Question 1

Which of the following would not be included in GDP?

Accepted Answer

A)  the real estate commission on the sale of a used home
B)  an attorney's fee for handling the sale of a used home
C)  the value of a used home,at its sale price
D)  fees paid to have the house cleaned

Question 2

The primary value of data for real GDP lies in its ability to

Accepted Answer

A)  reflect the welfare of a society relative to a previous period.
B)  compare a nation's productivity during two periods widely separated in time.
C)  indicate short-term changes in the output rate of a nation.
D)  indicate how hard the people of a nation are working.

Question 3

Use the table below to choose the correct answer.
Table 7-10
 
-Refer to Table 7-10.Measured in 1993 prices,real GDP in 2003 was

Accepted Answer

A)  $7,982 billion.
B)  $9,177 billion.
C)  $10,381 billion.
D)  $11,624 billion.

Question 4

New residential housing is counted in GDP as a(n)

Accepted Answer

A)  durable consumption good.
B)  household durable good.
C)  investment good.
D)  inventory expansion.
E)  long-term durable good.

Question 5

If the price of hot dogs was $2 last year and $3 this year,then 100 hotdogs will contribute

Accepted Answer

A)  $200 to last year's nominal GDP and $166 to this year's nominal GDP.
B)  $200 to last year's real GDP and $300 to this year's real GDP.
C)  the same dollar amount to each year's nominal GDP because hotdogs are intermediate goods.
D)  $200 to last year's nominal GDP and $300 to this year's nominal GDP.

Question 6

Which of the following would count as an investment expenditure in national income accounting?

Accepted Answer

A)  General Motors hires 10 electrical engineers.
B)  Boeing purchases a new metal stretching machine used to produce airplane wings.
C)  Ms.Quantum buys 100 shares of Microsoft stock.
D)  A large corporation spends $10,000 per month on long-distance phone charges.

Question 7

The change in nominal GDP will always exceed the change in real GDP when nominal GDP is

Accepted Answer

A)  increasing and prices are unchanged.
B)  increasing and prices are decreasing.
C)  decreasing and prices are decreasing.
D)  increasing and prices are increasing.

Question 8

Greg,a U.S.citizen,works only in Canada.The value that his labor contributes to U.S.output is

Accepted Answer

A)  included in both U.S.GDP and U.S.GNP.
B)  included in U.S.GDP,but it is not included in U.S.GNP.
C)  included in U.S.GNP,but it is not included in U.S.GDP.
D)  included in neither U.S.GDP nor U.S.GNP.

Question 9

Which one of the following transactions would be included in this year's GDP?

Accepted Answer

A)  Todd purchases a used CD at a neighborhood garage sale.
B)  Mrs.Rock purchases $500 of common stock of Quick-Gro Foods,Inc.
C)  Mr.I.V.League donates $300 to his town's junior college scholarship fund.
D)  An American buys a Honda manufactured at a plant in Ohio.

Question 10

In 2004,four major hurricanes struck Florida and left a wide area of severe damage.Which of the following most accurately indicates how GDP was influenced by the hurricanes?

Accepted Answer

A)  The expenditures on repair services and new construction necessary to restore damaged structures were added to GDP.
B)  The expenditures on repair services and new construction necessary to restore damaged structures were subtracted from GDP.
C)  Since the expenditures on repair services and new construction would merely leave the nation's wealth in the same position as it was prior to the hurricanes,they were excluded from GDP.
D)  The expenditures on new construction to replace structures destroyed by the hurricanes were added to GDP,but expenditures on repair services were excluded.

Question 11

Given the following information about a simple three-good economy,what would be the approximate 2007 consumer price index using a 2000 base year?

Accepted Answer

A)  50
B)  200
C)  222
D)  302

Question 12

Which of the following best illustrates the difference between GDP and GNP?

Accepted Answer

A)  GDP measures the goods consumed by the citizens of a country,while GNP measures output exported to other countries.
B)  GDP measures the output produced by the citizens within a country,while GNP measures output produced by noncitizens within a country.
C)  GDP measures the output produced by the citizens of a country,while GNP measures output produced within the borders of a country.
D)  GDP measures the output produced within the borders of a country,while GNP measures output produced by the citizens of a country.

Question 13

The primary purpose of measuring the overall level of prices in the economy is to

Accepted Answer

A)  allow for the measurement of GDP.
B)  allow consumers to know what kinds of prices to expect in the future.
C)  allow for the comparison of dollar figures from different points in time.
D)  allow for the comparison of dollar figures from the same point in time.

Question 14

Gross domestic product (measured in real dollars) is an important social tool because it provides

Accepted Answer

A)  observers with a reasonably good index of social progress.
B)  policy makers with a measure of the nation's total wealth.
C)  policy makers with information about the economy's current rate of output and the direction of recent changes.
D)  economists with a reasonably good measure of income inequality.

Question 15

Gross domestic product is

Accepted Answer

A)  the market value of all goods and services exchanged within a country during a time period.
B)  the market value of all domestic assets,regardless of whether they are owned by citizens or foreigners.
C)  the compensation received during a period for labor services plus interest,rents,and corporate profits.
D)  the market value of final goods and services produced within a country during a time period.

Question 16

Your grandfather tells you he earned $0.65 per hour at his job when he was a boy in 1929.Given that the CPI was 17.1 in 1929 and 215.3 in 2008,how much would you have had to make in 2008 to have the same real hourly wage as your grandfather?

Accepted Answer

A)  $0.65
B)  $5.14
C)  $8.18
D)  $11.12

Question 17

If the Consumer Price Index in 2008 was 150 and the CPI in 2009 was 165,the rate of inflation between 2008 and 2009 would be

Accepted Answer

A)  9.09 percent.
B)  10 percent.
C)  15 percent.
D)  110 percent.

Question 18

Comparisons of GDP between developed and underdeveloped countries are often misleading because underdeveloped countries produce

Accepted Answer

A)  a greater share of their total production in the household sector,which understates their GDP relative to developed countries.
B)  a smaller share of their total production in the household sector,which understates their GDP relative to developed countries.
C)  a greater share of their total production in the household sector,which overstates their GDP relative to developed countries.
D)  a smaller share of their total production in the household sector,which overstates their GDP relative to developed countries.

Question 19

The primary value of real GDP is its ability to measure year to year changes in

Accepted Answer

A)  real output.
B)  income inequality.
C)  real social welfare.
D)  the general level of prices.

Question 20

Gross domestic product

Accepted Answer

A)  is the sum of all exchanges of goods and services during a period.
B)  includes financial transactions such as the purchase of stocks or bonds traded during a period.
C)  is the sum of expenditures for both intermediate and final user goods.
D)  is the sum of the total spending on all final-user goods and services produced domestically during a period.

Exam 7: Ataking the Nations Economic Pulse

Greg,a U.S.citizen,works only in Canada.The value that his labor contributes to U.S.output is

Correct AnswerverifiedShow Answer

Comparisons of GDP between developed and underdeveloped countries are often misleading because underdeveloped countries produce

Correct AnswerverifiedShow Answer

If the price of hot dogs was $2 last year and $3 this year,then 100 hotdogs will contribute

Correct AnswerverifiedShow Answer

Gross domestic product (measured in real dollars) is an important social tool because it provides

Correct AnswerverifiedShow Answer

Which of the following would count as an investment expenditure in national income accounting?

Correct AnswerverifiedShow Answer

Which one of the following transactions would be included in this year's GDP?

Correct AnswerverifiedShow Answer

If the Consumer Price Index in 2008 was 150 and the CPI in 2009 was 165,the rate of inflation between 2008 and 2009 would be

Correct AnswerverifiedShow Answer

The change in nominal GDP will always exceed the change in real GDP when nominal GDP is

Correct AnswerverifiedShow Answer

The primary value of data for real GDP lies in its ability to

Correct AnswerverifiedShow Answer

Your grandfather tells you he earned $0.65 per hour at his job when he was a boy in 1929.Given that the CPI was 17.1 in 1929 and 215.3 in 2008,how much would you have had to make in 2008 to have the same real hourly wage as your grandfather?

Correct AnswerverifiedShow Answer

Given the following information about a simple three-good economy,what would be the approximate 2007 consumer price index using a 2000 base year?

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Gross domestic product

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The primary purpose of measuring the overall level of prices in the economy is to

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Gross domestic product is

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Which of the following would not be included in GDP?

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In 2004,four major hurricanes struck Florida and left a wide area of severe damage.Which of the following most accurately indicates how GDP was influenced by the hurricanes?

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New residential housing is counted in GDP as a(n)

Correct AnswerverifiedShow Answer

The primary value of real GDP is its ability to measure year to year changes in

Correct AnswerverifiedShow Answer

Use the table below to choose the correct answer. Table 7-10 -Refer to Table 7-10.Measured in 1993 prices,real GDP in 2003 was

Correct AnswerverifiedShow Answer

Which of the following best illustrates the difference between GDP and GNP?

Correct AnswerverifiedShow Answer

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