Question 1

Kelly's Surf Shop orders 5,000 new surf boards at the beginning of the year but only sells 4,500 by the end of the year.How are the 500 unsold surfboards accounted for in Gross Domestic Product?

Accepted Answer

A)  They will be included in the nondurable consumption category of GDP.
B)  They will be included in the residential investment category of GDP.
C)  They will be included in the government spending category of GDP.
D)  They will be included in the inventory investment category of GDP.
E)  They will be included in the durable consumption category of GDP.

Question 2

A restaurant buys fish to offer as a daily menu special.The purchase of the fish by the restaurant is

Accepted Answer

A)  a consumption expenditure.
B)  an investment.
C)  an intermediate good.
D)  an example of government expenditures on goods and services.
E)  part of net exports if the fish was caught beyond the U.S.border.

Question 3

Is it possible for nominal GDP to increase while real GDP does not change?

Accepted Answer

Yes,it is possible for nominal GDP to in...

Question 4

What is "underground production"? Is it included in GDP?

Accepted Answer

Underground production is the production...

Question 5

The abbreviation "GDP" stands for

Accepted Answer

A)  Gross Domestic Product.
B)  Gross Domestic Prices.
C)  General Domestic Prices.
D)  Great Domestic Prices.
E)  Government's Domestic Politics.

Question 6

Explain how the United Nations uses the Human Development Index (HDI)to better measure the standard of living around the globe.

Accepted Answer

Economists have long realized that the l...

Question 7

In one year,a firm increases its production by $9 million and increases sales by $8 million.All other things in the economy remaining the same,which of the following is true?

Accepted Answer

A)  GDP increases by $8 million and inventory investment decreases by $1 million.
B)  GDP increases by $9 million and inventory investment increases by $1 million.
C)  Inventory investment decreases by $1 million.
D)  GDP increases by $8 million and investment increases by $1 million.
E)  GDP increases by $17 million.

Question 8

The U.S.economy is experiencing rising output,rising employment,rising incomes and falling unemployment.These conditions best describe a business cycle

Accepted Answer

A)  expansion.
B)  peak.
C)  trend.
D)  recession.
E)  trough.

Question 9

Instead of taking the dirty laundry with you when you go back to visit your parents,you use a Laundromat.Your use of the Laundromat means that

Accepted Answer

A)  GDP will decrease and the country's standard of living will fall.
B)  your parents' contribution to GDP will increase.
C)  GDP will remain the same.
D)  what you paid for use of the Laundromat will be included in GDP.
E)  real GDP does not change because the clothes are still being laundered but nominal GDP rises since you are now paying for the service.

Question 10

-The table gives data for a nation.The value of the country's net exports of goods and services shows that the country's

Accepted Answer

A)  value of its exports exceeded the value of its imports.
B)  value of its imports are negative.
C)  net exports of goods and services are decreasing.
D)  value of its imports exceeded the value of its exports.
E)  value of its imports must equal zero.

Question 11

U.S.net exports include

Accepted Answer

A)  sales of Hollywood movies to the rest of the world.
B)  the production of Ford Mustangs in China that are sold in China.
C)  Honda automobiles produced and sold in Japan.
D)  the sale of shares of Nike stock on the New York Stock Exchange.
E)  the sale of U.S.government securities to U.S.citizens.

Question 12

GDP handles household production by

Accepted Answer

A)  estimating a dollar value of the goods purchased to do housework.
B)  estimating a dollar value of the services provided.
C)  ignoring it.
D)  including it in exactly the same way that all other production is included.
E)  including it in real GDP but not in nominal GDP because there are no prices paid for the work.

Question 13

Last year U.S.net exports of goods and services was negative.This fact means that last year

Accepted Answer

A)  there was an error made when calculating net exports of goods and services for the United States.
B)  the value of U.S.exports was greater than the value of U.S.imports.
C)  the value of U.S.exports was less than the value of U.S.imports.
D)  U.S.consumption expenditure plus investment was less than the value of exports plus the value of imports.
E)  U.S.consumption expenditure plus investment plus government expenditures on goods and services was less than the value of exports plus the value of imports.

Question 14

In the United States,between 1961 and 2011,there has been
I.a consistent ,non-changing growth rate of potential GDP per person.
Ii.an increase in the standard of living based on real GDP per person.
Iii.fluctuations in real GDP per person around potential GDP per person.

Accepted Answer

A)  ii only
B)  i,ii and iii
C)  i and ii only
D)  ii and iii
E)  i only

Question 15

In calculating GDP,economists

Accepted Answer

A)  measure total expenditure as the only true measure.
B)  can measure either total expenditure or total income.
C)  measure total income as the only true measure.
D)  measure total income minus total expenditure.
E)  measure total income plus total expenditure.

Question 16

If real GDP increases over time,the cost of living will

Accepted Answer

A)  always remain constant.
B)  always decrease.
C)  always increase.
D)  either remain constant or increase.
E)  More information is needed to determine how the cost of living changes.

Question 17

Which of the following is classified as an intermediate good?
I.the purchase of a Big Mac by a college student
Ii.McDonald's purchase of pickles
Iii.a McDonald's restaurant owner's interest payment for the loan on her building

Accepted Answer

A)  ii only
B)  ii and iii
C)  i only
D)  i and iii
E)  i,ii and iii

Question 18

Are sales and purchases of used goods counted as part of GDP? Why or why not?

Accepted Answer

Sales and purchases of used goods are no...

Question 19

Investment is defined as the purchase of

Accepted Answer

A)  any financial asset only.
B)  additions to inventories only.
C)  financial assets and inventories only.
D)  new capital goods and additions to inventories.
E)  new capital goods but not additions to inventories.

Question 20

The expenditure approach values ________ and the income approach values ________.

Accepted Answer

A)  goods and services at market prices;services at factor prices
B)  goods and services at market prices;goods and services at factor prices
C)  only goods at market prices;only services at factor prices
D)  services only at factor prices;goods only at market prices
E)  goods and services at factor prices;goods and services at market prices

Exam 14: Gdp: a Measure of Total Production and Income

Kelly's Surf Shop orders 5,000 new surf boards at the beginning of the year but only sells 4,500 by the end of the year.How are the 500 unsold surfboards accounted for in Gross Domestic Product?

Correct AnswerverifiedShow Answer

In one year,a firm increases its production by $9 million and increases sales by $8 million.All other things in the economy remaining the same,which of the following is true?

Correct AnswerverifiedShow Answer

The U.S.economy is experiencing rising output,rising employment,rising incomes and falling unemployment.These conditions best describe a business cycle

Correct AnswerverifiedShow Answer

Last year U.S.net exports of goods and services was negative.This fact means that last year

Correct AnswerverifiedShow Answer

What is "underground production"? Is it included in GDP?

Correct AnswerverifiedUnderground production is the production...View AnswerShow Answer

The abbreviation "GDP" stands for

Correct AnswerverifiedShow Answer

Explain how the United Nations uses the Human Development Index (HDI)to better measure the standard of living around the globe.

Correct AnswerverifiedEconomists have long realized that the l...View AnswerShow Answer

GDP handles household production by

Correct AnswerverifiedShow Answer

The expenditure approach values ________ and the income approach values ________.

Correct AnswerverifiedShow Answer

Are sales and purchases of used goods counted as part of GDP? Why or why not?

Correct AnswerverifiedSales and purchases of used goods are no...View AnswerShow Answer

In the United States,between 1961 and 2011,there has been I.a consistent ,non-changing growth rate of potential GDP per person. Ii.an increase in the standard of living based on real GDP per person. Iii.fluctuations in real GDP per person around potential GDP per person.

Correct AnswerverifiedShow Answer

A restaurant buys fish to offer as a daily menu special.The purchase of the fish by the restaurant is

Correct AnswerverifiedShow Answer

Investment is defined as the purchase of

Correct AnswerverifiedShow Answer

Instead of taking the dirty laundry with you when you go back to visit your parents,you use a Laundromat.Your use of the Laundromat means that

Correct AnswerverifiedShow Answer

In calculating GDP,economists

Correct AnswerverifiedShow Answer

U.S.net exports include

Correct AnswerverifiedShow Answer

-The table gives data for a nation.The value of the country's net exports of goods and services shows that the country's

Correct AnswerverifiedShow Answer

Which of the following is classified as an intermediate good? I.the purchase of a Big Mac by a college student Ii.McDonald's purchase of pickles Iii.a McDonald's restaurant owner's interest payment for the loan on her building

Correct AnswerverifiedShow Answer

Is it possible for nominal GDP to increase while real GDP does not change?

Correct AnswerverifiedYes,it is possible for nominal GDP to in...View AnswerShow Answer

If real GDP increases over time,the cost of living will

Correct AnswerverifiedShow Answer

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Underground production is the production...
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Economists have long realized that the l...
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The expenditure approach values and the income approach values .

Correct Answer
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Correct Answer
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Sales and purchases of used goods are no...
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Correct Answer
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Correct Answer
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Yes,it is possible for nominal GDP to in...
View Answer

Correct Answer
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