Question 1

Gross Domestic Product is computed by using

Accepted Answer

A)  base-year prices.
B)  wholesale prices.
C)  previous-year prices.
D)  current-year prices.

Question 2

Some economists argue that GDP overstates overall economic welfare because it does not include the impact of bads such as pollution.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 7-5
Economic Data for Country Z
 
-Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 2 and year 3?

Accepted Answer

A)  -3.0%
B)  2.6%
C)  14.0%
D)  -2.2%

Question 4

Which of the following does GDP omit?

Accepted Answer

A)  Jack purchases $2,300 worth of stock in company X.
B)  Bob mows his lawn and washes and irons his shirts.
C)  Helen receives $4,000 a year in Social Security payments.
D)  a and b
E)  a, b, and c

Question 5

Why do economists prefer to compare Real GDP figures for various years instead of GDP figures?

Accepted Answer

A)  Because when GDP in one year is higher than in another year, there is no way to tell why it is higher.Is it because output is higher, prices are higher, etc.? This is not the case with Real GDP.If Real GDP is higher in one year than in another year, it is because output is higher.
B)  Because when GDP in one year is higher than in another year, there is no way of knowing if the quality of goods produced is higher in one year than the other.This is not the case with Real GDP.If Real GDP is higher in one year than in another year, it is because the quality of the goods produced is higher.
C)  Actually the question is incorrect.Economists prefer to compare GDP figures instead of Real GDP figures.
D)  Because Real GDP is easier to compute than GDP.
E)  Because when GDP in one year is higher than in another year, there is no way to tell if the quality of life is higher in one year than the other.This is not the case with Real GDP.If Real GDP is higher in one year than in another year, it is because the quality of life is higher.

Question 6

Which of the following statements is true?

Accepted Answer

A)  Indirect business taxes are a component of national income because when added to the other components of national income, the sum must equal GDP.
B)  Indirect business taxes must be subtracted from national income to yield a figure equal to GDP.
C)  Indirect business taxes are a part of national income because they are considered a payment to a factor of production.
D)  Indirect business taxes are not part of national income because they are not considered a payment to a factor of production.

Question 7

Which of the following is counted in GDP?

Accepted Answer

A)  the trading of 100 shares of Microsoft stock
B)  the services of a real estate broker
C)  government transfer payments
D)  the sale of a used car
E)  none of the above

Question 8

Investment equals inventory investment added to

Accepted Answer

A)  business purchases of new capital goods.
B)  purchases of new residential housing.
C)  fixed investment.
D)  business purchases of new capital goods and purchases of new residential housing.
E)  either c or d

Question 9

Exhibit 7-1
 
-Refer to Exhibit 7-1. What is the value of disposable income?

Accepted Answer

A)  $3,618
B)  $4,795
C)  $3,727
D)  $4,207
E)  $4,017

Question 10

Which of the following illustrates double counting?

Accepted Answer

A)  The total market value of the steel used to produce a car and the total market value of the car itself are summed.
B)  The total market value of tennis rackets and the total market value of tennis balls are summed.
C)  The total market value of picture frames and the total market value of camera film are summed.
D)  The total market value of eyeglasses and the total market value of carpet are summed.
E)  b and c

Question 11

A transfer payment is a payment to a person that is made in return for goods and services supplied.

Accepted Answer

A) True 
 B)False

Question 12

An economy produces 10X, 20Y, and 30Z in a year. Base-year prices for these goods are $1, $2, and $3, respectively. Current-year prices for these goods are $2, $3, and $4, respectively. What is Real GDP?

Accepted Answer

A)  $180
B)  $200
C)  $140
D)  $240
E)  none of the above

Question 13

Exhibit 7-5
Economic Data for Country Z
 
-Refer to Exhibit 7-5. During year 3, Country Z experienced economic _____________ and _________________.

Accepted Answer

A)  decline; deflation (falling price level) 
B)  growth; inflation (rising price level) 
C)  growth; deflation (falling price level) 
D)  decline; inflation (rising price level)

Question 14

Corporate profits can be broken into three categories: dividends, undistributed profits, and corporate profits taxes.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 7-5
Economic Data for Country Z
 
-Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 1 and year 2?

Accepted Answer

A)  7.3%
B)  8.3%
C)  5.3%
D)  6.8%

Question 16

The base year is the year

Accepted Answer

A)  in which prices are unstable.
B)  in which prices are lowest.
C)  in which prices are highest.
D)  that serves as a reference point or benchmark.
E)  in which nominal output is largest.

Question 17

Net domestic product equals gross domestic product minus the capital consumption allowance.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would definitely not be included in the measurement of GDP?

Accepted Answer

A)  value of the services of a painter who paints your garage
B)  value of the services of a person who mows his or her own lawn
C)  value of the services of a maid who cleans your house
D)  value of the services of a plumber who fixes your kitchen sink

Question 19

If in the process of calculating GDP, the market value of all intermediate goods is added to the market value of all final goods, this would

Accepted Answer

A)  overstate the actual value of GDP.
B)  produce the correct value of GDP.
C)  understate the actual value of GDP.
D)  avoid the possible error of double counting.

Question 20

Government purchases consist of the total dollar amount(s)  spent on goods and services by the

Accepted Answer

A)  federal government only.
B)  state governments only.
C)  local governments only.
D)  state and local governments, but not the federal government.
E)  federal, state, and local governments.

Exam 7: Macroeconomic Measurements Part II Gdp and Real Gdp

Which of the following does GDP omit?

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The base year is the year

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A transfer payment is a payment to a person that is made in return for goods and services supplied.

Correct AnswerverifiedShow Answer

An economy produces 10X, 20Y, and 30Z in a year. Base-year prices for these goods are $1, $2, and $3, respectively. Current-year prices for these goods are $2, $3, and $4, respectively. What is Real GDP?

Correct AnswerverifiedShow Answer

Government purchases consist of the total dollar amount(s) spent on goods and services by the

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Which of the following statements is true?

Correct AnswerverifiedShow Answer

Exhibit 7-5 Economic Data for Country Z -Refer to Exhibit 7-5. During year 3, Country Z experienced economic _____________ and _________________.

Correct AnswerverifiedShow Answer

If in the process of calculating GDP, the market value of all intermediate goods is added to the market value of all final goods, this would

Correct AnswerverifiedShow Answer

Which of the following illustrates double counting?

Correct AnswerverifiedShow Answer

Exhibit 7-5 Economic Data for Country Z -Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 2 and year 3?

Correct AnswerverifiedShow Answer

Gross Domestic Product is computed by using

Correct AnswerverifiedShow Answer

Which of the following is counted in GDP?

Correct AnswerverifiedShow Answer

Corporate profits can be broken into three categories: dividends, undistributed profits, and corporate profits taxes.

Correct AnswerverifiedShow Answer

Which of the following would definitely not be included in the measurement of GDP?

Correct AnswerverifiedShow Answer

Exhibit 7-5 Economic Data for Country Z -Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 1 and year 2?

Correct AnswerverifiedShow Answer

Why do economists prefer to compare Real GDP figures for various years instead of GDP figures?

Correct AnswerverifiedShow Answer

Net domestic product equals gross domestic product minus the capital consumption allowance.

Correct AnswerverifiedShow Answer

Some economists argue that GDP overstates overall economic welfare because it does not include the impact of bads such as pollution.

Correct AnswerverifiedShow Answer

Exhibit 7-1 -Refer to Exhibit 7-1. What is the value of disposable income?

Correct AnswerverifiedShow Answer

Investment equals inventory investment added to

Correct AnswerverifiedShow Answer

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Exhibit 7-5 Economic Data for Country Z -Refer to Exhibit 7-5. During year 3, Country Z experienced economic _ and _____.

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