Deck 2: Measuring the Macroeconomy

Question 1

Refer to the following table when answering the following questions.
Table 2.1: U.S. 2010 and 2015 Expenditures ($ billions)
Consider Table 2.1. The federal government's share of total GDP in 2010 was about ________ percent, and in 2015 it was ________ percent.

A) 12; 11
B) 31; 29
C) 33; 34
D) 9; 7
E) 21; 18

Answer 1

9; 7

Question 2

Refer to the following table when answering the following questions.
Table 2.1: U.S. 2010 and 2015 Expenditures ($ billions)
Consider Table 2.1. The household's share of total investment in 2010 was about ________ percent, and in 2015 it was ________ percent.

A) 18; 21
B) 97; 98
C) 79; 81
D) 4; 4
E) Not enough information is given.

Answer 2

18; 21

Question 3

Household consumption as a share of GDP ________ and investment's share ________ between 2010 and 2015.

A) decreased; increased
B) stayed the same; increased
C) decreased; stayed the same
D) increased; decreased
E) stayed the same; stayed the same

Answer 3

stayed the same; increased

Question 4

Which measure of overall economic activity was NOT available in the 1930s?

A) stock prices
B) GDP
C) industrial production
D) steel production
E) gold prices

Question 5

According to the expenditure approach, if Y is GDP, C is consumption, I is investment, G is government purchases, and NX is net exports, the national income identity can be written as:

A) .
B) .
C) .
D) .
E) .

Question 6

The National Income and Product Accounts provides a system for aggregating the production of:

A) all goods and services into a single measure of economic activity.
B) all goods into a single measure of economic activity.
C) all services into a single measure of economic activity.
D) most goods and services into a single measure of economic activity.
E) all goods and services into two measures of economic activity.

Question 7

Goods that are produced in a different year than they are sold are called:

A) inventory.
B) output adjustment.
C) capital depreciation.
D) a loss.
E) net national product.

Question 8

Refer to the following table when answering the following questions.
Table 2.1: U.S. 2010 and 2015 Expenditures ($ billions)
Consider Table 2.1. Total GDP in 2015 was about ________ billion.

A) $44,609
B) $18,830
C) $14,818
D) $18,037
E) $20,391

Question 9

The National Income and Product Accounts identity states:

A) Expenditure = Production + Income.
B) Production = Expenditure - Income.
C) Production = Expenditure + Income.
D) Expenditure = Production - Income.
E) Production =Expenditure = Income.

Question 10

In 2015, U.S. national output per person was equal to about:

A) $15.7 billion.
B) $43,000.
C) $56,000.
D) $12,000.
E) $80,000.

Question 11

In 2015, U.S. national output was equal to about:

A) $17.9 billion.
B) $17.9 trillion.
C) $13.1 billion.
D) $13.1 trillion.
E) $13.1 million.

Question 12

An economy's ________ is/are equal to its ________.

A) consumption; income
B) expenditure on goods and services; output
C) expenditure on goods; expenditure on services
D) investment; government expenditures
E) taxes; net exports

Question 13

The difference between economic profits and normal profits is that:

A) normal profits are earnings based on the normal competitive payments to the factors used in production; economic profits are the above-normal returns associated with prices that exceed competitive prices.
B) economic profits are earnings based on the normal competitive payments to the factors used in production; normal profits are the above-normal returns associated with prices that exceed competitive prices.
C) normal profits are earnings based on the normal competitive payments to the factors used in production; economic profits are the above-normal returns associated with prices that exceed monopolistic prices.
D) economic profits are earnings based on the noncompetitive payments to the factors used in production; normal profits are the above-normal returns associated with prices that exceed competitive prices.
E) None of these answers is correct.

Question 14

Government consumption as a share of GDP ________ and investment's share ________ between 2010 and 2015.

A) decreased; increased
B) stayed the same; increased
C) decreased; stayed the same
D) increased; decreased
E) stayed the same; stayed the same

Question 15

The statistic used by economists to measure the value of economic output is:

A) the unemployment rate.
B) GDP.
C) the CPI.
D) the GDP deflator.
E) the federal funds rate.

Question 16

The National Income and Product Accounts allows us to relate ________ to ________ to ________.

A) household income; government income; firm income
B) total output; total spending; inflation
C) total output; inflation; total income
D) household income; household expenditure; total output
E) total output; total spending; total income

Question 17

According to the expenditure approach, if Y is GDP, C is consumption, I is investment, G is government purchases, and NX is net exports, the national income identity can be written as:

A) .
B) .
C) .
D) .
E) .

Question 18

According to the expenditure approach, if Y is GDP, C is consumption, I is investment, G is government purchases, and NX is net exports, which of the following is the national income identity?

A)
B)
C)
D)
E)

Question 19

Who led the team that created the original National Income and Product Accounts in the 1930s?

A) John M. Keynes
B) Paul A. Samuelson
C) William D. Nordhaus
D) Simon Kuznets
E) Milton Friedman

Question 20

Refer to the following table when answering the following questions.
Table 2.1: U.S. 2010 and 2015 Expenditures ($ billions)
Consider Table 2.1. Total GDP in 2010 was about ________ billion.

A) $16,520
B) $14,964
C) $11,790
D) $36,698
E) $15,459

Question 21

In 2015, government transfer payments accounted for about ________ of government spending.

A) one-half
B) one-third
C) 68 percent
D) three-fifths
E) 100 percent

Question 22

Which of the following is/are NOT included in the expenditure approach to national income accounting?

A) software
B) taxes
C) defense expenditures
D) All of these answers are correct.
E) None of these answers is correct.

Question 23

Using the expenditure approach, government expenditures include:

A) defense and nondefense federal, state, and local government expenditures.
B) only nondefense federal government expenditures.
C) federal government expenditures and transfer payments.
D) only state and local government expenditures.
E) residential investment and state and local government expenditures.

Question 24

Prior to the late 1970s, the United States ________ about as much as it ________.

A) exported; consumed
B) exported; imported
C) imported; consumed
D) invested; exported
E) imported; invested

Question 25

According to the text, the gains in GDP's consumption share have:

A) caused a rapid decline in inventories.
B) driven investment below 10 percent.
C) no impact on net exports.
D) been at a cost to net exports and government spending.
E) also pushed up the government expenditure share.

Question 26

Which of the following is/are NOT included in the expenditure approach to national income accounting?

A) transfer payments
B) taxes
C) Social Security
D) changes in stock prices
E) None of these answers is correct.

Question 27

Which of the following are included in the expenditure approach to national income accounting?

A) defense expenditures
B) firm expenditures on equipment
C) residential expenditures
D) household service expenditures
E) All of these answers are correct.

Question 28

Using the expenditure approach, consumption expenditures include household purchases of:

A) durable and nondurable goods and services.
B) durable and nondurable goods.
C) durable and nondurable goods and taxes.
D) durable and nondurable goods and residences.
E) nondurable goods.

Question 29

In 2015, net exports accounted for about ________ percent of total GDP.

A) -3
B) 13
C) 20
D) 100
E) -14

Question 30

In 2015, the U.S. GDP was about ________, and ________ was/were the largest share.

A) $5 trillion; net exports
B) $22.5 billion; government expenditures
C) $10.5 trillion; investment
D) $13.6 billion; consumption
E) $17.9 trillion; consumption

Question 31

U.S. expenditure shares by households, firms, and the government were relatively ________ except during ________.

A) constant; the 1970s
B) variable; the Great Depression
C) constant; World War II
D) constant; the Vietnam War
E) variable; the 1990s

Question 32

In 2015, household expenditures accounted for about ________ percent of total GDP.

A) 50
B) 68
C) 45
D) 76
E) 13

Question 33

In 2015, investment expenditures accounted for about ________ percent of total GDP.

A) 71
B)-3.5
C) 17
D) 10
E) 15

Question 34

During the 1940s, ________ increased sharply as a percentage of U.S. GDP because of ________.

A) government expenditure; World War II
B) residential investment; the war on poverty
C) nonresidential investment; the space program
D) durable consumption expenditures; rationing of nondurable goods
E) transfer payments; the New Deal

Question 35

Refer to the following table when answering the following questions.
Table 2.2: U.S. 2014-2015 Domestic Income ($ billions)
Consider Table 2.2. From this data, total GDP in 2014 was about ________ billion.

A) $13,219
B) $14,963
C) $18,527
D) $17,651
E) $17,765

Question 36

Net exports are also called:

A) capital outflows.
B) the trade balance.
C) the current account.
D) foreign aid.
E) government transfers.

Question 37

Using the expenditure approach, investment includes:

A) household residential expenditures.
B) firm structures, equipment, and inventories.
C) fixed firm and household structures, equipment, and inventories.
D) government and firm equipment expenditures.
E) government defense and firm equipment expenditures.

Question 38

According to the income approach to GDP, the largest percentage of GDP comes from:

A) indirect business taxes.
B) firm profits.
C) compensation to employees.
D) depreciation of fixed capital.
E) None of these answers is correct.

Question 39

Since about ________, U.S. expenditure shares by households, firms, and the government have been relatively ________.

A) 1939; constant
B) the Great Depression era; constant
C) 1950; variable
D) 1950; constant
E) 1945; constant

Question 40

In 2015, government expenditures accounted for about ________ percent of total GDP.

A) 5
B) -4
C) 66
D) 13
E) 18

Question 41

In the past 60 years or so, labor's share of GDP in the United States ________.

A) has been roughly two-thirds.
B) has been exactly 50 percent.
C) has been roughly one-third.
D) has been equal to capital's income share.
E) has risen sharply.

Question 42

The percent change in the nominal GDP is given as:

A) percent change in the price level + percent change in real GDP.
B) percent change in the price level -percent change in real GDP.
C) percent change in the price level ｴ percent change in real GDP.
D) percent change in the price level ｸ percent change in real GDP.
E) price level ｴ percent change in real GDP.

Question 43

Since about 1970, ________ income share of GDP has been ________.

A) labor's; rising
B) labor's; the same or falling
C) profits'; falling
D) indirect business taxes'; rising
E) the health sector's; falling

Question 44

By how much does GDP change between 2014 and 2015 in the following scenario? In 2014, a rich woman has a chef and pays him $50,000 to cook for her. In 2015, she marries the chef and he continues to cook.

A) GDP rises by $50,000.
B) GDP is unchanged.
C) GDP falls by $50,000.
D) GDP rises by $25,000.
E) Not enough information is given.

Question 45

If the percent change in the price level is ________ than the percent change in ________ GDP, ________.

A) smaller; nominal; real GDP shrinks
B) greater; nominal; real GDP shrinks
C) greater; real; nominal GDP shrinks
D) greater; real; nominal GDP always stays the same
E) Not enough information is given.

Question 46

Nominal GDP is the ________ of all goods and services produced in a period of time using ________ prices.

A) value; 1945
B) summation; current
C) value; a previous year's
D) value; current
E) summation; base-year

Question 47

Which of the following counts toward changes in the current GDP?

A) You find $10 on the sidewalk.
B) You purchase a used stereo from a friend.
C) The government builds a new highway.
D) You fix your own sink.
E) None of these answers is correct.

Question 48

Real GDP is given by ________, where the price level is the ________.

A) Real GDP =Nominal GDP ｴ Price level; CPI
B) Real GDP = Nominal GDP ｸ Price level; GDP deflator
C) Real GDP= Nominal GDP -Price level; GDP deflator
D) Real GDP = Nominal GDP -Price level; GDP deflator
E) Real GDP =Nominal GDP ｸ Price level; CPI

Question 49

Refer to the following table when answering the following questions.
Table 2.2: U.S. 2014-2015 Domestic Income ($ billions)
Consider Table 2.2. From this data, total net domestic product in 2015 was about ________ billion.

A) $15,366
B) $10,791
C) $18,290
D) $9,648
E) $15,460

Question 50

Refer to the following table when answering the following questions.
Table 2.2: U.S. 2014-2015 Domestic Income ($ billions)
Consider Table 2.2. From this data, total GDP in 2015 was about ________ billion.

A) $18,290
B) $15,516
C) $19,408
D) $18,404
E) $18,347

Question 51

When the city of Los Angeles hires more police officers, ________ may rise, but it may be due to the ________ associated with crime.

A) GDP; costs
B) revenues; costs
C) taxes; benefits
D) interest rates; costs
E) prices; costs

Question 52

Real GDP is the ________ of all goods and services produced in a period of time using ________ prices.

A) summation; current
B) value; base-year
C) value; 1970
D) value; 1945
E) summation; base-year

Question 53

Which of the following is NOT discussed in Jones and Klenow's alternative measure of economic welfare?

A) inequality
B) leisure
C) life expectancy
D) child mortality rates
E) consumption share of GDP

Question 54

Which of the following does NOT count toward changes in the current GDP?

A) A student pays for another year of tuition.
B) You buy a used car from your parents.
C) The local police station buys new squad cars.
D) The Pentagon buys gasoline.
E) None of these answers is correct.

Question 55

Nominal GDP is given by ________, where the price level is the ________.

A) Nominal GDP =Price level ｴ Real GDP; GDP deflator
B) Nominal GDP = Price level ｸ Real GDP; GDP deflator
C) Nominal GDP = Price level +Real GDP; CPI
D) Nominal GDP = Price level- Real GDP; GDP deflator
E) Nominal GDP = Price level ｴ Real GDP; CPI

Question 56

The price level can be derived as ________ and is called the ________.

A) Price level = Nominal GDP ｸ Real GDP; CPI
B) Price level = Nominal GDP ｴ Real GDP; CPI
C) Price level =Real GDP ｴ Nominal GDP; GDP deflator
D) Price level = Real GDP ｸ Nominal GDP; Paasche deflator
E) Price level =Nominal GDP ｸ Real GDP; GDP deflator

Question 57

If you own your own home, National Accounts uses ________ to measure the value of your home.

A) the geometric mean of the highest- and lowest-priced houses in your neighborhood
B) the original purchase price
C) an estimated price of your house based on current market conditions
D) "rental equivalents"
E) the value of your home to your insurance carrier

Question 58

Refer to the following table when answering the following questions.
Table 2.2: U.S. 2014-2015 Domestic Income ($ billions)
Consider Table 2.2. From this data, total net domestic product in 2014 was about ________ billion.

A) $14,906
B) $10,384
C) $17,651
D) $9,207
E) $14,754

Question 59

When a state builds a new penitentiary, ________ rise(s), but that does not imply that ________ improve(s).

A) income; welfare
B) GDP; taxes
C) GDP; transfers
D) GDP; welfare
E) taxes; costs

Question 60

By how much does the current GDP rise in the following scenario? A real estate agent sells a house for $250,000 that the previous owners had purchased 10 years earlier for $90,000. The real estate agent earns a commission of $10,000.

A) $160,000
B) $250,000
C) $10,000
D) $90,000
E) $260,000

Question 61

Refer to the following table when answering the following questions. In this economy, only two goods are produced: video games and pistachios.
Table 2.3: National Income Accounting
Consider Table 2.3. Using the Laspeyres index, the real GDP in 2018 is:

A) $9,025.
B) $8,500.
C) $8,600.
D) $9,150.
E) $8,475.

Question 62

Real gross domestic product is defined as the value of all goods:

A) and services produced by an economy, within its borders, over a period of time, at base-year prices.
B) and services produced by an economy, within its borders, over a period of time, at current prices.
C) produced by an economy, within its borders, over a period of time, at current prices.
D) and services produced by an economy's citizens, regardless of where they live, over a period of time, at current prices.
E) and services produced by an economy's citizens, regardless of where they live, over a period of time, at base-year prices.

Question 63

The chain-weighted measure of real GDP uses prices from a:

A) constant base year.
B) constantly changing base year.
C) base year that changes every five years.
D) base year that changes every 10 years.
E) None of these answers is correct.

Question 64

Suppose we calculate the percent change in real GDP from year 1 to year 2 using both the Laspeyres and the Paasche indices. With the Laspeyres index we get 12 percent and with the Paasche index we get 9 percent. The chain-weighted growth of real GDP is ________ percent.

A) 1.5
B) 9.75
C) 1.33
D) 9.5
E) 10.5

Question 65

If we calculate the real GDP using the initial period's prices, we are using a ________ index. If, instead, we use the final period's prices, we are using a ________ index.

A) Paasche; chain-weighted
B) Laspeyres; chain-weighted
C) Laspeyres; Paasche
D) Paasche; Laspeyres
E) chain-weighted; Fisher

Question 66

If NGDP is nominal GDP and P is the price level, which of the following can be used to calculate the growth of the real GDP?

A) percent change in NGDP - percent change in P
B) percent change in NGDP + percent change in P
C) percent change in NGDP ｴ percent change in P
D) percent change in P + percent change in NGDP
E) percent change in P - percent change in NGDP

Question 67

Nominal GDP means that the value of all goods and services is measured in ________ prices.

A) average
B) last year's
C) the base year's
D) current
E) constant

Question 68

Refer to the following table when answering the following questions. In this economy, only two goods are produced: video games and pistachios.
Table 2.3: National Income Accounting
Consider Table 2.3. Using the Laspeyres index, inflation between 2017 and 2018 was about:

A) 0 percent.
B) 5 percent.
C) 1 percent.
D) 6 percent.
E) Not enough information is given.

Question 69

If the nominal GDP rises by 6 percent and the real GDP rises by 3 percent, then the price level ________ by ________ percent.

A) rises; 3
B) rises; 9
C) falls; 3
D) falls; 9
E) There is no change in inflation.

Question 70

FRED stands for:

A) Food and Resource Economics Department.
B) Financial Reporting Exposure Draft.
C) Federal Reserve Economic Database.
D) Florida Research & Economic Database.
E) Faculty Research Expertise Database.

Question 71

Refer to the following table when answering the following questions. In this economy, only two goods are produced: video games and pistachios.
Table 2.3: National Income Accounting
Consider Table 2.3. Using the Laspeyres index, the real GDP in 2017 is:

A) $8,900.
B) $8,500.
C) $1,500.
D) $15,500.
E) $9,150.

Question 72

Refer to the following table when answering the following questions. In this economy, only two goods are produced: video games and pistachios.
Table 2.3: National Income Accounting
Consider Table 2.3. Using the Paasche index, the real GDP in 2017 is:

A) $8,475.
B) $8,500.
C) $8,600.
D) $9,150.
E) $8,875.

Question 73

If we calculate the real GDP using the ________ index, we use the ________ period's prices.

A) Laspeyres; final
B) Paasche; final
C) Paasche; initial
D) chain-weighted; current
E) chain-weighted; final

Question 74

If the nominal GDP rises by 3 percent and the price level rises by 5 percent, then the real GDP ________ by ________ percent.

A) rises; 8
B) falls; 8
C) rises; 2
D) falls; 2
E) None of these answers is correct.

Question 75

Refer to the following table when answering the following questions. In this economy, only two goods are produced: video games and pistachios.
Table 2.3: National Income Accounting
Consider Table 2.3. Using the Laspeyres index, the percent change in nominal GDP was about:

A) 5 percent.
B) 1 percent.
C) 6 percent.
D) 0 percent.
E) Not enough information is given.

Question 76

If NGDP is nominal GDP and RGDP is real GDP, which of the following can be used to calculate inflation?

A) percent change in NGDP + percent change in RGDP
B) percent change in NGDP - percent change in RGDP
C) percent change in NGDP ｴ percent change in RGDP
D) percent change in RGDP + percent change in NGDP
E) percent change in RGDP -percent change in NGDP

Question 77

Nominal gross domestic product is defined as the value of all goods:

A) and services produced by an economy, within its borders, over a period of time, at base-year prices.
B) produced by an economy, within its borders, over a period of time, at current prices.
C) and services produced by an economy, within its borders, over a period of time, at current prices.
D) and services produced by an economy's citizens, regardless of where they live, over a period of time, at current prices.
E) and services produced by an economy's citizens, regardless of where they live, over a period of time, at base-year prices.

Question 78

If the nominal GDP rises by 6 percent and the price level rises by 3 percent, then the real GDP ________ by ________ percent.

A) falls; 3
B) rises; 9
C) rises; 3
D) falls; 9
E) None of these answers is correct.

Question 79

Refer to the following table when answering the following questions. In this economy, only two goods are produced: video games and pistachios.
Table 2.3: National Income Accounting
Consider Table 2.3. Using the Laspeyres index, the percent change in real GDP was about:

A) 6 percent.
B) 5 percent.
C) 0 percent.
D) 1 percent.
E) Not enough information is given.

Question 80

Refer to the following table when answering the following questions. In this economy, only two goods are produced: video games and pistachios.
Table 2.3: National Income Accounting
Consider Table 2.3. Using the Paasche index, the real GDP in 2018 is:

A) $9,150.
B) $8,500.
C) $8,600.
D) $9,025.
E) $8,475.