Question 1

To calculate GDP by the expenditure method,one must add

Accepted Answer

A)  wages, rents, interest, and profits. 
B)  consumption spending, investment spending, government spending and net exports. 
C)  consumption spending, investment spending, government spending and exports. 
D)  labor, natural resources, entrepreneurship, and capital. 
A)  wages, rents, interest, and profits. 
B)  consumption spending, investment spending, government spending and net exports. 
C)  consumption spending, investment spending, government spending and exports. 
D)  labor, natural resources, entrepreneurship, and capital.

Question 2

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 3

What is the largest component of spending in the United States?

Accepted Answer

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

Question 4

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

Accepted Answer

A)  exports. 
B)  inflation. 
C)  intermediate goods. 
D)  household production. 
A)  exports. 
B)  inflation. 
C)  intermediate goods. 
D)  household production.

Question 5

The GDP deflator is the

Accepted Answer

A)  difference between real GDP and nominal GDP multiplied by 100. 
B)  difference between nominal GDP and real GDP multiplied by 100. 
C)  ratio of real GDP to nominal GDP multiplied by 100. 
D)  ratio of nominal GDP to real GDP multiplied by 100. 
A)  difference between real GDP and nominal GDP multiplied by 100. 
B)  difference between nominal GDP and real GDP multiplied by 100. 
C)  ratio of real GDP to nominal GDP multiplied by 100. 
D)  ratio of nominal GDP to real GDP multiplied by 100.

Question 6

In the first half of 2011,automobile sales in the United States were lower than they were in the first half of 2010.The decrease in auto sales impacts GDP because new automobiles are counted as ________ when purchased by households and ________ when purchased by businesses.

Accepted Answer

A)  nondurable goods; durable goods 
B)  consumption; investment 
C)  investment; consumption 
D)  durable goods; nondurable goods 
A)  nondurable goods; durable goods 
B)  consumption; investment 
C)  investment; consumption 
D)  durable goods; nondurable goods

Question 7

Investment,as defined by economists,would include the purchase of a

Accepted Answer

A)  corporate bond. 
B)  government bond. 
C)  share of stock in ExxonMobil. 
D)  computer by an accounting firm. 
A)  corporate bond. 
B)  government bond. 
C)  share of stock in ExxonMobil. 
D)  computer by an accounting firm.

Question 8

Residential investment includes spending by firms on office buildings.

Accepted Answer

A) True 
 B)False

Question 9

Using "chain-weighted" prices to calculate real GDP remedies the distortions causes by changes in relative prices over time.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Suppose,in 2012,you purchased a house built in 2003.Which of the following would be included in the gross domestic product for 2012?

Accepted Answer

A)  the value of the house in 2012 
B)  the value of the house in 2003 
C)  the value of the house in 2012 minus depreciation 
D)  the value of the services of the real estate agent 
A)  the value of the house in 2012 
B)  the value of the house in 2003 
C)  the value of the house in 2012 minus depreciation 
D)  the value of the services of the real estate agent

Question 12

Table 19-13
  
-Refer to Table 19-13.Consider the following data for a simple economy: Calculate nominal GDP and real GDP for 2011,using 2009 as the base year.Show your work.

Accepted Answer

Nominal GDP for 2011 equals (2

Question 13

Table 19-4
  
-Refer to Table 19-4.Consider the data above (in billions of dollars)for an economy: Gross domestic product (in billions of dollars)for this economy equals

Accepted Answer

A)  $2,200. 
B)  $2,100. 
C)  $1,600. 
D)  $1,400. 
A)  $2,200. 
B)  $2,100. 
C)  $1,600. 
D)  $1,400.

Question 14

The Philippines and Vietnam have roughly the same size population.Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion.You should conclude

Accepted Answer

A)  a typical person in Vietnam is 10 times as well off as the typical person in the Philippines. 
B)  a typical person in Vietnam is more than 10 times as well off as the typical person in the Philippines. 
C)  a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines. 
D)  it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional information. 
A)  a typical person in Vietnam is 10 times as well off as the typical person in the Philippines. 
B)  a typical person in Vietnam is more than 10 times as well off as the typical person in the Philippines. 
C)  a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines. 
D)  it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional information.

Question 15

Which of the following goods is directly counted in GDP?

Accepted Answer

A)  the lettuce that Subway purchases for its sandwiches 
B)  the bread that Subway purchases for its sandwiches 
C)  a 12-inch Subway sandwich purchased by a student 
D)  the plastic bags that Subway purchases to wrap its sandwiches 
A)  the lettuce that Subway purchases for its sandwiches 
B)  the bread that Subway purchases for its sandwiches 
C)  a 12-inch Subway sandwich purchased by a student 
D)  the plastic bags that Subway purchases to wrap its sandwiches

Question 16

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 17

Which of the following is included in both the U.S.GDP and U.S.GNP?

Accepted Answer

A)  the value of all cars produced by General Motors in the United States 
B)  the value of all cars produced by Ford in Mexico 
C)  the value of all cars produced by Toyota in the United States 
D)  the value of all cars produced by Nissan in Japan and the United States 
A)  the value of all cars produced by General Motors in the United States 
B)  the value of all cars produced by Ford in Mexico 
C)  the value of all cars produced by Toyota in the United States 
D)  the value of all cars produced by Nissan in Japan and the United States

Question 18

Table 19-10
   Consider the data shown above for Vicuna, a country that produces only two products: oranges and shirts.
-Refer to Table 19-10.Nominal GDP for Vicuna for 2009 equals

Accepted Answer

A)  $4,920. 
B)  $5,100. 
C)  $5,300. 
D)  $5,850. 
A)  $4,920. 
B)  $5,100. 
C)  $5,300. 
D)  $5,850.

Question 19

Legalizing all forms of illegal activities

Accepted Answer

A)  reduces GDP and the size of the underground economy. 
B)  reduces GDP and increases the size of the underground economy. 
C)  increases GDP and reduces the size of the underground economy. 
D)  increases GDP and increases the size of the underground economy. 
A)  reduces GDP and the size of the underground economy. 
B)  reduces GDP and increases the size of the underground economy. 
C)  increases GDP and reduces the size of the underground economy. 
D)  increases GDP and increases the size of the underground economy.

Question 20

If GDP calculations included measurements of pollution and environmental damage,GDP values would most likely be

Accepted Answer

A)  greater than their values without these measurements. 
B)  less than their values without these measurements. 
C)  unchanged from their values without these measurements. 
D)  meaningless, since GDP values without these measurements would no longer be of value. 
A)  greater than their values without these measurements. 
B)  less than their values without these measurements. 
C)  unchanged from their values without these measurements. 
D)  meaningless, since GDP values without these measurements would no longer be of value.

Exam 19: GDP: Measuring Total Production and Income

To calculate GDP by the expenditure method,one must add

The purchase of a new house is included in

What is the largest component of spending in the United States?

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

The GDP deflator is the

In the first half of 2011,automobile sales in the United States were lower than they were in the first half of 2010.The decrease in auto sales impacts GDP because new automobiles are counted as ________ when purchased by households and ________ when purchased by businesses.

Investment,as defined by economists,would include the purchase of a

Residential investment includes spending by firms on office buildings.

Using "chain-weighted" prices to calculate real GDP remedies the distortions causes by changes in relative prices over time.

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

Suppose,in 2012,you purchased a house built in 2003.Which of the following would be included in the gross domestic product for 2012?

Table 19-13 -Refer to Table 19-13.Consider the following data for a simple economy: Calculate nominal GDP and real GDP for 2011,using 2009 as the base year.Show your work.

Table 19-4 -Refer to Table 19-4.Consider the data above (in billions of dollars)for an economy: Gross domestic product (in billions of dollars)for this economy equals

The Philippines and Vietnam have roughly the same size population.Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion.You should conclude

Which of the following goods is directly counted in GDP?

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

Which of the following is included in both the U.S.GDP and U.S.GNP?

Table 19-10 Consider the data shown above for Vicuna, a country that produces only two products: oranges and shirts. -Refer to Table 19-10.Nominal GDP for Vicuna for 2009 equals

Legalizing all forms of illegal activities

If GDP calculations included measurements of pollution and environmental damage,GDP values would most likely be

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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In the first half of 2011,automobile sales in the United States were lower than they were in the first half of 2010.The decrease in auto sales impacts GDP because new automobiles are counted as when purchased by households and when purchased by businesses.