Deck 24: Measuring the Wealth of Nations

Question 1

Measuring the national income accounts can be helpful in explaining things like:

A)unemployment rates.
B)economic booms.
C)rates of inflation.
D)All of these statements are true.

Answer 1

All of these statements are true.

Question 2

Calculating the value of an economy is harder than just adding up the value of every single thing that is produced because:

A)that would lead to overcounting,as the value of intermediate products would be counted twice.
B)that would lead to overcounting,as there is a mark-up in everything that is sold.
C)that would lead to undercounting,as most goods are not sold in retail markets.
D)that would lead to undercounting,as only observable markets can be recorded.

Answer 2

that would lead to overcounting,as the value of intermediate products would be counted twice.

Question 3

GDP counts:

A)only final goods and services,because otherwise certain things would be double-counted and the GDP would be overestimated.
B)only intermediate goods and services,because those are easier to track.
C)both intermediate and final goods and services because it is important to capture all values,regardless of which market they take place in.
D)those values that are reported to the government.

Answer 3

only final goods and services,because otherwise certain things would be double-counted and the GDP would be overestimated.

Question 4

Everyone in an economy tends to do better when we experience:

A)high economic growth,low unemployment,and high inflation.
B)steady economic growth,low unemployment,and stable prices.
C)steady economic growth,high unemployment,and stable prices.
D)high economic growth,high unemployment,and low inflation.

Question 5

One of the economic changes that has most dramatically reshaped the world is:

A)the rapid growth of China's economy.
B)the rapid decline of Haiti's economy.
C)the unemployment rate declining in the U.S.by 40 percent.
D)the rapid growth of Italy's economy.

Question 6

GDP uses the market value of goods and services because:

A)it provides a common valuation that allows us to compare one economy to another.
B)it provides the opportunity to compare lists of outputs to see who produced more.
C)it is the only data that can be gathered about goods and services.
D)None of these statements is true.

Question 7

Gross domestic product is:

A)the sum of the market values of all final goods and services produced within a country in a given period of time.
B)the sum of the market values of all intermediate goods and services produced within a country in a given period of time.
C)the sum of all final goods and services produced by a country's citizens in a given period of time.
D)the sum of the market values of all final goods and services produced by a country's citizens in a given period of time.

Question 8

Macroeconomics works to explain things like:

A)economic growth.
B)unemployment rates.
C)rates of inflation.
D)All of these statements are true.

Question 9

In macroeconomics,which of the following topic would likely be studied?

A)Bob's budget
B)Nike's costs of production
C)The growth rate of the oil industry
D)All of these are microeconomic topics.

Question 10

We can measure the status of a national economy by looking at:

A)its total expenditures.
B)its total income.
C)We can look at either of these things to get the same measure.
D)Neither of these is used to measure a nation's economic status.

Question 11

The most commonly used metric for measuring the value of a national economy is:

A)gross domestic product,or GDP.
B)gross national product,or GNP.
C)gross national income,or GNI.
D)gross domestic income,or GDI.

Question 12

The field of macroeconomics studies ______ and microeconomics studies ______.

A)economic aggregates;individual markets
B)individual markets;economic aggregates
C)international variables;variables within a single economy
D)variables within a single economy;international variables

Question 13

Economic growth can:

A)create jobs.
B)reduce poverty.
C)improve standards of living.
D)All of these statements are true.

Question 14

In China,the fraction of the population living below the international poverty line ($1.25 per person per day)fell from over 80 percent in 1978 to:

A)under 20 percent as of 2011.
B)under 50 percent as of 2011.
C)under 40 percent as of 2011.
D)under 30 percent as of 2011.

Question 15

In macroeconomics,we talk about:

A)consumption at a national level.
B)production of all goods in the economy.
C)prices in the aggregate.
D)All of these are things macroeconomists talk about.

Question 16

The system we use to measure the value of an economy is called:

A)national income accounting.
B)national economic valuation.
C)macroeconomic summation.
D)national expenditure accounting.

Question 17

GDP:

A)gives us a sense of the well-being of the average person in a country.
B)allows us to gauge the direction an economy is headed when we examine changes in GDP over time.
C)measures the value of a national economy.
D)All of these statements are true.

Question 18

Intermediate goods and services are:

A)used only as inputs to produce something else and are not counted in GDP.
B)goods that consumers buy in parts-like a new tire for their car-and are included in GDP.
C)used only as inputs to produce something else and are counted in GDP.
D)goods that consumers buy in parts-like a new tire for their car-and are not included in GDP.

Question 19

In 1978,China was the world's 15^th-largest economy.By 2011,China:

A)had the second-largest economy in the world.
B)had a larger economy than Japan.
C)had an economy worth about $6 trillion.
D)All of these statements are true.

Question 20

The two largest economies in the world in 2012 were:

A)the U.S.and China.
B)Japan and the U.S.
C)England and the U.S.
D)the U.S.and Germany.

Question 21

An example of a final good or service is:

A)a tire to replace your flat.
B)a new car.
C)getting the oil changed in your car.
D)All of these are final goods or services.

Question 22

Which of the following is not an intermediate good?

A)Tires purchased by Ford to put on their new Explorers
B)Tires sold by Goodyear to put on your Explorer
C)Tomatoes used by Ortega to make their salsa
D)All of these are intermediate goods.

Question 23

The goods and services that count toward GDP are:

A)defined in terms of the location of production,not the citizenship of the producer.
B)anything produced within a country's borders,regardless of who owns it.
C)things made in one country,even if the majority of it is owned by someone else.
D)All of these statements are true.

Question 24

The goods and services that count toward GDP are:

A)defined in terms of the location of production,not the citizenship of the producer.
B)defined in terms of the citizenship of the producer,not the location of production.
C)defined in terms of citizens producing within a country's borders.
D)defined in terms of total production of companies owned by citizens,regardless of the actual location of production.

Question 25

An example of an intermediate good would be:

A)the rice used to make Chex cereal.
B)a bag of Uncle Ben's rice sold to consumers.
C)a bag of Quaker's rice cakes sold to consumers.
D)All of these are intermediate goods.

Question 26

An example of a final good is:

A)chocolate chips purchased by Nabisco to make Keebler chocolate chip cookies.
B)chocolate chips purchased by you to make chocolate chip cookies.
C)chocolate chips purchased by a restaurant to make a chocolate chip cookie pie to sell.
D)All of these are final goods.

Question 27

Intermediate goods are not included in GDP because:

A)certain goods that are used in the production of a final good would be counted twice.
B)the value of goods bought by producers to make something else would be counted twice.
C)the value of goods used by firms to make the goods they sell is included in the firm's product;accounting for the value twice would overestimate GDP.
D)All of these statements are true.

Question 28

You purchase a bag of chocolate chips for $3,a bag of flour for $1,a bag of sugar for $.50,a half dozen eggs for $.50,and a half pound of butter for $2.You use all these ingredients to make three dozen cookies.Your roommate offers you $15 for them,and you happily accept.How much does this process contribute to GDP?

A)$7
B)$15
C)$22
D)$8

Question 29

An example of a good or service that would not count in the U.S.GDP would be:

A)a car made by Toyota in Tennessee.
B)a car made by Ford in Michigan.
C)sneakers made by Nike in Indonesia.
D)sneakers made by New Balance in Ohio.

Question 30

Suzi is a British citizen who works for Yankee Candles in Massachusetts.Suzi's work will be included in:

A)U.S.GDP since she's working for a U.S.firm.
B)U.S.GDP since she's working for a firm located in the U.S.
C)England's GDP since she's a British citizen.
D)both the U.S.and England's GDP.

Question 31

Which of the following is not a final good or service?

A)A gallon of milk for your breakfast cereal
B)A notebook for your college courses
C)The cheese on the pizza you bought from Domino's
D)All of these are final goods or services.

Question 32

Sally is a U.S.citizen who works for an Italian company at the branch office located in Tulsa,Oklahoma.Sally's work will contribute toward:

A)U.S.GDP since Sally's a citizen.
B)U.S.GDP since the location of her office is in the U.S.
C)Italian GDP since she's working for an Italian firm.
D)both the U.S.and Italy's GDP.

Question 33

An example of a good or service that would count in the U.S.GNP would be:

A)a bag of coffee made in Vermont by Green Mountain Coffee Roasters.
B)a bag of coffee made in Colombia by Dunkin' Donuts.
C)a bag of coffee made in Canada by Starbucks.
D)All of these would count in U.S.GNP.

Question 34

Clarence is a Japanese citizen working for Toyota at the manufacturing plant located in Tennessee.Clarence's work will contribute toward:

A)U.S.GDP since the location of the plant is in the U.S.
B)Japan's GDP since he's a Japanese citizen.
C)Japan's GDP since it's a Japanese firm.
D)both the U.S.and Japan's GDP.

Question 35

A Chinese restaurant buys 10 cups rice for $1;soy,fish and oyster sauces for $1 each;and assorted vegetables for $20.They create 10 meals with these ingredients and sell each one for $5.How much does this process contribute to GDP?

A)$23
B)$50
C)$73
D)$27

Question 36

An example of a good or service that would count in the U.S.GDP would be:

A)a bag of coffee made in Vermont by Green Mountain Coffee Roasters.
B)a bag of coffee made in Colombia by Dunkin' Donuts.
C)a bag of coffee made in Canada by Starbucks.
D)All of these would count in U.S.GDP.

Question 37

An example of a good or service that would not count in the U.S.GDP would be:

A)a t-shirt made by The Gap in Cambodia.
B)a t-shirt made by Organi-tee in Oregon.
C)a TV made by Toshiba in Georgia.
D)a bottle of water made by Poland Springs in Maine.

Question 38

Which of the following is an intermediate good?

A)Tomatoes grown in your garden that you use to make salsa
B)Tomatoes you buy at a local farmer's stand that you use to make salsa
C)Tomatoes sold in the grocery store that you use to make salsa
D)None of these is an intermediate good.

Question 39

Which of the following is not a final good or service?

A)Coffee grounds you use to make your coffee every morning
B)Coffee grounds used by a coffee shop to make your coffee every morning
C)Coffee grounds used by Edy's to make coffee ice cream
D)None of these is a final good or service.

Question 40

An American citizen works for a U.S.-owned architectural firm located in Mexico.This architect will:

A)contribute toward U.S.GDP since he's a U.S.citizen.
B)contribute toward U.S.GDP since he's working for a U.S.firm.
C)contribute toward Mexico's GDP since he's working in Mexico.
D)contribute toward both Mexico's and U.S.GDP.

Question 41

U.S.Gross National Product includes:

A)goods produced by foreign firms on U.S.soil.
B)goods produced by U.S.firms on foreign soil.
C)goods produced by foreign firms on foreign soil.
D)None of these statements is true.

Question 42

John is a U.S.citizen who works for Walmart located in France.John's work contributes to:

A)U.S.GDP,but not U.S.GNP.
B)U.S.GNP,but not U.S.GDP.
C)both U.S.GDP and U.S.GNP.
D)neither U.S.GDP nor U.S.GNP.

Question 43

GDP could be calculated over:

A)a month.
B)a quarter.
C)a year.
D)any time period.

Question 44

Quarterly GDP:

A)is typically shown as a seasonally adjusted estimate at an annual rate.
B)takes account of predictable seasonal patterns to guess at annual GDP.
C)is adjusted for predictable,seasonal variation to predict what GDP would be if the economy continues at its current pace.
D)All of these statements are true.

Question 45

One way to estimate GDP is:

A)measure the total expenditure of an economy.
B)add up all the money people spend buying final goods and services.
C)add together the market value of all final goods and services sold in the economy.
D)All of these are ways to measure GDP.

Question 46

We can measure total production by:

A)adding up what people spend on final goods and services.
B)adding up everyone's asset wealth.
C)comparing cost of inputs to final sale price.
D)None of these statements is true.

Question 47

The income approach to calculating GDP:

A)is more accurate than using the expenditure approach.
B)is less accurate than using the expenditure approach.
C)will generate the same answer as using the expenditure approach.
D)is simpler to calculate than the expenditure approach.

Question 48

A closed economy refers to an economy in which:

A)all goods are produced and sold domestically.
B)all goods are consumed domestically.
C)intermediate goods are sold domestically.
D)a country exports,but does not allow imports.

Question 49

U.S.Gross Domestic Product includes:

A)goods produced by foreign firms on U.S.soil.
B)goods produced by U.S.firms on foreign soil.
C)goods produced by foreign firms on foreign soil.
D)None of these statements is true.

Question 50

In order to estimate the current annual GDP,economists:

A)multiply the quarterly estimate by four.
B)adjust quarterly GDP estimates to account for seasonal patterns.
C)take an average of the last four quarters measured.
D)None of these statements is correct.

Question 51

GDP is most often discussed using _______ figures,although it is typically calculated _______.

A)annual;quarterly
B)annual;monthly
C)quarterly;monthly
D)quarterly;annually

Question 52

The market value of a good or service is:

A)the price at which it is bought and sold.
B)the government's valuation using the CPI.
C)the price at which producers are willing to sell an output.
D)None of these statements is true.

Question 53

According to the circular flow model,expenditures by one person translate:

A)directly into income for someone else.
B)indirectly into the value of that person's time.
C)directly into his or her income.
D)indirectly into the household's budget.

Question 54

If we add up all the money people spend buying final goods and services-being careful to omit spending on intermediate goods so as not to double-count-the sum will be:

A)the market value of all output sold in the economy.
B)gross domestic product.
C)total expenditure.
D)All of these statements are true.

Question 55

The circular flow model illustrates the crucially important idea of macroeconomics,which is that:

A)every expenditure of someone in the economy is exactly equal to the income of another.
B)only two markets exist in every economy-input and output.
C)income is lower when there is more spending on goods and services.
D)the flow of two things in the economy-"stuff" and "money"-travel in the same direction.

Question 56

In August of this year,Jack can best estimate the current year's GDP by:

A)adjusting the first two quarterly estimates of GDP for seasonal variation.
B)taking an average of the last four quarterly estimates of GDP available.
C)multiplying the most recent quarter's GDP estimate by four.
D)All of these methods would give Jack the same answer.

Question 57

GNP is:

A)the sum of the market values of all final goods and services produced and capital owned by the permanent residents of a country in a given period of time.
B)gross national product.
C)the value of what is produced by all U.S.companies regardless of their location.
D)All of these statements are true.

Question 58

Kelly is a U.S.citizen who works for Burton located in Germany.Kelly's work contributes to:

A)U.S.GDP,but not U.S.GNP.
B)U.S.GNP,but not U.S.GDP.
C)Germany's GDP and U.S.GNP.
D)Germany's GNP and U.S.GDP.

Question 59

One of the most crucial ideas in macroeconomics is understanding that:

A)zero unemployment is the best way to achieve economic growth.
B)measuring total expenditures or total income both equal total production of an economy.
C)prolonging economic downturns can be prolonged by fiscal policy.
D)GNP is the most commonly used measurement of total production.

Question 60

Tallulah is a German citizen who works for Volkswagen located in Fresno,California.Tallulah's work contributes to:

A)U.S.GDP,but not U.S.GNP.
B)U.S.GNP,but not U.S.GDP.
C)German GDP,but not U.S.GDP.
D)German GDP and U.S.GNP.

Question 61

Mikey likes bagels,so he buys an old pizza shop for $150,000 and spends $10,000 installing new equipment which will allow him to make bagels instead of pizza.How will Mikey's recent purchases affect GDP?

A)Investment will increase $160,000.
B)Investment will increase $150,000,and consumption will increase $10,000.
C)Consumption will increase $150,000,and investment will increase $10,000.
D)Investment will increase $10,000.

Question 62

A consumption good that would be counted in GDP would be:

A)a new bicycle.
B)a bottle of water.
C)a new washing machine.
D)All of these will be counted as GDP.

Question 63

Apple has been producing the new iPhone throughout 2013,but doesn't plan to sell it until March 2014.How are these iPhones,which are sitting in a warehouse somewhere in the U.S. ,affecting GDP?

A)They are inventory and will increase investment in 2013.
B)They will increase GDP only in the year they are produced,2013.
C)They are considered inventory until they sell,so investment will fall each time one is sold in 2014.
D)All of these statements are true.

Question 64

A consumption good that would be counted in GDP would be:

A)the coffee Cyndi buys on her way to work in the morning.
B)Cyndi's brand new car.
C)the sunglasses Cyndi bought on clearance sale yesterday.
D)All of these will be counted as consumption in GDP.

Question 65

Investment,as a part of GDP,includes:

A)spending on productive inputs such as factories,machines,and inventory.
B)any goods that are bought by people or firms who plan to use those purchases to produce other goods and services in the future,rather than consuming them.
C)capital goods.
D)All of these statements are true.

Question 66

Which of the following does not appear in GDP as a part of government spending?

A)Clipboards at the Department of Motor Vehicles
B)Maintenance of government buildings
C)Social Security payments
D)City fireworks displays on the Fourth of July

Question 67

Inventory is:

A)the stock of goods that a company produces now,but keeps to sell at a future time.
B)the stock of goods that a company produced last year,but had to sell for below cost.
C)the total amount of goods that a company produces now,regardless of whether they've sold it or not.
D)the stock of goods that a company produces and sells in a given time period.

Question 68

An example of a government purchase that would be included in GDP would be:

A)pencils for the employees of the FBI to use.
B)the salaries of those in the military.
C)replacement calculators for the Congressional Budget Office.
D)All of these are considered part of government purchases in GDP.

Question 69

A good that would be counted as consumption in GDP would be:

A)the Subway sandwich Tony ate for lunch.
B)the $10 Tony received after winning a bet with his friend.
C)the $50 in wages Tony received that day from working all afternoon.
D)All of these would be counted as consumption in GDP.

Question 70

Upon getting a big promotion,Sally decides to buy a house in the neighborhood she grew up in as a child.In fact,the house she buys used to belong to a neighbor of hers,and so she's certain it's in good shape and well worth the $200,000 she pays for it.The only thing Sally needs to do is replace all the gutters for $1,000,which she happily does.How will GDP be affected by Sally's recent purchases?

A)Consumption will increase by $1,000,and investment will increase by $200,000.
B)Consumption will increase by $210,000.
C)Investment will increase by $210,000.
D)None of these statements is correct.

Question 71

Using the expenditure method to estimate GDP,we would include:

A)consumption,investment,government purchases,and net exports.
B)consumption,government revenues,durable goods,and net exports.
C)consumption,investment,government purchases,and exports.
D)consumption,investment,government purchases,and imports.

Question 72

Ted moves into his first apartment.He buys a barely used washer/dryer set from Craigslist and hires a company to pick it up and deliver it to his apartment.What about this transaction will be counted in GDP?

A)The value of the washer/dryer set
B)The value of the delivery service
C)The value of the washer/dryer set and the delivery service
D)Since Craigslist listings are free,nothing about this transaction will count toward GDP.

Question 73

An example of a transfer payment is:

A)a federal income tax refund.
B)a social Security payment.
C)the $3 donation to the Wildlife Fund you make on your tax return.
D)All of these are examples of transfer payments.

Question 74

At the end of the year,Ford realizes it has overproduced Fiestas,because 2,500 of them are left unsold.How is this accounted for in that year's GDP?

A)The cars are considered inventory and their value will increase investment.
B)The cars are considered durable goods,and their value will increase consumption.
C)The cars are not counted until they are sold in next year's GDP.
D)None of these statements is true.

Question 75

Transfer payments are:

A)spending that transfers resources from the government to individuals.
B)payments that individuals make to the government.
C)when individual stockholders transfer stock ownership in lieu of payment with cash or other liquid asset.
D)None of these is correct.

Question 76

Consumption,as a component of GDP:

A)measures spending on goods and services by private individuals and households.
B)includes nondurable goods only.
C)includes durable goods only.
D)measures spending only on goods,not services,by private individuals and households.

Question 77

Jake,Sr.sells the family business,a factory that produces snake oil,to Jake,Jr. ,for $100,even though the factory has been assessed at $400,000.How will this transaction affect GDP?

A)Investment will increase by $100.
B)Investment will increase by $400,000.
C)Consumption will increase by $400,000.
D)GDP will not be affected by the transaction.

Question 78

Ace has always been a top student,so it was no surprise he won a $1,500 scholarship from the company where he worked summers to help with college expenses.Ace decides to spend his scholarship money on a new Apple Macbook before heading off to college in the fall.How will GDP be affected by Ace's recent purchases?

A)Consumption will go up by $1,500,because a computer is a durable good.
B)Investment will go up by $1,500,because a computer is a durable good.
C)GDP will not be affected,since Ace acquired the computer with scholarship money.
D)Consumption will go up by $1,500,because a computer is a nondurable good.

Question 79

Investment,as a part of GDP,includes:

A)stocks.
B)bonds.
C)Both of these are included in investment.
D)Neither of these is included in investment.

Question 80

Government purchases,as a component of GDP:

A)represent goods and services bought by all levels of government.
B)include both consumption- and investment-type goods bought by the government.
C)include services the government pays for.
D)All of these statements are true.