Question 1

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 2

In order to be classified as a recession, a contraction of general economic activity must last at least

Accepted Answer

A) one year. 
B) six months. 
C) one period. 
D) one quarter. 
E) None of the above because recessions do not have a minimum length. 
A) one year. 
B) six months. 
C) one period. 
D) one quarter. 
E) None of the above because recessions do not have a minimum length.

Question 3

GDP includes the goods and services produced

Accepted Answer

A) within a country's borders by citizens and by non-citizens. 
B) by a country's legal citizens regardless of where in the world they are located. 
C) by a country's citizens but not by non-citizens within the country's borders. 
D) within a country's borders by citizens and non-citizens plus goods produced abroad by the country's citizens. 
E) within a country's borders by citizens and by non-citizens minus the production abroad by the country's citizens. 
A) within a country's borders by citizens and by non-citizens. 
B) by a country's legal citizens regardless of where in the world they are located. 
C) by a country's citizens but not by non-citizens within the country's borders. 
D) within a country's borders by citizens and non-citizens plus goods produced abroad by the country's citizens. 
E) within a country's borders by citizens and by non-citizens minus the production abroad by the country's citizens.

Question 4

When industrial activity increases ________.

Accepted Answer

A) GDP decreases because of pollution 
B) pollution does not necessarily increase 
C) health and life expectancy decrease 
D) and real GDP increases, it is the case that in all nations fewer resources are devoted to protecting the environment 
E) the increase in real GDP is partially offset by the increase in pollution 
A) GDP decreases because of pollution 
B) pollution does not necessarily increase 
C) health and life expectancy decrease 
D) and real GDP increases, it is the case that in all nations fewer resources are devoted to protecting the environment 
E) the increase in real GDP is partially offset by the increase in pollution

Question 5

Even though it is not a perfect measure, economists can use real GDP to i) compare how the value of the goods and services produced in China have changed over the past 10 years.
Ii) look at the length of recessions and expansions in the United States.
Iii) to compare the standard of living in China versus the standard of living in Vietnam.

Accepted Answer

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

Question 6

Which of the following correctly describes a final good?
i. A final good is bought by its final consumer.
ii. A final good can be used by a firm as a component of another good or service.
iii. Investment goods cannot be a final good.

Accepted Answer

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

Question 7

If a wealthy woman marries her butler, quits paying him and does not hire a new butler, then

Accepted Answer

A) GDP definitely decreases. 
B) GDP definitely does not change. 
C) GDP definitely increases. 
D) GDP either does not change or increases. 
E) There is not enough information given to reach a conclusion. 
A) GDP definitely decreases. 
B) GDP definitely does not change. 
C) GDP definitely increases. 
D) GDP either does not change or increases. 
E) There is not enough information given to reach a conclusion.

Question 8

If a firm does not sell all of the goods that it produces in a given time period, then the goods

Accepted Answer

A) do not count in GDP ever. 
B) do not count in GDP for that time period but always count next period. 
C) count positively in GDP as inventory investment. 
D) count negatively in GDP as inventory investment. 
E) count in GDP the period they are sold to the final user. 
A) do not count in GDP ever. 
B) do not count in GDP for that time period but always count next period. 
C) count positively in GDP as inventory investment. 
D) count negatively in GDP as inventory investment. 
E) count in GDP the period they are sold to the final user.

Question 9

A country with a real GDP per person similar to real GDP per person in the United States but with limited political freedom is generally considered to have ________.

Accepted Answer

A) a lower standard of living than the United States 
B) a larger Human Development Index because the other country still needs to develop more political freedom 
C) the same standard of living as the United States 
D) an understated GDP 
E) an overstated nominal GDP 
A) a lower standard of living than the United States 
B) a larger Human Development Index because the other country still needs to develop more political freedom 
C) the same standard of living as the United States 
D) an understated GDP 
E) an overstated nominal GDP

Question 10

Using prices from 2012, GDP grew 10 percent between 2012 and 2013; using prices from 2013, GDP grew 8 percent between 2012 and 2013. For its link back to the base year, the BEA will use ________ percent as the growth in real GDP between 2012 and 2013.

Accepted Answer

A) 10 
B) 8 
C) 2 
D) 18 
E) 9 
A) 10 
B) 8 
C) 2 
D) 18 
E) 9

Question 11

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 12

The following are all final goods EXCEPT

Accepted Answer

A) flour used by the baker to make cupcakes. 
B) bread eaten by a family for lunch. 
C) pencils used by a 6th grader in class. 
D) Nike shoes used by a basketball player. 
E) a computer used by Intel to design new computer chips. 
A) flour used by the baker to make cupcakes. 
B) bread eaten by a family for lunch. 
C) pencils used by a 6th grader in class. 
D) Nike shoes used by a basketball player. 
E) a computer used by Intel to design new computer chips.

Question 13

The nation's supply of productive resources increases if

Accepted Answer

A) investment is greater than depreciation. 
B) investment equals depreciation. 
C) investment is less than depreciation. 
D) Both answers A and B can be correct. 
E) None of the above answers are correct because the relationship between investment and depreciation has no bearing on the amount of the nation's productive resources. 
A) investment is greater than depreciation. 
B) investment equals depreciation. 
C) investment is less than depreciation. 
D) Both answers A and B can be correct. 
E) None of the above answers are correct because the relationship between investment and depreciation has no bearing on the amount of the nation's productive resources.

Question 14

The purchase and sale of three types of legal items are not included in this year's GDP. What are these three items?

Accepted Answer

The three items are:

Question 15

Suppose GDP is $10 billion, consumption expenditure is $7 billion, investment is $2 billion, and government expenditure on goods and services is $2 billion. Net exports of goods and services must be

Accepted Answer

A) $1 billion. 
B) -$1 billion. 
C) $2 billion. 
D) -$2 billion. 
E) $10 billion. 
A) $1 billion. 
B) -$1 billion. 
C) $2 billion. 
D) -$2 billion. 
E) $10 billion.

Question 16

Which of the following is included as investment in GDP?
I. cars produced during the year but unsold at the end of the year
Ii. new capital equipment produced and purchased during the year
Iii. purchases of a company's stocks and bonds

Accepted Answer

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

Question 17

"If country A has a higher level of real GDP per person than country B, then people in Country A must enjoy a higher standard of living than people in Country B." Is this statement true or false and explain your answer.

Accepted Answer

The statement is false. Factors other th

Question 18

Net exports of goods and services increase when

Accepted Answer

A) exports of goods and services decrease and imports of goods and services do not change. 
B) consumption expenditure increases. 
C) exports of goods and services increase and imports of goods and services do not change. 
D) consumption expenditure decreases. 
E) imports of goods and services increase and exports of goods and services do not change. 
A) exports of goods and services decrease and imports of goods and services do not change. 
B) consumption expenditure increases. 
C) exports of goods and services increase and imports of goods and services do not change. 
D) consumption expenditure decreases. 
E) imports of goods and services increase and exports of goods and services do not change.

Question 19

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 20

If you buy a new water skis and other new equipment for $2,500 and take a week off of your job, where you earn $1,000 a week, to go water skiing. The equipment you purchased was all produced in the United States. You think that the week was worth $4,000. As a result of your vacation, GDP changes by how much?

Accepted Answer

GDP changes by only

The income approach measures GDP by summing

In order to be classified as a recession, a contraction of general economic activity must last at least

GDP includes the goods and services produced

When industrial activity increases ________.

Which of the following correctly describes a final good? i. A final good is bought by its final consumer. ii. A final good can be used by a firm as a component of another good or service. iii. Investment goods cannot be a final good.

If a wealthy woman marries her butler, quits paying him and does not hire a new butler, then

If a firm does not sell all of the goods that it produces in a given time period, then the goods

A country with a real GDP per person similar to real GDP per person in the United States but with limited political freedom is generally considered to have ________.

Using prices from 2012, GDP grew 10 percent between 2012 and 2013; using prices from 2013, GDP grew 8 percent between 2012 and 2013. For its link back to the base year, the BEA will use ________ percent as the growth in real GDP between 2012 and 2013.

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

The following are all final goods EXCEPT

The nation's supply of productive resources increases if

The purchase and sale of three types of legal items are not included in this year's GDP. What are these three items?

Suppose GDP is $10 billion, consumption expenditure is $7 billion, investment is $2 billion, and government expenditure on goods and services is $2 billion. Net exports of goods and services must be

Which of the following is included as investment in GDP? I. cars produced during the year but unsold at the end of the year Ii. new capital equipment produced and purchased during the year Iii. purchases of a company's stocks and bonds

"If country A has a higher level of real GDP per person than country B, then people in Country A must enjoy a higher standard of living than people in Country B." Is this statement true or false and explain your answer.

Net exports of goods and services increase when

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

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

The income approach measures GDP by summing

In order to be classified as a recession, a contraction of general economic activity must last at least

GDP includes the goods and services produced

When industrial activity increases ________.

Which of the following correctly describes a final good? i. A final good is bought by its final consumer. ii. A final good can be used by a firm as a component of another good or service. iii. Investment goods cannot be a final good.

If a wealthy woman marries her butler, quits paying him and does not hire a new butler, then

If a firm does not sell all of the goods that it produces in a given time period, then the goods

A country with a real GDP per person similar to real GDP per person in the United States but with limited political freedom is generally considered to have ________.

Using prices from 2012, GDP grew 10 percent between 2012 and 2013; using prices from 2013, GDP grew 8 percent between 2012 and 2013. For its link back to the base year, the BEA will use ________ percent as the growth in real GDP between 2012 and 2013.

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

The following are all final goods EXCEPT

The nation's supply of productive resources increases if

The purchase and sale of three types of legal items are not included in this year's GDP. What are these three items?

Suppose GDP is $10 billion, consumption expenditure is $7 billion, investment is $2 billion, and government expenditure on goods and services is $2 billion. Net exports of goods and services must be

Which of the following is included as investment in GDP? I. cars produced during the year but unsold at the end of the year Ii. new capital equipment produced and purchased during the year Iii. purchases of a company's stocks and bonds

"If country A has a higher level of real GDP per person than country B, then people in Country A must enjoy a higher standard of living than people in Country B." Is this statement true or false and explain your answer.

Net exports of goods and services increase when

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

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