Question 1

What is the relationship shown by the circular flow among income, total expenditure, and GDP?

Accepted Answer

They are all equal. The value of product

Question 2

Real GDP is the value of final goods and services produced in a year

Accepted Answer

A) expressed in the prices of that same year. 
B) during a recession. 
C) minus depreciation. 
D) expressed in the prices of a base year. 
E) minus the value of all the intermediate goods produced. 
A) expressed in the prices of that same year. 
B) during a recession. 
C) minus depreciation. 
D) expressed in the prices of a base year. 
E) minus the value of all the intermediate goods produced.

Question 3

Economists define investment to include purchases of

Accepted Answer

A) capital goods and inventories. 
B) capital goods, household durable goods, and inventories. 
C) capital goods, such as tools, instruments, and buildings. 
D) capital goods, equity stocks, and bonds. 
E) capital goods, equity stocks, and inventories. 
A) capital goods and inventories. 
B) capital goods, household durable goods, and inventories. 
C) capital goods, such as tools, instruments, and buildings. 
D) capital goods, equity stocks, and bonds. 
E) capital goods, equity stocks, and inventories.

Question 4

Which of the following is a final good or service?

Accepted Answer

A) the grilled chicken purchased by Taco Bell for use in their burritos 
B) a new replacement muffler installed by Midas Mufflers 
C) the fertilizer purchased by Royal Lawn and Landscape 
D) the computers purchased by Office Depot for sale to its customers 
E) the CPUs purchased by Dell to be used in their computers 
A) the grilled chicken purchased by Taco Bell for use in their burritos 
B) a new replacement muffler installed by Midas Mufflers 
C) the fertilizer purchased by Royal Lawn and Landscape 
D) the computers purchased by Office Depot for sale to its customers 
E) the CPUs purchased by Dell to be used in their computers

Question 5

Instead of taking the dirty laundry with you when you go back to visit your parents, you use a Laundromat. Your use of the Laundromat means that

Accepted Answer

A) GDP will decrease and the country's standard of living will fall. 
B) your parents' contribution to GDP will increase. 
C) GDP will remain the same. 
D) what you paid for use of the Laundromat will be included in GDP. 
E) real GDP does not change because the clothes are still being laundered but nominal GDP rises since you are now paying for the service. 
A) GDP will decrease and the country's standard of living will fall. 
B) your parents' contribution to GDP will increase. 
C) GDP will remain the same. 
D) what you paid for use of the Laundromat will be included in GDP. 
E) real GDP does not change because the clothes are still being laundered but nominal GDP rises since you are now paying for the service.

Question 6

The calculation of GDP excludes the value of

Accepted Answer

A) government expenditure on office supplies. 
B) households' purchases of shampoo. 
C) businesses' purchase of new machine tools. 
D) a family member painting the family home. 
E) expenditure on durable goods. 
A) government expenditure on office supplies. 
B) households' purchases of shampoo. 
C) businesses' purchase of new machine tools. 
D) a family member painting the family home. 
E) expenditure on durable goods.

Question 7

Gross domestic product measures the

Accepted Answer

A) quantity of the goods and services produced in a given year, listed item by item, within a country. 
B) income of the business sector within a country. 
C) market value of the final goods and services produced in a given year within a country. 
D) market value of the domestic labor in a given year within a country. 
E) market value of the final goods and services consumed by households in a given year within a country. 
A) quantity of the goods and services produced in a given year, listed item by item, within a country. 
B) income of the business sector within a country. 
C) market value of the final goods and services produced in a given year within a country. 
D) market value of the domestic labor in a given year within a country. 
E) market value of the final goods and services consumed by households in a given year within a country.

Question 8

If real GDP increases over time, the cost of living will

Accepted Answer

A) always remain constant. 
B) always decrease. 
C) always increase. 
D) either remain constant or increase. 
E) More information is needed to determine how the cost of living changes. 
A) always remain constant. 
B) always decrease. 
C) always increase. 
D) either remain constant or increase. 
E) More information is needed to determine how the cost of living changes.

Question 9

What are the categories of total expenditure?

Accepted Answer

There are four categories: Consumption e

Question 10

To measure GDP by using the income approach, we must add all incomes and then ________ depreciation and ________ net taxes less subsidies.

Accepted Answer

A) neither add nor subtract; add 
B) add; neither add nor subtract 
C) add; add 
D) add; subtract 
E) subtract; add 
A) neither add nor subtract; add 
B) add; neither add nor subtract 
C) add; add 
D) add; subtract 
E) subtract; add

Question 11

$$\begin{array} { c c c c c } 
&{ \text { Data for 2012 } } &&{ \text { Data for 2013 } } \
\hline \text { Item } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Magazines } & 10 & \$ 5 & 30 & \$ 10 \
\text { Paperback books } & 10 & \$ 10 & 20 & \$ 15
\end{array}$$
-The table gives data on the production and prices in a small economy. Use 2012 as the base period. Using the chained-price method, what is the growth rate of real GDP from 2012 to 2013?

Accepted Answer

To calculate the growth rate, it is nece

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

When calculating real GDP, the reference base year

Accepted Answer

A) allows us to account for changes in GNP compared to GDP. 
B) always reduces the value of GDP compared to GNP. 
C) allows us to calculate the value of the goods and services in terms of prices of that base year. 
D) usually increases the value of GNP compared to GDP. 
E) allows us to increase the value of goods and services. 
A) allows us to account for changes in GNP compared to GDP. 
B) always reduces the value of GDP compared to GNP. 
C) allows us to calculate the value of the goods and services in terms of prices of that base year. 
D) usually increases the value of GNP compared to GDP. 
E) allows us to increase the value of goods and services.

Question 14

Total expenditure equals total income

Accepted Answer

A) because firms pay out everything they receive as income to the factors of production. 
B) if firms earn zero profit. 
C) if firms do not save for future investment. 
D) only if firms sell all the goods they produce in a given time period. 
E) only if net taxes equals government expenditures on goods and services. 
A) because firms pay out everything they receive as income to the factors of production. 
B) if firms earn zero profit. 
C) if firms do not save for future investment. 
D) only if firms sell all the goods they produce in a given time period. 
E) only if net taxes equals government expenditures on goods and services.

Question 15

Janet calculated the GDP growth rates for France between 2012 and 2013. Using 2012 prices for both years, GDP increased 5 percent. Using 2013 prices for both years, GDP increased 1 percent. Hence the chained-price method will calculate that between these years, real GDP increased by

Accepted Answer

A) 1 percent. 
B) 3 percent. 
C) 5 percent. 
D) 6 percent. 
E) 4 percent. 
A) 1 percent. 
B) 3 percent. 
C) 5 percent. 
D) 6 percent. 
E) 4 percent.

Question 16

A recession conventionally is defined as a decrease in

Accepted Answer

A) real GDP that lasts for at least six months. 
B) the growth rate of real GDP that lasts for at least six months. 
C) potential GDP that lasts for at least six months. 
D) real GDP that lasts for at least three months. 
E) the inflation rate that lasts for at least six months. 
A) real GDP that lasts for at least six months. 
B) the growth rate of real GDP that lasts for at least six months. 
C) potential GDP that lasts for at least six months. 
D) real GDP that lasts for at least three months. 
E) the inflation rate that lasts for at least six months.

Question 17

The value of used goods ________ counted as part of GDP ________.

Accepted Answer

A) are; as long as they are classified as consumption goods 
B) are; as long as they are classified as investment goods 
C) are not; because they were counted during the period when they were counted as new goods 
D) are not; because most fall in value and would cause a decrease in the value of GDP 
E) may be; as long as their value has risen 
A) are; as long as they are classified as consumption goods 
B) are; as long as they are classified as investment goods 
C) are not; because they were counted during the period when they were counted as new goods 
D) are not; because most fall in value and would cause a decrease in the value of GDP 
E) may be; as long as their value has risen

Question 18

Data for 2009 Data for 2010
 Item
Bread
Soda 
 $$\begin{array} { c c c c } 
\text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline 50 & \$ 4.00 & 70 & \$ 3.00 \
50 & \$ 5.00 & 50 & \$ 6.00 \
\hline
\end{array}$$
-The table above gives the production and prices for a small nation that produces only bread and soda. The base year is 2010. What is real GDP in 2010?

Accepted Answer

A) $530 
B) $1080 
C) $510 
D) $210 
E) $300 
A) $530 
B) $1080 
C) $510 
D) $210 
E) $300

Question 19

$$\begin{array} { l c c } 
& \begin{array} { c } 
\text { Data for 2012 } \
\text { (billions of dollars) }
\end{array} & \begin{array} { c } 
\text { Data for 2013 } \
\text { (billions of dollars) }
\end{array} \
\hline \text { Nominal GDP } & 4,000 & 4,400 \
\text { GDP using 2010 prices } & 4,000 & 4,240 \
\text { GDP using 2011 prices } & 4,230 & 4,400
\end{array}$$
-The table above gives some data about GDP in a country for two years. Using these the chained-dollar method for calculating real GDP, real GDP increased by ________ percent between these two years.

Accepted Answer

A) 4 
B) 5 
C) 6 
D) 10 
E) 2 
A) 4 
B) 5 
C) 6 
D) 10 
E) 2

Question 20

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.

What is the relationship shown by the circular flow among income, total expenditure, and GDP?

Real GDP is the value of final goods and services produced in a year

Economists define investment to include purchases of

Which of the following is a final good or service?

Instead of taking the dirty laundry with you when you go back to visit your parents, you use a Laundromat. Your use of the Laundromat means that

The calculation of GDP excludes the value of

Gross domestic product measures the

If real GDP increases over time, the cost of living will

What are the categories of total expenditure?

To measure GDP by using the income approach, we must add all incomes and then depreciation and net taxes less subsidies.

The calculation of GDP using the income approach EXCLUDES

When calculating real GDP, the reference base year

Total expenditure equals total income

Janet calculated the GDP growth rates for France between 2012 and 2013. Using 2012 prices for both years, GDP increased 5 percent. Using 2013 prices for both years, GDP increased 1 percent. Hence the chained-price method will calculate that between these years, real GDP increased by

A recession conventionally is defined as a decrease in

The value of used goods counted as part of GDP .

Data for 2009 Data for 2010 Item Bread Soda Quantity Price Quantity Price 50 \ 4.00 70 \ 3.00 50 \ 5.00 50 \ 6.00 -The table above gives the production and prices for a small nation that produces only bread and soda. The base year is 2010. What is real GDP in 2010?

In measuring GDP, which of the following is included?

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 relationship shown by the circular flow among income, total expenditure, and GDP?

Real GDP is the value of final goods and services produced in a year

Economists define investment to include purchases of

Which of the following is a final good or service?

Instead of taking the dirty laundry with you when you go back to visit your parents, you use a Laundromat. Your use of the Laundromat means that

The calculation of GDP excludes the value of

Gross domestic product measures the

If real GDP increases over time, the cost of living will

What are the categories of total expenditure?

To measure GDP by using the income approach, we must add all incomes and then ________ depreciation and ________ net taxes less subsidies.

The calculation of GDP using the income approach EXCLUDES

When calculating real GDP, the reference base year

Total expenditure equals total income

Janet calculated the GDP growth rates for France between 2012 and 2013. Using 2012 prices for both years, GDP increased 5 percent. Using 2013 prices for both years, GDP increased 1 percent. Hence the chained-price method will calculate that between these years, real GDP increased by

A recession conventionally is defined as a decrease in

The value of used goods ________ counted as part of GDP ________.

Data for 2009 Data for 2010 Item Bread Soda Quantity Price Quantity Price 50 \ 4.00 70 \ 3.00 50 \ 5.00 50 \ 6.00 -The table above gives the production and prices for a small nation that produces only bread and soda. The base year is 2010. What is real GDP in 2010?

In measuring GDP, which of the following is included?

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

To measure GDP by using the income approach, we must add all incomes and then depreciation and net taxes less subsidies.

The value of used goods counted as part of GDP .