Question 1

Marie grows vegetables in her garden to feed her family.The vegetables she grows are not counted in GDP because

Accepted Answer

A)  they were not produced for the marketplace.
B)  they are an intermediate good, which Marie will process further.
C)  the vegetables have no value.
D)  it reduces the amount of vegetables she will buy from shops.E) C) and D)
F) None of the above A

Question 2

You find that your salary for the year is higher this year than it was last year.Does that mean that your real income has increased? Explain carefully.

Accepted Answer

Real income is nominal income adjusted f...

Question 3

Describe the main components of GDP.

Accepted Answer

GDP is divided among four components of ...

Question 4

SA Gross Domestic Product (in contrast to Gross National Product)  measures the production and income of

Accepted Answer

A)  South African-owned firms no matter where they are located in the world.
B)  None of these answers.
C)  the domestic service sector only.
D)  people and factories located within the borders of the SA.
E)  the domestic manufacturing sector only.F) All of the above
G) D) and E)

Question 5

Expenditures on a nation's domestic production

Accepted Answer

A)  is less than its domestic production.
B)  are equal to its domestic production.
C)  are greater than its domestic production.
D)  could be less than, equal to, or greater than its domestic production.E) A) and D)
F) A) and C)

Question 6

Cigarettes should be valued in GDP at r₁7.50 per pack, even though r₁5.00 of that price is tax, because the buyers paid r₁7.50 per pack.

Accepted Answer

A) True 
 B)False

Question 7

Households play what role(s)  in the circular-flow diagram?

Accepted Answer

A)  Purchasers of factors of production and sellers of services.
B)  Purchasers of factors of production and sellers of goods.
C)  Purchasers of goods and services only.
D)  Purchasers of goods and services and sellers of factors of production.E) A) and C)
F) B) and C)

Question 8

The three sources of income for the household are

Accepted Answer

A)  taxes, subsidies from the government, and rent.
B)  wages, rent, and profit.
C)  wages, rent, and subsidies from the government.
D)  wages, rebates, and rent.E) A) and B)
F) B) and D) B

Question 9

Wages are an example of a transfer payment because there is a transfer of payment from the firm to the worker.

Accepted Answer

A) True 
 B)False

Question 10

The value of plant and equipment worn out in the process of manufacturing goods and services is measured by

Accepted Answer

A)  intermediate production.
B)  Net National Product.
C)  investment.
D)  depreciation.
E)  consumption.F) All of the above
G) A) and E)

Question 11

Which of the following statements about GDP is correct?

Accepted Answer

A)  GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services.
B)  Money continuously flows from households to firms and then back to households, and GDP measures this flow of money.
C)  GDP is generally regarded as the best single measure of a society's economic well-being.
D)  All of the above are correct.E) None of the above
F) B) and C)

Question 12

Gross Domestic Product is the sum of the market value of

Accepted Answer

A)  intermediate goods.
B)  final goods and services.
C)  manufactured goods.
D)  inferior goods and services.
E)  normal goods and services.F) B) and D)
G) A) and B)

Question 13

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy.Explain briefly the various parts of the diagram.

Accepted Answer

This diagram should duplicate the essential characteristics of the diagram in the text, with an explanation of the meaning of each flow and each market.It is important that the student understands that the inner loop represents the flow of real goods and services and that the outer loop represents the corresponding flow of payments.

Question 14

If nominal GDP in one year exceeds nominal GDP in the previous year, then the production of output

Accepted Answer

A)  must have fallen.
B)  must have risen.
C)  must have stayed the same.
D)  may have risen, fallen, or stayed the same because there is not enough information to determine what happened to real output.E) All of the above
F) A) and B)

Question 15

Because every transaction has a buyer and a seller,

Accepted Answer

A)  GDP is more closely associated with an economy's income than it is with an economy's expenditure.
B)  every transaction contributes equally to an economy's income and to its expenditure.
C)  the number of firms must be equal to the number of households in a simple circular-flow diagram.
D)  firms' profits are necessarily zero in a simple circular-flow diagram.E) A) and B)
F) B) and D)

Question 16

GDP is defined as the market value of all final goods and services produced within a country in a given period of time.In spite of this definition, some production is left out of GDP.Explain why some final goods and services are not included.

Accepted Answer

GDP excludes some products because they ...

Question 17

Figure 1
 
  Year  Price of  pens  Quantity of  pens  Price of books  Quantity of  books 2013 R57 100 R190 502014 R57 120 R228 702015 R76 120 R266 70\begin{array}{ccccc}	ext { Year } & \begin{array}{c}	ext { Price of } \	ext { pens }\end{array} & \begin{array}{c}	ext { Quantity of } \	ext { pens }\end{array} & 	ext { Price of books } & \begin{array}{c}	ext { Quantity of } \	ext { books }\end{array} \\hline 2013 & 	ext { R57 } & 100 & 	ext { R190 } & 50 \2014 & 	ext { R57 } & 120 & 	ext { R228 } & 70 \2015 & 	ext { R76 } & 120 & 	ext { R266 } & 70\end{array} Year 201320142015​ Price of  pens ​ R57  R57  R76 ​ Quantity of  pens ​100120120​ Price of books  R190  R228  R266 ​ Quantity of  books ​507070​​ 
-Refer to Figure 1.What is the value of real GDP for 2014?

Accepted Answer

A)  R15 200
B)  R20 140
C)  R21 660
D)  R22 800
E)  R27 740 F) C) and D)
G) A) and E)

Question 18

Assume that between two periods, GDP of a European country measured in current prices fell from €96 billion to €48 billion.Over the same period, the relevant price index fell from 100 to 75.
a.What was the percentage decline in nominal GDP during the period?
b.What was the percentage decline in real GDP during this period? Show your work.

Accepted Answer

a.GDP measured in current prices is nomi...

Question 19

Real GDP is measured in ________ prices while nominal GDP is measured in ________ prices.

Accepted Answer

A)  Foreign; domestic
B)  Current year; base year
C)  Domestic; foreign
D)  Base year; current year
E)  Intermediate; finalF) A) and E)
G) C) and D)

Question 20

Gross domestic product measures

Accepted Answer

A)  income and expenditures.
B)  income but not expenditures.
C)  expenditures but not income.
D)  neither income nor expenditures.E) B) and C)
F) A) and D)

Exam 3: Measuring a Nations Well-Being

Marie grows vegetables in her garden to feed her family.The vegetables she grows are not counted in GDP because

Correct Answer
verified
A

You find that your salary for the year is higher this year than it was last year.Does that mean that your real income has increased? Explain carefully.

Correct Answer
verified
Real income is nominal income adjusted f...
View Answer

Describe the main components of GDP.

Correct Answer
verified
GDP is divided among four components of ...
View Answer

SA Gross Domestic Product (in contrast to Gross National Product) measures the production and income of

Correct Answer
verified

Expenditures on a nation's domestic production

Correct Answer
verified

Cigarettes should be valued in GDP at r₁7.50 per pack, even though r₁5.00 of that price is tax, because the buyers paid r₁7.50 per pack.

Correct Answer
verified

Households play what role(s) in the circular-flow diagram?

Correct Answer
verified

The three sources of income for the household are

Correct Answer
verified
B

Wages are an example of a transfer payment because there is a transfer of payment from the firm to the worker.

Correct Answer
verified

The value of plant and equipment worn out in the process of manufacturing goods and services is measured by

Correct Answer
verified

Which of the following statements about GDP is correct?

Correct Answer
verified

Gross Domestic Product is the sum of the market value of

Correct Answer
verified

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy.Explain briefly the various parts of the diagram.

If nominal GDP in one year exceeds nominal GDP in the previous year, then the production of output

Correct Answer
verified

Because every transaction has a buyer and a seller,

Correct Answer
verified

GDP is defined as the market value of all final goods and services produced within a country in a given period of time.In spite of this definition, some production is left out of GDP.Explain why some final goods and services are not included.

Correct Answer
verified
GDP excludes some products because they ...
View Answer

Correct Answer
verified

Correct Answer
verified
a.GDP measured in current prices is nomi...
View Answer

Real GDP is measured in prices while nominal GDP is measured in prices.

Correct Answer
verified

Gross domestic product measures

Correct Answer
verified

Exam 3: Measuring a Nations Well-Being

Marie grows vegetables in her garden to feed her family.The vegetables she grows are not counted in GDP because

Correct AnswerverifiedA

You find that your salary for the year is higher this year than it was last year.Does that mean that your real income has increased? Explain carefully.

Correct AnswerverifiedReal income is nominal income adjusted f...View AnswerShow Answer

Describe the main components of GDP.

Correct AnswerverifiedGDP is divided among four components of ...View AnswerShow Answer

SA Gross Domestic Product (in contrast to Gross National Product) measures the production and income of

Correct AnswerverifiedShow Answer

Expenditures on a nation's domestic production

Correct AnswerverifiedShow Answer

Cigarettes should be valued in GDP at r₁7.50 per pack, even though r₁5.00 of that price is tax, because the buyers paid r₁7.50 per pack.

Correct AnswerverifiedShow Answer

Households play what role(s) in the circular-flow diagram?

Correct AnswerverifiedShow Answer

The three sources of income for the household are

Correct AnswerverifiedB

Wages are an example of a transfer payment because there is a transfer of payment from the firm to the worker.

Correct AnswerverifiedShow Answer

The value of plant and equipment worn out in the process of manufacturing goods and services is measured by

Correct AnswerverifiedShow Answer

Which of the following statements about GDP is correct?

Correct AnswerverifiedShow Answer

Gross Domestic Product is the sum of the market value of

Correct AnswerverifiedShow Answer

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy.Explain briefly the various parts of the diagram.

If nominal GDP in one year exceeds nominal GDP in the previous year, then the production of output

Correct AnswerverifiedShow Answer

Because every transaction has a buyer and a seller,

Correct AnswerverifiedShow Answer

GDP is defined as the market value of all final goods and services produced within a country in a given period of time.In spite of this definition, some production is left out of GDP.Explain why some final goods and services are not included.

Correct AnswerverifiedGDP excludes some products because they ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverifieda.GDP measured in current prices is nomi...View AnswerShow Answer

Real GDP is measured in ________ prices while nominal GDP is measured in ________ prices.

Correct AnswerverifiedShow Answer

Gross domestic product measures

Correct AnswerverifiedShow Answer

Correct Answer
verified
A

Correct Answer
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Real income is nominal income adjusted f...
View Answer

Correct Answer
verified
GDP is divided among four components of ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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B

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
GDP excludes some products because they ...
View Answer

Correct Answer
verified

Correct Answer
verified
a.GDP measured in current prices is nomi...
View Answer

Real GDP is measured in prices while nominal GDP is measured in prices.

Correct Answer
verified

Correct Answer
verified