Question 1

How are changes in inventory treated in GDP?

Accepted Answer

Changes in inventory are part of the inv

Question 2

Over the business cycle,

Accepted Answer

A) potential GDP fluctuates around its trend. 
B) real GDP fluctuates around its trend. 
C) only potential GDP fluctuates around its trend and real GDP remains equal to its trend. 
D) only real GDP fluctuates around its trend and potential GDP remains equal to its trend. 
E) neither real GDP nor potential GDP fluctuate because they just grow smoothly along their trends. 
A) potential GDP fluctuates around its trend. 
B) real GDP fluctuates around its trend. 
C) only potential GDP fluctuates around its trend and real GDP remains equal to its trend. 
D) only real GDP fluctuates around its trend and potential GDP remains equal to its trend. 
E) neither real GDP nor potential GDP fluctuate because they just grow smoothly along their trends.

Question 3

"When you purchase $1,000 of stock in Microsoft, your purchase is an investment and hence is part of GDP." Is this assertion correct?
 Explain your answer.

Accepted Answer

The assertion is incorrect. Your purchas

Question 4

Investment is defined as

Accepted Answer

A) the purchase of a stock or bond. 
B) financial capital. 
C) what consumers do with their savings. 
D) the purchase of new capital goods by firms. 
E) spending on capital goods by governments. 
A) the purchase of a stock or bond. 
B) financial capital. 
C) what consumers do with their savings. 
D) the purchase of new capital goods by firms. 
E) spending on capital goods by governments.

Question 5

What is "underground production"?
 Is it included in GDP?

Accepted Answer

Underground production is the production

Question 6

An increase in nominal GDP could result from an increase in i. production.
Ii. prices.
Iii. subsidies.

Accepted Answer

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

Question 7

The circular flow shows that GDP measures i. total income.
Ii. total expenditures.
Iii. price changes.

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 8

GDP is best defined as the ________ in a given time period.

Accepted Answer

A) number of goods and services produced within a country 
B) number of final goods and services produced within a country 
C) market value of the final goods and services produced within a country 
D) market value of the final goods and services consumed by a nation's citizens 
E) market value of all the goods and services produced within a country 
A) number of goods and services produced within a country 
B) number of final goods and services produced within a country 
C) market value of the final goods and services produced within a country 
D) market value of the final goods and services consumed by a nation's citizens 
E) market value of all the goods and services produced within a country

Question 9

If you mow the lawn yourself, the lawn mowing is considered household production. If you pay Larry's Lawn Service to mow your lawn, the lawn mowing is considered

Accepted Answer

A) a leisure time activity. 
B) a service, that will be counted as part of GDP. 
C) a service, but is not counted as part of GDP because it simply replaces a service you used to perform. 
D) rent, and therefore is counted as part of GDP. 
E) underground production because it replaces the underground production of you mowing your lawn. 
A) a leisure time activity. 
B) a service, that will be counted as part of GDP. 
C) a service, but is not counted as part of GDP because it simply replaces a service you used to perform. 
D) rent, and therefore is counted as part of GDP. 
E) underground production because it replaces the underground production of you mowing your lawn.

Question 10

In a small country, using prices of 2012, GDP in 2012 was $100 and GDP in 2013 was $110. Using prices of 2013, GDP in 2012 was $200 and GDP in 2013 was $210. The country's BEA will calculate ________ percent as the growth in real GDP between those years.

Accepted Answer

A) 10 
B) 5 
C) 15 
D) 7.5 
E) None of the above answers is correct. 
A) 10 
B) 5 
C) 15 
D) 7.5 
E) None of the above answers is correct.

Question 11

Total income in a country in 2012 is $780 billion. Total expenditure in the country

Accepted Answer

A) cannot be determined. 
B) is greater than $780 billion. 
C) is $780 billion. 
D) is less than $780 billion. 
E) is either less than or equal to $780 billion. 
A) cannot be determined. 
B) is greater than $780 billion. 
C) is $780 billion. 
D) is less than $780 billion. 
E) is either less than or equal to $780 billion.

Question 12

Gross Domestic Product equals

Accepted Answer

A) Y = C + I - G + NX. 
B) Y = C - I + G + NX. 
C) Y = C + I + G + NX. 
D) Y = C - I - G - NX. 
E) Y = C + I + G - NX. 
A) Y = C + I - G + NX. 
B) Y = C - I + G + NX. 
C) Y = C + I + G + NX. 
D) Y = C - I - G - NX. 
E) Y = C + I + G - NX.

Question 13

The purchase of 500 shares of Honda stock by the California State Employees' Pension fund

Accepted Answer

A) is counted as consumption expenditure. 
B) is not counted as part of GDP. 
C) is counted as investment in the GDP accounts. 
D) is counted as part of export expenditure in the GDP accounts because Honda is a foreign firm. 
E) Is counted as part of import expenditure in the GDP accounts because Honda is a foreign firm. 
A) is counted as consumption expenditure. 
B) is not counted as part of GDP. 
C) is counted as investment in the GDP accounts. 
D) is counted as part of export expenditure in the GDP accounts because Honda is a foreign firm. 
E) Is counted as part of import expenditure in the GDP accounts because Honda is a foreign firm.

Question 14

Investment includes

Accepted Answer

A) GM's purchase of robotic machinery. 
B) student purchases of laptops. 
C) Wal-Mart's purchase of health insurance for its workers. 
D) the New York City Library's purchase of new books. 
E) wages paid to military personnel. 
A) GM's purchase of robotic machinery. 
B) student purchases of laptops. 
C) Wal-Mart's purchase of health insurance for its workers. 
D) the New York City Library's purchase of new books. 
E) wages paid to military personnel.

Question 15

In recent years, which of the following has been negative?

Accepted Answer

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

Question 16

In comparing the magnitudes of the components of GDP according to the expenditure approach, we see that in the United States

Accepted Answer

A) government expenditure on goods and services is the largest category. 
B) investment is the largest category. 
C) investment is much larger than government expenditure on goods and services. 
D) investment is less than government expenditure on goods and services. 
E) investment, government expenditure on goods and services, and consumption expenditure are all about the same size. 
A) government expenditure on goods and services is the largest category. 
B) investment is the largest category. 
C) investment is much larger than government expenditure on goods and services. 
D) investment is less than government expenditure on goods and services. 
E) investment, government expenditure on goods and services, and consumption expenditure are all about the same size.

Question 17

In one year, a firm increases its production by $9 million and increases sales by $8 million. All other things in the economy remaining the same, which of the following is true?

Accepted Answer

A) GDP increases by $8 million and inventory investment decreases by $1 million. 
B) GDP increases by $9 million and inventory investment increases by $1 million. 
C) Inventory investment decreases by $1 million. 
D) GDP increases by $8 million and investment increases by $1 million. 
E) GDP increases by $17 million. 
A) GDP increases by $8 million and inventory investment decreases by $1 million. 
B) GDP increases by $9 million and inventory investment increases by $1 million. 
C) Inventory investment decreases by $1 million. 
D) GDP increases by $8 million and investment increases by $1 million. 
E) GDP increases by $17 million.

Question 18

Leisure time ________.

Accepted Answer

A) is less valuable to us than the wage we earn for working 
B) has steadily decreased over the years 
C) is not valued as part of GDP 
D) is not an economic good 
E) is included in GDP and has become an increasingly large part of GDP 
A) is less valuable to us than the wage we earn for working 
B) has steadily decreased over the years 
C) is not valued as part of GDP 
D) is not an economic good 
E) is included in GDP and has become an increasingly large part of GDP

Question 19

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 20

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

How are changes in inventory treated in GDP?

Over the business cycle,

"When you purchase $1,000 of stock in Microsoft, your purchase is an investment and hence is part of GDP." Is this assertion correct? Explain your answer.

Investment is defined as

What is "underground production"? Is it included in GDP?

An increase in nominal GDP could result from an increase in i. production. Ii. prices. Iii. subsidies.

The circular flow shows that GDP measures i. total income. Ii. total expenditures. Iii. price changes.

GDP is best defined as the ________ in a given time period.

If you mow the lawn yourself, the lawn mowing is considered household production. If you pay Larry's Lawn Service to mow your lawn, the lawn mowing is considered

In a small country, using prices of 2012, GDP in 2012 was $100 and GDP in 2013 was $110. Using prices of 2013, GDP in 2012 was $200 and GDP in 2013 was $210. The country's BEA will calculate ________ percent as the growth in real GDP between those years.

Total income in a country in 2012 is $780 billion. Total expenditure in the country

Gross Domestic Product equals

The purchase of 500 shares of Honda stock by the California State Employees' Pension fund

Investment includes

In recent years, which of the following has been negative?

In comparing the magnitudes of the components of GDP according to the expenditure approach, we see that in the United States

In one year, a firm increases its production by $9 million and increases sales by $8 million. All other things in the economy remaining the same, which of the following is true?

Leisure time ________.

Babysitting services the oldest son provides his parents

Undistributed profits counted as part of GDP because .

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

How are changes in inventory treated in GDP?

Over the business cycle,

"When you purchase $1,000 of stock in Microsoft, your purchase is an investment and hence is part of GDP." Is this assertion correct? Explain your answer.

Investment is defined as

What is "underground production"? Is it included in GDP?

An increase in nominal GDP could result from an increase in i. production. Ii. prices. Iii. subsidies.

The circular flow shows that GDP measures i. total income. Ii. total expenditures. Iii. price changes.

GDP is best defined as the ________ in a given time period.

If you mow the lawn yourself, the lawn mowing is considered household production. If you pay Larry's Lawn Service to mow your lawn, the lawn mowing is considered

In a small country, using prices of 2012, GDP in 2012 was $100 and GDP in 2013 was $110. Using prices of 2013, GDP in 2012 was $200 and GDP in 2013 was $210. The country's BEA will calculate ________ percent as the growth in real GDP between those years.

Total income in a country in 2012 is $780 billion. Total expenditure in the country

Gross Domestic Product equals

The purchase of 500 shares of Honda stock by the California State Employees' Pension fund

Investment includes

In recent years, which of the following has been negative?

In comparing the magnitudes of the components of GDP according to the expenditure approach, we see that in the United States

In one year, a firm increases its production by $9 million and increases sales by $8 million. All other things in the economy remaining the same, which of the following is true?

Leisure time ________.

Babysitting services the oldest son provides his parents

Undistributed profits ________ counted as part of GDP because ________.

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

Undistributed profits counted as part of GDP because .