Question 1

What is included when using the expenditure method to estimate GDP?

Accepted Answer

A)   Consumption, investment, government purchases, and net exports
B)   Consumption, government revenues, durable goods, and net exports
C)   Consumption, capital investment, government purchases, and exports
D)   Consumption, investment, government purchases, and importsE) B) and C)
F) A) and C)

Question 2

The value-added approach measures the:

Accepted Answer

A)   profit a firm earns selling a new product.
B)   utility a consumer gets from a good or service.
C)   difference between the sale value of a product and the value of the inputs that went into making it.
D)   difference between the sale value of a product in one country and the sale value of the same product in another country.E) A) and B)
F) B) and D)

Question 3

Which of the following is not included in government purchases?

Accepted Answer

A)   Goods and services bought by all levels of government
B)   Consumption and investment goods bought by the government
C)   Services paid for by the government
D)   Goods purchased by foreign governmentsE) A) and B)
F) A) and C)

Question 4

Which idea does the circular flow model illustrate?

Accepted Answer

A)   Every expenditure someone makes in an economy is exactly equal to another individual's income.
B)   Only two markets exist in every economy-input and output.
C)   Income is lower when there is more spending on services compared to goods.
D)   The flow of two things in the economy-production and money-travel in the same direction.E) None of the above
F) All of the above

Question 5

If consumption is $7 trillion, wages $10 trillion, interest $1 trillion, rental income $1.5 trillion and profits $2 trillion, what is the value of the economy using the income approach?

Accepted Answer

A)   $14.5 trillion
B)   $7.5 trillion
C)   $21.5 trillion
D)   $13 trillionE) A) and D)
F) None of the above

Question 6

GDP per capita is _______ correlated with quality of life.

Accepted Answer

A)   highly
B)   perfectly
C)   loosely
D)   negativelyE) B) and D)
F) None of the above

Question 7

The GDP deflator measures the overall change in prices in an economy:

Accepted Answer

A)   by calculating the ratio of nominal to real GDP.
B)   based on goods and services valued at constant prices.
C)   based on price-changes determined when output is held constant.
D)   by calculating the ratio of real to nominal GDP.E) A) and B)
F) A) and C)

Question 8

According to annual price deflator information (https://fred.stlouisfed.org)  from the table shown, what was the rate of inflation (rounded to the nearest percent)  from 2016 to 2018?

Accepted Answer

A)   5 percent
B)   2 percent
C)   3 percent
D)   4 percentE) None of the above
F) All of the above

Question 9

Gross domestic product is the sum of:

Accepted Answer

A)   the market values of all final goods and services produced within a country in a given period of time.
B)   the market values of all intermediate goods and services produced within a country in a given period of time.
C)   all final goods and services produced by a country's citizens in a given period of time.
D)   the market values of all final goods and services produced by a country's citizens in a given period of time.E) All of the above
F) None of the above

Question 10

Which of the following is not an intermediate good?

Accepted Answer

A)   Tires purchased by Ford to put on their new Explorers
B)   Goodyear tires purchased by Priya to put on her car
C)   Avocados purchased by Sabra to make their guacamole
D)   Beef purchased by McDonald's to make a Big MacE) A) and B)
F) A) and C)

Question 11

Which of the following topics would most likely be studied in microeconomics?

Accepted Answer

A)   Bob's household budget
B)   The U.S. federal budget
C)   Interest rate policy in Europe
D)   Unemployment in MexicoE) A) and B)
F) None of the above

Question 12

The value-added approach of calculating GDP:

Accepted Answer

A)   is an alternative, and equally valid, way of avoiding the problem of double-counting.
B)   breaks down the total amount paid for a product to see how much of it was created at each step of the production process.
C)   is especially useful when thinking about the services involved in the resale of existing goods.
D)   All of these are correct.E) C) and D)
F) A) and D)

Question 13

The GDP deflator is:

Accepted Answer

A)   measured using the ratio between real and nominal GDP.
B)   one way of summarizing how prices have changed across the entire economy.
C)   a weighted average of all the individual price changes in the economy.
D)   All of these statements are true.E) All of the above
F) A) and B)

Question 14

What are U.S. imports?

Accepted Answer

A)   U.S. goods sold to foreigners
B)   Foreign goods bought by Americans
C)   U.S. goods sold to Americans
D)   Foreign and U.S. goods sold to foreignersE) All of the above
F) B) and C)

Question 15

What is the difference between black market and gray market activities?

Accepted Answer

A)   Neither are included in GDP, but black market items are illegal and gray market items are legal.
B)   Neither are included in GDP, but gray market items are illegal and black market items are legal.
C)   Black market items are not counted in GDP, but gray market items are.
D)   Both are included in GDP, but black market items are illegal and gray market items are legal.E) B) and C)
F) C) and D)

Question 16

What are the four components that make up GDP in the expenditure approach?

Accepted Answer

A)   Consumption, Investment, Government Purchases, and Net Exports
B)   Consumption, Investment, Government Purchases, and Exports
C)   Capital, Investment, Government Purchases, and Net Exports
D)   Consumption, Income, Government Purchases, and ExportsE) A) and B)
F) B) and D)

Question 17

The value of the GDP deflator in the base year is always:

Accepted Answer

A)   103.
B)   100.
C)   4 percent.
D)   97.E) A) and C)
F) A) and B)

Question 18

Which of the following is a final good?

Accepted Answer

A)   Coffee grounds used by Elodie to make herself coffee every morning
B)   Coffee grounds used by a coffee shop to make the coffee purchased by Udoka every morning
C)   Coffee grounds used by Edy's to make coffee flavored ice cream
D)   None of these are final goods.E) A) and B)
F) All of the above

Question 19

One limitation of using GDP per capita to compare standards of living between countries is that it:

Accepted Answer

A)   does not account for what one can buy with a given amount of money in different countries.
B)   is less precise in countries with larger populations.
C)   does not clearly show the types of goods each country produces.
D)   fails to consider natural resources.E) A) and B)
F) A) and C)

Question 20

Nominal GDP measures this year's output at:

Accepted Answer

A)   base year prices.
B)   2015 prices.
C)   current prices.
D)   None of these are true.E) A) and B)
F) C) and D)

Exam 7: Measuringgdp

What are the four components that make up GDP in the expenditure approach?

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Gross domestic product is the sum of:

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Which of the following is a final good?

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Which of the following topics would most likely be studied in microeconomics?

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The value-added approach measures the:

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According to annual price deflator information (https://fred.stlouisfed.org) from the table shown, what was the rate of inflation (rounded to the nearest percent) from 2016 to 2018?

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The value of the GDP deflator in the base year is always:

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One limitation of using GDP per capita to compare standards of living between countries is that it:

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If consumption is $7 trillion, wages $10 trillion, interest $1 trillion, rental income $1.5 trillion and profits $2 trillion, what is the value of the economy using the income approach?

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Nominal GDP measures this year's output at:

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Which idea does the circular flow model illustrate?

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The GDP deflator is:

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Which of the following is not an intermediate good?

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GDP per capita is _______ correlated with quality of life.

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The value-added approach of calculating GDP:

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What are U.S. imports?

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What is the difference between black market and gray market activities?

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The GDP deflator measures the overall change in prices in an economy:

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Which of the following is not included in government purchases?

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What is included when using the expenditure method to estimate GDP?

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