Question 1

What is the Human Development Index?

Accepted Answer

The Human Development Index, or HDI, has been developed by the United Nations. The HDI attempts to measure the well-being of people in a given country. This index takes into account the country's material well-being by looking at real GDP per person and also considers other key factors, such as life expectancy, health, and education levels.

Question 2

While studying with your friend, your friend states, "Our leisure time increases GDP but lowers our standard of living because it reduces the amount of goods and services we can consume." Is your friend's statement correct?

Accepted Answer

Your friend's assertion is incorrect on two counts. First, leisure time does not increase GDP. Indeed, by taking time away from production, leisure time decreases GDP. Second, leisure time increases our standard of living. People enjoy their leisure time and therefore having more leisure time raises their standard of living.

Question 3

Real GDP measures the value of goods and services produced in a given year valued using

Accepted Answer

A) base year prices. 
B) prices that prevail the same year. 
C) no prices. 
D) future prices. 
E) real rather than nominal prices. 
A) base year prices. 
B) prices that prevail the same year. 
C) no prices. 
D) future prices. 
E) real rather than nominal prices. A

Question 4

Investment is defined as the purchase of

Accepted Answer

A) any financial asset only. 
B) additions to inventories only. 
C) financial assets and inventories only. 
D) the purchase of new capital goods and additions to inventories. 
E) the purchase of new capital goods but not additions to inventories. 
A) any financial asset only. 
B) additions to inventories only. 
C) financial assets and inventories only. 
D) the purchase of new capital goods and additions to inventories. 
E) the purchase of new capital goods but not additions to inventories.

Question 5

U.S. real GDP

Accepted Answer

A) precisely measures the improving standard of living in the United States. 
B) measures the change in the price level over time. 
C) excludes the value of underground production and leisure time. 
D) is not as accurate as nominal GDP when measuring standard of living changes over time. 
E) includes the value of underground production but excludes the value of leisure time. 
A) precisely measures the improving standard of living in the United States. 
B) measures the change in the price level over time. 
C) excludes the value of underground production and leisure time. 
D) is not as accurate as nominal GDP when measuring standard of living changes over time. 
E) includes the value of underground production but excludes the value of leisure time.

Question 6

When calculating GDP, purchases of used goods are

Accepted Answer

A) included at the original price. 
B) included by taking the original price and subtracting the (current)used price. 
C) included at the (current)used price. 
D) not included. 
E) included at the original price minus any depreciation. 
A) included at the original price. 
B) included by taking the original price and subtracting the (current)used price. 
C) included at the (current)used price. 
D) not included. 
E) included at the original price minus any depreciation.

Question 7

Which of the following would be included in Germany's GNP?

Accepted Answer

A) the production of BMWs (made by a German-based company)in South Carolina 
B) the production of Michelin tires made in Germany by a French company and then sold directly to French consumers 
C) the production of BMWs in Germany 
D) the production of Michelin tires made in France by a French company and then sold to BMW in Germany for use in BMW cars 
E) Answers A and C are correct. 
A) the production of BMWs (made by a German-based company)in South Carolina 
B) the production of Michelin tires made in Germany by a French company and then sold directly to French consumers 
C) the production of BMWs in Germany 
D) the production of Michelin tires made in France by a French company and then sold to BMW in Germany for use in BMW cars 
E) Answers A and C are correct.

Question 8

The NBER describes a recession as

Accepted Answer

A) "a period of significant decline in total output, income, employment, and trade, usually lasting from six months to a year." 
B) "a decrease in real GDP for two successive quarters." 
C) "a decrease in potential GDP for at least six months." 
D) "a decrease in the standard of living for at least one year." 
E) "a one year period with increases in the unemployment rate." 
A) "a period of significant decline in total output, income, employment, and trade, usually lasting from six months to a year." 
B) "a decrease in real GDP for two successive quarters." 
C) "a decrease in potential GDP for at least six months." 
D) "a decrease in the standard of living for at least one year." 
E) "a one year period with increases in the unemployment rate."

Question 9

In the years after 1998, the most severe recession occurred during

Accepted Answer

A) 1998. 
B) 2000-2001. 
C) 2008-2009. 
D) 1999-2001. 
E) 2005. 
A) 1998. 
B) 2000-2001. 
C) 2008-2009. 
D) 1999-2001. 
E) 2005.

Question 10

Pat gives up a $40,000 per year job to stay at home and take care of the house. By so doing, Pat saves $15,000 in child care and house cleaning services which he now performs himself. The direct effect on GDP from Pat's decision is a decrease of

Accepted Answer

A) $40,000. 
B) $55,000. 
C) $25,000. 
D) $15,000. 
E) $30,000. 
A) $40,000. 
B) $55,000. 
C) $25,000. 
D) $15,000. 
E) $30,000.

Question 11

The measurement of GDP handles underground production by

Accepted Answer

A) including the amount produced in this sector of the economy in exactly the same way that all other production is included. 
B) omitting it because underground production is unreported to the government by the people involved. 
C) adding it at fixed prices that change only infrequently. 
D) adding an estimate of it because it is difficult to precisely measure underground production. 
E) omitting it because, being illegal, it has no effect on the nation's total production. 
A) including the amount produced in this sector of the economy in exactly the same way that all other production is included. 
B) omitting it because underground production is unreported to the government by the people involved. 
C) adding it at fixed prices that change only infrequently. 
D) adding an estimate of it because it is difficult to precisely measure underground production. 
E) omitting it because, being illegal, it has no effect on the nation's total production.

Question 12

List and discuss various types of goods and services omitted from measured GDP.

Accepted Answer

Household production, such as preparing

Question 13

The difference between nominal GDP and real GDP is

Accepted Answer

A) the indirect taxes used in their calculations. 
B) the prices used in their calculations. 
C) that nominal GDP includes the depreciation of capital and real GDP does not. 
D) that nominal GDP includes net exports of goods and services and real GDP includes net imports. 
E) that real GDP includes the depreciation of capital and nominal GDP does not. 
A) the indirect taxes used in their calculations. 
B) the prices used in their calculations. 
C) that nominal GDP includes the depreciation of capital and real GDP does not. 
D) that nominal GDP includes net exports of goods and services and real GDP includes net imports. 
E) that real GDP includes the depreciation of capital and nominal GDP does not.

Question 14

During last year, a country produced 20,000 pizzas and 10,000 hamburgers and nothing else. The pizzas sold for $10.00 each and the hamburgers for $3.00 each. Nominal GDP was

Accepted Answer

A) $230,000. 
B) $70,000. 
C) $460,000. 
D) $390,000. 
E) $360,000. 
A) $230,000. 
B) $70,000. 
C) $460,000. 
D) $390,000. 
E) $360,000.

Question 15

GDP handles household production by

Accepted Answer

A) estimating a dollar value of the goods purchased to do housework. 
B) estimating a dollar value of the services provided. 
C) ignoring it. 
D) including it in exactly the same way that all other production is included. 
E) including it in real GDP but not in nominal GDP because there are no prices paid for the work. 
A) estimating a dollar value of the goods purchased to do housework. 
B) estimating a dollar value of the services provided. 
C) ignoring it. 
D) including it in exactly the same way that all other production is included. 
E) including it in real GDP but not in nominal GDP because there are no prices paid for the work.

Question 16

Explain why the purchase and sale of used goods and of financial assets are not included in the calculation of GDP even though transactions in these items amount to billions of dollars daily.

Accepted Answer

GDP measures the value of the goods and

Question 17

Recently, the government made adjustments to how GDP is calculated that included placing software purchases into the category of

Accepted Answer

A) intermediate goods because software is not a final good. 
B) inventory and now software purchases are not directly counted as part of GDP. 
C) investment and now directly counts software purchases as part of GDP. 
D) net exports of goods and services because most software is written abroad. 
E) net operating surplus. 
A) intermediate goods because software is not a final good. 
B) inventory and now software purchases are not directly counted as part of GDP. 
C) investment and now directly counts software purchases as part of GDP. 
D) net exports of goods and services because most software is written abroad. 
E) net operating surplus.

Question 18

Which of the following expenditure components of GDP can be negative or positive?

Accepted Answer

A) Consumption expenditure 
B) Investment 
C) Government expenditure on goods and services 
D) Net exports of goods and services 
E) None of the above because expenditure can never be negative. 
A) Consumption expenditure 
B) Investment 
C) Government expenditure on goods and services 
D) Net exports of goods and services 
E) None of the above because expenditure can never be negative.

Question 19

Explain how the purchases of used goods and of financial assets affect GDP.

Accepted Answer

Used goods count in GDP for the year in

Question 20

Nominal GDP measures the value of goods and services produced in a given year valued using

Accepted Answer

A) constant prices. 
B) prices of the same year. 
C) no prices. 
D) future prices. 
E) base year prices. 
A) constant prices. 
B) prices of the same year. 
C) no prices. 
D) future prices. 
E) base year prices.

What is the Human Development Index?

While studying with your friend, your friend states, "Our leisure time increases GDP but lowers our standard of living because it reduces the amount of goods and services we can consume." Is your friend's statement correct?

Real GDP measures the value of goods and services produced in a given year valued using

Investment is defined as the purchase of

U.S. real GDP

When calculating GDP, purchases of used goods are

Which of the following would be included in Germany's GNP?

The NBER describes a recession as

In the years after 1998, the most severe recession occurred during

Pat gives up a $40,000 per year job to stay at home and take care of the house. By so doing, Pat saves $15,000 in child care and house cleaning services which he now performs himself. The direct effect on GDP from Pat's decision is a decrease of

The measurement of GDP handles underground production by

List and discuss various types of goods and services omitted from measured GDP.

The difference between nominal GDP and real GDP is

During last year, a country produced 20,000 pizzas and 10,000 hamburgers and nothing else. The pizzas sold for $10.00 each and the hamburgers for $3.00 each. Nominal GDP was

GDP handles household production by

Explain why the purchase and sale of used goods and of financial assets are not included in the calculation of GDP even though transactions in these items amount to billions of dollars daily.

Recently, the government made adjustments to how GDP is calculated that included placing software purchases into the category of

Which of the following expenditure components of GDP can be negative or positive?

Explain how the purchases of used goods and of financial assets affect GDP.

Nominal GDP measures the value of goods and services produced in a given year valued using

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 14: Gdp: a Measure of Total Production and Income

What is the Human Development Index?

While studying with your friend, your friend states, "Our leisure time increases GDP but lowers our standard of living because it reduces the amount of goods and services we can consume." Is your friend's statement correct?

Real GDP measures the value of goods and services produced in a given year valued using

Investment is defined as the purchase of

U.S. real GDP

When calculating GDP, purchases of used goods are

Which of the following would be included in Germany's GNP?

The NBER describes a recession as

In the years after 1998, the most severe recession occurred during

Pat gives up a $40,000 per year job to stay at home and take care of the house. By so doing, Pat saves $15,000 in child care and house cleaning services which he now performs himself. The direct effect on GDP from Pat's decision is a decrease of

The measurement of GDP handles underground production by

List and discuss various types of goods and services omitted from measured GDP.

The difference between nominal GDP and real GDP is

During last year, a country produced 20,000 pizzas and 10,000 hamburgers and nothing else. The pizzas sold for $10.00 each and the hamburgers for $3.00 each. Nominal GDP was

GDP handles household production by

Explain why the purchase and sale of used goods and of financial assets are not included in the calculation of GDP even though transactions in these items amount to billions of dollars daily.

Recently, the government made adjustments to how GDP is calculated that included placing software purchases into the category of

Which of the following expenditure components of GDP can be negative or positive?

Explain how the purchases of used goods and of financial assets affect GDP.

Nominal GDP measures the value of goods and services produced in a given year valued using

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters