Question 1

Goods that are produced in a particular period but not sold in the current period:

Accepted Answer

A)   are included in consumption estimates.
B)   are called inventories and are included in gross private investment.
C)   are excluded from the current year's GDP and included in GDP in the year they are sold.
D)   are classified as intermediate goods.E) None of the above
F) B) and D)

Question 2

Disposable personal income excludes transfer payments received by households.

Accepted Answer

A) True 
 B)False

Question 3

Gross national product minus net factor earnings from abroad is equal to gross domestic product.

Accepted Answer

A) True 
 B)False

Question 4

When would an economist focus on GNP rather than GDP?

Accepted Answer

A)   When the economist wants a more accurate measure of production, since GNP data are typically much more precise than GDP data
B)   When the economist wants to study consumption, since consumption expenditures are weighted more heavily in GNP than in GDP
C)   When the economist wants to measure total income earned or total amount of factors of production supplied by the residents of a country
D)   When the economist wants a measure of output that includes depreciation, because GDP omits depreciation in its calculationsE) B) and C)
F) A) and D)

Question 5

Let C = consumption, I = private investment, G = government purchases, and Xn = net exports. Which of the following best represents the equation for GDP?

Accepted Answer

A)   GDP = C+ I + G − Xn
B)   GDP = C + I + G + Xn
C)   GDP = C + I + G + net imports
D)   GDP = C + I + G + tax revenues + XnE) A) and D)
F) All of the above B

Question 6

The amount by which the value of a firm's output exceeds the value of the goods and services that the firm purchases from other firms is called _____.

Accepted Answer

A)   profit
B)   value added
C)   the markup rate
D)   the marginal productE) None of the above
F) A) and B)

Question 7

For a given level of GDP, an increase in depreciation will

Accepted Answer

A)   increase gross domestic product.
B)   reduce net national product.
C)   not affect disposable personal income.
D)   increase savings and reduce consumption expenditures.E) None of the above
F) A) and D)

Question 8

If flour is sold to a bread producing firm, then the value of that flour is not included in the GDP.

Accepted Answer

A) True 
 B)False

Question 9

In GDP accounting, the value of the total final output in a given period equals the value of the:

Accepted Answer

A)   total income generated by the production of final goods and services in that period.
B)   net revenue earned from the sales of intermediate goods and services during that period.
C)   total profit earned by firms involved in the production of the output during that period.
D)   total inputs used in the production of the final output in that period.E) B) and D)
F) A) and D)

Question 10

In the calculation of GDP, the value of a new house constructed by a firm is included in:

Accepted Answer

A)   personal consumption expenditures.
B)   personal saving.
C)   the depreciation of capital.
D)   private investment.E) A) and B)
F) A) and C)

Question 11

Use the following to answer questions .
Exhibit: Components of GDP for an Economy 2
 
-(Exhibit: Components of GDP for an Economy 2)  Net exports are negative. This would mean that:

Accepted Answer

A)   imports are larger than exports and there is a trade surplus.
B)   exports are larger than imports and there is a trade surplus.
C)   imports are larger than exports and there is a trade deficit.
D)   exports are larger than imports and there is a trade deficit.E) A) and D)
F) C) and D)

Question 12

In the long run, a country's material standard of living is determined by:

Accepted Answer

A)   the difference between its exports and imports.
B)   the average level of prices and the average income of its population.
C)   its output relative to its population.
D)   the amount of money supply relative to its population.E) B) and D)
F) B) and C) C

Question 13

Disposable personal income is calculated as personal income:

Accepted Answer

A)   adjusted for inflation.
B)   minus depreciation.
C)   minus taxes.
D)   plus transfer payments.E) All of the above
F) C) and D) C

Question 14

Executive salaries and bonuses are included in gross domestic income under:

Accepted Answer

A)   employee compensation.
B)   rental income.
C)   net interest.
D)   profits.E) B) and C)
F) A) and B)

Question 15

The total volume of sales in an economy is much larger than the value of GDP because:

Accepted Answer

A)   GDP understates the value of total output.
B)   the output approach to measuring GDP excludes intermediate transactions.
C)   GDP includes transfer payments.
D)   total sales include sales to foreign countries but GDP excludes sale of output to foreign countries.E) All of the above
F) C) and D)

Question 16

The value of an economy's total output of goods and services is called _____.

Accepted Answer

A)   consumption
B)   investment
C)   gross domestic product
D)   exportsE) B) and C)
F) A) and D)

Question 17

Which of the following statements about GNP is correct?

Accepted Answer

A)   It measures the market value of all goods and services, both final and intermediate, produced by resources located within a nation regardless of who owns those resources.
B)   It measures the market value of all goods and services, both final and intermediate, produced by residents and firms regardless of the location of production.
C)   It measures the market value of all final goods and services produced by residents and firms of a nation regardless of the location of production.
D)   It measures the market value of all final goods and services produced by resources located within a nation regardless of who owns those resources.E) C) and D)
F) A) and D)

Question 18

Which of the following items is included in gross private domestic investment?

Accepted Answer

A)   An increase in the level of government spending on new schools
B)   The purchase of medical equipment by the Marines for use in its field hospitals
C)   An increase in business inventories
D)   An increase in the value of corporate stocks sold during the yearE) C) and D)
F) All of the above

Question 19

Which of the following is the best measure for comparing the standard of living across countries?

Accepted Answer

A)   productivity
B)   gross national product
C)   real gross national product
D)   real gross national product per personE) B) and C)
F) A) and B)

Question 20

An increase in real GDP from 2002 to 2006 necessarily indicates that

Accepted Answer

A)   people are better off in 2002 than they were in 2006.
B)   depreciation was lower in 2002 than it is in 2006.
C)   prices increased between 2002 and 2006.
D)   quantities of goods and services produced increased between 2002 and 2006.E) B) and C)
F) A) and C)

Exam 6: Measuring Total Output and Income

Goods that are produced in a particular period but not sold in the current period:

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Disposable personal income excludes transfer payments received by households.

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Gross national product minus net factor earnings from abroad is equal to gross domestic product.

Correct AnswerverifiedShow Answer

When would an economist focus on GNP rather than GDP?

Correct AnswerverifiedShow Answer

Let C = consumption, I = private investment, G = government purchases, and Xn = net exports. Which of the following best represents the equation for GDP?

Correct AnswerverifiedB

The amount by which the value of a firm's output exceeds the value of the goods and services that the firm purchases from other firms is called _____.

Correct AnswerverifiedShow Answer

For a given level of GDP, an increase in depreciation will

Correct AnswerverifiedShow Answer

If flour is sold to a bread producing firm, then the value of that flour is not included in the GDP.

Correct AnswerverifiedShow Answer

In GDP accounting, the value of the total final output in a given period equals the value of the:

Correct AnswerverifiedShow Answer

In the calculation of GDP, the value of a new house constructed by a firm is included in:

Correct AnswerverifiedShow Answer

Use the following to answer questions . Exhibit: Components of GDP for an Economy 2 -(Exhibit: Components of GDP for an Economy 2) Net exports are negative. This would mean that:

Correct AnswerverifiedShow Answer

In the long run, a country's material standard of living is determined by:

Correct AnswerverifiedC

Disposable personal income is calculated as personal income:

Correct AnswerverifiedC

Executive salaries and bonuses are included in gross domestic income under:

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The total volume of sales in an economy is much larger than the value of GDP because:

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The value of an economy's total output of goods and services is called _____.

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Which of the following statements about GNP is correct?

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Which of the following items is included in gross private domestic investment?

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Which of the following is the best measure for comparing the standard of living across countries?

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An increase in real GDP from 2002 to 2006 necessarily indicates that

Correct AnswerverifiedShow Answer

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Let C = consumption, I = private investment, G = government purchases, and X_n= net exports. Which of the following best represents the equation for GDP?

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B

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C

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C

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