Question 1

The measure of production that values output using base-year prices is called

Accepted Answer

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

Question 2

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) C) and D)
F) A) and D)

Question 3

What is the largest component of spending in the United States?

Accepted Answer

A)  consumption spending
B)  investment spending
C)  government spending
D)  net investment spendingE) C) and D)
F) B) and C)

Question 4

What is the underground economy and how could it hurt an economy? How does it hurt developing economies?

Accepted Answer

The underground economy is that part of ...

Question 5

To calculate GDP using the value-added method,one would add up

Accepted Answer

A)  the market value of final goods and services produced during a particular period.
B)  only the value added by the underground economy.
C)  the value added by each firm involved in the production of final goods and services.
D)  the market value of intermediate goods and services produced during a particular period.E) A) and D)
F) C) and D)

Question 6

Value added equals the market price of the firm's product minus

Accepted Answer

A)  wages and salaries.
B)  the price of intermediate goods.
C)  the price of all factors of production.
D)  depreciation on plant and equipment.E) All of the above
F) B) and C)

Question 7

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)

Question 8

Government spending ________ is included in gross domestic product.

Accepted Answer

A)  at federal,state,and local levels of government
B)  at the federal level of government only
C)  at state and local levels of government only
D)  on defense goods onlyE) B) and C)
F) A) and D)

Question 9

Table 8-29
 
-Refer to Table 8-29.Based on the table above,what is national income for this economy?

Accepted Answer

A)  $4,700 billion
B)  $4,000 billion
C)  $3,150 billion
D)  $2,450 billionE) All of the above
F) None of the above

Question 10

Which of the following would increase disposable personal income?

Accepted Answer

A)  a decrease in transfer payments received
B)  a decrease in taxes paid
C)  a decrease in personal income
D)  All of the above would increase disposable income.E) A) and D)
F) None of the above

Question 11

An example of a transfer payment is

Accepted Answer

A)  a teacher's paycheck.
B)  a paycheck for a member of the National Guard.
C)  a welfare payment.
D)  a purchase of a new bridge in Alaska.E) B) and D)
F) All of the above

Question 12

National income equals gross domestic product

Accepted Answer

A)  plus sales taxes.
B)  plus government transfer payments.
C)  minus the consumption of fixed capital.
D)  minus government transfer payments.E) None of the above
F) A) and B)

Question 13

Which of the following would increase GNP in the United States?

Accepted Answer

A)  an increase in the production of U.S.-owned General Motors cars made in Mexico
B)  an increase in the production of Japanese-owned Toyota cars in Mexico
C)  an increase in the production of Japanese-owned Toyota cars in the U.S.
D)  an increase in the production of Mexican-owned Grupo Minsa corn in the U.S.E) B) and C)
F) A) and B)

Question 14

The underground economy - the informal sector - can be a significant drag on the economies of developing countries.Why are firms in the informal sector often less efficient than firms in the formal sector?

Accepted Answer

Entrepreneurs of the firms in the inform...

Question 15

Table 8-17
  A very simple economy produces three goods: movies,burgers,and bikes.The quantities produced and their corresponding prices for 2006 and 2013 are shown in the table above.
-Refer to Table 8-17.What is real GDP in 2013,using 2006 as the base year?

Accepted Answer

A)  $3,320
B)  $3,690
C)  $6,360
D)  $7,035E) B) and D)
F) A) and B)

Question 16

Under what circumstances would the GDP deflator be less than 100 after the base year?

Accepted Answer

A)  The GDP deflator will be less than 100 if there has been inflation relative to the base year.
B)  The GDP deflator will be less than 100 if there has been inflation of less than 2% per year relative to the base year.
C)  The GDP deflator will be less than 100 if there has been deflation relative to the base year.
D)  There are no circumstances under which the GDP deflator could be less than 100.E) A) and D)
F) B) and C)

Question 17

Which of the following is a true statement about the impact of World War II on the U.S.economy?

Accepted Answer

A)  U.S.GDP decreased dramatically from 1941 to 1945.
B)  The war time years were a period of prosperity for U.S.consumers.
C)  Less than 10% of the labor force was in the military or producing war goods.
D)  Increased production of tanks,ships,planes,and munitions accounted for most of the increase in GDP.E) A) and D)
F) A) and C)

Question 18

Which of the following could cause nominal GDP to increase,but real GDP to decrease?

Accepted Answer

A)  The price level rises and the quantity of final goods and services produced rises.
B)  The price level rises and the quantity of final goods and services produced falls.
C)  The price level falls and the quantity of final goods and services produced rises.
D)  The price level falls and the quantity of final goods and services produced falls.E) B) and C)
F) A) and C)

Question 19

Consumption spending is $4.5 billion,gross private domestic investment is $3 billion,and government expenditures are $2 billion.If GDP is $14 billion,which of the following could be true regarding exports and imports in the economy?

Accepted Answer

A)  Exports are $4.5 billion,and imports are $2 billion.
B)  Exports are $6 billion,and imports are $8.5 billion.
C)  Exports are $9 billion,and imports are $6 billion.
D)  Exports are $15 billion,and imports are $10.5 billion.E) All of the above
F) B) and D)

Question 20

Suppose Bob works for Mary as a proofreader.Mary and Bob fall deeply in love,marry and have eight children.Bob stops working for Mary in order to care for the children.What will be the effect on GDP?

Accepted Answer

A)  GDP will decrease.
B)  GDP will increase.
C)  GDP will not change.
D)  GDP may increase or may decrease depending on inflation.E) All of the above
F) A) and B)

Exam 8: GDP: Measuring Total Production and Income

The measure of production that values output using base-year prices is called

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National income equals gross domestic product

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Table 8-29 -Refer to Table 8-29.Based on the table above,what is national income for this economy?

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

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Which of the following would increase GNP in the United States?

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Government spending ________ is included in gross domestic product.

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Which of the following is a true statement about the impact of World War II on the U.S.economy?

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Suppose Bob works for Mary as a proofreader.Mary and Bob fall deeply in love,marry and have eight children.Bob stops working for Mary in order to care for the children.What will be the effect on GDP?

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Investment spending includes spending on

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Under what circumstances would the GDP deflator be less than 100 after the base year?

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An example of a transfer payment is

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To calculate GDP using the value-added method,one would add up

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Which of the following could cause nominal GDP to increase,but real GDP to decrease?

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The underground economy - the informal sector - can be a significant drag on the economies of developing countries.Why are firms in the informal sector often less efficient than firms in the formal sector?

Correct AnswerverifiedEntrepreneurs of the firms in the inform...View AnswerShow Answer

Consumption spending is $4.5 billion,gross private domestic investment is $3 billion,and government expenditures are $2 billion.If GDP is $14 billion,which of the following could be true regarding exports and imports in the economy?

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What is the largest component of spending in the United States?

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Which of the following would increase disposable personal income?

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Table 8-17 A very simple economy produces three goods: movies,burgers,and bikes.The quantities produced and their corresponding prices for 2006 and 2013 are shown in the table above. -Refer to Table 8-17.What is real GDP in 2013,using 2006 as the base year?

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What is the underground economy and how could it hurt an economy? How does it hurt developing economies?

Correct AnswerverifiedThe underground economy is that part of ...View AnswerShow Answer

Value added equals the market price of the firm's product minus

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Entrepreneurs of the firms in the inform...
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The underground economy is that part of ...
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