Question 1

The underground economy ________.

Accepted Answer

A)  is measured by government officials through tax returns 
B)  is difficult to describe but easy to measure 
C)  includes production that uses illegal workers who are paid less than minimum wage 
D)  includes mining production 
E)  is estimated by the government and the estimate is part of official GDP 
A)  is measured by government officials through tax returns 
B)  is difficult to describe but easy to measure 
C)  includes production that uses illegal workers who are paid less than minimum wage 
D)  includes mining production 
E)  is estimated by the government and the estimate is part of official GDP

Question 2

Adding wages, interest, rent, and profits yields

Accepted Answer

A)  gross domestic product. 
B)  gross domestic product at factor cost. 
C)  net domestic product at factor cost. 
D)  GNP. 
E)  total expenditure. 
A)  gross domestic product. 
B)  gross domestic product at factor cost. 
C)  net domestic product at factor cost. 
D)  GNP. 
E)  total expenditure.

Question 3

Which of the following is classified as a final good or service?
I. tires bought by GM to put on new Tahoes
Ii. mustard bought by Subway to put on its sub sandwiches
Iii. your purchase of online access to the Wall Street Journal

Accepted Answer

A)  i and ii. 
B)  i, ii and iii. 
C)  iii only. 
D)  ii and iii. 
E)  ii only. 
A)  i and ii. 
B)  i, ii and iii. 
C)  iii only. 
D)  ii and iii. 
E)  ii only.

Question 4

Undistributed profits ________ counted as part of GDP because ________.

Accepted Answer

A)  are not; households are not paid by the firms. 
B)  are; they can be used to buy other goods. 
C)  are ; they are considered income paid to households and loaned back to firms. 
D)  are not; they are considered an intermediate good. 
E)  are; firms are required to pay corporate income taxes on them. 
A)  are not; households are not paid by the firms. 
B)  are; they can be used to buy other goods. 
C)  are ; they are considered income paid to households and loaned back to firms. 
D)  are not; they are considered an intermediate good. 
E)  are; firms are required to pay corporate income taxes on them.

Question 5

In calculating GDP, economists

Accepted Answer

A)  measure total expenditure as the only true measure. 
B)  can measure either total expenditure or total income. 
C)  measure total income as the only true measure. 
D)  measure total income minus total expenditure. 
E)  measure total income plus total expenditure. 
A)  measure total expenditure as the only true measure. 
B)  can measure either total expenditure or total income. 
C)  measure total income as the only true measure. 
D)  measure total income minus total expenditure. 
E)  measure total income plus total expenditure.

Question 6

In measuring GDP, which of the following is included?

Accepted Answer

A)  the value of preparing meals at home 
B)  the value of stocks and bonds bought and sold 
C)  the value of used goods when they are sold 
D)  the value of increases in business inventories 
E)  the value of durable consumption goods but not the value of nondurable consumption goods. 
A)  the value of preparing meals at home 
B)  the value of stocks and bonds bought and sold 
C)  the value of used goods when they are sold 
D)  the value of increases in business inventories 
E)  the value of durable consumption goods but not the value of nondurable consumption goods.

Question 7

The income approach measures GDP by summing

Accepted Answer

A)  C + I + G + NX. 
B)  the total production of all final goods and services produced in a year within a country's borders. 
C)  the wealth of households, business and government. 
D)  the incomes paid households for the resources they own. 
E)  Both answers A and D are correct. 
A)  C + I + G + NX. 
B)  the total production of all final goods and services produced in a year within a country's borders. 
C)  the wealth of households, business and government. 
D)  the incomes paid households for the resources they own. 
E)  Both answers A and D are correct.

Question 8

Bob's Funky T-shirts began the year with 1,000 shirts in inventory, produced 10,000 shirts during the year and ended the year with 1,100 shirts in inventory.The 100 shirts added to his inventory will be classified as

Accepted Answer

A)  consumption expenditure. 
B)  investment. 
C)  net exports of goods and services. 
D)  exports of goods and services. 
E)  nondurable consumption goods. 
A)  consumption expenditure. 
B)  investment. 
C)  net exports of goods and services. 
D)  exports of goods and services. 
E)  nondurable consumption goods.

Question 9

The sum of the components of incomes is called ________.

Accepted Answer

A)  net domestic product at market prices 
B)  gross domestic product at market prices 
C)  gross domestic product at factor cost 
D)  net domestic product at factor cost 
E)  GNP 
A)  net domestic product at market prices 
B)  gross domestic product at market prices 
C)  gross domestic product at factor cost 
D)  net domestic product at factor cost 
E)  GNP

Question 10

Where are the final goods and services produced that are included in Germany's GDP?

Accepted Answer

A)  within Germany 
B)  anywhere, as long as they are produced using German resources 
C)  outside of Germany 
D)  anywhere, as long as they are produced using German labor 
E)  within Germany but only if they are produced using only German resources 
A)  within Germany 
B)  anywhere, as long as they are produced using German resources 
C)  outside of Germany 
D)  anywhere, as long as they are produced using German labor 
E)  within Germany but only if they are produced using only German resources

Question 11

If the statistical discrepancy is zero, in order to calculate GDP from the value of net domestic product at factor cost, we must add

Accepted Answer

A)  the value of intermediate goods and subtract the value of imports. 
B)  direct taxes, subtract corporate profit, and add investment. 
C)  indirect taxes, subtract subsidies, and add depreciation. 
D)  subsidies, subtract indirect taxes and depreciation. 
E)  indirect taxes, subsidies, and depreciation. 
A)  the value of intermediate goods and subtract the value of imports. 
B)  direct taxes, subtract corporate profit, and add investment. 
C)  indirect taxes, subtract subsidies, and add depreciation. 
D)  subsidies, subtract indirect taxes and depreciation. 
E)  indirect taxes, subsidies, and depreciation.

Question 12

The calculation of GDP using the income approach EXCLUDES

Accepted Answer

A)  rent. 
B)  interest. 
C)  environment quality. 
D)  wages. 
E)  profit. 
A)  rent. 
B)  interest. 
C)  environment quality. 
D)  wages. 
E)  profit.

Question 13

Babysitting services the oldest son provides his parents

Accepted Answer

A)  counts as nominal GDP but not real GDP. 
B)  counts as real GDP but not nominal GDP. 
C)  counts as real GDP and nominal GDP. 
D)  does not count as real GDP nor nominal GDP. 
E)  counts in both real and nominal GDP only if the son is not paid. 
A)  counts as nominal GDP but not real GDP. 
B)  counts as real GDP but not nominal GDP. 
C)  counts as real GDP and nominal GDP. 
D)  does not count as real GDP nor nominal GDP. 
E)  counts in both real and nominal GDP only if the son is not paid.

Question 14

In a circular flow diagram, i) the value of production = income
Ii) the value of production = expenditure
Iii) expenditure = income

Accepted Answer

A)  i, ii and iii are true statements. 
B)  only iii is a true statement. 
C)  i and ii are true statements. 
D)  i and iii are true statements. 
E)  only i is a true statement. 
A)  i, ii and iii are true statements. 
B)  only iii is a true statement. 
C)  i and ii are true statements. 
D)  i and iii are true statements. 
E)  only i is a true statement.

Question 15

The business cycle describes

Accepted Answer

A)  the change in potential GDP over time. 
B)  the change in the standard of living across countries. 
C)  the behavior of real GDP over time. 
D)  the behavior of nominal GDP over time. 
E)  the behavior of GNP over time. 
A)  the change in potential GDP over time. 
B)  the change in the standard of living across countries. 
C)  the behavior of real GDP over time. 
D)  the behavior of nominal GDP over time. 
E)  the behavior of GNP over time.

Question 16

The expenditure approach to measuring GDP is done by using data on only

Accepted Answer

A)  consumption expenditure. 
B)  consumption expenditure and investment. 
C)  consumption expenditure, investment, government expenditure on goods and services, and net exports of goods and services. 
D)  consumption expenditure, investment, and government expenditures. 
E)  wages, rent, interest, and profit. 
A)  consumption expenditure. 
B)  consumption expenditure and investment. 
C)  consumption expenditure, investment, government expenditure on goods and services, and net exports of goods and services. 
D)  consumption expenditure, investment, and government expenditures. 
E)  wages, rent, interest, and profit.

Question 17

Comparing nominal GDP of 2010 to nominal GDP of twenty years ago

Accepted Answer

A)  is an inaccurate measure of the change in total production. 
B)  has no economic meaning. 
C)  will be an accurate measure of the change in total production. 
D)  determines the extent to which the cost of living changed. 
E)  cannot be done because the two GDP measures use different prices. 
A)  is an inaccurate measure of the change in total production. 
B)  has no economic meaning. 
C)  will be an accurate measure of the change in total production. 
D)  determines the extent to which the cost of living changed. 
E)  cannot be done because the two GDP measures use different prices.

Question 18

To calculate GDP using the income approach, one of the adjustments made to net domestic product at factor cost is to

Accepted Answer

A)  add depreciation. 
B)  add investment. 
C)  subtract investment. 
D)  add consumption expenditure. 
E)  subtract indirect taxes less subsidies. 
A)  add depreciation. 
B)  add investment. 
C)  subtract investment. 
D)  add consumption expenditure. 
E)  subtract indirect taxes less subsidies.

Question 19

In the circular flow, how are the "value of production", "income", and "expenditures" related?

Accepted Answer

A)  They have no relationship to each other. 
B)  Once tax payments are subtracted at each stage, they are equal. 
C)  Expenditures on GDP equals the value of production which equals income. 
D)  Once net exports of goods and services are subtracted from GDP, all three are equal. 
E)  Value of production always equals income but expenditures is smaller because households save some of their income and do not spend it. 
A)  They have no relationship to each other. 
B)  Once tax payments are subtracted at each stage, they are equal. 
C)  Expenditures on GDP equals the value of production which equals income. 
D)  Once net exports of goods and services are subtracted from GDP, all three are equal. 
E)  Value of production always equals income but expenditures is smaller because households save some of their income and do not spend it.

Question 20

Spending on financial assets ________ counted as part of GDP ________.

Accepted Answer

A)  are; because the cash exchanged represents an expenditure 
B)  are not; because their purchase is not spending on goods or services 
C)  are; as long as their purchase produces income 
D)  are not; because interest must be paid on them 
E)  may be; as long as their value increases 
A)  are; because the cash exchanged represents an expenditure 
B)  are not; because their purchase is not spending on goods or services 
C)  are; as long as their purchase produces income 
D)  are not; because interest must be paid on them 
E)  may be; as long as their value increases

The underground economy ________.

Adding wages, interest, rent, and profits yields

Which of the following is classified as a final good or service? I. tires bought by GM to put on new Tahoes Ii. mustard bought by Subway to put on its sub sandwiches Iii. your purchase of online access to the Wall Street Journal

Undistributed profits counted as part of GDP because .

In calculating GDP, economists

In measuring GDP, which of the following is included?

The income approach measures GDP by summing

Bob's Funky T-shirts began the year with 1,000 shirts in inventory, produced 10,000 shirts during the year and ended the year with 1,100 shirts in inventory.The 100 shirts added to his inventory will be classified as

The sum of the components of incomes is called ________.

Where are the final goods and services produced that are included in Germany's GDP?

If the statistical discrepancy is zero, in order to calculate GDP from the value of net domestic product at factor cost, we must add

The calculation of GDP using the income approach EXCLUDES

Babysitting services the oldest son provides his parents

In a circular flow diagram, i) the value of production = income Ii) the value of production = expenditure Iii) expenditure = income

The business cycle describes

The expenditure approach to measuring GDP is done by using data on only

Comparing nominal GDP of 2010 to nominal GDP of twenty years ago

To calculate GDP using the income approach, one of the adjustments made to net domestic product at factor cost is to

In the circular flow, how are the "value of production", "income", and "expenditures" related?

Spending on financial assets counted as part of GDP .

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 5: Gdp: a Measure of Total Production and Income

The underground economy ________.

Adding wages, interest, rent, and profits yields

Which of the following is classified as a final good or service? I. tires bought by GM to put on new Tahoes Ii. mustard bought by Subway to put on its sub sandwiches Iii. your purchase of online access to the Wall Street Journal

Undistributed profits ________ counted as part of GDP because ________.

In calculating GDP, economists

In measuring GDP, which of the following is included?

The income approach measures GDP by summing

Bob's Funky T-shirts began the year with 1,000 shirts in inventory, produced 10,000 shirts during the year and ended the year with 1,100 shirts in inventory.The 100 shirts added to his inventory will be classified as

The sum of the components of incomes is called ________.

Where are the final goods and services produced that are included in Germany's GDP?

If the statistical discrepancy is zero, in order to calculate GDP from the value of net domestic product at factor cost, we must add

The calculation of GDP using the income approach EXCLUDES

Babysitting services the oldest son provides his parents

In a circular flow diagram, i) the value of production = income Ii) the value of production = expenditure Iii) expenditure = income

The business cycle describes

The expenditure approach to measuring GDP is done by using data on only

Comparing nominal GDP of 2010 to nominal GDP of twenty years ago

To calculate GDP using the income approach, one of the adjustments made to net domestic product at factor cost is to

In the circular flow, how are the "value of production", "income", and "expenditures" related?

Spending on financial assets ________ counted as part of GDP ________.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Undistributed profits counted as part of GDP because .

Spending on financial assets counted as part of GDP .