Question 1

U.S. gross domestic product (GDP) measures the market value of all goods and services produced by Americans in one year.

Accepted Answer

A) True 
 B)False

Question 2

The sale of a used automobile would not be included in GDP of the current year because it is a:

Accepted Answer

A)   Nonmarket transaction
B)   Nonproduction transaction
C)   Purely financial transaction
D)   Private transfer paymentE) A) and B)
F) A) and C)

Question 3

Depreciation is all of the following, except:

Accepted Answer

A)   The difference between GDP and NDP
B)   The difference between gross investment and net investment
C)   The accumulation of capital stock
D)   The consumption of fixed capitalE) All of the above
F) B) and D)

Question 4

Government purchases are the largest component of aggregate expenditures in the United States.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not a component of GDP in the expenditures approach?

Accepted Answer

A)   Government purchases
B)   Workers' wages and other compensation
C)   Gross private domestic investment
D)   The difference between exports and importsE) A) and C)
F) None of the above

Question 6

Net exports are positive when exports are greater than imports.

Accepted Answer

A) True 
 B)False

Question 7

If the price index in year A is 130, this means that:

Accepted Answer

A)   Prices in year A are on average 130 percent higher than in the base year
B)   Prices in year A are on average13 times that in the base year
C)   Prices in year A are on average 30 percent higher than in the base year
D)   Nominal GDP is 130 percent higher than real GDP in year AE) C) and D)
F) None of the above

Question 8

GDP in an economy is $11,050 billion. Consumer expenditures are $7,735 billion, government purchases are $1,989 billion, and gross investment is $1,410 billion. Net exports must be:

Accepted Answer

A)   +$53 billion
B)   -$47 billion
C)   -$84 billion
D)   -$161 billionE) C) and D)
F) None of the above

Question 9

GDP tends to overstate economic well-being because it takes into account:

Accepted Answer

A)   All of the illegal activities conducted by organized crime in the economy
B)   Spending on intermediate goods that are used to produce final goods
C)   Total spending to deal with the adverse health effects of some products
D)   The personal labor time that car owners spend working on car repairs and maintenance of their vehiclesE) A) and C)
F) All of the above

Question 10

When businesses have to install anti-pollution equipment to clean up their wastes, they are adding to GDP.

Accepted Answer

A) True 
 B)False

Question 11

Over a period of time, a nation's GDP increases by 8 percent in constant-price terms, and by 6 percent in current-price terms. Other things being equal, the price level must have changed by about:

Accepted Answer

A)   14 percent
B)   4 percent
C)   2 percent
D)   -2 percentE) C) and D)
F) A) and C)

Question 12

The U.S. Customs Service is a main source of data for:

Accepted Answer

A)   C
B)   Ig
C)   G
D)   XnE) All of the above
F) B) and C)

Question 13

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) A) and B)
F) None of the above

Question 14

GDP excludes most nonmarket transactions. Therefore, GDP tends to:

Accepted Answer

A)   Underestimate the rate of inflation in the economy
B)   Overestimate the rate of inflation in the economy
C)   Overestimate the amount of production of the economy
D)   Underestimate the amount of production in the economyE) B) and C)
F) A) and D)

Question 15

(The following national income statistics are in billions of dollars.)   Refer to the above data. Disposable income is:

Accepted Answer

A)   $383 billion
B)   $372 billion
C)   $271 billion
D)   $212 billionE) B) and C)
F) A) and D)

Question 16

Refer to the above table. The base year of the price index given in the table is:

Accepted Answer

A)   Year 1
B)   Year 2
C)   Year 3
D)   Year 4E) B) and C)
F) A) and D)

Question 17

Nominal GDP has generally risen more rapidly than real GDP since World War II in the United States, suggesting that:

Accepted Answer

A)   The general price level has declined
B)   The general price level has increased
C)   Productivity has increased substantially
D)   World trade has increasedE) A) and B)
F) A) and C)

Exam 7: Measuring Domestic Output and National Income

GDP tends to overstate economic well-being because it takes into account:

Correct Answer
verified

Nominal GDP has generally risen more rapidly than real GDP since World War II in the United States, suggesting that:

Correct Answer
verified

Which of the following is included in GDP?

Correct Answer
verified

Which of the following is not a component of GDP in the expenditures approach?

Correct Answer
verified

U.S. gross domestic product (GDP) measures the market value of all goods and services produced by Americans in one year.

Correct Answer
verified

The sale of a used automobile would not be included in GDP of the current year because it is a:

Correct Answer
verified

Refer to the above table. The base year of the price index given in the table is:

Correct Answer
verified

The U.S. Customs Service is a main source of data for:

Correct Answer
verified

If the price index in year A is 130, this means that:

Correct Answer
verified

GDP in an economy is $11,050 billion. Consumer expenditures are $7,735 billion, government purchases are $1,989 billion, and gross investment is $1,410 billion. Net exports must be:

Correct Answer
verified

Government purchases are the largest component of aggregate expenditures in the United States.

Correct Answer
verified

Net exports are positive when exports are greater than imports.

Correct Answer
verified

When businesses have to install anti-pollution equipment to clean up their wastes, they are adding to GDP.

Correct Answer
verified

(The following national income statistics are in billions of dollars.) Refer to the above data. Disposable income is:

Correct Answer
verified

Over a period of time, a nation's GDP increases by 8 percent in constant-price terms, and by 6 percent in current-price terms. Other things being equal, the price level must have changed by about:

Correct Answer
verified

GDP excludes most nonmarket transactions. Therefore, GDP tends to:

Correct Answer
verified

Depreciation is all of the following, except:

Correct Answer
verified

Exam 7: Measuring Domestic Output and National Income

GDP tends to overstate economic well-being because it takes into account:

Correct AnswerverifiedShow Answer

Nominal GDP has generally risen more rapidly than real GDP since World War II in the United States, suggesting that:

Correct AnswerverifiedShow Answer

Which of the following is included in GDP?

Correct AnswerverifiedShow Answer

Which of the following is not a component of GDP in the expenditures approach?

Correct AnswerverifiedShow Answer

U.S. gross domestic product (GDP) measures the market value of all goods and services produced by Americans in one year.

Correct AnswerverifiedShow Answer

The sale of a used automobile would not be included in GDP of the current year because it is a:

Correct AnswerverifiedShow Answer

Refer to the above table. The base year of the price index given in the table is:

Correct AnswerverifiedShow Answer

The U.S. Customs Service is a main source of data for:

Correct AnswerverifiedShow Answer

If the price index in year A is 130, this means that:

Correct AnswerverifiedShow Answer

GDP in an economy is $11,050 billion. Consumer expenditures are $7,735 billion, government purchases are $1,989 billion, and gross investment is $1,410 billion. Net exports must be:

Correct AnswerverifiedShow Answer

Government purchases are the largest component of aggregate expenditures in the United States.

Correct AnswerverifiedShow Answer

Net exports are positive when exports are greater than imports.

Correct AnswerverifiedShow Answer

When businesses have to install anti-pollution equipment to clean up their wastes, they are adding to GDP.

Correct AnswerverifiedShow Answer

(The following national income statistics are in billions of dollars.) Refer to the above data. Disposable income is:

Correct AnswerverifiedShow Answer

Over a period of time, a nation's GDP increases by 8 percent in constant-price terms, and by 6 percent in current-price terms. Other things being equal, the price level must have changed by about:

Correct AnswerverifiedShow Answer

GDP excludes most nonmarket transactions. Therefore, GDP tends to:

Correct AnswerverifiedShow Answer

Depreciation is all of the following, except:

Correct AnswerverifiedShow Answer

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