Question 1

Net exports of goods and services is equal to the value of

Accepted Answer

A) exports plus the value of imports. 
B) imports minus the value of exports. 
C) domestic consumption minus the value of imports. 
D) exports minus the value of imports. 
E) domestic consumption minus the value of exports.

Question 2

Real GDP can increase if the i. quantities of goods and services produced decrease and prices fall by a smaller percentage.
Ii. quantities of goods and services produced decrease and prices fall by a larger percentage.
Iii. quantities of goods and services produced decrease and prices do not change.
Iv. quantities of goods and services produced increase.

Accepted Answer

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

Question 3

During the business cycle,

Accepted Answer

A) real GDP fluctuates around nominal GDP. 
B) nominal GDP fluctuates around real GDP. 
C) real GDP fluctuates around its trend. 
D) trend GDP fluctuates around real GDP. 
E) real GDP falls after the trough.

Question 4

As measured, GDP omits which of the following?
I. illegal sales of goods and services
Ii. changes in the amount of leisure time
Iii. household production of goods and services

Accepted Answer

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

Question 5

-Based on the figure above, in which quarter or quarters did a recession 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) between 2006, 1st quarter to 2006, 2nd quarter 
E) after 2005, 2nd quarter

Question 6

What are the categories of expenditure used in the expenditure approach to measuring GDP?

Accepted Answer

The answer of What are the categories of expenditure used...

Question 7

Gross domestic product is equal to the market value of all the final goods and services ________ in a given period of time.

Accepted Answer

A) produced within a country 
B) consumed within a country 
C) consumed by the citizens of a country 
D) produced by the citizens of a country 
E) produced and consumed within a country

Question 8

A measure of a country's production is its

Accepted Answer

A) gross daily production. 
B) general daily product. 
C) general domestic production. 
D) gross domestic product. 
E) gross total output.

Question 9

In order to measure gross domestic product, we can follow

Accepted Answer

A) only one approach: the circular flow approach. 
B) only one approach: the national accounts approach. 
C) two approaches: the expenditure approach and the income approach. 
D) three approaches: the expenditure approach, the income approach, and the production approach. 
E) three approaches: the expenditure approach, the income approach, and the market-based approach.

Question 10

Using the chained-dollar method to calculate real GDP, real GDP is calculated by

Accepted Answer

A) valuing the current output at last year's real GDP prices. 
B) valuing the current output at current year prices. 
C) averaging the growth of output from one year to the next when the growth rates are calculated using this year's prices and using last year's prices. 
D) either A or C, depending which gives the larger value for real GDP. 
E) averaging the value of current output valued using base year prices and current output valued using current year prices.

Question 11

Investment, as included in GDP, consists of what?

Accepted Answer

The answer of Investment, as included in GDP, consists of...

Question 12

Which of the following is likely to be an unreported economic activity?

Accepted Answer

A) a $250,000 bonus paid to the CEO of a company 
B) tips paid to a taxi driver 
C) the minimum wage paid to a teenager working at a McDonald's 
D) the brokerage fees paid to a broker at Merrill Lynch 
E) the purchase of shares of stock in Walgreen's Pharmacy

Question 13

The table gives data for a nation. The value of the country's net exports of goods and services shows that the country's

Accepted Answer

A) value of its exports exceeded the value of its imports. 
B) value of its imports are negative. 
C) net exports of goods and services are decreasing. 
D) value of its imports exceeded the value of its exports. 
E) value of its imports must equal zero.

Question 14

The income approach to measuring GDP is based on summing

Accepted Answer

A) the production of each industry. 
B) wages, interest, rent, and profits. 
C) the values of final goods, intermediate goods and services, used goods, and financial assets. 
D) consumption expenditure, investment, government expenditures on goods and services, and net exports of goods and services. 
E) consumption expenditure and wages.

Question 15

GDP is

Accepted Answer

A) a perfect measure of the standard of living. 
B) a perfect measure of the value of production. 
C) a measure which includes the value of all newly produced goods and services. 
D) an imperfect measure of the standard of living. 
E) the only factor that affects our standard of living.

Question 16

What is the difference between real and nominal GDP, and why do economists make this distinction?

Accepted Answer

The answer of What is the difference between real and...

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

"To calculate GDP, economists begin with total income earned and then subtract total expenditure by the four sectors of the economy." Is the previous sentence true or false?
 Explain your answer.

Accepted Answer

The answer of "To calculate GDP, economists begin with total...

Question 19

-Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. Nominal GDP in 2012 is equal to

Accepted Answer

A) $500. 
B) $625. 
C) $640. 
D) $800. 
E) $100.

Question 20

A recession runs from the

Accepted Answer

A) peak of the business cycle to its trough. 
B) peak of the business cycle to a recovery. 
C) expansion of a business cycle to its peak. 
D) trough of a business cycle to its peak. 
E) trough of a business cycle to its expansion.

Exam 14: Gdp: a Measure of Total Production and Income