Question 1

Which of the following would be counted in the calculation of GDP?

Accepted Answer

A)  the sale of a rare, old coin to a coin collector
B)  the damage to a house caused by a hurricane
C)  the brokerage commission from the sale of 100 shares of Microsoft stock
D)  the sale of cocaine in the black marketE) None of the above
F) A) and B)

Question 2

What is meant by a final good or service as opposed to an intermediate good or service? Why are only final goods and services included in the calculation of GDP?

Accepted Answer

A final good is a good purchased by its ...

Question 3

If the consumer price index (CPI)  at the end of year one was 100 and was 108 at the end of year two, the inflation rate during year two was

Accepted Answer

A)  zero; the CPI of 100 indicates that prices were stable.
B)  8 percent.
C)  5 percent.
D)  108 percent.E) All of the above
F) None of the above

Question 4

Gross domestic product equals the sum of

Accepted Answer

A)  all income earned by domestic producers of goods and services minus indirect business taxes and depreciation during the year.
B)  the purchases of final goods and services produced domestically during a year.
C)  the amount received by firms for consumer goods and services.
D)  incomes received by households minus the sale of factor services supplied domestically.E) All of the above
F) A) and D)

Question 5

Gross private domestic investment

Accepted Answer

A)  excludes all investment in the United States by foreign firms.
B)  includes all capital in the United States.
C)  includes net additions to the capital stock plus all new corporate stocks and bonds.
D)  includes business expenditures on new factories, tools, and machinery.E) A) and C)
F) A) and D)

Question 6

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

Accepted Answer

A)  reduced measured GDP.
B)  not affected measured GDP.
C)  increased measured GDP only to the extent that the value of the restaurant meals exceeded the value of meals previously cooked at home.
D)  increased measured GDP by the full value of the restaurant meals.E) All of the above
F) A) and B)

Question 7

If nominal GDP rises from one year to the next, then

Accepted Answer

A)  the economy must be producing a larger output of goods and services.
B)  prices at which goods and services are sold must be higher.
C)  either output, or the general level of prices, or both must be rising.
D)  employment and productivity must be rising.E) A) and C)
F) B) and C)

Question 8

If a local shop buys a used motorcycle for $1,000, makes repairs and refurbishes it, then resells it for $2,500, the

Accepted Answer

A)  shop contributes value added equal to $1,500, but nothing is added to GDP.
B)  shop contributes value added equal to $1,500, and consequently $1,500 is added to GDP.
C)  shop contributes nothing to production because only existing goods are involved.
D)  shop contributes value added equal to $2,500, but only $1,500 is added to GDP.E) C) and D)
F) None of the above

Question 9

The 2012 box office receipts for the movie The Avengers were $1,515.8 million. By way of comparison, the 1977 receipts for Star Wars were $798.0 million. If the Consumer Price Index was 60.6 in 1977 and 229.6 in 2012, which of the following is true?

Accepted Answer

A)  The real receipts of The Avengers were almost four times greater than those for Star Wars.
B)  The real receipts of Star Wars were nearly two times greater than those for The Avengers.
C)  The real receipts of The Avengers were one-third of those for Star Wars.
D)  The real receipts of Star Wars were about 33 percent greater than those for The Avengers.E) B) and C)
F) C) and D)

Question 10

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

Accepted Answer

A)  Deion sends $100 to a hotel in Costa Rica as a deposit for his vacation.
B)  Deion buys a travel guide written by a Costa Rican woman living in the United States.
C)  Deion buys a shirt while on vacation in Costa Rica.
D)  Deion spends money in an American-owned restaurant in Costa Rica.E) B) and C)
F) A) and C)

Question 11

The primary purpose of measuring the overall level of prices in the economy is to

Accepted Answer

A)  allow for the measurement of GDP.
B)  allow consumers to know what kinds of prices to expect in the future.
C)  allow for the comparison of dollar figures from different points in time.
D)  allow for the comparison of dollar figures from the same point in time.E) A) and B)
F) A) and C)

Question 12

When the expenditure approach is used to measure GDP, the major components of GDP are

Accepted Answer

A)  consumption, investment, indirect business taxes, and depreciation.
B)  employee compensation, rents, interest, self-employment income, and corporate profits.
C)  employee compensation, corporate profits, depreciation, and indirect business taxes.
D)  consumption, investment, government consumption and gross investment, and net exports.E) A) and B)
F) A) and C)

Question 13

The price of dishwashers increases dramatically, causing a 1 percent increase in the CPI. The price increase will most likely cause the GDP deflator to increase by

Accepted Answer

A)  more than 1 percent.
B)  less than 1 percent.
C)  1 percent.
D)  None of the above is correct; this particular price increase will not affect the GDP deflator.E) A) and B)
F) A) and C)

Question 14

Your grandfather tells you that he earned $.50 per hour at his job when he was a boy in 1929.
a.Given that the CPI was 17.1 in 1929 and 184.0 in 2003, how much would you have to make in 2003 to have the same real hourly wage?
b.You made $5.50 an hour working during 2003.Were you better off than your grandfather in terms of purchasing power? Explain.
c.Your grandfather also tells you that a soda cost $.05 in 1929, and you know a soda cost $.55 in 2003.You decide to use the price of a soda as the price index.How much would the 2003 "soda equivalent" of $.50 per hour in 1929 be?

Accepted Answer

a.
$5.38
b.
Yes, $5.50 had mor...

Question 15

Which of the following does not contribute to GDP?

Accepted Answer

A)  You lose $50 playing cards with friends.
B)  You pay a doctor $200 to treat an arm that you broke in an accident.
C)  You pay $300 for this month's rent on your apartment.
D)  Your economics textbook is revised, and you buy the new edition.E) All of the above
F) A) and B)

Question 16

Which of the following best illustrates the difference between GDP and GNP?

Accepted Answer

A)  GDP measures the goods consumed by the citizens of a country, while GNP measures output exported to other countries.
B)  GDP measures the output produced by the citizens within a country, while GNP measures output produced by noncitizens within a country.
C)  GDP measures the output produced by the citizens of a country, while GNP measures output produced within the borders of a country.
D)  GDP measures the output produced within the borders of a country, while GNP measures output produced by the citizens of a country.E) None of the above
F) B) and C)

Question 17

If you wanted to compare the quantity of output of a country across time periods, which of the following would you use?

Accepted Answer

A)  the consumer price index
B)  nominal GDP
C)  the GDP deflator
D)  real GDPE) A) and B)
F) All of the above

Question 18

As inflation drives up prices, people attempt to find substitutes and adjust what they buy. The resulting substitution bias problem causes the CPI to

Accepted Answer

A)  overstate the impact of higher prices on consumers.
B)  consistently underestimate the true inflation rate.
C)  omit the benefits of product quality improvements.
D)  have larger fluctuations than other price indexes.E) A) and B)
F) All of the above

Question 19

The GDP of a country can be derived by summing

Accepted Answer

A)  the expenditures on final user goods and services produced domestically during the year.
B)  the payments to employees and owners of capital resources and then subtracting depreciation and indirect business taxes.
C)  the market value of all goods and services produced domestically during the period and then subtracting net exports from that figure.
D)  the income payments to the resource suppliers and net exports.E) A) and B)
F) None of the above

Question 20

If an economy's capital stock is greater at the end of the year than at the beginning of the year, over this period,

Accepted Answer

A)  net investment has been positive.
B)  depreciation has exceeded net investment.
C)  depreciation has exceeded gross investment.
D)  net investment has exceeded gross investment.E) A) and B)
F) None of the above

Exam 7: Taking the Nations Economic Pulse

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

Correct Answer
verified

The 2012 box office receipts for the movie The Avengers were $1,515.8 million. By way of comparison, the 1977 receipts for Star Wars were $798.0 million. If the Consumer Price Index was 60.6 in 1977 and 229.6 in 2012, which of the following is true?

Correct Answer
verified

The primary purpose of measuring the overall level of prices in the economy is to

Correct Answer
verified

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

Correct Answer
verified

If the consumer price index (CPI) at the end of year one was 100 and was 108 at the end of year two, the inflation rate during year two was

Correct Answer
verified

When the expenditure approach is used to measure GDP, the major components of GDP are

Correct Answer
verified

Gross private domestic investment

Correct Answer
verified

If a local shop buys a used motorcycle for $1,000, makes repairs and refurbishes it, then resells it for $2,500, the

Correct Answer
verified

Which of the following does not contribute to GDP?

Correct Answer
verified

Which of the following would be counted in the calculation of GDP?

Correct Answer
verified

If nominal GDP rises from one year to the next, then

Correct Answer
verified

Which of the following best illustrates the difference between GDP and GNP?

Correct Answer
verified

Gross domestic product equals the sum of

Correct Answer
verified

If you wanted to compare the quantity of output of a country across time periods, which of the following would you use?

Correct Answer
verified

What is meant by a final good or service as opposed to an intermediate good or service? Why are only final goods and services included in the calculation of GDP?

Correct Answer
verified
A final good is a good purchased by its ...
View Answer

As inflation drives up prices, people attempt to find substitutes and adjust what they buy. The resulting substitution bias problem causes the CPI to

Correct Answer
verified

Correct Answer
verified
a.
$5.38
b.
Yes, $5.50 had mor...
View Answer

The GDP of a country can be derived by summing

Correct Answer
verified

If an economy's capital stock is greater at the end of the year than at the beginning of the year, over this period,

Correct Answer
verified

The price of dishwashers increases dramatically, causing a 1 percent increase in the CPI. The price increase will most likely cause the GDP deflator to increase by

Correct Answer
verified

Exam 7: Taking the Nations Economic Pulse

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

Correct AnswerverifiedShow Answer

The 2012 box office receipts for the movie The Avengers were $1,515.8 million. By way of comparison, the 1977 receipts for Star Wars were $798.0 million. If the Consumer Price Index was 60.6 in 1977 and 229.6 in 2012, which of the following is true?

Correct AnswerverifiedShow Answer

The primary purpose of measuring the overall level of prices in the economy is to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the consumer price index (CPI) at the end of year one was 100 and was 108 at the end of year two, the inflation rate during year two was

Correct AnswerverifiedShow Answer

When the expenditure approach is used to measure GDP, the major components of GDP are

Correct AnswerverifiedShow Answer

Gross private domestic investment

Correct AnswerverifiedShow Answer

If a local shop buys a used motorcycle for $1,000, makes repairs and refurbishes it, then resells it for $2,500, the

Correct AnswerverifiedShow Answer

Which of the following does not contribute to GDP?

Correct AnswerverifiedShow Answer

Which of the following would be counted in the calculation of GDP?

Correct AnswerverifiedShow Answer

If nominal GDP rises from one year to the next, then

Correct AnswerverifiedShow Answer

Which of the following best illustrates the difference between GDP and GNP?

Correct AnswerverifiedShow Answer

Gross domestic product equals the sum of

Correct AnswerverifiedShow Answer

If you wanted to compare the quantity of output of a country across time periods, which of the following would you use?

Correct AnswerverifiedShow Answer

What is meant by a final good or service as opposed to an intermediate good or service? Why are only final goods and services included in the calculation of GDP?

Correct AnswerverifiedA final good is a good purchased by its ...View AnswerShow Answer

As inflation drives up prices, people attempt to find substitutes and adjust what they buy. The resulting substitution bias problem causes the CPI to

Correct AnswerverifiedShow Answer

Correct Answerverifieda.$5.38b.Yes, $5.50 had mor...View AnswerShow Answer

The GDP of a country can be derived by summing

Correct AnswerverifiedShow Answer

If an economy's capital stock is greater at the end of the year than at the beginning of the year, over this period,

Correct AnswerverifiedShow Answer

The price of dishwashers increases dramatically, causing a 1 percent increase in the CPI. The price increase will most likely cause the GDP deflator to increase by

Correct AnswerverifiedShow Answer

Correct Answer
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A final good is a good purchased by its ...
View Answer

Correct Answer
verified

Correct Answer
verified
a.
$5.38
b.
Yes, $5.50 had mor...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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