it includes the value of work done by householders. 
D) it includes the value of work done by illegal immigrants. 
A) it includes the value of work done by nannies. 
B) it ignores the distribution of products. 
C) it includes the value of work done by householders. 
D) it includes the value of work done by illegal immigrants.

Question 11

In the circular flow model,the demand arrow represents:

Accepted Answer

A) the flow of investment expenditures from households to firms. 
B) the flow of consumption expenditures from households to firms. 
C) the flow of consumption expenditures from firms to households. 
D) the flow of investment expenditures from businesses to firms. 
A) the flow of investment expenditures from households to firms. 
B) the flow of consumption expenditures from households to firms. 
C) the flow of consumption expenditures from firms to households. 
D) the flow of investment expenditures from businesses to firms.

Question 12

In recent years,people have benefited from greater amounts of leisure time.This trend:

Accepted Answer

A) has caused GDP to rise. 
B) has caused GDP to fall. 
C) made GDP fluctuate randomly 
D) is not accounted for in GDP. 
A) has caused GDP to rise. 
B) has caused GDP to fall. 
C) made GDP fluctuate randomly 
D) is not accounted for in GDP.

Question 13

To construct GDP,exports:

Accepted Answer

A) and imports must be subtracted. 
B) and imports must be included. 
C) must be subtracted and imports must be included. 
D) must be included and imports must be ignored. 
E) must be included and imports must be subtracted. 
A) and imports must be subtracted. 
B) and imports must be included. 
C) must be subtracted and imports must be included. 
D) must be included and imports must be ignored. 
E) must be included and imports must be subtracted.

Question 14

Exhibit 11-3 GDP data (billions of dollars)
  
-Use the information in Exhibit 11-3 to compute personal consumption expenditures.Which of the following is correct?

Accepted Answer

A) $6750 billion. 
B) $6600 billion. 
C) $6550 billion. 
D) $6100 billion. 
E) $5000 billion. 
A) $6750 billion. 
B) $6600 billion. 
C) $6550 billion. 
D) $6100 billion. 
E) $5000 billion.

Question 15

Which of the following purchases would be counted as a final good in the GDP calculation?

Accepted Answer

A) A family's purchase of a used car. 
B) A speculator's purchase of 100 shares of News Corp. stock. 
C) A deli's purchase of bread for making its sandwiches. 
D) A business's purchase of new office equipment. 
A) A family's purchase of a used car. 
B) A speculator's purchase of 100 shares of News Corp. stock. 
C) A deli's purchase of bread for making its sandwiches. 
D) A business's purchase of new office equipment.

Question 16

Real GDP measures a value of a specific basket of goods produced in a given period.

Accepted Answer

A) True 
 B)False

Question 17

The calculation of the GDP chain price index differs from the calculation of the CPI in which of the following ways?

Accepted Answer

A) The CPI measures the price changes for all goods and services, whereas the GDP chain price index only looks at certain goods and services. 
B) The GDP chain price index measures the price changes for all goods and services, whereas the CPI only looks at certain goods and services. 
C) The CPI is a percentage, whereas the GDP chain price index method is an index. 
D) The CPI measures only consumer prices, whereas the GDP chain price index measures producer prices. 
A) The CPI measures the price changes for all goods and services, whereas the GDP chain price index only looks at certain goods and services. 
B) The GDP chain price index measures the price changes for all goods and services, whereas the CPI only looks at certain goods and services. 
C) The CPI is a percentage, whereas the GDP chain price index method is an index. 
D) The CPI measures only consumer prices, whereas the GDP chain price index measures producer prices.

Question 18

Gross domestic product (GDP)includes:

Accepted Answer

A) intermediate as well as final goods. 
B) foreign goods as well as domestically produced goods. 
C) used goods sold in the current time period. 
D) only final goods and services. 
E) quality goods and environmental bads. 
A) intermediate as well as final goods. 
B) foreign goods as well as domestically produced goods. 
C) used goods sold in the current time period. 
D) only final goods and services. 
E) quality goods and environmental bads.

Question 19

The GDP implicit price deflator is:

Accepted Answer

A) a broad index that includes the price of a specific basket of goods and services. 
B) a more narrow measure than the CPI, as it only includes producer prices. 
C) used to calculate nominal GDP from real GDP. 
D) a measure of changes in the prices of consumer goods, business investment, government spending and exports and imports. 
A) a broad index that includes the price of a specific basket of goods and services. 
B) a more narrow measure than the CPI, as it only includes producer prices. 
C) used to calculate nominal GDP from real GDP. 
D) a measure of changes in the prices of consumer goods, business investment, government spending and exports and imports.

Question 20

The expenditure approach for the calculation of GDP includes spending on:

Accepted Answer

A) consumption, investment, durable goods and exports. 
B) consumption, gross private domestic investment, government spending for goods and services, and exports. 
C) consumption, gross private domestic investment, government spending for goods and services, and net exports. 
D) consumption, net private domestic investment, government spending for goods and services, and net exports. 
E) consumption, gross private domestic investment, all government spending including transfer payments, and net exports. 
A) consumption, investment, durable goods and exports. 
B) consumption, gross private domestic investment, government spending for goods and services, and exports. 
C) consumption, gross private domestic investment, government spending for goods and services, and net exports. 
D) consumption, net private domestic investment, government spending for goods and services, and net exports. 
E) consumption, gross private domestic investment, all government spending including transfer payments, and net exports.

The circular flow model shows the flow of:

Because of transactions which take place in the underground economy,the:

GDP ignores:

Which of the following increases GDP?

A country's current account balance is:

Household consumption expenditures include:

If the underground economy were included in GDP,GDP would:

Net national product is:

GDP data provide _____ information as to whether a small fraction of the population consumes most of a country's GDP or whether consumption is evenly divided.

GDP underestimates our economic wellbeing because:

In the circular flow model,the demand arrow represents:

In recent years,people have benefited from greater amounts of leisure time.This trend:

To construct GDP,exports:

Exhibit 11-3 GDP data (billions of dollars) -Use the information in Exhibit 11-3 to compute personal consumption expenditures.Which of the following is correct?

Which of the following purchases would be counted as a final good in the GDP calculation?

Real GDP measures a value of a specific basket of goods produced in a given period.

The calculation of the GDP chain price index differs from the calculation of the CPI in which of the following ways?

Gross domestic product (GDP)includes:

The GDP implicit price deflator is:

The expenditure approach for the calculation of GDP includes spending on:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Exam 11: Measuring the size of the economy

The circular flow model shows the flow of:

Because of transactions which take place in the underground economy,the:

GDP ignores:

Which of the following increases GDP?

A country's current account balance is:

Household consumption expenditures include:

If the underground economy were included in GDP,GDP would:

Net national product is:

GDP data provide _____ information as to whether a small fraction of the population consumes most of a country's GDP or whether consumption is evenly divided.

GDP underestimates our economic wellbeing because:

In the circular flow model,the demand arrow represents:

In recent years,people have benefited from greater amounts of leisure time.This trend:

To construct GDP,exports:

Exhibit 11-3 GDP data (billions of dollars) -Use the information in Exhibit 11-3 to compute personal consumption expenditures.Which of the following is correct?

Which of the following purchases would be counted as a final good in the GDP calculation?

Real GDP measures a value of a specific basket of goods produced in a given period.

The calculation of the GDP chain price index differs from the calculation of the CPI in which of the following ways?

Gross domestic product (GDP)includes:

The GDP implicit price deflator is:

The expenditure approach for the calculation of GDP includes spending on:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters