Question 1

Personal income (PI)  refers to all income

Accepted Answer

A)  received.
B)  earned.
C)  earned but not received.
D)  received but not earned.

Question 2

Which of the following activities is excluded from GDP, causing GDP to understate a nation's production?

Accepted Answer

A)  the services of health care workers
B)  the services of military personnel
C)  the construction of new buildings
D)  goods and services produced in the underground economy

Question 3

Gordon sells narcotics "on the street." This type of illegal activity

Accepted Answer

A)  would be considered double counting in calculating GDP.
B)  is estimated and included in GDP figures.
C)  is excluded from GDP figures.
D)  causes GDP to be overstated.

Question 4

If the economy adds to its inventory of goods during some year,

Accepted Answer

A)  gross investment will exceed net investment by the amount of the inventory increase.
B)  this amount should be ignored in calculating that year's GDP.
C)  this amount should be subtracted in calculating that year's GDP.
D)  this amount should be included in calculating that year's GDP.

Question 5

Within the circular flow model, the level of total resource income and total spending on output will be approximately equal.

Accepted Answer

A) True 
 B)False

Question 6

The simplest way to calculate GDP is to sum the total sales of all business firms.

Accepted Answer

A) True 
 B)False

Question 7

A large underground economy results in an

Accepted Answer

A)  understated GDP.
B)  overstated GDP.
C)  understated GDP price index.
D)  overstated GDP price index.

Question 8

Suppose the total monetary value of all final goods and services produced in a particular country in 2015 is $500 billion and the total monetary value of final goods and services sold is $450 billion.We can conclude that

Accepted Answer

A)  GDP in 2015 is $450 billion.
B)  NDP in 2015 is $450 billion.
C)  GDP in 2015 is $500 billion.
D)  inventories in 2015 fell by $50 billion.

Question 9

GDP can be calculated by summing

Accepted Answer

A)  consumption, investment, government purchases, exports, and imports.
B)  consumption, investment, government purchases, and net exports.
C)  consumption, investment, wages, and rents.
D)  consumption, investment, government purchases, and imports.

Question 10

GDP excludes most nonmarket transactions.Therefore, GDP tends to

Accepted Answer

A)  underestimate the rate of inflation in the economy.
B)  overestimate the rate of inflation in the economy.
C)  overestimate the amount of production of the economy.
D)  underestimate the amount of production in the economy.

Question 11

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is

Accepted Answer

A)  100.
B)  200.
C)  240.
D)  300.

Question 12

Real GDP refers to

Accepted Answer

A)  the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income.
B)  GDP data that embody changes in the price level but not changes in physical output.
C)  GDP data that do not reflect changes in both physical output and the price level.
D)  GDP data that have been adjusted for changes in the price level.

Question 13

Exports are subtracted from imports in calculating U.S.GDP because exports are not available for domestic consumption.

Accepted Answer

A) True 
 B)False

Question 14

(Advanced analysis)  Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5.The current year per-unit prices of these three goods are A = $2, B = $3, and C = $1.If the per-unit prices of the three goods were each $1 in a base year used to construct a GDP price index, then the GDP price index in the current year is

Accepted Answer

A)  205.5.
B)  255.5.
C)  39.3.
D)  100.

Question 15

In year 1, nominal GDP for the United States was $2,250 billion and in year 2 it was $2,508 billion.The GDP deflator was 72 in year 1 and 79 in year 2.Between year 1 and year 2, real GDP rose by

Accepted Answer

A)  11.4 percent.
B)  9.7 percent.
C)  2.4 percent.
D)  1.6 percent.

Question 16

By summing the dollar value of all market transactions in the economy, we would

Accepted Answer

A)  determine the market value of all resources used in the production process.
B)  obtain a sum substantially larger than the GDP.
C)  determine value added for the economy.
D)  measure GDP.

Question 17

Welfare payments to low-income families are included in national income.

Accepted Answer

A) True 
 B)False

Question 18

(Last Word)  The U.S.government agency responsible for compiling the national income accounts is the

Accepted Answer

A)  Census Bureau.
B)  Bureau of Labor Statistics (BLS) .
C)  Commerce Department's Bureau of Economic Analysis (BE
A)  .
D)  Government Accountability Office (GAO) .

Question 19

Adding the market value of all final and intermediate goods and services in an economy in a given year would result in

Accepted Answer

A)  the calculation of GDP for that year.
B)  the calculation of NDP for that year.
C)  an amount less than GDP for that year.
D)  an amount greater than GDP for that year.

Question 20

Which of the following government agencies estimates and compiles the U.S.GDP accounts?

Accepted Answer

A)  the American Economic Association
B)  the Federal Reserve System
C)  the Bureau of Economic Analysis
D)  the Internal Revenue Service

Exam 27: Measuring Domestic Output and National Income

Within the circular flow model, the level of total resource income and total spending on output will be approximately equal.

Correct Answer
verified

GDP excludes most nonmarket transactions.Therefore, GDP tends to

Correct Answer
verified

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is

Correct Answer
verified

GDP can be calculated by summing

Correct Answer
verified

If the economy adds to its inventory of goods during some year,

Correct Answer
verified

Gordon sells narcotics "on the street." This type of illegal activity

Correct Answer
verified

Adding the market value of all final and intermediate goods and services in an economy in a given year would result in

Correct Answer
verified

By summing the dollar value of all market transactions in the economy, we would

Correct Answer
verified

Suppose the total monetary value of all final goods and services produced in a particular country in 2015 is $500 billion and the total monetary value of final goods and services sold is $450 billion.We can conclude that

Correct Answer
verified

Exports are subtracted from imports in calculating U.S.GDP because exports are not available for domestic consumption.

Correct Answer
verified

In year 1, nominal GDP for the United States was $2,250 billion and in year 2 it was $2,508 billion.The GDP deflator was 72 in year 1 and 79 in year 2.Between year 1 and year 2, real GDP rose by

Correct Answer
verified

Correct Answer
verified

Personal income (PI) refers to all income

Correct Answer
verified

(Last Word) The U.S.government agency responsible for compiling the national income accounts is the

Correct Answer
verified

A large underground economy results in an

Correct Answer
verified

Which of the following activities is excluded from GDP, causing GDP to understate a nation's production?

Correct Answer
verified

Real GDP refers to

Correct Answer
verified

Which of the following government agencies estimates and compiles the U.S.GDP accounts?

Correct Answer
verified

The simplest way to calculate GDP is to sum the total sales of all business firms.

Correct Answer
verified

Welfare payments to low-income families are included in national income.

Correct Answer
verified

Exam 27: Measuring Domestic Output and National Income

Within the circular flow model, the level of total resource income and total spending on output will be approximately equal.

Correct AnswerverifiedShow Answer

GDP excludes most nonmarket transactions.Therefore, GDP tends to

Correct AnswerverifiedShow Answer

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is

Correct AnswerverifiedShow Answer

GDP can be calculated by summing

Correct AnswerverifiedShow Answer

If the economy adds to its inventory of goods during some year,

Correct AnswerverifiedShow Answer

Gordon sells narcotics "on the street." This type of illegal activity

Correct AnswerverifiedShow Answer

Adding the market value of all final and intermediate goods and services in an economy in a given year would result in

Correct AnswerverifiedShow Answer

By summing the dollar value of all market transactions in the economy, we would

Correct AnswerverifiedShow Answer

Suppose the total monetary value of all final goods and services produced in a particular country in 2015 is $500 billion and the total monetary value of final goods and services sold is $450 billion.We can conclude that

Correct AnswerverifiedShow Answer

Exports are subtracted from imports in calculating U.S.GDP because exports are not available for domestic consumption.

Correct AnswerverifiedShow Answer

In year 1, nominal GDP for the United States was $2,250 billion and in year 2 it was $2,508 billion.The GDP deflator was 72 in year 1 and 79 in year 2.Between year 1 and year 2, real GDP rose by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Personal income (PI) refers to all income

Correct AnswerverifiedShow Answer

(Last Word) The U.S.government agency responsible for compiling the national income accounts is the

Correct AnswerverifiedShow Answer

A large underground economy results in an

Correct AnswerverifiedShow Answer

Which of the following activities is excluded from GDP, causing GDP to understate a nation's production?

Correct AnswerverifiedShow Answer

Real GDP refers to

Correct AnswerverifiedShow Answer

Which of the following government agencies estimates and compiles the U.S.GDP accounts?

Correct AnswerverifiedShow Answer

The simplest way to calculate GDP is to sum the total sales of all business firms.

Correct AnswerverifiedShow Answer

Welfare payments to low-income families are included in national income.

Correct AnswerverifiedShow Answer

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