Question 1

Consumption, as a component of GDP, measures:

Accepted Answer

A)   spending on goods and services by individuals and households.
B)   spending on luxury items only.
C)   spending by the government.
D)   spending only on goods, not services, by individuals and households.E) B) and C)
F) A) and D)

Question 2

Using the income approach, what is the value of profits in an economy if total expenditure equals $250 billion, wages $150 billion, rental income $50 billion, and interest $25 billion?

Accepted Answer

A)   $250 billion
B)   $25 billion
C)   $75 billion
D)   $150 billionE) None of the above
F) B) and D)

Question 3

The income approach to calculating GDP is:

Accepted Answer

A)   more accurate than the expenditure approach to calculating GDP.
B)   less accurate than the expenditure approach to calculating GDP.
C)   the same as the expenditure approach to calculating GDP.
D)   simpler to carry out than the expenditure approach to calculating GDP.E) A) and D)
F) All of the above

Question 4

Investment, as a part of GDP, includes:

Accepted Answer

A)   stocks.
B)   bonds.
C)   gold.
D)   factories.E) C) and D)
F) A) and B) D

Question 5

Which of the following is an example of a good that would not count toward U.S. GDP?

Accepted Answer

A)   A T-shirt made by H&M in Cambodia
B)   A T-shirt made by Organi-tee in Oregon
C)   A LED TV made by Toshiba in Georgia
D)   A bottle of spring water made by Poland Springs in MaineE) B) and D)
F) None of the above

Question 6

Why doesn't GDP include intermediate goods?

Accepted Answer

A)   Intermediate goods are not sold to consumers.
B)   Intermediate goods are never valued at full retail price, leading to an undervaluation of GDP.
C)   The value of intermediate goods is included in the final product, and accounting for the value twice would overestimate GDP.
D)   All of these are reasons why GDP does not include intermediate goods.E) B) and C)
F) C) and D)

Question 7

The market value of a good or service is the:

Accepted Answer

A)   price at which the good or service is bought and sold.
B)   government's valuation of the good or service using the CPI.
C)   price at which producers are willing to sell the good or service.
D)   None of these are true.E) A) and B)
F) A) and C)

Question 8

Using the annual price deflator information (https://fred.stlouisfed.org)  from the table shown, we can conclude which year had the lowest price level?

Accepted Answer

A)   2011
B)   2015
C)   2017
D)   2018E) All of the above
F) B) and C)

Question 9

A GDP deflator of 112 means:

Accepted Answer

A)   the overall price level is 12 percent higher than in the base year.
B)   overall output increased by 12 percent since the base year.
C)   the overall price level is 12 percent lower than in the base year.
D)   both production and the overall price level have increased by 12 percent compared to the base year.E) A) and C)
F) B) and C)

Question 10

GDP per capita:

Accepted Answer

A)   paints a picture of well-being in an economy.
B)   tells us how much is produced per person in an economy.
C)   is calculated by dividing GDP by the population size of the economy.
D)   All of these are true.E) B) and C)
F) A) and C)

Question 11

The market values of goods and services are used when calculating GDP because they:

Accepted Answer

A)   allow us to compare one economy to another.
B)   accurately capture the value of economic activity occurring in black and gray markets.
C)   focus on the quantities produced rather than the overall value of production.
D)   track production but not spending on services.E) None of the above
F) C) and D)

Question 12

Green GDP:

Accepted Answer

A)   tries to capture environmental effects that regular GDP does not.
B)   subtracts the environmental costs of production from the positive outputs normally counted in GDP.
C)   values negative externalities.
D)   All of these are true.E) C) and D)
F) A) and B)

Question 13

Given the annual price deflator information (https://fred.stlouisfed.org)  shown in the table, we can conclude that which year was the base year?

Accepted Answer

A)   2011
B)   2015
C)   2018
D)   None of these are the base year.E) C) and D)
F) A) and B)

Question 14

Investment, as a part of GDP, includes:

Accepted Answer

A)   spending on stocks, bonds, and other types of financial instruments.
B)   goods bought by firms that plan to use those purchases to produce other goods and services in the future.
C)   goods used by government-contracted firms to build roads or bridges.
D)   buying a house to renovate and resell it.E) B) and C)
F) None of the above

Question 15

Apple has started producing the newest iPhone, but doesn't plan to sell the phones it makes this year until the official product launch next year. How will these iPhones affect this year's GDP?

Accepted Answer

A)   They are inventory and will decrease GDP
B)   They will increase GDP
C)   GDP will increase next year, when the phones are sold
D)   GDP will increase by less than the full cost of the phone due to depreciationE) B) and C)
F) C) and D) B

Question 16

If consumption is $6 trillion, investment is $3 trillion, government purchases are $1 trillion, and GDP is $12 trillion, then net exports must equal:

Accepted Answer

A)   $22 trillion.
B)   $10 trillion.
C)   $2 trillion.
D)   $12 trillion.E) All of the above
F) None of the above

Question 17

Which of the following is a consumption good that would not be counted in GDP?

Accepted Answer

A)   The coffee Cyndi buys on her way to work in the morning
B)   Cyndi's brand-new car
C)   The sunglasses Cyndi bought on clearance sale yesterday
D)   The flour Cyndi purchases to make bread for her catering business.E) A) and C)
F) A) and B)

Question 18

The government office that declares official periods of recession and depression is the:

Accepted Answer

A)   National Bureau of Economic Research.
B)   Bureau of Labor Statistics.
C)   Congressional Budget Office.
D)   Federal Reserve Board.E) A) and B)
F) A) and C)

Question 19

If a country experiences a negative GDP growth rate, it means:

Accepted Answer

A)   people are producing less than they did the year before.
B)   the economy is shrinking.
C)   there are fewer goods to allocate in the economy than before.
D)   All of these are true.E) B) and C)
F) B) and D)

Question 20

Pollution from a factory:

Accepted Answer

A)   damages the environment and health; these costs get subtracted from GDP.
B)   is not factored into GDP calculation.
C)   is a positive externality of power generation.
D)   is not measured by green GDP.E) A) and B)
F) A) and C) B

Exam 7: Measuringgdp

Consumption, as a component of GDP, measures:

Correct AnswerverifiedShow Answer

Using the income approach, what is the value of profits in an economy if total expenditure equals $250 billion, wages $150 billion, rental income $50 billion, and interest $25 billion?

Correct AnswerverifiedShow Answer

The income approach to calculating GDP is:

Correct AnswerverifiedShow Answer

Investment, as a part of GDP, includes:

Correct AnswerverifiedD

Which of the following is an example of a good that would not count toward U.S. GDP?

Correct AnswerverifiedShow Answer

Why doesn't GDP include intermediate goods?

Correct AnswerverifiedShow Answer

The market value of a good or service is the:

Correct AnswerverifiedShow Answer

Using the annual price deflator information (https://fred.stlouisfed.org) from the table shown, we can conclude which year had the lowest price level?

Correct AnswerverifiedShow Answer

A GDP deflator of 112 means:

Correct AnswerverifiedShow Answer

GDP per capita:

Correct AnswerverifiedShow Answer

The market values of goods and services are used when calculating GDP because they:

Correct AnswerverifiedShow Answer

Green GDP:

Correct AnswerverifiedShow Answer

Given the annual price deflator information (https://fred.stlouisfed.org) shown in the table, we can conclude that which year was the base year?

Correct AnswerverifiedShow Answer

Investment, as a part of GDP, includes:

Correct AnswerverifiedShow Answer

Apple has started producing the newest iPhone, but doesn't plan to sell the phones it makes this year until the official product launch next year. How will these iPhones affect this year's GDP?

Correct AnswerverifiedB

If consumption is $6 trillion, investment is $3 trillion, government purchases are $1 trillion, and GDP is $12 trillion, then net exports must equal:

Correct AnswerverifiedShow Answer

Which of the following is a consumption good that would not be counted in GDP?

Correct AnswerverifiedShow Answer

The government office that declares official periods of recession and depression is the:

Correct AnswerverifiedShow Answer

If a country experiences a negative GDP growth rate, it means:

Correct AnswerverifiedShow Answer

Pollution from a factory:

Correct AnswerverifiedB

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D

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B

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B