Question 1

Spending on new capital goods, new homes, and the addition of unsold goods to company inventories is included in:

Accepted Answer

A)  consumption expenditures. 
B)  investment. 
C)  government purchases. 
D)  service spending. 
A)  consumption expenditures. 
B)  investment. 
C)  government purchases. 
D)  service spending.

Question 2

If total output is calculated by adding up the market value of goods and services produced, then more expensive items:

Accepted Answer

A)  receive the same weight as cheaper items. 
B)  receive a greater weight than cheaper items. 
C)  receive a smaller weight than cheaper items. 
D)  are double counted. 
A)  receive the same weight as cheaper items. 
B)  receive a greater weight than cheaper items. 
C)  receive a smaller weight than cheaper items. 
D)  are double counted.

Question 3

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: $$\begin{array} { l c c } 
\text { Name of Company } & \text { Revenues } & \text { Cost of Purchased Inputs } \
\text { Fulton Family Farm } & \$ 0.50 & 0 \
\text { DeLux Popcorn Co. } & \$ 2.50 & \$ .50 \
\text { Friendly Groceries } & \$ 4.00 & \$ 2.50
\end{array}$$ If the corn was grown and the jar of popcorn produced in the year 2009, but the jar was sold at Friendly Groceries in the year 2010, what is the contribution of these transactions to GDP in the year 2009?

Accepted Answer

A)  $0.50 
B)  $2.00 
C)  $2.50 
D)  $3.00 
A)  $0.50 
B)  $2.00 
C)  $2.50 
D)  $3.00

Question 4

Consumption expenditures include spending by households on:

Accepted Answer

A)  exports. 
B)  inventories. 
C)  residential housing. 
D)  services. 
A)  exports. 
B)  inventories. 
C)  residential housing. 
D)  services.

Question 5

Which of the following would increase the consumption component of U.S. GDP?

Accepted Answer

A)  You purchase a bottle of California wine. 
B)  A person in Paris purchases a bottle of California wine. 
C)  A restaurant in Denver purchases a bottle of California wine to include on its wine list. 
D)  The U.S. government buys a bottle of California wine to serve at a state dinner in the White House. 
A)  You purchase a bottle of California wine. 
B)  A person in Paris purchases a bottle of California wine. 
C)  A restaurant in Denver purchases a bottle of California wine to include on its wine list. 
D)  The U.S. government buys a bottle of California wine to serve at a state dinner in the White House.

Question 6

A measure of GDP in which quantities produced are valued at the prices of a fixed base year is called:

Accepted Answer

A)  real GDP. 
B)  nominal GDP. 
C)  base GDP. 
D)  current GDP. 
A)  real GDP. 
B)  nominal GDP. 
C)  base GDP. 
D)  current GDP.

Question 7

Which of the following would increase the government purchases component of U.S. GDP?

Accepted Answer

A)  The U.S. federal government pays $3 billion in pensions to government workers. 
B)  The U.S. federal government pays $3 billion in interest on the national debt. 
C)  The U.S. federal government pays $3 billion in salaries to soldiers in the military. 
D)  The U.S. federal government pays $3 billion in interest to foreign holders of U.S. government bonds. 
A)  The U.S. federal government pays $3 billion in pensions to government workers. 
B)  The U.S. federal government pays $3 billion in interest on the national debt. 
C)  The U.S. federal government pays $3 billion in salaries to soldiers in the military. 
D)  The U.S. federal government pays $3 billion in interest to foreign holders of U.S. government bonds.

Question 8

Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: $$\begin{array} { l c c } 
{ \text { Name of Company } } & \text { Revenues } & \text { Cost of Purchased Inputs } \
\text { Citrus Growers Inc. } & \$ 0.75 & 0 \
\text { Florida Jam Company } & \$ 2.00 & \$ .75 \
\text { The Corner Store } & \$ 2.50 & \$ 2.00
\end{array}$$ What is the value added of The Corner Store?

Accepted Answer

A)  $0.50 
B)  $1.75 
C)  $2.00 
D)  $2.50 
A)  $0.50 
B)  $1.75 
C)  $2.00 
D)  $2.50

Question 9

Capital goods are treated as ______ goods and, therefore, are ______ GDP.

Accepted Answer

A)  final; included in 
B)  final; excluded from 
C)  intermediate; included in 
D)  intermediate; excluded from 
A)  final; included in 
B)  final; excluded from 
C)  intermediate; included in 
D)  intermediate; excluded from

Question 10

Goods and services that are consumed by the ultimate user are called ______ goods and services.

Accepted Answer

A)  intermediate 
B)  final 
C)  value added 
D)  nominal 
A)  intermediate 
B)  final 
C)  value added 
D)  nominal

Question 11

Which of the following expenditures would increase the investment component of U.S. GDP?

Accepted Answer

A)  You purchase a new house. 
B)  You purchase a new car. 
C)  You purchase 1,000 shares of stock. 
D)  You pay a commission to your stock broker for selling some stocks that you owned. 
A)  You purchase a new house. 
B)  You purchase a new car. 
C)  You purchase 1,000 shares of stock. 
D)  You pay a commission to your stock broker for selling some stocks that you owned.

Question 12

If an economy produces 3 million oranges that sell for $0.25 each and 100,000 cars that sell for $25,000 each, then when the market value of total output is calculated:

Accepted Answer

A)  oranges receive a greater weight than cars. 
B)  oranges receive the same weight as cars. 
C)  oranges receive a smaller weight than cars. 
D)  the market value of oranges is excluded. 
A)  oranges receive a greater weight than cars. 
B)  oranges receive the same weight as cars. 
C)  oranges receive a smaller weight than cars. 
D)  the market value of oranges is excluded.

Question 13

Real GDP measures the ______ of production; nominal GDP measures the ______ of production.

Accepted Answer

A)  current dollar value; physical volume 
B)  current dollar value; current dollar value 
C)  current dollar value; market value 
D)  physical volume; current dollar value 
A)  current dollar value; physical volume 
B)  current dollar value; current dollar value 
C)  current dollar value; market value 
D)  physical volume; current dollar value

Question 14

Which of the following would be included in the GDP of the United States?

Accepted Answer

A)  Boeing builds a plane in Seattle that is sold to Air Canada. 
B)  Chrysler produces a car in Germany that is sold in Michigan. 
C)  Nestle produces a candy bar in Switzerland that is sold in San Francisco. 
D)  Planet Hollywood serves customers in a restaurant in Hong Kong. 
A)  Boeing builds a plane in Seattle that is sold to Air Canada. 
B)  Chrysler produces a car in Germany that is sold in Michigan. 
C)  Nestle produces a candy bar in Switzerland that is sold in San Francisco. 
D)  Planet Hollywood serves customers in a restaurant in Hong Kong.

Question 15

Changes in business inventories are:

Accepted Answer

A)  classified as consumption expenditures. 
B)  classified as investment expenditures. 
C)  classified as government purchases. 
D)  excluded from GDP. 
A)  classified as consumption expenditures. 
B)  classified as investment expenditures. 
C)  classified as government purchases. 
D)  excluded from GDP.

Question 16

Three equivalent ways to measure GDP are total _____, total _____, and total ______.

Accepted Answer

A)  profits; production; saving 
B)  expenditure; income; profits 
C)  investment; consumption; saving 
D)  production; income; expenditure 
A)  profits; production; saving 
B)  expenditure; income; profits 
C)  investment; consumption; saving 
D)  production; income; expenditure

Question 17

Gross domestic product (GDP) equals the ______ of final ______ produced within a country during a given period of time.

Accepted Answer

A)  market value; goods 
B)  market value; services 
C)  market value; goods and services 
D)  quantity; goods and services 
A)  market value; goods 
B)  market value; services 
C)  market value; goods and services 
D)  quantity; goods and services

Question 18

An economy produces 1,000,000 computers valued at $2,000 each. Households purchase 200,000 computers, of which 100,000 are imported. Businesses purchase 300,000 domestically produced computers, the government purchases 300,000 domestically produced computers, and 100,000 domestically produced computers are sold abroad. The unsold computers at the end of the year are held in inventory by the computer manufacturers. What is the value of GDP?

Accepted Answer

A)  $0.9 billion 
B)  $1.0 billion 
C)  $1.8 billion 
D)  $2.0 billion 
A)  $0.9 billion 
B)  $1.0 billion 
C)  $1.8 billion 
D)  $2.0 billion

Question 19

A measure of GDP in which quantities produced are valued at current-year prices is called:

Accepted Answer

A)  real GDP. 
B)  nominal GDP. 
C)  base GDP. 
D)  physical GDP. 
A)  real GDP. 
B)  nominal GDP. 
C)  base GDP. 
D)  physical GDP.

Question 20

In the base year, real GDP ______ nominal GDP.

Accepted Answer

A)  is greater than 
B)  is less than 
C)  is equal to 
D)  could be greater than or less than 
A)  is greater than 
B)  is less than 
C)  is equal to 
D)  could be greater than or less than

Spending on new capital goods, new homes, and the addition of unsold goods to company inventories is included in:

If total output is calculated by adding up the market value of goods and services produced, then more expensive items:

Consumption expenditures include spending by households on:

Which of the following would increase the consumption component of U.S. GDP?

A measure of GDP in which quantities produced are valued at the prices of a fixed base year is called:

Which of the following would increase the government purchases component of U.S. GDP?

Capital goods are treated as goods and, therefore, are GDP.

Goods and services that are consumed by the ultimate user are called ______ goods and services.

Which of the following expenditures would increase the investment component of U.S. GDP?

If an economy produces 3 million oranges that sell for $0.25 each and 100,000 cars that sell for $25,000 each, then when the market value of total output is calculated:

Real GDP measures the of production; nominal GDP measures the of production.

Which of the following would be included in the GDP of the United States?

Changes in business inventories are:

Three equivalent ways to measure GDP are total ___, total _, and total ____.

Gross domestic product (GDP) equals the of final produced within a country during a given period of time.

A measure of GDP in which quantities produced are valued at current-year prices is called:

In the base year, real GDP ______ nominal GDP.

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Measuring Economic Activity: Gdp and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

Workers, Wages, and Unemployment

Saving and Capital Formation

Money, Prices, and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economics Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: the Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Filters

Exam 4: Macroeconomics: the Birds-Eye View of the Economy

Spending on new capital goods, new homes, and the addition of unsold goods to company inventories is included in:

If total output is calculated by adding up the market value of goods and services produced, then more expensive items:

Consumption expenditures include spending by households on:

Which of the following would increase the consumption component of U.S. GDP?

A measure of GDP in which quantities produced are valued at the prices of a fixed base year is called:

Which of the following would increase the government purchases component of U.S. GDP?

Capital goods are treated as ______ goods and, therefore, are ______ GDP.

Goods and services that are consumed by the ultimate user are called ______ goods and services.

Which of the following expenditures would increase the investment component of U.S. GDP?

If an economy produces 3 million oranges that sell for $0.25 each and 100,000 cars that sell for $25,000 each, then when the market value of total output is calculated:

Real GDP measures the ______ of production; nominal GDP measures the ______ of production.

Which of the following would be included in the GDP of the United States?

Changes in business inventories are:

Three equivalent ways to measure GDP are total _____, total _____, and total ______.

Gross domestic product (GDP) equals the ______ of final ______ produced within a country during a given period of time.

A measure of GDP in which quantities produced are valued at current-year prices is called:

In the base year, real GDP ______ nominal GDP.

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Measuring Economic Activity: Gdp and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

Workers, Wages, and Unemployment

Saving and Capital Formation

Money, Prices, and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economics Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: the Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Filters

Capital goods are treated as goods and, therefore, are GDP.

Real GDP measures the of production; nominal GDP measures the of production.

Three equivalent ways to measure GDP are total ___, total _, and total ____.

Gross domestic product (GDP) equals the of final produced within a country during a given period of time.