Question 1

Increases in real GDP would understate the well-being of a country over time if,over that time period,the

Accepted Answer

A)  crime rate increased. 
B)  percentage of people addicted to illegal drugs increased. 
C)  amount of pollution decreased. 
D)  average hours worked per week decreased. 
A)  crime rate increased. 
B)  percentage of people addicted to illegal drugs increased. 
C)  amount of pollution decreased. 
D)  average hours worked per week decreased.

Question 2

Which of the following could cause nominal GDP to decrease,but real GDP to increase?

Accepted Answer

A)  The price level rises and the quantity of final goods and services produced rises. 
B)  The price level falls and the quantity of final goods and services produced rises. 
C)  The price level rises and the quantity of final goods and services produced falls. 
D)  The price level falls and the quantity of final goods and services produced falls. 
A)  The price level rises and the quantity of final goods and services produced rises. 
B)  The price level falls and the quantity of final goods and services produced rises. 
C)  The price level rises and the quantity of final goods and services produced falls. 
D)  The price level falls and the quantity of final goods and services produced falls.

Question 3

In May 2009,Ford Motor Company's sales were down 20 percent from a year earlier.These events were caused by

Accepted Answer

A)  an economic recession. 
B)  an economic expansion. 
C)  a reduction in advertising. 
D)  declining quality of service. 
A)  an economic recession. 
B)  an economic expansion. 
C)  a reduction in advertising. 
D)  declining quality of service.

Question 4

If the GDP deflator is less than 100,which will be higher: nominal GDP or real GDP? Why?

Accepted Answer

Real GDP will be higher.The GD

Question 5

If income is unequally distributed in an economy,increases in GDP may not raise well-being in an economy.

Accepted Answer

A) True 
 B)False

Question 6

Japan experienced periods of deflation a declining price level during the 1990s.During a deflationary period,which would be higher: nominal GDP or real GDP? Why? Assume that the base year of choice is prior to the deflationary period.

Accepted Answer

Real GDP would be higher,as long as the

Question 7

If the GDP deflator is equal to 100,then for that year nominal GDP is equal to real GDP

Accepted Answer

A) True 
 B)False

Question 8

Gross national product,GNP,of the United States is the market value of all final goods and services

Accepted Answer

A)  produced within the United States. 
B)  consumed within the United States. 
C)  produced by citizens of the United States anywhere in the world. 
D)  consumed by citizens of the United States anywhere in the world. 
A)  produced within the United States. 
B)  consumed within the United States. 
C)  produced by citizens of the United States anywhere in the world. 
D)  consumed by citizens of the United States anywhere in the world.

Question 9

The total value of production from Ford's manufacturing plant in Cologne,Germany would be included in Germany's gross national product.

Accepted Answer

A) True 
 B)False

Question 10

In the term "real GDP," what does "GDP" stand for and what does it measure? What does "real" indicate?

Accepted Answer

GDP stands for gross domestic product an

Question 11

The size of the underground economy would tend to increase if the government of a country

Accepted Answer

A)  decreased government regulations on businesses. 
B)  increased income tax rates. 
C)  legalized prostitution. 
D)  legalized marijuana. 
A)  decreased government regulations on businesses. 
B)  increased income tax rates. 
C)  legalized prostitution. 
D)  legalized marijuana.

Question 12

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 13

If the value added of a firm is positive,will the firm necessarily have positive profits?

Accepted Answer

No.Value added equals the price of the f

Question 14

The factors of production include

Accepted Answer

A)  wages. 
B)  capital. 
C)  investment. 
D)  transfers. 
A)  wages. 
B)  capital. 
C)  investment. 
D)  transfers.

Question 15

In the circular flow model,the value of total income for an economy ________ the value of total production.

Accepted Answer

A)  equals 
B)  is greater than 
C)  is less than 
D)  may be greater than or less than 
A)  equals 
B)  is greater than 
C)  is less than 
D)  may be greater than or less than

Question 16

Gross domestic product understates the total production of final goods and services because of the omission of

Accepted Answer

A)  the underground economy. 
B)  intermediate goods. 
C)  inflation. 
D)  exports. 
A)  the underground economy. 
B)  intermediate goods. 
C)  inflation. 
D)  exports.

Question 17

In May 2009,the U.S.auto industry experienced a 34 percent decline in sales compared to May 2008.The automobile industry was experiencing the effects of

Accepted Answer

A)  deflation. 
B)  the underground economy. 
C)  the business cycle. 
D)  depreciation. 
A)  deflation. 
B)  the underground economy. 
C)  the business cycle. 
D)  depreciation.

Question 18

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 19

If nominal GDP is $5 trillion and real GDP is $4 trillion,the GDP deflator is

Accepted Answer

A)  12.5. 
B)  80. 
C)  125. 
D)  800. 
A)  12.5. 
B)  80. 
C)  125. 
D)  800.

Question 20

What are the differences between national income,personal income,and disposable personal income?

Accepted Answer

National income is the total income rece

Exam 19: GDP: Measuring Total Production and Income

Increases in real GDP would understate the well-being of a country over time if,over that time period,the

Which of the following could cause nominal GDP to decrease,but real GDP to increase?

In May 2009,Ford Motor Company's sales were down 20 percent from a year earlier.These events were caused by

If the GDP deflator is less than 100,which will be higher: nominal GDP or real GDP? Why?

If income is unequally distributed in an economy,increases in GDP may not raise well-being in an economy.

Japan experienced periods of deflation a declining price level during the 1990s.During a deflationary period,which would be higher: nominal GDP or real GDP? Why? Assume that the base year of choice is prior to the deflationary period.

If the GDP deflator is equal to 100,then for that year nominal GDP is equal to real GDP

Gross national product,GNP,of the United States is the market value of all final goods and services

The total value of production from Ford's manufacturing plant in Cologne,Germany would be included in Germany's gross national product.

In the term "real GDP," what does "GDP" stand for and what does it measure? What does "real" indicate?

The size of the underground economy would tend to increase if the government of a country

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

If the value added of a firm is positive,will the firm necessarily have positive profits?

The factors of production include

In the circular flow model,the value of total income for an economy ________ the value of total production.

Gross domestic product understates the total production of final goods and services because of the omission of

In May 2009,the U.S.auto industry experienced a 34 percent decline in sales compared to May 2008.The automobile industry was experiencing the effects of

Depreciation is

If nominal GDP is $5 trillion and real GDP is $4 trillion,the GDP deflator is

What are the differences between national income,personal income,and disposable personal income?

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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