Question 1

Depreciation is

Accepted Answer

A) fall in the value of an exchange rate. 
B) the decrease in the value of capital resulting from its use and obsolescence. 
C) the decrease in the purchasing power of a dollar because of inflation. 
D) part of consumption expenditure. 
E) part of net domestic product at factor cost. 
A) fall in the value of an exchange rate. 
B) the decrease in the value of capital resulting from its use and obsolescence. 
C) the decrease in the purchasing power of a dollar because of inflation. 
D) part of consumption expenditure. 
E) part of net domestic product at factor cost.

Question 2

"The amount of new stocks and bonds issued in a year adds to the country's GDP." Is this assertion correct or incorrect?
 Explain your answer.

Accepted Answer

The assertion is incorrect. Stocks and b

Question 3

In calculating GDP, we must

Accepted Answer

A) add the market value of imports and subtract the market value of exports. 
B) add the market value of exports and subtract the market value of imports. 
C) exclude net exports of goods and services (NX). 
D) add the value of the goods produced outside of the United States by American firms. 
E) subtract the market value of imports, because these goods are produced in a country other than the United States, and subtract the market value of exports, because these goods are consumed in a country other than the United States. 
A) add the market value of imports and subtract the market value of exports. 
B) add the market value of exports and subtract the market value of imports. 
C) exclude net exports of goods and services (NX). 
D) add the value of the goods produced outside of the United States by American firms. 
E) subtract the market value of imports, because these goods are produced in a country other than the United States, and subtract the market value of exports, because these goods are consumed in a country other than the United States.

Question 4

-Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. In 2013, which is larger: Nominal GDP or real GDP?

Accepted Answer

A) nominal GDP is larger 
B) real GDP is larger 
C) both are the same size 
D) the answer is ambiguous 
E) More information is needed to determine which is larger. 
A) nominal GDP is larger 
B) real GDP is larger 
C) both are the same size 
D) the answer is ambiguous 
E) More information is needed to determine which is larger.

Question 5

Everything else the same, if government expenditure increases by $400 billion and imports increase by $400 billion, then GDP

Accepted Answer

A) increases by $400 billion. 
B) increases by $200 billion. 
C) decreases by $400 billion. 
D) does not change. 
E) decreases by $200 billion. 
A) increases by $400 billion. 
B) increases by $200 billion. 
C) decreases by $400 billion. 
D) does not change. 
E) decreases by $200 billion.

Question 6

-Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. Nominal GDP in 2013 is equal to

Accepted Answer

A) $500. 
B) $800. 
C) $640. 
D) $625. 
E) $200. 
A) $500. 
B) $800. 
C) $640. 
D) $625. 
E) $200.

Question 7

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

Question 8

Nominal GDP increases

Accepted Answer

A) only if total production increases. 
B) only if prices increase. 
C) if either prices and/or total production increase. 
D) only if the productivity of resources increase. 
E) only if depreciation decreases. 
A) only if total production increases. 
B) only if prices increase. 
C) if either prices and/or total production increase. 
D) only if the productivity of resources increase. 
E) only if depreciation decreases.

Question 9

Which adjustment(s)must be made to convert net domestic product to GDP?
i. add indirect taxes
ii. subtract subsidies
iii. add depreciation

Accepted Answer

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

Question 10

The business cycle has two phases,

Accepted Answer

A) expansion and peak. 
B) recession and trough. 
C) peak and trough. 
D) recession and expansion. 
E) expansion and trough. 
A) expansion and peak. 
B) recession and trough. 
C) peak and trough. 
D) recession and expansion. 
E) expansion and trough.

Question 11

A restaurant buys fish to offer as a daily menu special. The purchase of the fish by the restaurant is

Accepted Answer

A) a consumption expenditure. 
B) an investment. 
C) an intermediate good. 
D) an example of government expenditures on goods and services. 
E) part of net exports if the fish was caught beyond the U.S. border. 
A) a consumption expenditure. 
B) an investment. 
C) an intermediate good. 
D) an example of government expenditures on goods and services. 
E) part of net exports if the fish was caught beyond the U.S. border.

Question 12

When measuring GDP,

Accepted Answer

A) the government sector is not included because it is the public sector not the private sector. 
B) the government sector is counted, and the value of the government sector in GDP is equal to its tax revenue. 
C) only the federal government's expenditure on goods and services are included. 
D) the expenditure on goods and services by all levels of government are included. 
E) the government sector is not counted because it does not produce goods and services. 
A) the government sector is not included because it is the public sector not the private sector. 
B) the government sector is counted, and the value of the government sector in GDP is equal to its tax revenue. 
C) only the federal government's expenditure on goods and services are included. 
D) the expenditure on goods and services by all levels of government are included. 
E) the government sector is not counted because it does not produce goods and services.

Question 13

Once the categories of income are totaled, the sum is called

Accepted Answer

A) "GDP measured by the income approach." 
B) "net domestic product at factor cost" and is not equal to GDP. 
C) "net domestic product at factor cost" and is equal to GDP. 
D) "total income earned" and is equal to GDP. 
E) GNP and is not equal to GDP. 
A) "GDP measured by the income approach." 
B) "net domestic product at factor cost" and is not equal to GDP. 
C) "net domestic product at factor cost" and is equal to GDP. 
D) "total income earned" and is equal to GDP. 
E) GNP and is not equal to GDP.

Question 14

Net exports of goods and services are defined as the

Accepted Answer

A) value of the goods we sell to foreigners. 
B) income we receive from selling goods to foreigners. 
C) value of exports minus the value of imports. 
D) value of exports minus the income we receive from foreigners. 
E) value of exports plus the income we receive from foreigners. 
A) value of the goods we sell to foreigners. 
B) income we receive from selling goods to foreigners. 
C) value of exports minus the value of imports. 
D) value of exports minus the income we receive from foreigners. 
E) value of exports plus the income we receive from foreigners.

Question 15

If nominal GDP increases this year, then real GDP

Accepted Answer

A) must decrease. 
B) must increase. 
C) must not change. 
D) could increase, decrease, or not change. 
E) could either increase or not change but cannot decrease. 
A) must decrease. 
B) must increase. 
C) must not change. 
D) could increase, decrease, or not change. 
E) could either increase or not change but cannot decrease.

Question 16

When the value of nominal GDP increases from one year to the next, we know that one or two things must have happened during that time:

Accepted Answer

A) The nation produced fewer goods and services and/or prices fell for goods and services. 
B) Consumption expenditure increased and/or corporate profits increased. 
C) Investment increased and/or payments to employees increased. 
D) The nation produced more goods and services and/or prices rose for goods and services. 
E) The value of real GDP must have increased and/or the price level must have decreased. 
A) The nation produced fewer goods and services and/or prices fell for goods and services. 
B) Consumption expenditure increased and/or corporate profits increased. 
C) Investment increased and/or payments to employees increased. 
D) The nation produced more goods and services and/or prices rose for goods and services. 
E) The value of real GDP must have increased and/or the price level must have decreased.

Question 17

Several adjustments must be made to net domestic product at factor cost in order to calculate GDP. One of these adjustments is adding depreciation. What is depreciation and why must it be added?

Accepted Answer

Depreciation is the wear and tear of cap

Question 18

The purchase of a new Boeing fighter jet by Israel is classified in the U.S. GDP accounts as

Accepted Answer

A) export expenditure. 
B) consumption expenditure. 
C) investment expenditure. 
D) government expenditure. 
E) import expenditure. 
A) export expenditure. 
B) consumption expenditure. 
C) investment expenditure. 
D) government expenditure. 
E) import expenditure.

Question 19

Which of the following is NOT included in the expenditure approach to calculating GDP?

Accepted Answer

A) government expenditures on goods and services 
B) investment 
C) net exports of goods and services 
D) wages 
E) consumption expenditure 
A) government expenditures on goods and services 
B) investment 
C) net exports of goods and services 
D) wages 
E) consumption expenditure

Question 20

Nominal GDP is GDP

Accepted Answer

A) using current market values. 
B) during a recession. 
C) minus depreciation. 
D) after adjusting for any price changes. 
E) that ignores depreciation. 
A) using current market values. 
B) during a recession. 
C) minus depreciation. 
D) after adjusting for any price changes. 
E) that ignores depreciation.

Depreciation is

"The amount of new stocks and bonds issued in a year adds to the country's GDP." Is this assertion correct or incorrect? Explain your answer.

In calculating GDP, we must

-Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. In 2013, which is larger: Nominal GDP or real GDP?

Everything else the same, if government expenditure increases by $400 billion and imports increase by $400 billion, then GDP

-Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. Nominal GDP in 2013 is equal to

Spending on financial assets counted as part of GDP .

Nominal GDP increases

Which adjustment(s)must be made to convert net domestic product to GDP? i. add indirect taxes ii. subtract subsidies iii. add depreciation

The business cycle has two phases,

A restaurant buys fish to offer as a daily menu special. The purchase of the fish by the restaurant is

When measuring GDP,

Once the categories of income are totaled, the sum is called

Net exports of goods and services are defined as the

If nominal GDP increases this year, then real GDP

When the value of nominal GDP increases from one year to the next, we know that one or two things must have happened during that time:

Several adjustments must be made to net domestic product at factor cost in order to calculate GDP. One of these adjustments is adding depreciation. What is depreciation and why must it be added?

The purchase of a new Boeing fighter jet by Israel is classified in the U.S. GDP accounts as

Which of the following is NOT included in the expenditure approach to calculating GDP?

Nominal GDP is 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

Depreciation is

"The amount of new stocks and bonds issued in a year adds to the country's GDP." Is this assertion correct or incorrect? Explain your answer.

In calculating GDP, we must

-Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. In 2013, which is larger: Nominal GDP or real GDP?

Everything else the same, if government expenditure increases by $400 billion and imports increase by $400 billion, then GDP

-Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. Nominal GDP in 2013 is equal to

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

Nominal GDP increases

Which adjustment(s)must be made to convert net domestic product to GDP? i. add indirect taxes ii. subtract subsidies iii. add depreciation

The business cycle has two phases,

A restaurant buys fish to offer as a daily menu special. The purchase of the fish by the restaurant is

When measuring GDP,

Once the categories of income are totaled, the sum is called

Net exports of goods and services are defined as the

If nominal GDP increases this year, then real GDP

When the value of nominal GDP increases from one year to the next, we know that one or two things must have happened during that time:

Several adjustments must be made to net domestic product at factor cost in order to calculate GDP. One of these adjustments is adding depreciation. What is depreciation and why must it be added?

The purchase of a new Boeing fighter jet by Israel is classified in the U.S. GDP accounts as

Which of the following is NOT included in the expenditure approach to calculating GDP?

Nominal GDP is 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

Spending on financial assets counted as part of GDP .