Question 1

The base year is 2010. A country only produces MP3 players. The price of an MP3 player in 2008 was $50. The price of an MP3 player was $30 in 2010. The quantity of MP3 players produced in 2008 was 10,000 units and in 2010 was 20,000 units. Nominal GDP in 2010 equals

Accepted Answer

A)  $1,000,000.
B)  $500,000
C)  $600,000.
D)  $200,000
E)  an amount that cannot be determined without information about real GDP in 2010.F) B) and E)
G) A) and E)

Question 2

Which of the following are included in interest income?
i. payments made for the use of land
ii. income paid to households for loans they make
iii. payments made by households for their borrowing

Accepted Answer

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

Question 3

Which of the following is NOT included in measured U.S. GDP?

Accepted Answer

A)  the value of the pizzas produced at Pizza Hut in Kansas City
B)  the value of leisure time
C)  the value of the goods produced at a French owned plant in Atlanta, GA
D)  the value of the services produced by a lawyer in Tampa, FL
E)  the value of a plane produced by Boeing in Washington and sold to Air FranceF) A) and B)
G) A) and C)

Question 4

In 2011, U.S. GDP was

Accepted Answer

A)  $15 trillion using the expenditure approach.
B)  $15 trillion using the income approach.
C)  $15 trillion using the expenditure approach and $14 trillion using the income approach.
D)  $16 trillion using the income approach and $14 trillion using the expenditure approach.
E)  both A and B are correct.F) B) and D)
G) A) and D)

Question 5

Expenditures on U.S. produced steaks, shoes, and doctor visits are most likely classified as

Accepted Answer

A)  consumption expenditure.
B)  investment.
C)  government expenditure on goods and services.
D)  net exports of goods and services.
E)  net imports of goods and services.F) B) and C)
G) B) and E)

Question 6

Item  Billions of dollars  Wages 300 Consumption expenditure 350 Interest, rent, and profit 50 Statistical discrepancy 0 Government expenditure 300 Indirect taxes minus subsidies 15 Net exports of goods and services −11 Depredation 15\begin{array}{lc}{	ext { Item }} & 	ext { Billions of dollars } \\hline 	ext { Wages } & 300 \	ext { Consumption expenditure } & 350 \	ext { Interest, rent, and profit } & 50 \	ext { Statistical discrepancy } & 0 \	ext { Government expenditure } & 300 \	ext { Indirect taxes minus subsidies } & 15 \	ext { Net exports of goods and services } & -11 \	ext { Depredation } & 15\end{array} Item  Wages  Consumption expenditure  Interest, rent, and profit  Statistical discrepancy  Government expenditure  Indirect taxes minus subsidies  Net exports of goods and services  Depredation ​ Billions of dollars 30035050030015−1115​​ 
-Using the information in the table above, what does GDP equal?

Accepted Answer

A)  $365 billion
B)  $350 billion
C)  $650 billion
D)  $380 billion
E)  GDP cannot be calculated without information on the amount of investment. F) A) and E)
G) A) and D)

Question 7

One reason the total sum of the income categories does not equal GDP is that

Accepted Answer

A)  GDP values goods and services at market prices and the income approach values them at factor cost.
B)  GDP values goods and services at retail prices and the income approach values them at wholesale cost.
C)  taxes are generally larger than subsidies and the depreciation of capital is negligible.
D)  GDP does not include depreciation, which is part of the income categories.
E)  people do not spend all their income, so the value of consumption expenditure is less than the value of wages.F) A) and D)
G) All of the above

Question 8

The business cycle is defined as

Accepted Answer

A)  changes in the stock market.
B)  changes in financial markets.
C)  persistent growth in potential GDP.
D)  irregular ups and downs in production and jobs.
E)  the period of time during which the unemployment rate is rising.F) A) and B)
G) A) and D)

Question 9

Item  Billions of dollars  Wages 5,000 Consumption expenditure 3,500 Interest, rent, and profit 1,500 Investment 1,200 Statistical discrepancy 0 Net exports −300 Indirect taxes minus subsidies 500 Depreciation 800\begin{array} { l r }  { 	ext { Item } } & 	ext { Billions of dollars } \\hline 	ext { Wages } & 5,000 \	ext { Consumption expenditure } & 3,500 \	ext { Interest, rent, and profit } & 1,500 \	ext { Investment } & 1,200 \	ext { Statistical discrepancy } & 0 \	ext { Net exports } & - 300 \	ext { Indirect taxes minus subsidies } & 500 \	ext { Depreciation } & 800\end{array} Item  Wages  Consumption expenditure  Interest, rent, and profit  Investment  Statistical discrepancy  Net exports  Indirect taxes minus subsidies  Depreciation ​ Billions of dollars 5,0003,5001,5001,2000−300500800​​ 
-The table above has information about an economy. Using this information, GDP equals

Accepted Answer

A)  $6,500 billion.
B)  $7,800 billion.
C)  $7,000 billion.
D)  $8,500 billion.
E)  some amount that cannot be calculated without information on the amount of government expenditures. F) A) and B)
G) D) and E)

Question 10

The largest expenditure category in the United States is

Accepted Answer

A)  consumption expenditure.
B)  investment.
C)  government expenditure on goods and services.
D)  net exports of goods and services.
E)  wages.F) D) and E)
G) None of the above

Question 11

A new technology is discovered that results in all new cars producing 50 percent less pollution. The technology costs nothing to produce and cars do not change in price. As a result of the technology, there is a reduction in the number of visits people make to the doctor to complain of breathing difficulties. Which of the following is true?

Accepted Answer

A)  Real GDP decreases as a result of fewer doctor services being provided.
B)  Real GDP is not affected.
C)  Nominal GDP increases to reflect the improvement in the health of the population.
D)  Real GDP decreases to reflect the decrease in pollution.
E)  Nominal GDP does not change and real GDP increases.F) D) and E)
G) C) and E)

Question 12

A new technology is discovered which results in all new cars producing 50 percent less pollution. Which of the following is true?

Accepted Answer

A)  GDP will increase to reflect the fact that the air we breathe is cleaner.
B)  GDP will increase if there is an increase in the production cost and price of the car.
C)  GDP increases anytime pollution is reduced.
D)  GDP will decrease.
E)  Real GDP increases because the air is cleaner, but nominal GDP does not change since air is free.F) B) and D)
G) B) and C)

Question 13

When Jamie purchases a classic 1968 Plymouth Cuda convertible from Shane, GDP

Accepted Answer

A)  does not change, because the car was not produced this year.
B)  increases, because the car is a durable good and increases consumption.
C)  increases, because the car is a durable good and increases investment.
D)  does not change, because Jamie did not buy the car from a dealership.
E)  increases, because this expenditure decreases saving.F) A) and B)
G) A) and C)

Question 14

Which of the following is NOT included in the income approach to calculating GDP?

Accepted Answer

A)  interest
B)  wages
C)  net exports of goods and services
D)  profits
E)  rentF) C) and D)
G) B) and E)

Question 15

The base year is 2011. A country only produces Blu-ray players. The price of a Blu-ray player in 2011 was $100. The price of a Blu-ray player was $90 in 2012. The quantity of Blu-ray players produced in 2011 was 10,000 units and in 2012 was 10,500 units. Nominal GDP in 2012 equals

Accepted Answer

A)  $900,000.
B)  $945,000.
C)  $1,000,000.
D)  $1,050,000.
E)  an amount that cannot be determined without information about nominal GDP in 2008.F) A) and D)
G) B) and D)

Question 16

Investment is the expenditure done by

Accepted Answer

A)  savers.
B)  firms.
C)  governments.
D)  the rest of the world.
E)  Both answers A and B are correct.F) A) and E)
G) C) and E)

Question 17

Last year in a nation to the south, net domestic product at factor cost equaled $3,300 billion. Indirect taxes minus subsidies equaled $200 billion, depreciation equaled $800 billion, the statistical discrepancy equaled zero, and net operating surplus equaled $150 billion. The country's GDP was

Accepted Answer

A)  $2,300 billion.
B)  $3,500 billion.
C)  $4,300 billion.
D)  $4,450 billion.
E)  $4,150 billion.F) C) and D)
G) D) and E)

Question 18

When measuring GDP by the income approach, wage income includes i)  health-care insurance paid for by the firm for its employees.
Ii)  Social Security contributions made by the firm.
Iii)  wages paid during a worker's vacation time.

Accepted Answer

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

Question 19

What must be done to net domestic product at factor cost in order to transform it to gross domestic product?
 Explain why these adjustments are necessary.

Accepted Answer

Several adjustments must be made to net ...

Question 20

The business cycle describes

Accepted Answer

A)  the change in potential GDP over time.
B)  the change in the standard of living across countries.
C)  the behavior of real GDP over time.
D)  the behavior of nominal GDP over time.
E)  the behavior of GNP over time.F) A) and E)
G) B) and C)

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

Correct Answer
verified

The base year is 2011. A country only produces Blu-ray players. The price of a Blu-ray player in 2011 was $100. The price of a Blu-ray player was $90 in 2012. The quantity of Blu-ray players produced in 2011 was 10,000 units and in 2012 was 10,500 units. Nominal GDP in 2012 equals

Correct Answer
verified

Which of the following are included in interest income? i. payments made for the use of land ii. income paid to households for loans they make iii. payments made by households for their borrowing

Correct Answer
verified

The largest expenditure category in the United States is

Correct Answer
verified

The business cycle is defined as

Correct Answer
verified

What must be done to net domestic product at factor cost in order to transform it to gross domestic product? Explain why these adjustments are necessary.

Correct Answer
verified
Several adjustments must be made to net ...
View Answer

Correct Answer
verified

The business cycle describes

Correct Answer
verified

When measuring GDP by the income approach, wage income includes i) health-care insurance paid for by the firm for its employees. Ii) Social Security contributions made by the firm. Iii) wages paid during a worker's vacation time.

Correct Answer
verified

In 2011, U.S. GDP was

Correct Answer
verified

Expenditures on U.S. produced steaks, shoes, and doctor visits are most likely classified as

Correct Answer
verified

A new technology is discovered which results in all new cars producing 50 percent less pollution. Which of the following is true?

Correct Answer
verified

Last year in a nation to the south, net domestic product at factor cost equaled $3,300 billion. Indirect taxes minus subsidies equaled $200 billion, depreciation equaled $800 billion, the statistical discrepancy equaled zero, and net operating surplus equaled $150 billion. The country's GDP was

Correct Answer
verified

The base year is 2010. A country only produces MP3 players. The price of an MP3 player in 2008 was $50. The price of an MP3 player was $30 in 2010. The quantity of MP3 players produced in 2008 was 10,000 units and in 2010 was 20,000 units. Nominal GDP in 2010 equals

Correct Answer
verified

Investment is the expenditure done by

Correct Answer
verified

One reason the total sum of the income categories does not equal GDP is that

Correct Answer
verified

Which of the following is NOT included in the income approach to calculating GDP?

Correct Answer
verified

Which of the following is NOT included in measured U.S. GDP?

Correct Answer
verified

When Jamie purchases a classic 1968 Plymouth Cuda convertible from Shane, GDP

Correct Answer
verified

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

The base year is 2011. A country only produces Blu-ray players. The price of a Blu-ray player in 2011 was $100. The price of a Blu-ray player was $90 in 2012. The quantity of Blu-ray players produced in 2011 was 10,000 units and in 2012 was 10,500 units. Nominal GDP in 2012 equals

Correct AnswerverifiedShow Answer

Which of the following are included in interest income? i. payments made for the use of land ii. income paid to households for loans they make iii. payments made by households for their borrowing

Correct AnswerverifiedShow Answer

The largest expenditure category in the United States is

Correct AnswerverifiedShow Answer

The business cycle is defined as

Correct AnswerverifiedShow Answer

What must be done to net domestic product at factor cost in order to transform it to gross domestic product? Explain why these adjustments are necessary.

Correct AnswerverifiedSeveral adjustments must be made to net ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The business cycle describes

Correct AnswerverifiedShow Answer

When measuring GDP by the income approach, wage income includes i) health-care insurance paid for by the firm for its employees. Ii) Social Security contributions made by the firm. Iii) wages paid during a worker's vacation time.

Correct AnswerverifiedShow Answer

In 2011, U.S. GDP was

Correct AnswerverifiedShow Answer

Expenditures on U.S. produced steaks, shoes, and doctor visits are most likely classified as

Correct AnswerverifiedShow Answer

A new technology is discovered which results in all new cars producing 50 percent less pollution. Which of the following is true?

Correct AnswerverifiedShow Answer

Last year in a nation to the south, net domestic product at factor cost equaled $3,300 billion. Indirect taxes minus subsidies equaled $200 billion, depreciation equaled $800 billion, the statistical discrepancy equaled zero, and net operating surplus equaled $150 billion. The country's GDP was

Correct AnswerverifiedShow Answer

The base year is 2010. A country only produces MP3 players. The price of an MP3 player in 2008 was $50. The price of an MP3 player was $30 in 2010. The quantity of MP3 players produced in 2008 was 10,000 units and in 2010 was 20,000 units. Nominal GDP in 2010 equals

Correct AnswerverifiedShow Answer

Investment is the expenditure done by

Correct AnswerverifiedShow Answer

One reason the total sum of the income categories does not equal GDP is that

Correct AnswerverifiedShow Answer

Which of the following is NOT included in the income approach to calculating GDP?

Correct AnswerverifiedShow Answer

Which of the following is NOT included in measured U.S. GDP?

Correct AnswerverifiedShow Answer

When Jamie purchases a classic 1968 Plymouth Cuda convertible from Shane, GDP

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Several adjustments must be made to net ...
View Answer

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verified

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