Question 1

Which of the following is not true about the composition of GDP in 2014?

Accepted Answer

A) The majority of consumer spending is on durable goods. 
B) Purchases made by state and local governments are greater than purchases made by the federal government. 
C) Imports are greater than exports. 
D) Business fixed investment is the largest component of investment. 
A) The majority of consumer spending is on durable goods. 
B) Purchases made by state and local governments are greater than purchases made by the federal government. 
C) Imports are greater than exports. 
D) Business fixed investment is the largest component of investment.

Question 2

How are intermediate goods treated in the calculation of GDP?

Accepted Answer

A) Their value is not counted separately,but included as part of the value of the final good for which they are an input. 
B) Their value is counted separately,and their value is also included as part of the value of the final good for which they are an input. 
C) Their value is counted separately,but is not included as part of the value of the final good for which they are an input. 
D) They are included only if they are imported. 
A) Their value is not counted separately,but included as part of the value of the final good for which they are an input. 
B) Their value is counted separately,and their value is also included as part of the value of the final good for which they are an input. 
C) Their value is counted separately,but is not included as part of the value of the final good for which they are an input. 
D) They are included only if they are imported.

Question 3

Which of the following is not a durable good?

Accepted Answer

A) furniture 
B) automobile 
C) clothing 
D) refrigerator 
A) furniture 
B) automobile 
C) clothing 
D) refrigerator

Question 4

Nominal GDP is another term for

Accepted Answer

A) inflation-adjusted GDP. 
B) real GDP. 
C) constant-dollar GDP. 
D) current-dollar GDP. 
A) inflation-adjusted GDP. 
B) real GDP. 
C) constant-dollar GDP. 
D) current-dollar GDP.

Question 5

Table 19-29
 $$\begin{array} { | l | r | } 
\hline& \begin{array} { c } 
\text { Billions of } \
\text { Dollars }
\end{array} \
\hline \text { GDP } & \$ 5,250\
\hline \text { Transfer Payments } &50 \
\hline \text { Retained earnings } & 700 \
\hline \text { Depreciation } & 1,250 \
\hline
\end{array}$$
-Refer to Table 19-29.Based on the table above,what is national income for this economy?

Accepted Answer

A) $4,700 billion 
B) $4,000 billion 
C) $3,150 billion 
D) $2,450 billion 
A) $4,700 billion 
B) $4,000 billion 
C) $3,150 billion 
D) $2,450 billion

Question 6

Between 2015 and 2016,if an economy's exports rise by $8 billion and its imports fall by $8 billion,by how much will GDP change between the two years,all else equal?

Accepted Answer

A) Net exports will increase GDP by $8 billion. 
B) The increase in exports is offset by the decrease in imports,so there is no change in net exports and no effect on GDP. 
C) Net exports will increase GDP by $16 billion. 
D) Net exports will decrease GDP by $8 billion. 
A) Net exports will increase GDP by $8 billion. 
B) The increase in exports is offset by the decrease in imports,so there is no change in net exports and no effect on GDP. 
C) Net exports will increase GDP by $16 billion. 
D) Net exports will decrease GDP by $8 billion.

Question 7

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

Accepted Answer

A) average price levels of goods and services in the economy. 
B) price charged for laptop computers by Dell. 
C) wages paid to employees by Dell. 
D) quantity of Dell employees. 
A) average price levels of goods and services in the economy. 
B) price charged for laptop computers by Dell. 
C) wages paid to employees by Dell. 
D) quantity of Dell employees.

Question 8

Gross national product is defined as

Accepted Answer

A) the value of final goods and services produced within the United States. 
B) the value of final goods and services produced outside of the United States. 
C) the value of final goods and services produced by residents of the United States even if the production takes place outside of the United States. 
D) the value of final goods and services produced within the United States,by United States residents. 
A) the value of final goods and services produced within the United States. 
B) the value of final goods and services produced outside of the United States. 
C) the value of final goods and services produced by residents of the United States even if the production takes place outside of the United States. 
D) the value of final goods and services produced within the United States,by United States residents.

Question 9

Suppose in 2016,you purchase a house built in 2003.Which of the following would be included in the gross domestic product for 2016?

Accepted Answer

A) the value of the house in 2016 
B) the value of the house in 2003 
C) the value of the house in 2016 minus depreciation 
D) the value of the services of the real estate agent 
A) the value of the house in 2016 
B) the value of the house in 2003 
C) the value of the house in 2016 minus depreciation 
D) the value of the services of the real estate agent

Question 10

Why do we not count the value of intermediate goods and services in gross domestic product? Does the value of intermediate goods and services show up in gross domestic product? If so,how?

Accepted Answer

We would double count if we co

Question 11

The underground economy can be described as

Accepted Answer

A) production of intermediate goods and services. 
B) economic production that includes mining. 
C) economic activity that is hidden from the government to avoid taxes or because the activity is illegal. 
D) production of infrastructure that spurs growth in the rest of the economy. 
A) production of intermediate goods and services. 
B) economic production that includes mining. 
C) economic activity that is hidden from the government to avoid taxes or because the activity is illegal. 
D) production of infrastructure that spurs growth in the rest of the economy.

Question 12

Why do we subtract import spending from total expenditures?

Accepted Answer

Import spending is defined as spending o

Question 13

When the BEA calculates real GDP using the average of prices in the current year and the year preceding it,and this average changes from year to year,this is called calculating GDP using

Accepted Answer

A) chained-weighted prices. 
B) fixed-weight prices. 
C) current-year prices. 
D) fixed base-year prices. 
A) chained-weighted prices. 
B) fixed-weight prices. 
C) current-year prices. 
D) fixed base-year prices.

Question 14

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 15

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

Accepted Answer

A) decreased government regulations on businesses. 
B) made over-the-counter drugs illegal. 
C) increased income tax rates. 
D) increased business taxes. 
A) decreased government regulations on businesses. 
B) made over-the-counter drugs illegal. 
C) increased income tax rates. 
D) increased business taxes.

Question 16

In comparing China to Canada,China's relatively ________ growth rate in GDP would make you more likely to take a job in China,and China's relatively ________ level of GDP would make you less likely to take a job in China.

Accepted Answer

A) high;low 
B) high;high 
C) low;low 
D) low;high 
A) high;low 
B) high;high 
C) low;low 
D) low;high

Question 17

Caroline is an artist.She purchases canvas,paints,brushes,and accessories for $75.She sells one of her original paintings to an art gallery for $1,500,even though an art lover would pay $4,500 for that painting.How much value does Caroline add?

Accepted Answer

A) $75 
B) $1,425 
C) $1,500 
D) $4,425 
A) $75 
B) $1,425 
C) $1,500 
D) $4,425

Question 18

Table 19-6
 $$\begin{array} { | l | c | c | } 
\hline { \text { Product } } & \text { Quantity } & \text { Price per Unit } \
\hline \text { Coke } & 10,000 & \$ 2 \
\hline \text { iPhones } & 2,000 & 150 \
\hline \text { Backpacks } & 4,000 & 25 \
\hline \text { Hershey bars } & 8,000 & 1 \
\hline
\end{array}$$
-Refer to Table 19-6.Consider the table of production and price statistics for a small economy in 2013.If the economy only produces the four goods listed below,what is GDP for 2013?

Accepted Answer

A) $428,000 
B) $267,000 
C) $24,000 
D) $1,424 
A) $428,000 
B) $267,000 
C) $24,000 
D) $1,424

Question 19

"Household production" refers to

Accepted Answer

A) the manufacturing of durable household products. 
B) the home building sector of the economy. 
C) home-based craft businesses. 
D) goods and services people produce for themselves. 
A) the manufacturing of durable household products. 
B) the home building sector of the economy. 
C) home-based craft businesses. 
D) goods and services people produce for themselves.

Question 20

In 2015,the U.S.auto industry experienced rising sales.The automobile industry was experiencing the effects of

Accepted Answer

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

Exam 19: Gdp: Measuring Total Production and Income

Which of the following is not true about the composition of GDP in 2014?

How are intermediate goods treated in the calculation of GDP?

Which of the following is not a durable good?

Nominal GDP is another term for

Table 19-29 Billions of Dollars GDP \ 5,250 Transfer Payments 50 Retained earnings 700 Depreciation 1,250 -Refer to Table 19-29.Based on the table above,what is national income for this economy?

Between 2015 and 2016,if an economy's exports rise by $8 billion and its imports fall by $8 billion,by how much will GDP change between the two years,all else equal?

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

Gross national product is defined as

Suppose in 2016,you purchase a house built in 2003.Which of the following would be included in the gross domestic product for 2016?

Why do we not count the value of intermediate goods and services in gross domestic product? Does the value of intermediate goods and services show up in gross domestic product? If so,how?

The underground economy can be described as

Why do we subtract import spending from total expenditures?

When the BEA calculates real GDP using the average of prices in the current year and the year preceding it,and this average changes from year to year,this is called calculating GDP using

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

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

In comparing China to Canada,China's relatively ________ growth rate in GDP would make you more likely to take a job in China,and China's relatively ________ level of GDP would make you less likely to take a job in China.

Caroline is an artist.She purchases canvas,paints,brushes,and accessories for $75.She sells one of her original paintings to an art gallery for $1,500,even though an art lover would pay $4,500 for that painting.How much value does Caroline add?

Table 19-6 Product Quantity Price per Unit Coke 10,000 \ 2 iPhones 2,000 150 Backpacks 4,000 25 Hershey bars 8,000 1 -Refer to Table 19-6.Consider the table of production and price statistics for a small economy in 2013.If the economy only produces the four goods listed below,what is GDP for 2013?

"Household production" refers to

In 2015,the U.S.auto industry experienced rising sales.The automobile industry was experiencing the effects of

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 comparing China to Canada,China's relatively growth rate in GDP would make you more likely to take a job in China,and China's relatively level of GDP would make you less likely to take a job in China.