Question 1

If the GDP deflator in 2009 was 120 compared to a value of 100 during the 2004 base year, this would indicate that

Accepted Answer

A)  the inflation rate during 2009 was 20 percent.
B)  the general level of prices during 2009 was 20 percent higher than during 2004.
C)  the inflation rate during 2009 was 120 percent.
D)  real GDP was 20 percent higher in 2009 than 2004.E) A) and C)
F) A) and D)

Question 2

When economists speak of changes in GDP measured in constant dollars, they mean that

Accepted Answer

A)  money GDP is constant.
B)  the price level is constant.
C)  a price index has been used to adjust money GDP for the effects of inflation.
D)  the growth rate of money GDP has been adjusted for changes in population.E) A) and B)
F) A) and C)

Question 3

Per capita GDP is

Accepted Answer

A)  real GDP divided by the GDP deflator
B)  a measure of income per person
C)  a measure of resources available to each person
D)  an indicator of the overall production of a governmentE) None of the above
F) A) and B)

Question 4

The typical bundle of goods and services on which the GDP deflator is based

Accepted Answer

A)  is narrower than the one used to calculate the CPI.
B)  is updated once every decade.
C)  is the same as the one used to calculate the CPI.
D)  is updated every year.E) A) and B)
F) All of the above

Question 5

Which one of the following would count as investment in the national income accounts?

Accepted Answer

A)  purchase of a new airplane by an airline
B)  purchase of a U.S.government bond
C)  purchase of 100 shares of Wal-Mart stock
D)  purchase of an existing houseE) A) and B)
F) B) and C)

Question 6

Because of transactions which take place in the underground economy, the

Accepted Answer

A)  GDP calculation tends to overstate the actual value of goods sold in the economy.
B)  GDP calculation tends to accurately portray the value of goods sold in the economy.
C)  GDP calculation tends to understate the actual value of goods sold in the economy.
D)  value of the GDP calculation will be equal to the value of the national income calculation.
E)  value of the GDP calculation through the expenditure approach will be greater then the value calculated through the income approach.F) A) and E)
G) None of the above

Question 7

A real estate salesperson sells a house in 2011 that was built in 1994. How does this transaction get counted in the GDP statistics?

Accepted Answer

A)  The price of the house and the real estate salesperson's commission are both included in 2011's GDP.
B)  Neither the price of the house or the commission is included in 2011's GDP.
C)  The real estate salesperson's commission but not the price of the house is included in 2011's GDP.
D)  The price of the house would be included in both 1994's GDP and the GDP for 2011.E) B) and D)
F) C) and D)

Question 8

Which of the following events will reduce GDP?

Accepted Answer

A)  A hurricane destroys your house.
B)  You lose $500 playing poker.
C)  You pay $500 to repair the damage done to your house by a hurricane.
D)  You work 15 hours less this month so that you can repair the damage done to your home by a hurricane.E) A) and D)
F) None of the above

Question 9

Use the table below to choose the correct answer.  Gross domestic product equals

Accepted Answer

A)  $550.
B)  $510.
C)  $595.
D)  $610.E) B) and C)
F) C) and D)

Question 10

Your brother graduated from college 10 years ago and started to work at a salary of $20,000. You expect to graduate this year and start to work for $35,000. If the consumer price index was 80 ten years ago and is 120 this year, who will have received the higher real starting salary?

Accepted Answer

A)  You will have.
B)  Your brother did.
C)  You and your brother both will have started at the same real salary level.
D)  Not enough information is supplied to answer the question.E) C) and D)
F) None of the above

Question 11

If nominal GDP increases by 4 percent, then

Accepted Answer

A)  real output has increased by 4 percent
B)  the price level has increased by 4 percent
C)  consumer spending must have increased by 4 percent
D)  it is possible that all of the increase was caused by an increase in the price level
E)  net exports increased by 4 percentF) B) and C)
G) A) and D)

Question 12

Suppose you received a 5 percent increase in your nominal wage. Over the year, inflation ran about 2 percent. Which of the following is true?

Accepted Answer

A)  Your real wage fell.
B)  Your nominal wage fell.
C)  Both your nominal and real wages decreased.
D)  Although your nominal wage fell, your real wage increased.
E)  Both your nominal and real wages increased.F) A) and B)
G) B) and E)

Question 13

GDP is not a perfect measure of welfare because it

Accepted Answer

A)  treats a dollar spent on candy bars the same as a dollar spent on education
B)  treats a dollar spent on exports the same as a dollar spent on imports
C)  double counts the value of leisure time
D)  double counts depreciation
E)  counts illegal activities in the underground economyF) A) and B)
G) B) and C)

Question 14

Which of the following transactions would be included in this year's GDP for the United States?

Accepted Answer

A)  You buy a rug imported from Mexico.
B)  You buy stock in an American textile company.
C)  You purchase a table over the Internet from a North Carolina furniture manufacturer.
D)  You purchase a table over the Internet from a Mexican manufacturer.E) C) and D)
F) B) and D)

Question 15

Gross domestic product during a period is measured by adding

Accepted Answer

A)  incomes received by households minus the sale of factor services supplied domestically.
B)  factor payments made by domestic firms minus retained earnings and indirect business taxes.
C)  expenditures on new final goods and services produced domestically.
D)  the market value of all goods and services produced domestically and then subtracting net exports from that figure.E) B) and C)
F) A) and D)

Question 16

Which one of the following events will leave GDP unchanged?

Accepted Answer

A)  You pay $500 to repair your car damaged in an accident.
B)  You buy a new domestic car to replace one that was stolen.
C)  You lose $500 playing blackjack with friends.
D)  You work extra hours this month to help make up for the money you lost playing blackjack.E) A) and B)
F) A) and C)

Question 17

Crime currently affects the measurement of GDP such that

Accepted Answer

A)  expenditures on police protection and detention centers contribute to GDP.
B)  the loss to victims due to crime is subtracted from GDP.
C)  crime is completely ignored because it does not express the economic well-being indicated by GDP.
D)  expenditures on police protection and detention centers are subtracted from GDP.E) All of the above
F) C) and D)

Question 18

Use of real GDP to measure changes in national output from one period to another can be misleading if

Accepted Answer

A)  the price level is different for the two periods.
B)  the share of production carried out in the nonmarket sector is different for the two periods.
C)  the bundle of goods produced during the periods is quite similar.
D)  the size of the export-import sector differs for the two periods.E) All of the above
F) B) and C)

Question 19

A firm purchases $600,000 worth of raw materials and pays wages and salaries of $100,000 and dividends of $200,000. If the firm sells its output for $1 million, the firm's value added to GDP is

Accepted Answer

A)  $300,000.
B)  $400,000.
C)  $900,000.
D)  $1,000,000.E) C) and D)
F) None of the above

Question 20

Table 7-1
 
-Given the information in Table 7-1, the GDP equals

Accepted Answer

A)  $1,140.
B)  $1,330.
C)  $1,650.
D)  $2,670.E) A) and D)
F) C) and D)

Exam 7: Taking the Nations Economic Pulse

Per capita GDP is

Correct AnswerverifiedShow Answer

Which of the following events will reduce GDP?

Correct AnswerverifiedShow Answer

Crime currently affects the measurement of GDP such that

Correct AnswerverifiedShow Answer

Gross domestic product during a period is measured by adding

Correct AnswerverifiedShow Answer

If nominal GDP increases by 4 percent, then

Correct AnswerverifiedShow Answer

Your brother graduated from college 10 years ago and started to work at a salary of $20,000. You expect to graduate this year and start to work for $35,000. If the consumer price index was 80 ten years ago and is 120 this year, who will have received the higher real starting salary?

Correct AnswerverifiedShow Answer

Because of transactions which take place in the underground economy, the

Correct AnswerverifiedShow Answer

Which of the following transactions would be included in this year's GDP for the United States?

Correct AnswerverifiedShow Answer

Use of real GDP to measure changes in national output from one period to another can be misleading if

Correct AnswerverifiedShow Answer

If the GDP deflator in 2009 was 120 compared to a value of 100 during the 2004 base year, this would indicate that

Correct AnswerverifiedShow Answer

A firm purchases $600,000 worth of raw materials and pays wages and salaries of $100,000 and dividends of $200,000. If the firm sells its output for $1 million, the firm's value added to GDP is

Correct AnswerverifiedShow Answer

Table 7-1 -Given the information in Table 7-1, the GDP equals

Correct AnswerverifiedShow Answer

Suppose you received a 5 percent increase in your nominal wage. Over the year, inflation ran about 2 percent. Which of the following is true?

Correct AnswerverifiedShow Answer

The typical bundle of goods and services on which the GDP deflator is based

Correct AnswerverifiedShow Answer

Which one of the following would count as investment in the national income accounts?

Correct AnswerverifiedShow Answer

A real estate salesperson sells a house in 2011 that was built in 1994. How does this transaction get counted in the GDP statistics?

Correct AnswerverifiedShow Answer

GDP is not a perfect measure of welfare because it

Correct AnswerverifiedShow Answer

Which one of the following events will leave GDP unchanged?

Correct AnswerverifiedShow Answer

Use the table below to choose the correct answer. Gross domestic product equals

Correct AnswerverifiedShow Answer

When economists speak of changes in GDP measured in constant dollars, they mean that

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified