Question 1

Which of the following market transactions of final goods and services are excluded from the computation of U.S. GDP?

Accepted Answer

A)   Purchases of products such as wine, beer, hard liquor, and cigarettes.
B)   Secondhand transactions, such as when a used car is sold.
C)   New purchase that a resident of one state makes in a different state.
D)   Purchases of necessities such as groceries and rent.E) B) and C)
F) A) and B)

Question 2

The largest component of GDP is:

Accepted Answer

A)   personal consumption expenditures.
B)   government spending.
C)   durable goods.
D)   net exports.E) None of the above
F) A) and D)

Question 3

In an economy with persistent inflation,

Accepted Answer

A)   real GDP will grow faster than nominal GDP.
B)   nominal GDP will grow faster than real GDP.
C)   nominal and real GDP will grow at the same rate.
D)   nominal and real GDP will both fall.E) None of the above
F) A) and D)

Question 4

In a given year, U.S. nominal GDP was $2,784 billion and the GDP chain price index for that year is 60.4. Real GDP is:

Accepted Answer

A)   $1,682 billion.
B)   $4,609 billion.
C)   $3,889 billion.
D)   $4,000 billion.E) C) and D)
F) B) and D)

Question 5

GDP overstates the productive capacity of a country when:

Accepted Answer

A)   economic bads like pollution are produced and then must be cleaned up.
B)   there is a sizable underground economy.
C)   nonmarket production represents a large portion of the economy.
D)   working conditions improve, allowing jobs to be completed safer and faster.E) None of the above
F) B) and D)

Question 6

Why is it important to use real GDP rather than nominal GDP figures when making comparisons of output across time periods?

Accepted Answer

A)   The real GDP figures are a better measure of changes in the general level of prices.
B)   The real figures will reflect changes in the quantity of output and not changes in the general level of prices.
C)   The real figures will reflect changes in the general level of prices as well as changes in the quantity of output.
D)   The real GDP figures adjust for changes in the level of employment.E) A) and C)
F) All of the above

Question 7

GDP includes:

Accepted Answer

A)   the negative attributes from erosion and deforested landscape.
B)   all quality improvements resulting from higher quality goods replacing inferior goods.
C)   the cleaning-up expenses associated with pollution.
D)   the value of leisure time.E) A) and B)
F) C) and D)

Question 8

Which of the following activities would be calculated as part of GDP accounts?

Accepted Answer

A)   Drug trafficking.
B)   Money laundry.
C)   Illegal prostitution.
D)   Purchasing plastic surgery.E) C) and D)
F) B) and D)

Question 9

Exhibit 11-6 Use the table below to answer the following question(s) .   Year  Nominal GDP  (billions)   GDP  deflator  Year 1 600100.0 Year 2 1,000133.3\begin{array} { | l | c | c | } \hline 	ext { Year } & \begin{array} { c } 	ext { Nominal GDP } \	ext { (billions)  }\end{array} & \begin{array} { c } 	ext { GDP } \	ext { deflator }\end{array} \\hline 	ext { Year 1 } & 600 & 100.0 \	ext { Year 2 } & 1,000 & 133.3 \\hline\end{array} Year  Year 1  Year 2 ​ Nominal GDP  (billions)  ​6001,000​ GDP  deflator ​100.0133.3​​  Refer to Exhibit 11-6. Measured in terms of Year 1 prices, real GDP in Year 2 was:

Accepted Answer

A)   600.
B)   750.
C)   900.
D)   1,333. E) All of the above
F) A) and B)

Question 10

Payments to households not in exchange for goods and services currently produced are:

Accepted Answer

A)   transfer payments.
B)   government purchases.
C)   consumption expenditures.
D)   investment expenditures.E) All of the above
F) A) and B)

Question 11

Which one of the following is not a component of GDP, as measured using the expenditure approach?

Accepted Answer

A)   personal consumption
B)   exports
C)   interest
D)   government spendingE) A) and B)
F) None of the above

Question 12

If you buy a book of U.S. postage stamps to use to mail love letters to your sweetheart, the purchase is considered part of:

Accepted Answer

A)   C.
B)   I.
C)   G.
D)   X.E) B) and D)
F) All of the above

Question 13

In a given year, U.S. nominal GDP was $5,744 billion and the GDP chain price index is 93.6. Real GDP is:

Accepted Answer

A)   $6,137 billion.
B)   $5,376 billion.
C)   $6,000 billion.
D)   $6,376 billion.E) B) and D)
F) B) and C)

Question 14

Which of the following purchases would be counted as a final good in the GDP calculation?

Accepted Answer

A)   A family's purchase of a used car.
B)   A speculator's purchase of 100 shares of Apple Computer stock.
C)   A deli's purchase of bread for making its sandwiches.
D)   A business's purchase of new office equipment.E) None of the above
F) A) and B)

Question 15

Which of the following expenditures would be included in GDP for this year?

Accepted Answer

A)   The purchase of a new car.
B)   The purchase of a new tire by General Motors for a new car.
C)   The purchase of a used car.
D)   The purchase of an intermediate good.E) B) and C)
F) None of the above

Question 16

In recent years, people have benefited from greater amounts of leisure time. This trend:

Accepted Answer

A)   has caused GDP to rise.
B)   has caused GDP to fall.
C)   made GDP fluctuate randomly.
D)   is not accounted for in GDP.E) C) and D)
F) None of the above

Question 17

Gross private domestic investment does not include:

Accepted Answer

A)   spending for new houses.
B)   spending to build up inventories.
C)   unintentional inventory investment.
D)   spending on employee salaries.E) A) and C)
F) B) and C)

Question 18

Increased production, but not increased inflation, will result in higher:

Accepted Answer

A)   nominal GDP.
B)   money GDP.
C)   real GDP.
D)   current dollar GDP.E) None of the above
F) A) and B)

Question 19

Resources that flow through the circular flow model include all of the following except :

Accepted Answer

A)   land.
B)   labor.
C)   capital.
D)   final goods.E) B) and D)
F) B) and C)

Question 20

Suppose in a given year, GDP was $7,242 billion and the GDP chain price index for that year is 117.5. Real GDP is:

Accepted Answer

A)   $5,488 billion.
B)   $6,163 billion.
C)   $6,740 billion.
D)   $7,789 billion.E) A) and C)
F) B) and D)

Exam 11: Gross Domestic Product

In an economy with persistent inflation,

Correct Answer
verified

In a given year, U.S. nominal GDP was $2,784 billion and the GDP chain price index for that year is 60.4. Real GDP is:

Correct Answer
verified

Gross private domestic investment does not include:

Correct Answer
verified

In recent years, people have benefited from greater amounts of leisure time. This trend:

Correct Answer
verified

Which of the following market transactions of final goods and services are excluded from the computation of U.S. GDP?

Correct Answer
verified

Correct Answer
verified

Which one of the following is not a component of GDP, as measured using the expenditure approach?

Correct Answer
verified

If you buy a book of U.S. postage stamps to use to mail love letters to your sweetheart, the purchase is considered part of:

Correct Answer
verified

GDP includes:

Correct Answer
verified

Which of the following activities would be calculated as part of GDP accounts?

Correct Answer
verified

In a given year, U.S. nominal GDP was $5,744 billion and the GDP chain price index is 93.6. Real GDP is:

Correct Answer
verified

Which of the following expenditures would be included in GDP for this year?

Correct Answer
verified

Resources that flow through the circular flow model include all of the following except :

Correct Answer
verified

Suppose in a given year, GDP was $7,242 billion and the GDP chain price index for that year is 117.5. Real GDP is:

Correct Answer
verified

Payments to households not in exchange for goods and services currently produced are:

Correct Answer
verified

Which of the following purchases would be counted as a final good in the GDP calculation?

Correct Answer
verified

Increased production, but not increased inflation, will result in higher:

Correct Answer
verified

Why is it important to use real GDP rather than nominal GDP figures when making comparisons of output across time periods?

Correct Answer
verified

The largest component of GDP is:

Correct Answer
verified

GDP overstates the productive capacity of a country when:

Correct Answer
verified

Exam 11: Gross Domestic Product

In an economy with persistent inflation,

Correct AnswerverifiedShow Answer

In a given year, U.S. nominal GDP was $2,784 billion and the GDP chain price index for that year is 60.4. Real GDP is:

Correct AnswerverifiedShow Answer

Gross private domestic investment does not include:

Correct AnswerverifiedShow Answer

In recent years, people have benefited from greater amounts of leisure time. This trend:

Correct AnswerverifiedShow Answer

Which of the following market transactions of final goods and services are excluded from the computation of U.S. GDP?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following is not a component of GDP, as measured using the expenditure approach?

Correct AnswerverifiedShow Answer

If you buy a book of U.S. postage stamps to use to mail love letters to your sweetheart, the purchase is considered part of:

Correct AnswerverifiedShow Answer

GDP includes:

Correct AnswerverifiedShow Answer

Which of the following activities would be calculated as part of GDP accounts?

Correct AnswerverifiedShow Answer

In a given year, U.S. nominal GDP was $5,744 billion and the GDP chain price index is 93.6. Real GDP is:

Correct AnswerverifiedShow Answer

Which of the following expenditures would be included in GDP for this year?

Correct AnswerverifiedShow Answer

Resources that flow through the circular flow model include all of the following except :

Correct AnswerverifiedShow Answer

Suppose in a given year, GDP was $7,242 billion and the GDP chain price index for that year is 117.5. Real GDP is:

Correct AnswerverifiedShow Answer

Payments to households not in exchange for goods and services currently produced are:

Correct AnswerverifiedShow Answer

Which of the following purchases would be counted as a final good in the GDP calculation?

Correct AnswerverifiedShow Answer

Increased production, but not increased inflation, will result in higher:

Correct AnswerverifiedShow Answer

Why is it important to use real GDP rather than nominal GDP figures when making comparisons of output across time periods?

Correct AnswerverifiedShow Answer

The largest component of GDP is:

Correct AnswerverifiedShow Answer

GDP overstates the productive capacity of a country when:

Correct AnswerverifiedShow Answer

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