Question 1

Table 19-18
  A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above.
-To make the calculation of real GDP more accurate, in 1996 the BEA switched to using

Accepted Answer

A)   base-year prices.
B)   current prices.
C)   chain-weighted prices.
D)   market prices.

Question 2

The drawback to calculating real GDP using base-year prices is that

Accepted Answer

A)   real GDP in one year is not comparable to real GDP in another year.
B)   relative prices change over time and these are not reflected in base-year prices, and this distorts GDP.
C)   relative prices change over time and these changes are reflected in base-year prices.
D)   quality changes are reflected in base-year prices.

Question 3

Recent estimates put the size of the underground economy in the United States at ________ of measured GDP.

Accepted Answer

A)   2 percent
B)   8 percent
C)   13 percent
D)   over 50 percent

Question 4

Describe briefly how the final value of an iPhone must be equal to the sum of incomes generated by the production of the iPhone.

Accepted Answer

Consider the value of an iPhone which co...

Question 5

A transfer payment is a payment by the government to an individual

Accepted Answer

A)   for a service.
B)   for an investment good.
C)   for a consumption good.
D)   for which the government does not receive a good or service in return.
E)   for a debt owed.

Question 6

The purchase of a new house is included in

Accepted Answer

A)   consumption expenditures.
B)   investment expenditures.
C)   government purchases.
D)   net exports.

Question 7

Real GDP is GDP in a given year

Accepted Answer

A)   adjusted only for anticipated inflation.
B)   adjusted only for unanticipated inflation.
C)   valued in the prices of that year.
D)   valued in the prices of the base year.

Question 8

In periods when prices are falling, on average,

Accepted Answer

A)   real GDP will grow slower than nominal GDP.
B)   real GDP will grow faster than nominal GDP.
C)   real GDP will grow as fast as nominal GDP.
D)   one cannot calculate real GDP.

Question 9

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of

Accepted Answer

A)   employment in a specific industry.
B)   employment in the economy.
C)   output of a specific firm.
D)   output of a specific industry.

Question 10

Investment, as defined by economists, would not include which of the following? Ford

Accepted Answer

A)   buys a new robotic machine (from a plant in Ohio)  to assemble cars.
B)   adds 1,000 new cars to inventories.
C)   builds another assembly plant in the United States.
D)   buys U.S. government bonds.

Question 11

Presently, GDP is ________ to compensate for the costs of environmental damage.

Accepted Answer

A)   fully adjusted
B)   partially adjusted
C)   adjusted on a chain-weight basis
D)   not adjusted

Question 12

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements. This will

Accepted Answer

A)   increase GDP and increase well-being in the economy.
B)   increase GDP and decrease well-being in the economy.
C)   decrease GDP and increase well-being in the economy.
D)   decrease GDP and decrease well-being in the economy.

Question 13

In 2012, which component of GDP had a negative value?

Accepted Answer

A)   consumption
B)   investment
C)   government spending
D)   net exports

Question 14

The measure of production that values production using current prices is called

Accepted Answer

A)   value-added GDP.
B)   nominal GDP.
C)   real GDP.
D)   underground GDP.

Question 15

A final good is one that

Accepted Answer

A)   is used in the production of another good.
B)   is a natural resource used to produce a good.
C)   is purchased as an input in the production process.
D)   is purchased by its final user.

Question 16

Table 19-28
 
-Refer to Table 19-28. Based on the table above, what is national income for this economy?

Accepted Answer

A)   $1,950 billion
B)   $2,250 billion
C)   $2,950 billion
D)   $3,550 billion

Question 17

Depreciation is

Accepted Answer

A)   the value of worn-out equipment, machinery, and buildings.
B)   the value of the decrease in business inventory stocks.
C)   the value of the addition to the capital stock.
D)   the decline in the value of the stock market, net of dividends.

Question 18

Real GDP per capita is calculated by dividing the value of real GDP for a country by the country's adult population.

Accepted Answer

A) True 
 B)False

Question 19

High-income countries such as the United States spend a greater amount on services as compared to goods.

Accepted Answer

A) True 
 B)False

Question 20

Transfer payments are subtracted from national income to get to personal income.

Accepted Answer

A) True 
 B)False

Exam 19: GDP: Measuring Total Production and Income

In periods when prices are falling, on average,

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Table 19-28 -Refer to Table 19-28. Based on the table above, what is national income for this economy?

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Real GDP is GDP in a given year

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High-income countries such as the United States spend a greater amount on services as compared to goods.

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The purchase of a new house is included in

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Real GDP per capita is calculated by dividing the value of real GDP for a country by the country's adult population.

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Table 19-18 A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above. -To make the calculation of real GDP more accurate, in 1996 the BEA switched to using

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The measure of production that values production using current prices is called

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In 2012, which component of GDP had a negative value?

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A transfer payment is a payment by the government to an individual

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A final good is one that

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The drawback to calculating real GDP using base-year prices is that

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Transfer payments are subtracted from national income to get to personal income.

Correct AnswerverifiedShow Answer

Investment, as defined by economists, would not include which of the following? Ford

Correct AnswerverifiedShow Answer

Presently, GDP is ________ to compensate for the costs of environmental damage.

Correct AnswerverifiedShow Answer

Recent estimates put the size of the underground economy in the United States at ________ of measured GDP.

Correct AnswerverifiedShow Answer

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of

Correct AnswerverifiedShow Answer

Describe briefly how the final value of an iPhone must be equal to the sum of incomes generated by the production of the iPhone.

Correct AnswerverifiedConsider the value of an iPhone which co...View AnswerShow Answer

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements. This will

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Depreciation is

Correct AnswerverifiedShow Answer

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Consider the value of an iPhone which co...
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