Question 1

If in the process of calculating GDP,the market value of all intermediate goods is added to the market value of all final goods,this would

Accepted Answer

A) overstate the actual value of GDP. 
B) produce the correct value of GDP. 
C) understate the actual value of GDP. 
D) avoid the possible error of double counting. 
A) overstate the actual value of GDP. 
B) produce the correct value of GDP. 
C) understate the actual value of GDP. 
D) avoid the possible error of double counting.

Question 2

Suppose the total market value of all final goods and services produced in economy X this year is $4 million.Of the $4 million worth of goods and services,$3 million is sold and $1 million is held in inventory.For this year,the GDP for economy X is

Accepted Answer

A) $4 million. 
B) $3 million. 
C) $1 million. 
D) $7 million. 
E) none of the above 
A) $4 million. 
B) $3 million. 
C) $1 million. 
D) $7 million. 
E) none of the above

Question 3

The expenditure approach to measuring GDP sums

Accepted Answer

A) consumption,investment,government purchases,and net exports. 
B) sales,revenues,income,and wages. 
C) profits,compensation of employees,consumption,and investment. 
D) net exports,consumption,wages,and salaries. 
E) consumption,interest,net exports,and federal government purchases 
A) consumption,investment,government purchases,and net exports. 
B) sales,revenues,income,and wages. 
C) profits,compensation of employees,consumption,and investment. 
D) net exports,consumption,wages,and salaries. 
E) consumption,interest,net exports,and federal government purchases

Question 4

Net exports equals

Accepted Answer

A) exports divided by imports. 
B) the sum of exports and imports. 
C) exports minus imports. 
D) exports during the year. 
E) none of the above 
A) exports divided by imports. 
B) the sum of exports and imports. 
C) exports minus imports. 
D) exports during the year. 
E) none of the above

Question 5

Nominal GDP in the United States was higher in 2012 than in 1950,but Real GDP was higher in 1950 than in 2012.

Accepted Answer

A) True 
 B)False

Question 6

In the definition of GDP,the words "total market value" refer to total

Accepted Answer

A) dollar value at base prices. 
B) dollar value at current prices. 
C) subjective value. 
D) objective value. 
E) a and d 
A) dollar value at base prices. 
B) dollar value at current prices. 
C) subjective value. 
D) objective value. 
E) a and d

Question 7

If the GDP in one year is greater than it was in the previous year,then economic growth must have occurred.

Accepted Answer

A) True 
 B)False

Question 8

An example of income received but not earned is

Accepted Answer

A) government transfer payments. 
B) undistributed profits. 
C) compensation of employees. 
D) rental income. 
E) a and c 
A) government transfer payments. 
B) undistributed profits. 
C) compensation of employees. 
D) rental income. 
E) a and c

Question 9

The best reason economists take only final goods and services into account when calculating GDP is that

Accepted Answer

A) this is the way things have always been done,but there is no particular reason why. 
B) they want to avoid the problem of final counting. 
C) they want to avoid the problem of double counting. 
D) this is the only way it can be done. 
A) this is the way things have always been done,but there is no particular reason why. 
B) they want to avoid the problem of final counting. 
C) they want to avoid the problem of double counting. 
D) this is the only way it can be done.

Question 10

Consumption expenditures in the U.S.usually account for approximately __________ percent of GDP.

Accepted Answer

A) 40 
B) 50 
C) 60 
D) 70 
E) 80 
A) 40 
B) 50 
C) 60 
D) 70 
E) 80

Question 11

Which of the following statements is true?

Accepted Answer

A) Indirect business taxes are a component of national income because when added to the other components of national income,the sum must equal GDP. 
B) Indirect business taxes must be subtracted from national income to yield a figure equal to GDP. 
C) Indirect business taxes are a part of national income because they are considered a payment to a factor of production. 
D) Indirect business taxes are not part of national income because they are not considered a payment to a factor of production. 
A) Indirect business taxes are a component of national income because when added to the other components of national income,the sum must equal GDP. 
B) Indirect business taxes must be subtracted from national income to yield a figure equal to GDP. 
C) Indirect business taxes are a part of national income because they are considered a payment to a factor of production. 
D) Indirect business taxes are not part of national income because they are not considered a payment to a factor of production.

Question 12

GDP includes some nonmarket goods.

Accepted Answer

A) True 
 B)False

Question 13

List and describe four of the six categories of economic exchanges that are omitted from GDP calculations.Explain why these transactions are not included in GDP and give an example of each to help support your answer.

Accepted Answer

Certain nonmarket goods and services are

Question 14

In the United States,the largest expenditure component in GDP is

Accepted Answer

A) gross private domestic investment. 
B) government purchases of goods and services. 
C) consumption expenditures. 
D) net exports. 
E) none of the above 
A) gross private domestic investment. 
B) government purchases of goods and services. 
C) consumption expenditures. 
D) net exports. 
E) none of the above

Question 15

Which of the following is a point made by economist Richard Easterlin (for whom the Easterlin Paradox is named)based on his research?

Accepted Answer

A) Rich people tend to be happier than poor people in the same country. 
B) People in richer countries tend to be no happier than people in poorer countries. 
C) People in richer countries tend to be much happier than people in poorer countries. 
D) People in poorer countries tend to be much happier than people in richer countries. 
E) a and b 
A) Rich people tend to be happier than poor people in the same country. 
B) People in richer countries tend to be no happier than people in poorer countries. 
C) People in richer countries tend to be much happier than people in poorer countries. 
D) People in poorer countries tend to be much happier than people in richer countries. 
E) a and b

Question 16

Underground activities are not counted in GDP because

Accepted Answer

A) some underground activities are illegal and the government doesn't want to place,for instance,drug dealers on an equal footing with small businesses. 
B) there are no written records of underground activities. 
C) of a decision made in the 1930s and no one has gotten around to changing it yet. 
D) although it is possible to accurately measure underground activities,it is harder than measuring above-ground activities because with the latter,one doesn't have to dig as deep. 
A) some underground activities are illegal and the government doesn't want to place,for instance,drug dealers on an equal footing with small businesses. 
B) there are no written records of underground activities. 
C) of a decision made in the 1930s and no one has gotten around to changing it yet. 
D) although it is possible to accurately measure underground activities,it is harder than measuring above-ground activities because with the latter,one doesn't have to dig as deep.

Question 17

Net domestic product (NDP)is the total value of new goods available in the economy after worn out capital goods have been replaced.

Accepted Answer

A) True 
 B)False

Question 18

Draw an appropriate diagram to represent the business cycle and label each of the five phases.Provide a brief description of each phase.

Accepted Answer

The five phases of the business cycle ar

Question 19

Compensation of employees is the largest component of GDP when using the expenditure approach to calculate GDP.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is always a characteristic of the contraction phase of the business cycle?

Accepted Answer

A) lower unemployment rates 
B) a decline in Real GDP 
C) higher inflation rates 
D) a decline in GDP 
E) all of the above 
A) lower unemployment rates 
B) a decline in Real GDP 
C) higher inflation rates 
D) a decline in GDP 
E) all of the above

Exam 7: Macroeconomic Measurements, part II: GDP and Real GDP

If in the process of calculating GDP,the market value of all intermediate goods is added to the market value of all final goods,this would

Suppose the total market value of all final goods and services produced in economy X this year is $4 million.Of the $4 million worth of goods and services,$3 million is sold and $1 million is held in inventory.For this year,the GDP for economy X is

The expenditure approach to measuring GDP sums

Net exports equals

Nominal GDP in the United States was higher in 2012 than in 1950,but Real GDP was higher in 1950 than in 2012.

In the definition of GDP,the words "total market value" refer to total

If the GDP in one year is greater than it was in the previous year,then economic growth must have occurred.

An example of income received but not earned is

The best reason economists take only final goods and services into account when calculating GDP is that

Consumption expenditures in the U.S.usually account for approximately __________ percent of GDP.

Which of the following statements is true?

GDP includes some nonmarket goods.

List and describe four of the six categories of economic exchanges that are omitted from GDP calculations.Explain why these transactions are not included in GDP and give an example of each to help support your answer.

In the United States,the largest expenditure component in GDP is

Which of the following is a point made by economist Richard Easterlin (for whom the Easterlin Paradox is named)based on his research?

Underground activities are not counted in GDP because

Net domestic product (NDP)is the total value of new goods available in the economy after worn out capital goods have been replaced.

Draw an appropriate diagram to represent the business cycle and label each of the five phases.Provide a brief description of each phase.

Compensation of employees is the largest component of GDP when using the expenditure approach to calculate GDP.

Which of the following is always a characteristic of the contraction phase of the business cycle?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self-Regulating Economy

Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money,banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

Stocks, bonds, futures, and Options

Filters