Question 1

In determining real GDP economists adjust the nominal GDP by using the:

Accepted Answer

A)   national productivity index.
B)   wholesale (producer)  price index.
C)   GDP price index.
D)   consumer price index.E) B) and C)
F) None of the above

Question 2

In a typical year which of the following measures of aggregate output and income is likely to be the smallest?

Accepted Answer

A)   gross domestic product
B)   net domestic income
C)   disposable income
D)   personal incomeE) C) and D)
F) A) and B)

Question 3

Suppose the total market value of all final goods and services produced in a particular country in 2000 is $600 billion and the total market value of final goods and services sold is $525 billion. We can conclude that:

Accepted Answer

A)   GDP in 2000 is $525 billion.
B)   NDI in 2000 is $525 billion.
C)   GDP in 2000 is $600 billion.
D)   inventories in 2000 fell by $75 billion.E) A) and D)
F) C) and D)

Question 4

Which would be considered an investment according to economists?

Accepted Answer

A)   the purchase of newly-issued shares of stock in Microsoft
B)   the construction of a new computer chip factory by Intel
C)   the purchase of shares of stock by Fidelity, a mutual fund company
D)   the sale of government bonds by the nation's central bankE) A) and B)
F) B) and C)

Question 5

An example of a final good in national income accounts would be new:

Accepted Answer

A)   lawn mowers purchased by Cut-rite Mowers.
B)   flowers purchased by homeowner Lenny Davis.
C)   chemicals purchased by Green Grass Lawn Care.
D)   trees purchased by Wendy Lee's Garden Center.E) B) and C)
F) A) and D)

Question 6

Real GDP is:

Accepted Answer

A)   the nominal value of all goods and services produced in the economy.
B)   the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation.
C)   that aggregate output which is produced when the economy is operating at full employment.
D)   always greater than nominal GDP.E) A) and B)
F) C) and D)

Question 7

GDP excludes most non-market transactions. Therefore, GDP tends to:

Accepted Answer

A)   underestimate the rate of inflation in the economy.
B)   overestimate the rate of inflation in the economy.
C)   overestimate the amount of production of the economy.
D)   underestimate the amount of production in the economy.E) A) and B)
F) A) and C)

Question 8

A nation's stock of capital goods will decline when:

Accepted Answer

A)   gross investment exceeds net investment.
B)   net investment is positive, but less than gross investment.
C)   depreciation exceeds gross investment.
D)   gross investment exceeds depreciation.E) A) and B)
F) B) and D)

Question 9

In national income accounting, G stands for:

Accepted Answer

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

Question 10

Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5. The current year per unit prices of these three goods are A = $2, B = $3, and C = $1.
-If the per unit prices of the three goods each were $1 in a base year used to construct a GDP price index, then the GDP price index in the current year is:

Accepted Answer

A)   205.5.
B)   255.5.
C)   39.3.
D)   100.E) A) and C)
F) A) and B)

Question 11

Durable goods are products with expected lives of less than three years.

Accepted Answer

A) True 
 B)False

Question 12

A business buys $5,000 worth of resources to produce a product. The business makes 100 units of the product and each of them sells for $65. The value added by the business to these products is:

Accepted Answer

A)   $5,000.
B)   $6,500.
C)   $1,000.
D)   $1,500.E) B) and C)
F) All of the above

Question 13

By summing the dollar value of all market transactions in the economy we would:

Accepted Answer

A)   be determining the market value of all resources used in the production process.
B)   obtain a sum substantially larger than the GDP.
C)   be determining value added for the economy.
D)   be measuring GDP.E) A) and B)
F) None of the above

Question 14

Assume an economy which is producing only one product. Output and price data for a three-year period are as follows.
 
-Refer to the above data. If year 2 is chosen for the base year, in year 3 nominal GDP and real GDP, respectively, are:

Accepted Answer

A)   $180 and $30.
B)   $30 and $5.
C)   $180 and $120.
D)   $120 and $100.E) A) and D)
F) B) and C)

Question 15

Which of the following is not an economic investment?

Accepted Answer

A)   the purchase of a drill press by the Ajax Manufacturing Company
B)   the purchase of 100 shares of Bell Canada by a retired business executive
C)   construction of a suburban housing project
D)   the piling up of inventories on a grocer's shelfE) A) and D)
F) A) and C)

Question 16

Nominal GDP is less than real GDP in an economy in year 1 and year 2. In year 3, nominal GDP is equal to real GDP. In year 4, nominal GDP is slightly greater than real GDP. In year 5, nominal GDP is significantly greater than real GDP. Which year is most likely to be the base year being used to calculate the price index for this economy?

Accepted Answer

A)   2
B)   3
C)   4
D)   5E) A) and B)
F) A) and C)

Question 17

Which is included in GDP?

Accepted Answer

A)   used autos purchased by consumers
B)   transfer payments
C)   telephone service for a home
D)   bread for a restaurantE) A) and D)
F) C) and D)

Question 18

If depreciation (consumption of fixed capital)  exceeds gross investment, it can be concluded that:

Accepted Answer

A)   nominal GDP is rising but real GDP is declining.
B)   net investment is negative.
C)   the economy is importing more than it exports.
D)   the economy is expanding.E) B) and D)
F) A) and D)

Question 19

The value of Canadian imports is:

Accepted Answer

A)   added to exports when calculating GDP because imports reflect spending by Canadians.
B)   subtracted from exports when calculating GDP because imports do not entail spending by Canadians.
C)   subtracted from exports when calculating GDP because imports do not entail production in Canada.
D)   added when calculating GDP because imports do not entail production in Canada.E) All of the above
F) C) and D)

Question 20

Refer to the data below and using year 1 as the base year, the real GDP in year 4 was approximately:

Accepted Answer

A)   $3,989 billion.
B)   $3,562 billion.
C)   $3,774 billion.
D)   $3,494 billion.E) None of the above
F) A) and C)

Exam 5: Measuring the Economys Output

Refer to the data below and using year 1 as the base year, the real GDP in year 4 was approximately:

Correct Answer
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Correct Answer
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Assume an economy which is producing only one product. Output and price data for a three-year period are as follows. -Refer to the above data. If year 2 is chosen for the base year, in year 3 nominal GDP and real GDP, respectively, are:

Correct Answer
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Which would be considered an investment according to economists?

Correct Answer
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A nation's stock of capital goods will decline when:

Correct Answer
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If depreciation (consumption of fixed capital) exceeds gross investment, it can be concluded that:

Correct Answer
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The value of Canadian imports is:

Correct Answer
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Suppose the total market value of all final goods and services produced in a particular country in 2000 is $600 billion and the total market value of final goods and services sold is $525 billion. We can conclude that:

Correct Answer
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Correct Answer
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In a typical year which of the following measures of aggregate output and income is likely to be the smallest?

Correct Answer
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Which of the following is not an economic investment?

Correct Answer
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In determining real GDP economists adjust the nominal GDP by using the:

Correct Answer
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In national income accounting, G stands for:

Correct Answer
verified

Durable goods are products with expected lives of less than three years.

Correct Answer
verified

GDP excludes most non-market transactions. Therefore, GDP tends to:

Correct Answer
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By summing the dollar value of all market transactions in the economy we would:

Correct Answer
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Real GDP is:

Correct Answer
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Which is included in GDP?

Correct Answer
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An example of a final good in national income accounts would be new:

Correct Answer
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A business buys $5,000 worth of resources to produce a product. The business makes 100 units of the product and each of them sells for $65. The value added by the business to these products is:

Correct Answer
verified

Exam 5: Measuring the Economys Output

Refer to the data below and using year 1 as the base year, the real GDP in year 4 was approximately:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume an economy which is producing only one product. Output and price data for a three-year period are as follows. -Refer to the above data. If year 2 is chosen for the base year, in year 3 nominal GDP and real GDP, respectively, are:

Correct AnswerverifiedShow Answer

Which would be considered an investment according to economists?

Correct AnswerverifiedShow Answer

A nation's stock of capital goods will decline when:

Correct AnswerverifiedShow Answer

If depreciation (consumption of fixed capital) exceeds gross investment, it can be concluded that:

Correct AnswerverifiedShow Answer

The value of Canadian imports is:

Correct AnswerverifiedShow Answer

Suppose the total market value of all final goods and services produced in a particular country in 2000 is $600 billion and the total market value of final goods and services sold is $525 billion. We can conclude that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a typical year which of the following measures of aggregate output and income is likely to be the smallest?

Correct AnswerverifiedShow Answer

Which of the following is not an economic investment?

Correct AnswerverifiedShow Answer

In determining real GDP economists adjust the nominal GDP by using the:

Correct AnswerverifiedShow Answer

In national income accounting, G stands for:

Correct AnswerverifiedShow Answer

Durable goods are products with expected lives of less than three years.

Correct AnswerverifiedShow Answer

GDP excludes most non-market transactions. Therefore, GDP tends to:

Correct AnswerverifiedShow Answer

By summing the dollar value of all market transactions in the economy we would:

Correct AnswerverifiedShow Answer

Real GDP is:

Correct AnswerverifiedShow Answer

Which is included in GDP?

Correct AnswerverifiedShow Answer

An example of a final good in national income accounts would be new:

Correct AnswerverifiedShow Answer

A business buys $5,000 worth of resources to produce a product. The business makes 100 units of the product and each of them sells for $65. The value added by the business to these products is:

Correct AnswerverifiedShow Answer

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