Question 1

U.S. gross national product is defined as

Accepted Answer

A)   the value of final goods and services produced within the United States.
B)   the value of final goods and services produced outside of the United States.
C)   the value of final goods and services produced by residents of the United States even if the production takes place outside of the United States.
D)   the value of final goods and services produced within the United States, by United States residents.E) B) and C)
F) All of the above

Question 2

A transfer payment is a payment by the government to an individual

Accepted Answer

A)   for a service.
B)   for an investment good.
C)   for a consumption good.
D)   for which the government does not receive a good or service in return.
E)   for a debt owed.F) B) and E)
G) A) and D)

Question 3

Macroeconomics, as opposed to microeconomics, includes the study of what determines the

Accepted Answer

A)   average price levels of goods and services in the economy.
B)   price charged for laptop computers by Dell.
C)   wages paid to employees by Dell.
D)   quantity of Dell employees.E) A) and C)
F) All of the above

Question 4

The drawback to calculating real GDP using base-year prices is that

Accepted Answer

A)   real GDP in one year is not comparable to real GDP in another year.
B)   relative prices change over time and these are not reflected in base-year prices, and this distorts GDP.
C)   relative prices change over time and these changes are reflected in base-year prices.
D)   quality changes are reflected in base-year prices.E) All of the above
F) None of the above

Question 5

In the circular flow diagram, the value of all the income in the economy is greater than the value of goods and services produced in the economy.

Accepted Answer

A) True 
 B)False

Question 6

If real GDP increases we know for sure that

Accepted Answer

A)   output has risen.
B)   prices have risen.
C)   prices have risen but output has remained constant.
D)   prices have remained constant.E) C) and D)
F) None of the above

Question 7

The measure of production that values production using current prices is called

Accepted Answer

A)   value-added GDP.
B)   nominal GDP.
C)   real GDP.
D)   underground GDP.E) C) and D)
F) All of the above

Question 8

The circular flow of income shows that GDP can be measured as the sum of wages, interest, rent, and profits received by households or total expenditures on goods and services by households, firms, government, and the rest of the world.

Accepted Answer

A) True 
 B)False

Question 9

If China decides to enact laws to clean up the environment, what would be the effect on GDP?

Accepted Answer

A)   GDP would increase reflecting the fact that the environment would be cleaner.
B)   GDP would decrease if the pollution controls reduce productivity by more than the cost of the controls.
C)   GDP would increase as the citizens of China were made happier as the environment was cleaned up.
D)   GDP would increase as the environmental costs of pollution were not included in the calculation of GDP.E) A) and B)
F) A) and C)

Question 10

The GDP deflator is a measure of the price level which is calculated as nominal GDP divided by real GDP and multiplied by 100.

Accepted Answer

A) True 
 B)False

Question 11

If a country passes a labor law limiting the number of hours of work per week, GDP would ________ and leisure would ________.

Accepted Answer

A)   decrease; increase
B)   increase; increase
C)   decrease; decrease
D)   increase; decreaseE) B) and C)
F) A) and B)

Question 12

Real GDP is GDP in a given year

Accepted Answer

A)   adjusted only for anticipated inflation.
B)   adjusted only for unanticipated inflation.
C)   valued in the prices of that year.
D)   valued in the prices of the base year.E) B) and D)
F) B) and C)

Question 13

National income is equal to

Accepted Answer

A)   personal income minus personal taxes.
B)   GDP minus depreciation.
C)   disposable personal income plus depreciation plus personal taxes.
D)   GNP plus depreciation.E) A) and D)
F) B) and D)

Question 14

Which of the following would result in GDP for an economy equal to $10 trillion?

Accepted Answer

A)   C = $6 trillion I = $2 trillionG = $1.5 trillionNX = -$2 trillion
B)   C = $7 trillion I = $2 trillionG = $4 trillionNX = $3 trillion
C)   C = $5 trillion I = $5 trillionG = $2 trillionNX = -$2 trillion
D)   C = $4 trillion I = $3 trillionG = $2 trillionNX = -$1 trillionE) B) and C)
F) None of the above

Question 15

Which of the following is a true statement about real and nominal GDP?

Accepted Answer

A)   If nominal GDP increases from one year to the next, we know that production of goods and services has risen.
B)   Nominal GDP is a better measure than real GDP in comparing changes in the production of goods and service year after year.
C)   Increases in average prices do not affect the calculation of nominal GDP.
D)   If real GDP increases from one year to the next, we know that production of goods and services has risen.E) B) and C)
F) A) and C)

Question 16

Explain the difference between gross domestic product and gross national product. Give an example of each.

Accepted Answer

Gross domestic product is the value of f...

Question 17

Table 19-5
  Consider the table above showing three stages of production of an automobile.
-Refer to Table 19-5. The value of each automobile in gross domestic product equals

Accepted Answer

A)   $7,000.
B)   $15,000.
C)   $18,000.
D)   $25,000.E) A) and B)
F) A) and C)

Question 18

The Bureau of Economic Analysis divides it's statistics on GDP into four major categories. List the categories of expenditures and define each.

Accepted Answer

The largest category of expenditures is ...

Question 19

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

Accepted Answer

A)   CPI; real GDP; nominal GDP
B)   GDP deflator; real GDP; nominal GDP
C)   GDP deflator; nominal GDP; real GDP
D)   PPI; nominal GDP; real GDP
E)   PPI; real GDP; nominal GDPF) A) and B)
G) All of the above

Question 20

Investment spending includes spending on

Accepted Answer

A)   stocks.
B)   food.
C)   changes in business inventories.
D)   transfer payments.E) A) and B)
F) A) and C)

Exam 19: Gdp: Measuring Total Production and Income

If real GDP increases we know for sure that

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The drawback to calculating real GDP using base-year prices is that

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Which of the following is a true statement about real and nominal GDP?

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Explain the difference between gross domestic product and gross national product. Give an example of each.

Correct AnswerverifiedGross domestic product is the value of f...View AnswerShow Answer

National income is equal to

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If China decides to enact laws to clean up the environment, what would be the effect on GDP?

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The circular flow of income shows that GDP can be measured as the sum of wages, interest, rent, and profits received by households or total expenditures on goods and services by households, firms, government, and the rest of the world.

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If a country passes a labor law limiting the number of hours of work per week, GDP would ________ and leisure would ________.

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Macroeconomics, as opposed to microeconomics, includes the study of what determines the

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Real GDP is GDP in a given year

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Investment spending includes spending on

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The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

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The GDP deflator is a measure of the price level which is calculated as nominal GDP divided by real GDP and multiplied by 100.

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Table 19-5 Consider the table above showing three stages of production of an automobile. -Refer to Table 19-5. The value of each automobile in gross domestic product equals

Correct AnswerverifiedShow Answer

The Bureau of Economic Analysis divides it's statistics on GDP into four major categories. List the categories of expenditures and define each.

Correct AnswerverifiedThe largest category of expenditures is ...View AnswerShow Answer

A transfer payment is a payment by the government to an individual

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The measure of production that values production using current prices is called

Correct AnswerverifiedShow Answer

Which of the following would result in GDP for an economy equal to $10 trillion?

Correct AnswerverifiedShow Answer

U.S. gross national product is defined as

Correct AnswerverifiedShow Answer

In the circular flow diagram, the value of all the income in the economy is greater than the value of goods and services produced in the economy.

Correct AnswerverifiedShow Answer

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Gross domestic product is the value of f...
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If a country passes a labor law limiting the number of hours of work per week, GDP would and leisure would .

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The is a measure of the price level and is calculated by dividing by and multiplying by 100.

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The largest category of expenditures is ...
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