Question 1

High-income countries such as the United States spend a greater amount on services as compared to goods.

Accepted Answer

A) True 
 B)False

Question 2

The measure of production that values production using current prices is called

Accepted Answer

A)  value-added GDP. 
B)  nominal GDP. 
C)  real GDP. 
D)  underground GDP. 
A)  value-added GDP. 
B)  nominal GDP. 
C)  real GDP. 
D)  underground GDP.

Question 3

Presently, GDP is ________ to compensate for the costs of environmental damage.

Accepted Answer

A)  fully adjusted 
B)  partially adjusted 
C)  adjusted on a chain-weight basis 
D)  not adjusted 
A)  fully adjusted 
B)  partially adjusted 
C)  adjusted on a chain-weight basis 
D)  not adjusted

Question 4

In periods when prices are falling, on average,

Accepted Answer

A)  real GDP will grow slower than nominal GDP. 
B)  real GDP will grow faster than nominal GDP. 
C)  real GDP will grow as fast as nominal GDP. 
D)  one cannot calculate real GDP. 
A)  real GDP will grow slower than nominal GDP. 
B)  real GDP will grow faster than nominal GDP. 
C)  real GDP will grow as fast as nominal GDP. 
D)  one cannot calculate real GDP.

Question 5

Real GDP is GDP in a given year

Accepted Answer

A)  adjusted only for anticipated inflation. 
B)  adjusted only for unanticipated inflation. 
C)  valued in the prices of that year. 
D)  valued in the prices of the base year. 
A)  adjusted only for anticipated inflation. 
B)  adjusted only for unanticipated inflation. 
C)  valued in the prices of that year. 
D)  valued in the prices of the base year.

Question 6

In 2012, which component of GDP had a negative value?

Accepted Answer

A)  consumption 
B)  investment 
C)  government spending 
D)  net exports 
A)  consumption 
B)  investment 
C)  government spending 
D)  net exports

Question 7

A final good is one that

Accepted Answer

A)  is used in the production of another good. 
B)  is a natural resource used to produce a good. 
C)  is purchased as an input in the production process. 
D)  is purchased by its final user. 
A)  is used in the production of another good. 
B)  is a natural resource used to produce a good. 
C)  is purchased as an input in the production process. 
D)  is purchased by its final user.

Question 8

A transfer payment is a payment by the government to an individual

Accepted Answer

A)  for a service. 
B)  for an investment good. 
C)  for a consumption good. 
D)  for which the government does not receive a good or service in return. 
E)  for a debt owed. 
A)  for a service. 
B)  for an investment good. 
C)  for a consumption good. 
D)  for which the government does not receive a good or service in return. 
E)  for a debt owed.

Question 9

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements. This will

Accepted Answer

A)  increase GDP and increase well-being in the economy. 
B)  increase GDP and decrease well-being in the economy. 
C)  decrease GDP and increase well-being in the economy. 
D)  decrease GDP and decrease well-being in the economy. 
A)  increase GDP and increase well-being in the economy. 
B)  increase GDP and decrease well-being in the economy. 
C)  decrease GDP and increase well-being in the economy. 
D)  decrease GDP and decrease well-being in the economy.

Question 10

Table 19-28
  
-Refer to Table 19-28. Based on the table above, what is national income for this economy?

Accepted Answer

A)  $1,950 billion 
B)  $2,250 billion 
C)  $2,950 billion 
D)  $3,550 billion 
A)  $1,950 billion 
B)  $2,250 billion 
C)  $2,950 billion 
D)  $3,550 billion

Question 11

Real GDP per capita is calculated by dividing the value of real GDP for a country by the country's adult population.

Accepted Answer

A) True 
 B)False

Question 12

Depreciation is

Accepted Answer

A)  the value of worn-out equipment, machinery, and buildings. 
B)  the value of the decrease in business inventory stocks. 
C)  the value of the addition to the capital stock. 
D)  the decline in the value of the stock market, net of dividends. 
A)  the value of worn-out equipment, machinery, and buildings. 
B)  the value of the decrease in business inventory stocks. 
C)  the value of the addition to the capital stock. 
D)  the decline in the value of the stock market, net of dividends.

Question 13

Describe briefly how the final value of an iPhone must be equal to the sum of incomes generated by the production of the iPhone.

Accepted Answer

Consider the value of an iPhone which co

Question 14

Recent estimates put the size of the underground economy in the United States at ________ of measured GDP.

Accepted Answer

A)  2 percent 
B)  8 percent 
C)  13 percent 
D)  over 50 percent 
A)  2 percent 
B)  8 percent 
C)  13 percent 
D)  over 50 percent

Question 15

Table 19-18
   A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above.
-To make the calculation of real GDP more accurate, in 1996 the BEA switched to using

Accepted Answer

A)  base-year prices. 
B)  current prices. 
C)  chain-weighted prices. 
D)  market prices. 
A)  base-year prices. 
B)  current prices. 
C)  chain-weighted prices. 
D)  market prices.

Question 16

The drawback to calculating real GDP using base-year prices is that

Accepted Answer

A)  real GDP in one year is not comparable to real GDP in another year. 
B)  relative prices change over time and these are not reflected in base-year prices, and this distorts GDP. 
C)  relative prices change over time and these changes are reflected in base-year prices. 
D)  quality changes are reflected in base-year prices. 
A)  real GDP in one year is not comparable to real GDP in another year. 
B)  relative prices change over time and these are not reflected in base-year prices, and this distorts GDP. 
C)  relative prices change over time and these changes are reflected in base-year prices. 
D)  quality changes are reflected in base-year prices.

Question 17

Transfer payments are subtracted from national income to get to personal income.

Accepted Answer

A) True 
 B)False

Question 18

The purchase of a new house is included in

Accepted Answer

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

Question 19

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of

Accepted Answer

A)  employment in a specific industry. 
B)  employment in the economy. 
C)  output of a specific firm. 
D)  output of a specific industry. 
A)  employment in a specific industry. 
B)  employment in the economy. 
C)  output of a specific firm. 
D)  output of a specific industry.

Question 20

Investment, as defined by economists, would not include which of the following? Ford

Accepted Answer

A)  buys a new robotic machine (from a plant in Ohio) to assemble cars. 
B)  adds 1,000 new cars to inventories. 
C)  builds another assembly plant in the United States. 
D)  buys U.S. government bonds. 
A)  buys a new robotic machine (from a plant in Ohio) to assemble cars. 
B)  adds 1,000 new cars to inventories. 
C)  builds another assembly plant in the United States. 
D)  buys U.S. government bonds.

Exam 19: GDP: Measuring Total Production and Income

High-income countries such as the United States spend a greater amount on services as compared to goods.

The measure of production that values production using current prices is called

Presently, GDP is ________ to compensate for the costs of environmental damage.

In periods when prices are falling, on average,

Real GDP is GDP in a given year

In 2012, which component of GDP had a negative value?

A final good is one that

A transfer payment is a payment by the government to an individual

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements. This will

Table 19-28 -Refer to Table 19-28. Based on the table above, what is national income for this economy?

Real GDP per capita is calculated by dividing the value of real GDP for a country by the country's adult population.

Depreciation is

Describe briefly how the final value of an iPhone must be equal to the sum of incomes generated by the production of the iPhone.

Recent estimates put the size of the underground economy in the United States at ________ of measured GDP.

Table 19-18 A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above. -To make the calculation of real GDP more accurate, in 1996 the BEA switched to using

The drawback to calculating real GDP using base-year prices is that

Transfer payments are subtracted from national income to get to personal income.

The purchase of a new house is included in

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of

Investment, as defined by economists, would not include which of the following? Ford

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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