Question 1

GDP reflects many things; however, it does not reflect the depletion of natural resources, leisure, or many things we as individuals do for ourselves.

Accepted Answer

A) True 
 B)False

Question 2

If real GDP equals $200 billion this year and nominal GDP equals $300 billion, the price level since the base year has increased

Accepted Answer

A) $100 billion 
B) $200 billion 
C) 50 percent 
D) 100 percent 
E) 33 percent 
A) $100 billion 
B) $200 billion 
C) 50 percent 
D) 100 percent 
E) 33 percent

Question 3

How does net domestic product (NDP) differ from gross domestic product (GDP)?

Accepted Answer

A) GDP includes expenditures for gross products that pollute the environment; NDP does not. 
B) GDP is gross because it values spending on each good and service in dollar terms; NDP excludes taxes. 
C) GDP includes exports; NDP omits exports. 
D) GDP includes all government spending; NDP subtracts taxes. 
E) GDP includes that part of the capital stock used up in the production process; NDP does not. 
A) GDP includes expenditures for gross products that pollute the environment; NDP does not. 
B) GDP is gross because it values spending on each good and service in dollar terms; NDP excludes taxes. 
C) GDP includes exports; NDP omits exports. 
D) GDP includes all government spending; NDP subtracts taxes. 
E) GDP includes that part of the capital stock used up in the production process; NDP does not.

Question 4

Which of the following would not be included in GDP as a form of consumption spending?

Accepted Answer

A) Ann takes Tim out to a restaurant for dinner. 
B) Ann and Tim buy a microwave oven. 
C) Ann and Tim buy vegetables to prepare soup at home. 
D) Ann prepares Tim's income tax return. 
E) Tim buys Ann flowers. 
A) Ann takes Tim out to a restaurant for dinner. 
B) Ann and Tim buy a microwave oven. 
C) Ann and Tim buy vegetables to prepare soup at home. 
D) Ann prepares Tim's income tax return. 
E) Tim buys Ann flowers.

Question 5

If real GDP for the base year is $3 trillion, then nominal GDP for that year is

Accepted Answer

A) $.03 trillion 
B) $0.3 trillion 
C) $3 trillion 
D) $30 trillion 
E) $300 trillion 
A) $.03 trillion 
B) $0.3 trillion 
C) $3 trillion 
D) $30 trillion 
E) $300 trillion

Question 6

An increase in household production will show up in GDP.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is the best example of an intermediate good?

Accepted Answer

A) the flowers Mr. Grover buys at a local nursery 
B) the flowers that Timmy Grover, age three, brought Mrs. Grover after he picked them from a neighbor's garden 
C) the flour Grandma Grover buys to make a birthday cake 
D) the flour that Joe buys so that he can eat pizza three nights a week 
E) the flour Amy orders each month for the bakery she manages 
A) the flowers Mr. Grover buys at a local nursery 
B) the flowers that Timmy Grover, age three, brought Mrs. Grover after he picked them from a neighbor's garden 
C) the flour Grandma Grover buys to make a birthday cake 
D) the flour that Joe buys so that he can eat pizza three nights a week 
E) the flour Amy orders each month for the bakery she manages

Question 8

The government budget must be balanced in order to have an equilibrium in the circular flow model.

Accepted Answer

A) True 
 B)False

Question 9

If the GDP deflator is 100 this year,

Accepted Answer

A) there has been no inflation during the year 
B) the price level is the same as it was in the base year 
C) the price level is one hundred times what it was in the base year 
D) the price level is double what it was in the base year 
E) the inflation rate has been 100 percent per year since the base year 
A) there has been no inflation during the year 
B) the price level is the same as it was in the base year 
C) the price level is one hundred times what it was in the base year 
D) the price level is double what it was in the base year 
E) the inflation rate has been 100 percent per year since the base year

Question 10

Real GDP is the same thing as

Accepted Answer

A) total spending on all goods and services 
B) constant-dollar GDP 
C) net domestic product 
D) nominal GDP adjusted for taxes 
E) domestic income 
A) total spending on all goods and services 
B) constant-dollar GDP 
C) net domestic product 
D) nominal GDP adjusted for taxes 
E) domestic income

Question 11

Ann's Adventures, Inc. organizes and leads backpacking trips for $160. The business spends $30 on first aid equipment and $10 on maps. The amount of value added to GDP is

Accepted Answer

A) $160 of backpacking trips 
B) $200 of backpacking trips, $30 of first aid equipment, and $10 of maps 
C) $160 of backpacking trips, $30 of first aid equipment, and $10 of maps 
D) $120 of backpacking trips 
E) $30 of first aid equipment and $10 of maps only 
A) $160 of backpacking trips 
B) $200 of backpacking trips, $30 of first aid equipment, and $10 of maps 
C) $160 of backpacking trips, $30 of first aid equipment, and $10 of maps 
D) $120 of backpacking trips 
E) $30 of first aid equipment and $10 of maps only

Question 12

Net taxes are indirect business taxes minus transfer payments.

Accepted Answer

A) True 
 B)False

Question 13

The State of the USA is a nonprofit organization that is developing "a key national indicator" system for the United States.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a problem associated with GDP as a measure of social welfare?

Accepted Answer

A) It excludes many nonmarket activities. 
B) It values all types of output equally. 
C) It excludes pollution damage. 
D) It excludes intermediate goods as a separate entry. 
E) It excludes the value of leisure time. 
A) It excludes many nonmarket activities. 
B) It values all types of output equally. 
C) It excludes pollution damage. 
D) It excludes intermediate goods as a separate entry. 
E) It excludes the value of leisure time.

Question 15

The simple circular flow model shows that

Accepted Answer

A) households are on the demand side of both the product and resource market 
B) firms are on the demand side of both the product and resource market 
C) households are on the supply side of the resource market and the demand side of the product market 
D) firms and governments are on the supply side of the loanable funds market 
E) governments are on the demand side of the product market and the supply side of the resource market 
A) households are on the demand side of both the product and resource market 
B) firms are on the demand side of both the product and resource market 
C) households are on the supply side of the resource market and the demand side of the product market 
D) firms and governments are on the supply side of the loanable funds market 
E) governments are on the demand side of the product market and the supply side of the resource market

Question 16

The country of Fishland had a GDP of 1,000 doubloons (the monetary unit) in 2003 and 1,500 doubloons in 2004. The GDP price index was 100 in 2003 and 150 in 2004. Between 2003 and 2004 real GDP in Fishland

Accepted Answer

A) increased by 500 doubloons 
B) increased by 333 doubloons 
C) increased by 50 doubloons 
D) remained the same 
E) decreased by 50 doubloons 
A) increased by 500 doubloons 
B) increased by 333 doubloons 
C) increased by 50 doubloons 
D) remained the same 
E) decreased by 50 doubloons

Question 17

Suppose a loaf of bread sold for $3.00 in 2008. The price of bread then increases to $3.60 in 2009. The price index for bread is

Accepted Answer

A) ($3.60/$3.00) = 1.20 
B) ($3.00/$3.60) × 100 = 83.33 
C) ($3.60/$3.00) × 100 = 120 
D) ($3.00/$3.00) × 100 = 100 
E) ($0.60/$3.00) × 100 = 20 
A) ($3.60/$3.00) = 1.20 
B) ($3.00/$3.60) × 100 = 83.33 
C) ($3.60/$3.00) × 100 = 120 
D) ($3.00/$3.00) × 100 = 100 
E) ($0.60/$3.00) × 100 = 20

Question 18

The circular flow model

Accepted Answer

A) measures identical flows through the different markets 
B) shows how firms maximize profits and minimize costs 
C) shows how competitive markets interact with noncompetitive markets 
D) measures the value of income earned by the public sector 
E) measures the value added by the business sector as it uses funds 
A) measures identical flows through the different markets 
B) shows how firms maximize profits and minimize costs 
C) shows how competitive markets interact with noncompetitive markets 
D) measures the value of income earned by the public sector 
E) measures the value added by the business sector as it uses funds

Question 19

If the CPI is 200 one year and 206 the next year, the annual rate of inflation as measured by the CPI is approximately

Accepted Answer

A) 103 percent 
B) 1 percent 
C) 6 percent 
D) 3 percent 
E) 206 percent 
A) 103 percent 
B) 1 percent 
C) 6 percent 
D) 3 percent 
E) 206 percent

Question 20

Exhibit 6-3
  
-Refer to Exhibit 6-3. Between 2001 and 2002, real GDP for this nation

Accepted Answer

A) increased by slightly less than $10 billion 
B) decreased by slightly more than $5 billion 
C) remained constant 
D) increased by only about $1 billion 
E) cannot be determined from the information given 
A) increased by slightly less than $10 billion 
B) decreased by slightly more than $5 billion 
C) remained constant 
D) increased by only about $1 billion 
E) cannot be determined from the information given

Exam 7: Tracking the Us Economy

GDP reflects many things; however, it does not reflect the depletion of natural resources, leisure, or many things we as individuals do for ourselves.

If real GDP equals $200 billion this year and nominal GDP equals $300 billion, the price level since the base year has increased

How does net domestic product (NDP) differ from gross domestic product (GDP)?

Which of the following would not be included in GDP as a form of consumption spending?

If real GDP for the base year is $3 trillion, then nominal GDP for that year is

An increase in household production will show up in GDP.

Which of the following is the best example of an intermediate good?

The government budget must be balanced in order to have an equilibrium in the circular flow model.

If the GDP deflator is 100 this year,

Real GDP is the same thing as

Ann's Adventures, Inc. organizes and leads backpacking trips for $160. The business spends $30 on first aid equipment and $10 on maps. The amount of value added to GDP is

Net taxes are indirect business taxes minus transfer payments.

The State of the USA is a nonprofit organization that is developing "a key national indicator" system for the United States.

Which of the following is not a problem associated with GDP as a measure of social welfare?

The simple circular flow model shows that

The country of Fishland had a GDP of 1,000 doubloons (the monetary unit) in 2003 and 1,500 doubloons in 2004. The GDP price index was 100 in 2003 and 150 in 2004. Between 2003 and 2004 real GDP in Fishland

Suppose a loaf of bread sold for $3.00 in 2008. The price of bread then increases to $3.60 in 2009. The price index for bread is

The circular flow model

If the CPI is 200 one year and 206 the next year, the annual rate of inflation as measured by the CPI is approximately

Exhibit 6-3 -Refer to Exhibit 6-3. Between 2001 and 2002, real GDP for this nation

The Art and Science of Economic Analysis

Understanding Graphs-Appendix

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Agregate Demand

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

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