Question 1

The circular flow diagram shows

Accepted Answer

A)   how nominal GDP is distinct from real GDP.
B)   how the prices of factors are determined.
C)   the effects of inflation in a simple economy.
D)   the flows between different sectors of the economy.E) B) and C)
F) None of the above

Question 2

Neither intermediate goods nor used goods are included in GDP. Explain why these expenditures are not included in GDP.

Accepted Answer

Intermediate goods and used goods are no...

Question 3

Why are only final goods and services included in measuring GDP? Give examples to complete your answer.

Accepted Answer

We purposely leave intermediate goods or...

Question 4

Let C represent consumption expenditure, S saving, I gross private domestic investment, G government expenditure on goods and services, and X - M net exports of goods and services. Then GDP equals

Accepted Answer

A)   C + S + G + X - M.
B)   C + S + G - X - M.
C)   C + I + G + X - M.
D)   C + I + G - X - M.E) B) and D)
F) A) and B)

Question 5

The difference between gross investment and net investment is

Accepted Answer

A)   the capital stock.
B)   depreciation.
C)   the real interest rate.
D)   equal to saving.E) A) and C)
F) B) and C)

Question 6

Which of the following are examples of the gross private domestic investment component of GDP?
I.the purchase of production machinery by IBM
II.an increase in the finished goods inventory at Intel

Accepted Answer

A)   I only
B)   II only
C)   both I and II
D)   neither I nor IIE) A) and B)
F) A) and C)

Question 7

Using the above figure, during which of the following periods does the price of crude oil have a downward trend?

Accepted Answer

A)   May to July
B)   May to November
C)   July to October
D)   October to DecemberE) B) and C)
F) A) and B)

Question 8

Assume a small nation has the following statistics: its consumption expenditure is $15 million, investment is $2 million, government purchases of goods and services is $1 million, exports of goods and services to foreigners is $1 million, and imports of goods and services from foreigners is $1.5 million. Calculate this nation's GDP.

Accepted Answer

The nation's GDP equals the sum of consu...

Question 9

Which of the following is included in "compensation of employees" part of the income approach to measuring GDP?
I.Wages and salaries.
II.Pension fund contributions.
III.Social Security contributions.

Accepted Answer

A)   I only
B)   I and II
C)   I and III
D)   I, II and IIIE) None of the above
F) A) and B)

Question 10

The following data describe Mexico's economy in 2007.
Government spending	$210 billion
Investment	$210 billion
Exports	$272 billion
Imports	$283 billion
GDP	1 trillion
Population	110 million
From the data, we can conclude that ________ in Mexico in 2007.

Accepted Answer

A)   consumption totaled $591 billion
B)   net exports totaled -$11 billion
C)   GDP per person equaled $2000
D)   imports were the largest component of GDPE) None of the above
F) A) and B)

Question 11

Two methods of measuring GDP are

Accepted Answer

A)   the income approach and the expenditure approach.
B)   the income approach and the receipts approach.
C)   the goods approach and the services approach.
D)   the saving approach and the investment approach.E) A) and B)
F) All of the above

Question 12

List the components of the expenditure approach to measuring GDP.

Accepted Answer

The expenditure approach measures GDP by...

Question 13

In the equation, GDP = C + I + G + X - M, G refers to

Accepted Answer

A)   federal government expenditures plus all transfer payments.
B)   local, state, and federal government spending for all purposes.
C)   the taxes and expenditures of all government units.
D)   local, state, and federal government expenditure on goods and services, but does not include transfer payments.E) C) and D)
F) B) and C)

Question 14

The factor market can best be described as where

Accepted Answer

A)   households buy goods and services.
B)   firms buy goods and services.
C)   firms buy the services of labor, land and capital.
D)   governments sell goods and services.E) A) and B)
F) B) and D)

Question 15

Which of the following is TRUE regarding real GDP?
I.Real GDP is the value of the total production of the country's farms, factories, shops, and offices.
II.Real GDP rises whenever inflation occurs.
III.Real GDP does not measure all that is produced.

Accepted Answer

A)   I and II
B)   I and III
C)   II and III
D)   I, II and IIIE) A) and B)
F) A) and C)

Question 16

Suppose the country of Dingo experienced an economic trough in January 2011. We can conclude that

Accepted Answer

A)   real GDP in Dingo was increasing in January 2011.
B)   an expansion occurred after January 2011.
C)   Dingo did not experience a recession in 2010.
D)   Dingo's potential GDP fell in 2011.E) All of the above
F) B) and D)

Question 17

A recession is commonly defined as occurring when

Accepted Answer

A)   real GDP decreases for a period of 12 or more months.
B)   real GDP decreases for a period of 6 or more months.
C)   the unemployment rate rises above 7.5 percent for 6 or more months.
D)   the unemployment rate rises above 5.0 percent for 12 or more months.E) A) and D)
F) All of the above

Question 18

Gross domestic product (GDP) measures the

Accepted Answer

A)   number of final goods and services produced in the economy in a given time period.
B)   number of final goods and services sold in the economy in a given time period.
C)   market value of old and new final goods and services sold in the economy in a given time period.
D)   market value of final goods and services produced in the economy in a given time period.E) B) and C)
F) A) and C)

Question 19

Phases and turning points of the business cycle are expansion, peak, recession and trough.

Accepted Answer

A) True 
 B)False

Question 20

In 2013, Ozzie purchased a 2010 Ford Escort from his neighbor for his son, purchased a 2009 "one owner" Camry from Larchmont Toyota for his wife, bought a 2013 new Ford for himself, and sold his 2002 Dodge Caravan to his teenage nephew. Which, if any, of these transactions will be included in GDP in 2013?

Accepted Answer

A)   all four transactions
B)   all three purchases but not the sale
C)   the purchase of the Ford and the Caravan
D)   only the purchase of the FordE) A) and D)
F) B) and C)

Exam 4: Measuring GDP and Economic Growth

The factor market can best be described as where

Correct Answer
verified

The following data describe Mexico's economy in 2007. Government spending $210 billion Investment $210 billion Exports $272 billion Imports $283 billion GDP 1 trillion Population 110 million From the data, we can conclude that ________ in Mexico in 2007.

Correct Answer
verified

Phases and turning points of the business cycle are expansion, peak, recession and trough.

Correct Answer
verified

Let C represent consumption expenditure, S saving, I gross private domestic investment, G government expenditure on goods and services, and X - M net exports of goods and services. Then GDP equals

Correct Answer
verified

Correct Answer
verified
The nation's GDP equals the sum of consu...
View Answer

Two methods of measuring GDP are

Correct Answer
verified

Gross domestic product (GDP) measures the

Correct Answer
verified

In the equation, GDP = C + I + G + X - M, G refers to

Correct Answer
verified

The circular flow diagram shows

Correct Answer
verified

Which of the following is TRUE regarding real GDP? I.Real GDP is the value of the total production of the country's farms, factories, shops, and offices. II.Real GDP rises whenever inflation occurs. III.Real GDP does not measure all that is produced.

Correct Answer
verified

Which of the following is included in "compensation of employees" part of the income approach to measuring GDP? I.Wages and salaries. II.Pension fund contributions. III.Social Security contributions.

Correct Answer
verified

A recession is commonly defined as occurring when

Correct Answer
verified

Which of the following are examples of the gross private domestic investment component of GDP? I.the purchase of production machinery by IBM II.an increase in the finished goods inventory at Intel

Correct Answer
verified

Why are only final goods and services included in measuring GDP? Give examples to complete your answer.

Correct Answer
verified
We purposely leave intermediate goods or...
View Answer

Suppose the country of Dingo experienced an economic trough in January 2011. We can conclude that

Correct Answer
verified

Using the above figure, during which of the following periods does the price of crude oil have a downward trend?

Correct Answer
verified

Correct Answer
verified

List the components of the expenditure approach to measuring GDP.

Correct Answer
verified
The expenditure approach measures GDP by...
View Answer

Neither intermediate goods nor used goods are included in GDP. Explain why these expenditures are not included in GDP.

Correct Answer
verified
Intermediate goods and used goods are no...
View Answer

The difference between gross investment and net investment is

Correct Answer
verified

Exam 4: Measuring GDP and Economic Growth

The factor market can best be described as where

Correct AnswerverifiedShow Answer

The following data describe Mexico's economy in 2007. Government spending $210 billion Investment $210 billion Exports $272 billion Imports $283 billion GDP 1 trillion Population 110 million From the data, we can conclude that ________ in Mexico in 2007.

Correct AnswerverifiedShow Answer

Phases and turning points of the business cycle are expansion, peak, recession and trough.

Correct AnswerverifiedShow Answer

Let C represent consumption expenditure, S saving, I gross private domestic investment, G government expenditure on goods and services, and X - M net exports of goods and services. Then GDP equals

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe nation's GDP equals the sum of consu...View AnswerShow Answer

Two methods of measuring GDP are

Correct AnswerverifiedShow Answer

Gross domestic product (GDP) measures the

Correct AnswerverifiedShow Answer

In the equation, GDP = C + I + G + X - M, G refers to

Correct AnswerverifiedShow Answer

The circular flow diagram shows

Correct AnswerverifiedShow Answer

Which of the following is TRUE regarding real GDP? I.Real GDP is the value of the total production of the country's farms, factories, shops, and offices. II.Real GDP rises whenever inflation occurs. III.Real GDP does not measure all that is produced.

Correct AnswerverifiedShow Answer

Which of the following is included in "compensation of employees" part of the income approach to measuring GDP? I.Wages and salaries. II.Pension fund contributions. III.Social Security contributions.

Correct AnswerverifiedShow Answer

A recession is commonly defined as occurring when

Correct AnswerverifiedShow Answer

Which of the following are examples of the gross private domestic investment component of GDP? I.the purchase of production machinery by IBM II.an increase in the finished goods inventory at Intel

Correct AnswerverifiedShow Answer

Why are only final goods and services included in measuring GDP? Give examples to complete your answer.

Correct AnswerverifiedWe purposely leave intermediate goods or...View AnswerShow Answer

Suppose the country of Dingo experienced an economic trough in January 2011. We can conclude that

Correct AnswerverifiedShow Answer

Using the above figure, during which of the following periods does the price of crude oil have a downward trend?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

List the components of the expenditure approach to measuring GDP.

Correct AnswerverifiedThe expenditure approach measures GDP by...View AnswerShow Answer

Neither intermediate goods nor used goods are included in GDP. Explain why these expenditures are not included in GDP.

Correct AnswerverifiedIntermediate goods and used goods are no...View AnswerShow Answer

The difference between gross investment and net investment is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
The nation's GDP equals the sum of consu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
We purposely leave intermediate goods or...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The expenditure approach measures GDP by...
View Answer

Correct Answer
verified
Intermediate goods and used goods are no...
View Answer

Correct Answer
verified