Question 1

The largest component of GDP is

Accepted Answer

A)  government spending. 
B)  consumption expenditures. 
C)  private investment expenditures. 
D)  net exports. 
A)  government spending. 
B)  consumption expenditures. 
C)  private investment expenditures. 
D)  net exports.

Question 2

Use the following information to answer the next several questions:
Scenario 1: Imagine that an economy produces two goods, flashlights and fishing lures. In 2015, the economy produced 70 flashlights and 40 fishing lures, and the prices of flashlights and fishing lures were $5 and $12, respectively. In 2016, the economy produced 85 flashlights and 50 fishing lures, and the prices of flashlights and fishing lures were $7 and $15, respectively.
-Based on the information in Scenario 1, nominal GDP in 2016 in this economy was

Accepted Answer

A)  $830. 
B)  $1,025. 
C)  $1,090. 
D)  $1,345. 
A)  $830. 
B)  $1,025. 
C)  $1,090. 
D)  $1,345.

Question 3

Why is GDP only an imperfect valid measure of the value of output produced by an economy?

Accepted Answer

GDP will miss transactions that do not t

Question 4

If the economy grew at 7 percent from 2015 to 2016 and real GDP was 400 in 2015, what was real GDP in 2016?

Accepted Answer

A)  393 
B)  400 
C)  407 
D)  428 
A)  393 
B)  400 
C)  407 
D)  428

Question 5

A firm's value added can be measured as the value of its

Accepted Answer

A)  profits. 
B)  purchases of inputs from other firms. 
C)  total sales. 
D)  total sales, less purchases from other firms. 
A)  profits. 
B)  purchases of inputs from other firms. 
C)  total sales. 
D)  total sales, less purchases from other firms.

Question 6

GDP ignores all of the following EXCEPT

Accepted Answer

A)  household production. 
B)  the value of leisure time. 
C)  products produced in other countries that are sold in the United States. 
D)  changes in the environment that occur in the production of output. 
A)  household production. 
B)  the value of leisure time. 
C)  products produced in other countries that are sold in the United States. 
D)  changes in the environment that occur in the production of output.

Question 7

"Recession" refers to a period when real GDP in the economy

Accepted Answer

A)  declines for at least six months. 
B)  suffers due to political instability. 
C)  grows rapidly. 
D)  experiences a rise in living standards. 
A)  declines for at least six months. 
B)  suffers due to political instability. 
C)  grows rapidly. 
D)  experiences a rise in living standards.

Question 8

In the expanded circular flow diagram, the government supplies

Accepted Answer

A)  goods and services to the product market. 
B)  factors of production to the factor market. 
C)  goods and services to households. 
D)  factors of production to firms. 
A)  goods and services to the product market. 
B)  factors of production to the factor market. 
C)  goods and services to households. 
D)  factors of production to firms.

Question 9

GDP measures underestimate the value of output produced by an economy because they include services not transferred through markets.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is an example of a consumption expenditure?

Accepted Answer

A)  the construction of a new public library 
B)  the purchase of a ticket to a New Orleans Saints game 
C)  the purchase of a new fire truck 
D)  the salary paid to the mayor of Denver 
A)  the construction of a new public library 
B)  the purchase of a ticket to a New Orleans Saints game 
C)  the purchase of a new fire truck 
D)  the salary paid to the mayor of Denver

Question 11

Use the following information to answer the next several questions:
Scenario 1: Imagine that an economy produces two goods, flashlights and fishing lures. In 2015, the economy produced 70 flashlights and 40 fishing lures, and the prices of flashlights and fishing lures were $5 and $12, respectively. In 2016, the economy produced 85 flashlights and 50 fishing lures, and the prices of flashlights and fishing lures were $7 and $15, respectively.
-Based on the information in Scenario 1, nominal GDP in 2015 in this economy was

Accepted Answer

A)  $830. 
B)  $1,025. 
C)  $1,090. 
D)  $1,345. 
A)  $830. 
B)  $1,025. 
C)  $1,090. 
D)  $1,345.

Question 12

Define GDP.

Accepted Answer

The total market val

Question 13

Recall the Application about the size of Wal-Mart to answer the following question(s). During 2014, Wal-Mart's sales were approximately $473 billion, or roughly 2.7 percent of U.S. GDP, and its cost of sales was $358 billion.
-According to this Application, why is the value of Wal-Mart's 2014 sales NOT an accurate measurement of its actual sales impact on the U.S. economy?

Accepted Answer

A)  The sales figure did not account for chain-weighted inflation measurements. 
B)  The sales figure includes the value of purchases from other firms. 
C)  The sales figure did not take into account the recession of 2008. 
D)  The sales figure was in nominal, not real, dollars. 
A)  The sales figure did not account for chain-weighted inflation measurements. 
B)  The sales figure includes the value of purchases from other firms. 
C)  The sales figure did not take into account the recession of 2008. 
D)  The sales figure was in nominal, not real, dollars.

Question 14

Depreciation is the term used when plants, equipment and housing deteriorate and wear out, thus losing their original values.

Accepted Answer

A) True 
 B)False

Question 15

Recall the Application about the link between happiness and GDP to answer the following question(s). Comparing changes in happiness to changes in per capita income over the last 30 years, economists at Dartmouth College and Warwick University have measured levels of happiness in the United States and United Kingdom based on income levels, ethnicity, age, and gender.
-According to the Application

Accepted Answer

A)  reported levels of happiness in the United States have increased over the past 30 years. 
B)  stable marriages account for no more happiness than marriages ending in divorce. 
C)  retired people report higher levels of happiness than people below the age of 40. 
D)  money does appear to buy happiness, ceteris paribus. 
A)  reported levels of happiness in the United States have increased over the past 30 years. 
B)  stable marriages account for no more happiness than marriages ending in divorce. 
C)  retired people report higher levels of happiness than people below the age of 40. 
D)  money does appear to buy happiness, ceteris paribus.

Question 16

As a component of GDP, consumption expenditures refers to purchases by consumers of currently produced goods and services.

Accepted Answer

A) True 
 B)False

Question 17

How many broad categories are used by economists to define the GDP?

Accepted Answer

A)  3 
B)  4 
C)  6 
D)  8 
A)  3 
B)  4 
C)  6 
D)  8

Question 18

The period of time in which the level of output moves from a trough to a peak is called a

Accepted Answer

A)  recovery or expansion. 
B)  depression. 
C)  contraction or recession. 
D)  plateau. 
A)  recovery or expansion. 
B)  depression. 
C)  contraction or recession. 
D)  plateau.

Question 19

Explain the supply and demand of products, factors of production, and the payments for the products and factors of production as described in the circular flow diagram.

Accepted Answer

Households supply the factors of product

Question 20

A nation's net exports consist of

Accepted Answer

A)  its exports plus its imports. 
B)  its exports minus its imports. 
C)  its exports plus all other nation's imports. 
D)  its imports plus all other nation's exports. 
A)  its exports plus its imports. 
B)  its exports minus its imports. 
C)  its exports plus all other nation's imports. 
D)  its imports plus all other nation's exports.

The largest component of GDP is

Why is GDP only an imperfect valid measure of the value of output produced by an economy?

If the economy grew at 7 percent from 2015 to 2016 and real GDP was 400 in 2015, what was real GDP in 2016?

A firm's value added can be measured as the value of its

GDP ignores all of the following EXCEPT

"Recession" refers to a period when real GDP in the economy

In the expanded circular flow diagram, the government supplies

GDP measures underestimate the value of output produced by an economy because they include services not transferred through markets.

Which of the following is an example of a consumption expenditure?

Define GDP.

Depreciation is the term used when plants, equipment and housing deteriorate and wear out, thus losing their original values.

As a component of GDP, consumption expenditures refers to purchases by consumers of currently produced goods and services.

How many broad categories are used by economists to define the GDP?

The period of time in which the level of output moves from a trough to a peak is called a

Explain the supply and demand of products, factors of production, and the payments for the products and factors of production as described in the circular flow diagram.

A nation's net exports consist of

Introduction: What Is Economics

The Key Principles of Economics

Demand, Supply, and Market Equilibrium

Elasticity: A Measure of Responsiveness

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry, Monopolistic Competition, and Oligopoly

Imperfect Information, External Benefits, and External Costs

The Labor Market and the Distribution of Income

Unemployment and Inflation

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and the Banking System

Monetary Policy and Inflation

International Trade and Finance

Filters

Exam 11: Measuring a Nations Production and Income

The largest component of GDP is

Why is GDP only an imperfect valid measure of the value of output produced by an economy?

If the economy grew at 7 percent from 2015 to 2016 and real GDP was 400 in 2015, what was real GDP in 2016?

A firm's value added can be measured as the value of its

GDP ignores all of the following EXCEPT

"Recession" refers to a period when real GDP in the economy

In the expanded circular flow diagram, the government supplies

GDP measures underestimate the value of output produced by an economy because they include services not transferred through markets.

Which of the following is an example of a consumption expenditure?

Define GDP.

Depreciation is the term used when plants, equipment and housing deteriorate and wear out, thus losing their original values.

As a component of GDP, consumption expenditures refers to purchases by consumers of currently produced goods and services.

How many broad categories are used by economists to define the GDP?

The period of time in which the level of output moves from a trough to a peak is called a

Explain the supply and demand of products, factors of production, and the payments for the products and factors of production as described in the circular flow diagram.

A nation's net exports consist of

Introduction: What Is Economics

The Key Principles of Economics

Demand, Supply, and Market Equilibrium

Elasticity: A Measure of Responsiveness

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry, Monopolistic Competition, and Oligopoly

Imperfect Information, External Benefits, and External Costs

The Labor Market and the Distribution of Income

Unemployment and Inflation

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and the Banking System

Monetary Policy and Inflation

International Trade and Finance

Filters