Question 1

If real GDP equals nominal GDP, then:

Accepted Answer

A)  output did not grow. 
B)  there was no inflation. 
C)  the current year is the base year. 
D)  the growth in output was equal to the growth in the price level. 
E)  the growth in output was greater than the growth in the price level. 
A)  output did not grow. 
B)  there was no inflation. 
C)  the current year is the base year. 
D)  the growth in output was equal to the growth in the price level. 
E)  the growth in output was greater than the growth in the price level.

Question 2

Explain why real GDP is preferred to nominal GDP as a measure of economic growth.

Accepted Answer

Nominal GDP can increase as a result of

Question 3

A doctor receives $50,000 per month from her patients (and their insurance companies) as payment for her services. Each month she buys medical supplies for $10,000 and she pays a lab $15,000 for analyzing slides. The total contribution to GDP this month is:

Accepted Answer

A)  $50,000. 
B)  $65,000. 
C)  $75,000. 
D)  $25,000. 
E)  $55,000. 
A)  $50,000. 
B)  $65,000. 
C)  $75,000. 
D)  $25,000. 
E)  $55,000.

Question 4

When you buy a new car built by Ford, it is included in the ________ category of GDP.

Accepted Answer

A)  consumption 
B)  investment 
C)  government purchases 
D)  export 
E)  import 
A)  consumption 
B)  investment 
C)  government purchases 
D)  export 
E)  import

Question 5

Consider the following data that identifies real GDP in comparison to the long-run trend of real GDP to answer the next  questions:  
-How many quarters did this economy spend in a recession?

Accepted Answer

A)  8 quarters 
B)  4 quarters 
C)  2 quarters 
D)  6 quarters 
E)  7 quarters 
A)  8 quarters 
B)  4 quarters 
C)  2 quarters 
D)  6 quarters 
E)  7 quarters

Question 6

Company X sells sugar to company Y for $50,000. Company Y uses the sugar to make chocolate bars, selling them to consumers for $150,000. The total contribution to GDP is:

Accepted Answer

A)  $200,000. 
B)  $100,000. 
C)  $30,000. 
D)  $150,000. 
E)  $50,000. 
A)  $200,000. 
B)  $100,000. 
C)  $30,000. 
D)  $150,000. 
E)  $50,000.

Question 7

You bought a popular video game last year for $75 and sold it to a store this year for $20. The store sells the used game to a consumer for $40. When you sell your game to the store, how is this included in GDP?

Accepted Answer

A)  as consumption 
B)  as investment 
C)  as government purchases 
D)  as net exports 
E)  This does not count in GDP. 
A)  as consumption 
B)  as investment 
C)  as government purchases 
D)  as net exports 
E)  This does not count in GDP.

Question 8

Assuming these are the only two goods produced in the economy, what is the value of the GDP?

Accepted Answer

A)  $110 million 
B)  $750 million 
C)  $2 million 
D)  $250 million 
E)  $500 million 
A)  $110 million 
B)  $750 million 
C)  $2 million 
D)  $250 million 
E)  $500 million

Question 9

The consumption category includes:

Accepted Answer

A)  all purchases made by consumers. 
B)  all purchases of goods and services made by consumers. 
C)  all purchases of final goods and services made by consumers. 
D)  all purchases of final goods and services made by consumers except new houses. 
E)  all purchases of final goods and services made by consumers except new houses and new cars. 
A)  all purchases made by consumers. 
B)  all purchases of goods and services made by consumers. 
C)  all purchases of final goods and services made by consumers. 
D)  all purchases of final goods and services made by consumers except new houses. 
E)  all purchases of final goods and services made by consumers except new houses and new cars.

Question 10

GDP is an important indicator because it is used as a measure of all of the following except:

Accepted Answer

A)  economic growth. 
B)  average living standards. 
C)  business-cycle fluctuations. 
D)  average income levels. 
E)  environmental quality. 
A)  economic growth. 
B)  average living standards. 
C)  business-cycle fluctuations. 
D)  average income levels. 
E)  environmental quality.

Question 11

Real GDP would be a better measure of economic well-being if it included the value of:

Accepted Answer

A)  stocks and bonds purchases. 
B)  intermediate goods. 
C)  used goods. 
D)  leisure time. 
E)  Social Security payments. 
A)  stocks and bonds purchases. 
B)  intermediate goods. 
C)  used goods. 
D)  leisure time. 
E)  Social Security payments.

Question 12

Real GDP can be calculated as:

Accepted Answer

A)  (nominal GDP * the GDP deflator) * 100. 
B)  (nominal GDP √ the GDP deflator) * 100. 
C)  (nominal GDP - the GDP deflator) * 100. 
D)  (the GDP deflator √ nominal GDP) * 100. 
E)  (nominal GDP * the long-run trend growth rate of GDP) * 100. 
A)  (nominal GDP * the GDP deflator) * 100. 
B)  (nominal GDP √ the GDP deflator) * 100. 
C)  (nominal GDP - the GDP deflator) * 100. 
D)  (the GDP deflator √ nominal GDP) * 100. 
E)  (nominal GDP * the long-run trend growth rate of GDP) * 100.

Question 13

Identify three reasons why GDP is not a perfect measure of a nation's well-being.

Accepted Answer

Four shortcomings limit the effectivenes

Question 14

A shortcoming of real GDP is:

Accepted Answer

A)  it does not include the underground economy. 
B)  it includes non-market goods. 
C)  it does not measure changes in employment. 
D)  it does not include the value obtained through purchases of stocks and bonds. 
E)  it does not account for changes in the prices of goods and services. 
A)  it does not include the underground economy. 
B)  it includes non-market goods. 
C)  it does not measure changes in employment. 
D)  it does not include the value obtained through purchases of stocks and bonds. 
E)  it does not account for changes in the prices of goods and services.

Question 15

GDP is best defined as the total market value of all:

Accepted Answer

A)  goods and services produced within a country within a given time. 
B)  final goods and services produced within a country within a given time. 
C)  services produced within a country within a given time. 
D)  goods produced within a country within a given time. 
E)  final goods produced within a country within a given time. 
A)  goods and services produced within a country within a given time. 
B)  final goods and services produced within a country within a given time. 
C)  services produced within a country within a given time. 
D)  goods produced within a country within a given time. 
E)  final goods produced within a country within a given time.

Question 16

Nominal GDP increased from $15.62 trillion to $16.09 trillion, and the price level increased from 120.0 to 122.4. The rate of inflation was: (Round to the nearest first decimal.)

Accepted Answer

A)  3.0%. 
B)  1.0%. 
C)  2.4%. 
D)  20.0%. 
E)  2.0%. 
A)  3.0%. 
B)  1.0%. 
C)  2.4%. 
D)  20.0%. 
E)  2.0%.

Question 17

Nominal GDP is GDP measured in:

Accepted Answer

A)  current prices. 
B)  base prices. 
C)  average prices. 
D)  fixed prices. 
E)  marginal prices. 
A)  current prices. 
B)  base prices. 
C)  average prices. 
D)  fixed prices. 
E)  marginal prices.

Question 18

Real GDP increases if:

Accepted Answer

A)  current prices increase. 
B)  current quantities increase. 
C)  current prices are constant. 
D)  nominal GDP increases. 
E)  nominal GDP decreases. 
A)  current prices increase. 
B)  current quantities increase. 
C)  current prices are constant. 
D)  nominal GDP increases. 
E)  nominal GDP decreases.

Question 19

GDP is a good, but not the best, measure of:

Accepted Answer

A)  the percentage change in the overall level of prices. 
B)  income inequality. 
C)  changes in average living standards. 
D)  environmental quality. 
E)  the cost of living. 
A)  the percentage change in the overall level of prices. 
B)  income inequality. 
C)  changes in average living standards. 
D)  environmental quality. 
E)  the cost of living.

Question 20

GDP increases if prices decrease by ________ and quantities produced increase by ________.

Accepted Answer

A)  2%; 4% 
B)  2%; 2% 
C)  4%; 2% 
D)  3%; 1% 
E)  3%; 3% 
A)  2%; 4% 
B)  2%; 2% 
C)  4%; 2% 
D)  3%; 1% 
E)  3%; 3%

If real GDP equals nominal GDP, then:

Explain why real GDP is preferred to nominal GDP as a measure of economic growth.

A doctor receives $50,000 per month from her patients (and their insurance companies) as payment for her services. Each month she buys medical supplies for $10,000 and she pays a lab $15,000 for analyzing slides. The total contribution to GDP this month is:

When you buy a new car built by Ford, it is included in the ________ category of GDP.

Consider the following data that identifies real GDP in comparison to the long-run trend of real GDP to answer the next questions: -How many quarters did this economy spend in a recession?

Company X sells sugar to company Y for $50,000. Company Y uses the sugar to make chocolate bars, selling them to consumers for $150,000. The total contribution to GDP is:

You bought a popular video game last year for $75 and sold it to a store this year for $20. The store sells the used game to a consumer for $40. When you sell your game to the store, how is this included in GDP?

Assuming these are the only two goods produced in the economy, what is the value of the GDP?

The consumption category includes:

GDP is an important indicator because it is used as a measure of all of the following except:

Real GDP would be a better measure of economic well-being if it included the value of:

Real GDP can be calculated as:

Identify three reasons why GDP is not a perfect measure of a nation's well-being.

A shortcoming of real GDP is:

GDP is best defined as the total market value of all:

Nominal GDP increased from $15.62 trillion to $16.09 trillion, and the price level increased from 120.0 to 122.4. The rate of inflation was: (Round to the nearest first decimal.)

Nominal GDP is GDP measured in:

Real GDP increases if:

GDP is a good, but not the best, measure of:

GDP increases if prices decrease by and quantities produced increase by .

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Exam 6: Introduction to Macroeconomics and Gross Domestic Product

If real GDP equals nominal GDP, then:

Explain why real GDP is preferred to nominal GDP as a measure of economic growth.

A doctor receives $50,000 per month from her patients (and their insurance companies) as payment for her services. Each month she buys medical supplies for $10,000 and she pays a lab $15,000 for analyzing slides. The total contribution to GDP this month is:

When you buy a new car built by Ford, it is included in the ________ category of GDP.

Consider the following data that identifies real GDP in comparison to the long-run trend of real GDP to answer the next questions: -How many quarters did this economy spend in a recession?

Company X sells sugar to company Y for $50,000. Company Y uses the sugar to make chocolate bars, selling them to consumers for $150,000. The total contribution to GDP is:

You bought a popular video game last year for $75 and sold it to a store this year for $20. The store sells the used game to a consumer for $40. When you sell your game to the store, how is this included in GDP?

Assuming these are the only two goods produced in the economy, what is the value of the GDP?

The consumption category includes:

GDP is an important indicator because it is used as a measure of all of the following except:

Real GDP would be a better measure of economic well-being if it included the value of:

Real GDP can be calculated as:

Identify three reasons why GDP is not a perfect measure of a nation's well-being.

A shortcoming of real GDP is:

GDP is best defined as the total market value of all:

Nominal GDP increased from $15.62 trillion to $16.09 trillion, and the price level increased from 120.0 to 122.4. The rate of inflation was: (Round to the nearest first decimal.)

Nominal GDP is GDP measured in:

Real GDP increases if:

GDP is a good, but not the best, measure of:

GDP increases if prices decrease by ________ and quantities produced increase by ________.

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

GDP increases if prices decrease by and quantities produced increase by .