Question 1

An estimate of the depreciation of plant, equipment and structures is called:

Accepted Answer

A)  depreciation of variable capital. 
B)  expenditure on capital. 
C)  consumption of fixed capital. 
D)  undesirable expenses. 
A)  depreciation of variable capital. 
B)  expenditure on capital. 
C)  consumption of fixed capital. 
D)  undesirable expenses.

Question 2

GDP ignores:

Accepted Answer

A)  the value of mowing your lawn, if you pay someone to do it. 
B)  the value of cleaning your house, if you hire someone. 
C)  the value of a water purifier system. 
D)  air, water and noise pollution. 
A)  the value of mowing your lawn, if you pay someone to do it. 
B)  the value of cleaning your house, if you hire someone. 
C)  the value of a water purifier system. 
D)  air, water and noise pollution.

Question 3

Which of the following are not included in GDP?

Accepted Answer

A)  A car produced and sold this year. 
B)  A car produced within a nation's geographic borders. 
C)  A second-hand car bought from the black market this year. 
D)  A car produced but not sold this year. 
A)  A car produced and sold this year. 
B)  A car produced within a nation's geographic borders. 
C)  A second-hand car bought from the black market this year. 
D)  A car produced but not sold this year.

Question 4

Government spending on teachers and university lecturers is counted in GDP figures as:

Accepted Answer

A)  human capital investment. 
B)  private consumption expenditure. 
C)  public consumption expenditure. 
D)  transfer payments. 
A)  human capital investment. 
B)  private consumption expenditure. 
C)  public consumption expenditure. 
D)  transfer payments.

Question 5

Intermediate goods are included in calculating gross domestic product but final goods are not.

Accepted Answer

A) True 
 B)False

Question 6

Real GDP can be calculated using which of the following formulas?

Accepted Answer

A)  (Nominal GDP / real GDP) × 100. 
B)  (GDP chain price index / nominal GDP) × 100. 
C)  (Nominal GDP × 100) / (GDP implicit price deflator). 
D)  (Nominal GDP / inflation rate) × 100. 
A)  (Nominal GDP / real GDP) × 100. 
B)  (GDP chain price index / nominal GDP) × 100. 
C)  (Nominal GDP × 100) / (GDP implicit price deflator). 
D)  (Nominal GDP / inflation rate) × 100.

Question 7

The underground economy:

Accepted Answer

A)  produces final goods and services that can be counted in GDP. 
B)  is illegal because it is not included in GDP. 
C)  is about 60 to 65 per cent of GDP. 
D)  is a good indicator of the size of GDP. 
A)  produces final goods and services that can be counted in GDP. 
B)  is illegal because it is not included in GDP. 
C)  is about 60 to 65 per cent of GDP. 
D)  is a good indicator of the size of GDP.

Question 8

Economic values that are measured in units per period of time are referred to as:

Accepted Answer

A)  stocks. 
B)  insignificant. 
C)  unit values. 
D)  flows. 
A)  stocks. 
B)  insignificant. 
C)  unit values. 
D)  flows.

Question 9

Which of the following would not be included as part of government spending in GDP calculations?

Accepted Answer

A)  Police salaries. 
B)  Road construction. 
C)  Public service salaries. 
D)  Transfer payments. 
A)  Police salaries. 
B)  Road construction. 
C)  Public service salaries. 
D)  Transfer payments.

Question 10

In an open economy, domestic savings must always equal investment.

Accepted Answer

A) True 
 B)False

Question 11

Assume that household consumption is $500 billion, gross private domestic investment is $300 billion, government investment is $40 billion, and net exports are -$10 billion. The GDP is:

Accepted Answer

A)  $850 billion. 
B)  $830 billion. 
C)  $890 billion. 
D)  None of the above. 
A)  $850 billion. 
B)  $830 billion. 
C)  $890 billion. 
D)  None of the above.

Question 12

In a closed economy, any differences between desired saving and investment will be equal to:

Accepted Answer

A)  the change in inventories. 
B)  government spending. 
C)  consumption. 
D)  public saving. 
A)  the change in inventories. 
B)  government spending. 
C)  consumption. 
D)  public saving.

Question 13

If I bought 1000 shares in Newish Corp. for $5 per share and sold them two months later for $6 per share, then:

Accepted Answer

A)  GDP will rise by $6000. 
B)  GDP will fall by $6000. 
C)  GDP will rise by $1000. 
D)  GDP will rise by the amount I have to pay my broker to arrange the transaction. 
A)  GDP will rise by $6000. 
B)  GDP will fall by $6000. 
C)  GDP will rise by $1000. 
D)  GDP will rise by the amount I have to pay my broker to arrange the transaction.

Question 14

Which of the following is included in GDP?

Accepted Answer

A)  The underground economy. 
B)  Leisure time. 
C)  Environmental degradation. 
D)  Price increase. 
A)  The underground economy. 
B)  Leisure time. 
C)  Environmental degradation. 
D)  Price increase.

Question 15

New residential housing is counted in GDP as a/an:

Accepted Answer

A)  durable consumption good. 
B)  household durable good. 
C)  investment good. 
D)  inventory expansion. 
A)  durable consumption good. 
B)  household durable good. 
C)  investment good. 
D)  inventory expansion.

Question 16

To construct GDP, exports:

Accepted Answer

A)  and imports must be subtracted. 
B)  and imports must be included. 
C)  must be subtracted and imports must be included. 
D)  must be included and imports must be subtracted. 
A)  and imports must be subtracted. 
B)  and imports must be included. 
C)  must be subtracted and imports must be included. 
D)  must be included and imports must be subtracted.

Question 17

Which one of the following statements is true?

Accepted Answer

A)  Resources flow from the government to firms. 
B)  Taxes flow from foreign economies to the government. 
C)  Goods and services flow from households to foreign economies. 
D)  Resources flow from households to firms. 
A)  Resources flow from the government to firms. 
B)  Taxes flow from foreign economies to the government. 
C)  Goods and services flow from households to foreign economies. 
D)  Resources flow from households to firms.

Question 18

Narrbegin Exhibit 11.2 GDP data (billions of dollars)
 $\begin{array}{|l|r|}
\hline \text { Personal consumption expenditures } & 5207.6 \
\hline \text { Interest } & 425.1 \
\hline \text { Corporate profit } & 735.9 \
\hline \text { Government spending } & 1406.7 \
\hline \text { Depreciation } & 830.1 \
\hline \text { Rent } & 146.3 \
\hline \text { Gross private domestic investment } & 1116.5 \
\hline \text { Compensation of employees } & 4426.9 \
\hline \text { Exports } & 870.9 \
\hline \text { Imports } & 965.7 \
\hline \text { Indirect business taxes } & 553.1 \
\hline \text { Proprietors' income } & 520.3 \
\hline \text { Direct taxes } & 886.9 \
\hline \text { Income earned but not received } & 617.3 \
\hline \text { Income received but not earned } & 376.6\

\hline
\end{array}$
 
-In Exhibit 11.2, GDP is:

Accepted Answer

A)  $6807.6 billion. 
B)  $7082.9 billion. 
C)  $7636.0 billion. 
D)  $7637.7 billion. 
A)  $6807.6 billion. 
B)  $7082.9 billion. 
C)  $7636.0 billion. 
D)  $7637.7 billion.

Question 19

The calculation of the GDP chain price index differs from the calculation of the CPI in which of the following ways?

Accepted Answer

A)  The CPI measures the price changes for all goods and services, whereas the GDP chain price index only looks at certain goods and services. 
B)  The GDP chain price index measures the price changes for all goods and services, whereas the CPI only looks at certain goods and services. 
C)  The CPI is a percentage, whereas the GDP chain price index method is an index. 
D)  The CPI measures only consumer prices, whereas the GDP chain price index measures producer prices. 
A)  The CPI measures the price changes for all goods and services, whereas the GDP chain price index only looks at certain goods and services. 
B)  The GDP chain price index measures the price changes for all goods and services, whereas the CPI only looks at certain goods and services. 
C)  The CPI is a percentage, whereas the GDP chain price index method is an index. 
D)  The CPI measures only consumer prices, whereas the GDP chain price index measures producer prices.

Question 20

Gross domestic product includes:

Accepted Answer

A)  all goods and services. 
B)  newly produced foreign goods as well as used goods. 
C)  used goods sold in the current time period. 
D)  only the values of final goods and services. 
A)  all goods and services. 
B)  newly produced foreign goods as well as used goods. 
C)  used goods sold in the current time period. 
D)  only the values of final goods and services.

An estimate of the depreciation of plant, equipment and structures is called:

GDP ignores:

Which of the following are not included in GDP?

Government spending on teachers and university lecturers is counted in GDP figures as:

Intermediate goods are included in calculating gross domestic product but final goods are not.

Real GDP can be calculated using which of the following formulas?

The underground economy:

Economic values that are measured in units per period of time are referred to as:

Which of the following would not be included as part of government spending in GDP calculations?

In an open economy, domestic savings must always equal investment.

Assume that household consumption is $500 billion, gross private domestic investment is $300 billion, government investment is $40 billion, and net exports are -$10 billion. The GDP is:

In a closed economy, any differences between desired saving and investment will be equal to:

If I bought 1000 shares in Newish Corp. for $5 per share and sold them two months later for $6 per share, then:

Which of the following is included in GDP?

New residential housing is counted in GDP as a/an:

To construct GDP, exports:

Which one of the following statements is true?

The calculation of the GDP chain price index differs from the calculation of the CPI in which of the following ways?

Gross domestic product includes:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters

Exam 12: Measuring the Size of the Economy

An estimate of the depreciation of plant, equipment and structures is called:

GDP ignores:

Which of the following are not included in GDP?

Government spending on teachers and university lecturers is counted in GDP figures as:

Intermediate goods are included in calculating gross domestic product but final goods are not.

Real GDP can be calculated using which of the following formulas?

The underground economy:

Economic values that are measured in units per period of time are referred to as:

Which of the following would not be included as part of government spending in GDP calculations?

In an open economy, domestic savings must always equal investment.

Assume that household consumption is $500 billion, gross private domestic investment is $300 billion, government investment is $40 billion, and net exports are -$10 billion. The GDP is:

In a closed economy, any differences between desired saving and investment will be equal to:

If I bought 1000 shares in Newish Corp. for $5 per share and sold them two months later for $6 per share, then:

Which of the following is included in GDP?

New residential housing is counted in GDP as a/an:

To construct GDP, exports:

Which one of the following statements is true?

The calculation of the GDP chain price index differs from the calculation of the CPI in which of the following ways?

Gross domestic product includes:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters