Question 1

In the United States, between 1959 and 2009, there has been i) a consistent , non-changing growth rate of potential GDP per person
Ii) an increase in the standard of living based on real GDP per person
Iii) fluctuations in real GDP per person around potential GDP per person

Accepted Answer

A)  ii only. 
B)  i, ii and iii. 
C)  i and ii only. 
D)  ii and iii. 
E)  i only.

Question 2

Which of the following is included in Germany's GDP?
I.BMWs produced in a German owned factory in South Carolina
Ii. the value of the stocks sold on the German stock exchange, the Frankfurt Stock Exchange
Iii. china produced by the English owned Wedgewood Company at a factory in Berlin, Germany

Accepted Answer

A)  i and iii 
B)  ii only 
C)  iii only 
D)  i and ii 
E)  None of the above answers are correct.

Question 3

Which of the following is NOT included in measured U.S.GDP?

Accepted Answer

A)  the value of the pizzas produced at Pizza Hut in Kansas City 
B)  the value of leisure time 
C)  the value of the goods produced at a French owned plant in Atlanta, GA 
D)  the value of the services produced by a lawyer in Tampa, FL 
E)  the value of a plane produced by Boeing in Washington and sold to Air France

Question 4

A business cycle has two turning points, which are the

Accepted Answer

A)  recession and trough. 
B)  peak and recession. 
C)  trough and peak. 
D)  expansion and recession. 
E)  peak and expansion.

Question 5

Are sales and purchases of used goods counted as part of GDP?
 Why or why not?

Accepted Answer

The answer of Are sales and purchases of used goods...

Question 6

If we use GDP to measure our standard of living, then our procedure is

Accepted Answer

A)  inaccurate because our standard of living does not depend only on goods and services. 
B)  accurate because our standard of living depends solely on goods and services. 
C)  inaccurate because our standard of living has nothing to do with goods and services. 
D)  inaccurate because our standard of living only depends on used goods and services. 
E)  accurate only if we use nominal GDP rather than real GDP.

Question 7

Can nominal GDP ever be less than real GDP?

Accepted Answer

The answer of Can nominal GDP ever be less than...

Question 8

The U.S.economy is experiencing rising output, rising employment, rising incomes and falling unemployment.These conditions best describe a business cycle ________.

Accepted Answer

A)  expansion 
B)  peak 
C)  trend 
D)  recession 
E)  trough

Question 9

The measurement of GDP handles underground production by

Accepted Answer

A)  including the amount produced in this sector of the economy in exactly the same way that all other production is included. 
B)  omitting it because underground production is unreported to the government by the people involved. 
C)  adding it at fixed prices that change only infrequently. 
D)  adding an estimate of it because it is difficult to precisely measure underground production. 
E)  omitting it because, being illegal, it has no effect on the nation's total production.

Question 10

Which of the following is NOT part of the income used in the income approach to measuring GDP?

Accepted Answer

A)  wages 
B)  rent 
C)  interest 
D)  taxes paid by persons 
E)  profit

Question 11

-Based on the figure above, in which quarter or quarters did an expansion occur?

Accepted Answer

A)  between 2004, 2nd quarter to 2005, 2nd quarter and also between 2006, 2nd quarter to the end of the figure 
B)  in 2005, 2nd quarter 
C)  between 2005, 2nd quarter to 2006, 2nd quarter 
D)  in 2006, 2nd quarter 
E)  there are no expansions illustrated in the figure

Question 12

Everything else the same, if government expenditure increases by $400 billion and imports increase by $400 billion, then GDP

Accepted Answer

A)  increases by $400 billion. 
B)  increases by $200 billion. 
C)  decreases by $400 billion. 
D)  does not change. 
E)  decreases by $200 billion.

Question 13

Over the business cycle,

Accepted Answer

A)  potential GDP fluctuates around its trend. 
B)  real GDP fluctuates around its trend. 
C)  only potential GDP fluctuates around its trend and real GDP remains equal to its trend. 
D)  only real GDP fluctuates around its trend and potential GDP remains equal to its trend. 
E)  neither real GDP nor potential GDP fluctuate because they just grow smoothly along their trends.

Question 14

If real GDP is greater than nominal GDP for a particular year, then

Accepted Answer

A)  production must have fallen between the current year and the base year. 
B)  production must have increased between the current year and the base year. 
C)  prices must have fallen between the current year and the base year. 
D)  prices must have risen between the current year and the base year. 
E)  prices must have fallen between the current year and the immediate past year.

Question 15

If the purchase of used goods was to be incorporated into measuring GDP using the expenditure approach, then

Accepted Answer

A)  we also will have to account for spending on financial assets. 
B)  it will be very difficult to assign a fair market value to a used good. 
C)  we will be counting the value of the used goods both at the time of their production and at the time of their re-sale. 
D)  we will have to account for the natural depreciation that a used good experiences. 
E)  consumption spending would need to be adjusted for depreciation.

Question 16

Use the idea of the circular flow diagram to explain why the value of production equals total income equals total expenditure.

Accepted Answer

The answer of Use the idea of the circular flow...

Question 17

In the business cycle, what immediately precedes the time when real GDP is falling?

Accepted Answer

A)  recession 
B)  peak 
C)  depression 
D)  trough 
E)  expansion

Question 18

When total output, income, employment, and trade decline for 6 to 12 months, the economy is in what part of the business cycle?

Accepted Answer

The answer of When total output, income, employment, and trade...

Question 19

The abbreviation "GDP" stands for

Accepted Answer

A)  Gross Domestic Product. 
B)  Gross Domestic Prices. 
C)  General Domestic Prices. 
D)  Great Domestic Prices. 
E)  Government's Domestic Politics.

Question 20

Consumption expenditure includes spending

Accepted Answer

A)  on intermediate goods and services by firms. 
B)  on office supplies by firms. 
C)  by households. 
D)  by households and spending on office supplies by firms. 
E)  by governments when they are buying goods and services that consumers also buy.

Exam 5: Gdp: a Measure of Total Production and Income

In the United States, between 1959 and 2009, there has been i) a consistent , non-changing growth rate of potential GDP per person Ii) an increase in the standard of living based on real GDP per person Iii) fluctuations in real GDP per person around potential GDP per person

Which of the following is included in Germany's GDP? I.BMWs produced in a German owned factory in South Carolina Ii. the value of the stocks sold on the German stock exchange, the Frankfurt Stock Exchange Iii. china produced by the English owned Wedgewood Company at a factory in Berlin, Germany