Question 1

A GDP deflator of 112 means:

Accepted Answer

A)   the overall price level is 12 percent higher than in the base year.
B)   the overall output increased by 12 percent since the base year.
C)   every price in the economy has gone up by 12 percent.
D)   the production of each good in the economy has increased by 12 percent.E) B) and D)
F) C) and D)

Question 2

We can measure total production by:

Accepted Answer

A)   adding up what people spend on final goods and services.
B)   adding up everyone's asset wealth.
C)   comparing cost of inputs to final sale price.
D)   adding up all spending in the economy on all goods and services.E) C) and D)
F) All of the above

Question 3

The rate of change in GDP over time is called the:

Accepted Answer

A)   price accelerator.
B)   output generator.
C)   Gini coefficient.
D)   economic growth rate.E) B) and C)
F) A) and D)

Question 4

An example of something that might be sold in the underground economy is:

Accepted Answer

A)   lawn-mowing services.
B)   endangered animals.
C)   baby-sitting services.
D)   All of these could be exchanged in the underground economy.E) A) and B)
F) None of the above

Question 5

The government office that declares official periods of recession and depression is the:

Accepted Answer

A)   National Bureau of Economic Research.
B)   Bureau of Labor Statistics.
C)   Congressional Budget Office.
D)   Federal Reserve Board.E) B) and C)
F) C) and D)

Question 6

The four components that make up GDP in the expenditure approach are:

Accepted Answer

A)   C, I, G, and NX.
B)   C, I, G, and EX.
C)   K, I, G, and NX.
D)   C, Im, G, and EX. E) B) and C)
F) C) and D)

Question 7

At the end of the year, Ford realizes it has overproduced Fiestas, because 2,500 of them are left unsold. How is this accounted for in that year's GDP? The cars are:

Accepted Answer

A)   considered inventory and their value will increase investment.
B)   considered durable goods, and their value will increase consumption.
C)   not counted until they are sold in next year's GDP.
D)   considered a bad thing and reduce the value of investment.E) A) and C)
F) B) and C)

Question 8

The income approach to calculating GDP:

Accepted Answer

A)   is more accurate than using the expenditure approach.
B)   is less accurate than using the expenditure approach.
C)   will generate the same answer as using the expenditure approach.
D)   is simpler to calculate than the expenditure approach.E) B) and D)
F) B) and C)

Question 9

Calculating the value of an economy is more complex than just adding up the value of every single thing that is produced because that would lead to:

Accepted Answer

A)   overcounting, as the value of intermediate products would be counted twice.
B)   overcounting, as there is a mark-up in everything that is sold.
C)   undercounting, as most goods are not sold in retail markets.
D)   undercounting, as only observable markets can be recorded.E) A) and B)
F) None of the above

Question 10

If we add up all the money people spend buying final goods and services-being careful to omit spending on intermediate goods so as not to double-count-the sum will be:

Accepted Answer

A)   the market value of all output sold in the economy.
B)   thegross domestic product of the economy.
C)   total expenditure in the economy.
D)   All of these statements are true.E) All of the above
F) B) and D)

Question 11

An example of a final good is:

Accepted Answer

A)   chocolate chips purchased by Nabisco to make Keebler chocolate chip cookies.
B)   chocolate chips purchased by you to make chocolate chip cookies.
C)   chocolate chips purchased by a restaurant to make a chocolate chip cookie pie to sell.
D)   chocolate used to make Cocoa Rice Krispies.E) All of the above
F) C) and D)

Question 12

If the Real GDP increases from one year to the next, we could conclude the country experienced:

Accepted Answer

A)   inflation and no change in output.
B)   an increase in output and no change in prices.
C)   a definite increase in output and may have experienced an increase in prices.
D)   definite inflation and may have experienced an increase in output.E) B) and C)
F) B) and D)

Question 13

Investment, as a part of GDP, includes:

Accepted Answer

A)   spending on productive inputs such as stocks, bonds, and other types of financial instruments.
B)   any goods that are bought by firms who plan to use those purchases to produce other goods and services in the future, rather than consuming them.
C)   consumption goods that are purchased by households.
D)   any item you buy that you are looking for a return on over time.E) C) and D)
F) B) and C)

Question 14

Inrecent years in China, the fraction of the population living below the international poverty line ($1.25 per person per day) :

Accepted Answer

A)   fell substantially.
B)   increased dramatically.
C)   increased more on average compare toother developing countries.
D)   fell to zero.E) A) and B)
F) A) and C)

Question 15

We can measure the status of a national economy by looking at:

Accepted Answer

A)   its total expenditures.
B)   its median income.
C)   We can look at either of these things to get the same measure.
D)   Neither of these is used to measure a nation's economic status.E) B) and C)
F) A) and C)

Question 16

Of the world's countries, which of the following can be said of their real GDP growth rates in recent years?

Accepted Answer

A)   Countries like China and India have experienced higher rates of growth than the U.S.
B)   The U.S. has always had the highest growth rate in the world.
C)   Neither of these statements is true.
D)   Both of these statements are true, since the U.S. was highest until 2010, when China surpassed it.E) None of the above
F) B) and D)

Question 17

Suppose you are given the following annual deflator information for the US (https://fred.stlouisfed.org) . Using the information from the table we can conclude that the year with the lowest price level was:

Accepted Answer

A)   2008
B)   2009
C)   2012
D)   2015E) A) and C)
F) A) and B)

Question 18

If a country experiences a negative growth rate in real GDP, it means:

Accepted Answer

A)   people are producing less than they did the year before.
B)   the economy is shrinking.
C)   there are less goods to allocate in the economy than before.
D)   All of these statements are true.E) B) and C)
F) All of the above

Question 19

A good that would be counted as consumption in GDP would be the:

Accepted Answer

A)   Subway sandwich Tony ate for lunch.
B)   $10 Tony received after winning a bet with his friend.
C)   $50 in wages Tony received that day from working all afternoon.
D)   common stock Tony purchased for his 401(k) .E) All of the above
F) B) and D)

Question 20

U.S. Gross Domestic Product includes goods produced by:

Accepted Answer

A)   foreign firms on U.S. soil.
B)   U.S. firms on foreign soil.
C)   foreign firms on foreign soil.
D)   None of these statements is true.E) C) and D)
F) B) and C)

Exam 7: Measuring GDP

The government office that declares official periods of recession and depression is the:

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Investment, as a part of GDP, includes:

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The rate of change in GDP over time is called the:

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A GDP deflator of 112 means:

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Inrecent years in China, the fraction of the population living below the international poverty line ($1.25 per person per day) :

Correct AnswerverifiedShow Answer

At the end of the year, Ford realizes it has overproduced Fiestas, because 2,500 of them are left unsold. How is this accounted for in that year's GDP? The cars are:

Correct AnswerverifiedShow Answer

We can measure total production by:

Correct AnswerverifiedShow Answer

If we add up all the money people spend buying final goods and services-being careful to omit spending on intermediate goods so as not to double-count-the sum will be:

Correct AnswerverifiedShow Answer

Calculating the value of an economy is more complex than just adding up the value of every single thing that is produced because that would lead to:

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The four components that make up GDP in the expenditure approach are:

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An example of a final good is:

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We can measure the status of a national economy by looking at:

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Suppose you are given the following annual deflator information for the US (https://fred.stlouisfed.org) . Using the information from the table we can conclude that the year with the lowest price level was:

Correct AnswerverifiedShow Answer

Of the world's countries, which of the following can be said of their real GDP growth rates in recent years?

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An example of something that might be sold in the underground economy is:

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If a country experiences a negative growth rate in real GDP, it means:

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The income approach to calculating GDP:

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A good that would be counted as consumption in GDP would be the:

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U.S. Gross Domestic Product includes goods produced by:

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If the Real GDP increases from one year to the next, we could conclude the country experienced:

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