Question 1

The growth of GDP may understate changes in the economy's economic well-being over time if the

Accepted Answer

A)  distribution of income becomes increasingly unequal.
B)  quality of products and services improves.
C)  environment deteriorates because of pollution.
D)  amount of leisure decreases.E) A) and B)
F) C) and D)

Question 2

A statistic called Gross Output (GO)  sums together the value of economic activity taking place in each of the four stages of a productive economy, namely,

Accepted Answer

A)  resource extraction, production, distribution, and final output.
B)  planning, implementation, review, and wrap-up.
C)  addition, subtraction, multiplication, and division.
D)  by land, by air, by sea, and by rivers and lakes.E) A) and B)
F) C) and D)

Question 3

If real GDP declines in a given year, nominal GDP

Accepted Answer

A)  must also be declining.
B)  must also be increasing.
C)  may either rise or fall.
D)  is likely to remain constant.E) A) and B)
F) All of the above

Question 4

Net exports is a positive number when

Accepted Answer

A)  a nation's exports of goods and services are increasing.
B)  a nation exports goods and services to other nations.
C)  a nation's exports of goods and services exceed its imports.
D)  a nation's exports of goods and services fall short of its imports.E) A) and D)
F) B) and C)

Question 5

Suppose that the base year is 2015, and the GDP price index in 2014 is 92.0.This implies that the

Accepted Answer

A)  output in 2015 was higher than in 2014.
B)  prices in 2015 were higher than in 2014.
C)  output in 2015 was lower than in 2014.
D)  prices in 2015 were lower than in 2014.E) All of the above
F) A) and C)

Question 6

Personal income will equal disposable income when

Accepted Answer

A)  corporate profits are zero.
B)  personal taxes are zero.
C)  transfer payments are zero.
D)  Social Security contributions are zero.E) All of the above
F) B) and C)

Question 7

Value added can be determined by

Accepted Answer

A)  summing the profits of all enterprises in the economy.
B)  subtracting the purchase of intermediate products from the value of the sales of final products.
C)  calculating the year-to-year changes in real GDP.
D)  deflating nominal GDP.E) None of the above
F) A) and B)

Question 8

Which of the following is included in GDP?

Accepted Answer

A)  welfare payments received by some households
B)  fees received by stockbrokers
C)  cash gifts from relatives during the holidays
D)  payments received from selling stocks in one's portfolioE) All of the above
F) A) and D)

Question 9

Tom Atoe grows fruits and vegetables for home consumption.This activity is

Accepted Answer

A)  excluded from GDP in order to avoid double counting.
B)  excluded from GDP because an intermediate good is involved.
C)  productive but is excluded from GDP because no market transaction occurs.
D)  included in GDP because it reflects production.E) All of the above
F) A) and D)

Question 10

The value added of a firm is the market value of

Accepted Answer

A)  a firm's output plus the value of the inputs bought from others.
B)  a firm's output less the value of the inputs bought from others.
C)  the firm's output.
D)  the firm's inputs bought from others.E) B) and C)
F) A) and B)

Question 11

Alejandro Scoobertini owns a store specializing in soccer jerseys.In 2016, he purchased $150,000 worth of jerseys from manufacturers, employed one worker for $40,000, purchased $20,000 worth of supplies from an office supply store, and sold jerseys for $280,000.Based on this information, what was the value added at Alejandro's store in 2016?

Accepted Answer

A)  $70,000
B)  $110,000
C)  $280,000
D)  $490,000E) B) and C)
F) A) and B)

Question 12

If nominal GDP in one year is $5,000 billion and the price index is 135, then the real GDP that year would be $3,704 billion.

Accepted Answer

A) True 
 B)False

Question 13

Suppose Smith pays $100 to Jones.

Accepted Answer

A)  We can say with certainty that the GDP has increased by $100.
B)  We can say with certainty that the GDP has increased, but we cannot determine the amount.
C)  We can say with certainty that the nominal GDP has increased, but we can't say whether real GDP has increased or decreased.
D)  We need more information to determine whether GDP has changed.E) A) and B)
F) B) and C)

Question 14

The amount of new output produced per year for both consumption and additions to capital stock is measured by

Accepted Answer

A)  GDP.
B)  net investment.
C)  NDP.
D)  net exports.E) B) and D)
F) C) and D)

Question 15

Consumption of fixed capital (depreciation)  can be determined by

Accepted Answer

A)  adding taxes on production and imports to NDP.
B)  subtracting NDP from GDP.
C)  subtracting net investment from GDP.
D)  adding net investment to gross investment.E) A) and C)
F) B) and C)

Question 16

Economy A: gross investment equals depreciation Economy B: depreciation exceeds gross investment Economy C: gross investment exceeds depreciation Based on this information, positive net investment is occurring in

Accepted Answer

A)  economy A only.
B)  economy B only.
C)  economy C only.
D)  economies A and B only.E) A) and B)
F) None of the above

Question 17

To avoid multiple counting in national income accounts,

Accepted Answer

A)  only final goods and services should be counted.
B)  intermediate goods and services should be counted.
C)  both final and intermediate goods and services should be counted.
D)  primary, intermediate, and final goods and services should be counted.E) B) and D)
F) A) and C)

Question 18

Suppose nominal GDP in 2009 was $100 billion and in 2010 it was $260 billion.The general price index in 2009 was 100 and in 2010 it was 180.Between 2009 and 2010, the real GDP rose by approximately

Accepted Answer

A)  160 percent.
B)  44 percent.
C)  37 percent.
D)  80 percent.E) A) and B)
F) A) and C)

Question 19

(Consider This)  Capital is a

Accepted Answer

A)  flow, whereas gross investment and depreciation are stocks.
B)  flow, as are gross investment and depreciation.
C)  stock, as are gross investment and depreciation.
D)  stock, whereas gross investment and depreciation are flows.E) All of the above
F) A) and D)

Question 20

Personal income (PI) is the income that households are free to spend or save as they please.

Accepted Answer

A) True 
 B)False

Exam 27: Measuring Domestic Output and National Income

Suppose nominal GDP in 2009 was $100 billion and in 2010 it was $260 billion.The general price index in 2009 was 100 and in 2010 it was 180.Between 2009 and 2010, the real GDP rose by approximately

Correct Answer
verified

The amount of new output produced per year for both consumption and additions to capital stock is measured by

Correct Answer
verified

If nominal GDP in one year is $5,000 billion and the price index is 135, then the real GDP that year would be $3,704 billion.

Correct Answer
verified

Personal income will equal disposable income when

Correct Answer
verified

The value added of a firm is the market value of

Correct Answer
verified

(Consider This) Capital is a

Correct Answer
verified

Personal income (PI) is the income that households are free to spend or save as they please.

Correct Answer
verified

Which of the following is included in GDP?

Correct Answer
verified

Correct Answer
verified

A statistic called Gross Output (GO) sums together the value of economic activity taking place in each of the four stages of a productive economy, namely,

Correct Answer
verified

Economy A: gross investment equals depreciation Economy B: depreciation exceeds gross investment Economy C: gross investment exceeds depreciation Based on this information, positive net investment is occurring in

Correct Answer
verified

To avoid multiple counting in national income accounts,

Correct Answer
verified

Suppose Smith pays $100 to Jones.

Correct Answer
verified

If real GDP declines in a given year, nominal GDP

Correct Answer
verified

Consumption of fixed capital (depreciation) can be determined by

Correct Answer
verified

The growth of GDP may understate changes in the economy's economic well-being over time if the

Correct Answer
verified

Net exports is a positive number when

Correct Answer
verified

Value added can be determined by

Correct Answer
verified

Suppose that the base year is 2015, and the GDP price index in 2014 is 92.0.This implies that the

Correct Answer
verified

Tom Atoe grows fruits and vegetables for home consumption.This activity is

Correct Answer
verified

Exam 27: Measuring Domestic Output and National Income

Suppose nominal GDP in 2009 was $100 billion and in 2010 it was $260 billion.The general price index in 2009 was 100 and in 2010 it was 180.Between 2009 and 2010, the real GDP rose by approximately

Correct AnswerverifiedShow Answer

The amount of new output produced per year for both consumption and additions to capital stock is measured by

Correct AnswerverifiedShow Answer

If nominal GDP in one year is $5,000 billion and the price index is 135, then the real GDP that year would be $3,704 billion.

Correct AnswerverifiedShow Answer

Personal income will equal disposable income when

Correct AnswerverifiedShow Answer

The value added of a firm is the market value of

Correct AnswerverifiedShow Answer

(Consider This) Capital is a

Correct AnswerverifiedShow Answer

Personal income (PI) is the income that households are free to spend or save as they please.

Correct AnswerverifiedShow Answer

Which of the following is included in GDP?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A statistic called Gross Output (GO) sums together the value of economic activity taking place in each of the four stages of a productive economy, namely,

Correct AnswerverifiedShow Answer

Economy A: gross investment equals depreciation Economy B: depreciation exceeds gross investment Economy C: gross investment exceeds depreciation Based on this information, positive net investment is occurring in

Correct AnswerverifiedShow Answer

To avoid multiple counting in national income accounts,

Correct AnswerverifiedShow Answer

Suppose Smith pays $100 to Jones.

Correct AnswerverifiedShow Answer

If real GDP declines in a given year, nominal GDP

Correct AnswerverifiedShow Answer

Consumption of fixed capital (depreciation) can be determined by

Correct AnswerverifiedShow Answer

The growth of GDP may understate changes in the economy's economic well-being over time if the

Correct AnswerverifiedShow Answer

Net exports is a positive number when

Correct AnswerverifiedShow Answer

Value added can be determined by

Correct AnswerverifiedShow Answer

Suppose that the base year is 2015, and the GDP price index in 2014 is 92.0.This implies that the

Correct AnswerverifiedShow Answer

Tom Atoe grows fruits and vegetables for home consumption.This activity is

Correct AnswerverifiedShow Answer

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