Question 1

Nominal gross domestic product is based on:

Accepted Answer

A)  the existing prices at which final goods and services are actually sold.
B)  prices of final goods and services adjusted for inflation.
C)  prices at which intermediate goods are sold.
D)  none of these.E) A) and C)
F) C) and D)

Question 2

Gross domestic product is officially measured by adding together the:

Accepted Answer

A)  quantity of each good and service produced by U.S. residents.
B)  market value of all final goods and services produced within the borders of a nation.
C)  quantity of goods and services produced by companies owned by U.S. citizens.
D)  none of these.E) None of the above
F) B) and C)

Question 3

In any year, nominal GDP divided by the GDP chain price index times 100 equals real GDP.

Accepted Answer

A) True 
 B)False

Question 4

The expenditure approach for the calculation of GDP includes spending on:

Accepted Answer

A)  consumption, investment, durable goods and exports.
B)  consumption, gross private domestic investment, government spending for goods and services, and exports.
C)  consumption, gross private domestic investment, government spending for goods and services, and net exports.
D)  consumption, net private domestic investment, government spending for goods and services, and net exports.
E)  consumption, gross private domestic investment, all government spending including transfer payments, and net exports.F) A) and D)
G) C) and D)

Question 5

The Department of Commerce sums the payments made to resources to arrive at GDP in the form of wages, rents, interest, profits, indirect taxes, and depreciation. This method of deriving GDP is called the:

Accepted Answer

A)  opportunity cost approach.
B)  income approach.
C)  expenditure approach.
D)  monetarist approach.E) C) and D)
F) B) and C)

Question 6

Exhibit 5-1 Use the information below to answer the following question(s) .  Refer to Exhibit 5-1. What is this country's net exports?

Accepted Answer

A)  $35.
B)  - $35.
C)  $379.
D)  - $379.E) A) and D)
F) B) and C)

Question 7

Which approach to calculating GDP is computed using compensation of employees, rental income, profits, net interest, indirect business taxes, and depreciation?

Accepted Answer

A)  The expenditure approach.
B)  The income approach.
C)  The product-market approach.
D)  The circular-flow approach.E) All of the above
F) B) and C)

Question 8

If the underground economy is sizable, then GDP will:

Accepted Answer

A)  understate the economy's performance.
B)  overstate the economy's performance.
C)  fluctuate unpredictably.
D)  accurately reflect this subterranean activity.E) B) and C)
F) A) and B)

Question 9

Exhibit 5-3 Expenditure approach  As shown in Exhibit 5-3, total expenditures by households for domestically produced goods is:

Accepted Answer

A)  $1,000 billion.
B)  $100 billion.
C)  $600 billion.
D)  $20 billion.E) A) and C)
F) A) and B)

Question 10

The largest component of GDP as measured by the expenditure approach is:

Accepted Answer

A)  wages and salary earnings.
B)  personal consumption.
C)  net profits of corporations.
D)  gross private investment.E) A) and B)
F) A) and C)

Question 11

GDP measures the economy's production of:

Accepted Answer

A)  final goods and services.
B)  intermediate goods.
C)  consumer goods and services.
D)  capital goods.E) None of the above
F) All of the above

Question 12

If a man marries his hired housekeeper, the value of GDP:

Accepted Answer

A)  rises.
B)  falls.
C)  is unchanged.
D)  rises, but the value of GDP falls.E) B) and C)
F) A) and D)

Question 13

Nominal values are values measured in terms of the prices at which goods and services are actually sold.

Accepted Answer

A) True 
 B)False

Question 14

Which one of the following statements is true in the four-sector circular model?

Accepted Answer

A)  Money flows from government to households for taxes.
B)  Money flows from foreign economies to households for exports.
C)  Money flows from government to firms for goods and services.
D)  Money flows from firms to foreign economies for exports.
E)  Money flows from households to foreign economies for resources.F) C) and D)
G) None of the above

Question 15

Exhibit 5-9 GDP data (billions of dollars) 
 In Exhibit 5-10, compute national income (NI) . Which of the following is correct?

Accepted Answer

A)  $7,400 billion.
B)  $7,250 billion.
C)  $8,150 billion.
D)  $8,200 billion.
E)  $8,350 billion.F) B) and C)
G) A) and E)

Question 16

Social Security payments are included in personal income.

Accepted Answer

A) True 
 B)False

Question 17

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) A) and C)
F) All of the above

Question 18

Gross domestic product (GDP)is a satisfactory measure of both economic "goods" and "bads".

Accepted Answer

A) True 
 B)False

Question 19

The equation for determining real GDP for year X is:

Accepted Answer

A)   
B)   
C)   
D)   E) None of the above
F) All of the above

Question 20

Gross domestic product (GDP) is defined as:

Accepted Answer

A)  the market value of all final goods and services produced within the borders of a nation.
B)  incomes received by all of a nation's households.
C)  the quantity of each good and service produced by U.S. residents.
D)  none of these.E) C) and D)
F) A) and B)

Exam 5: Gross Domestic Product

Gross domestic product (GDP)is a satisfactory measure of both economic "goods" and "bads".

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Nominal values are values measured in terms of the prices at which goods and services are actually sold.

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The expenditure approach for the calculation of GDP includes spending on:

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The largest component of GDP as measured by the expenditure approach is:

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Gross domestic product (GDP) is defined as:

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Gross domestic product is officially measured by adding together the:

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In any year, nominal GDP divided by the GDP chain price index times 100 equals real GDP.

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Exhibit 5-3 Expenditure approach As shown in Exhibit 5-3, total expenditures by households for domestically produced goods is:

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Social Security payments are included in personal income.

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Which one of the following statements is true in the four-sector circular model?

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Which approach to calculating GDP is computed using compensation of employees, rental income, profits, net interest, indirect business taxes, and depreciation?

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GDP measures the economy's production of:

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

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Exhibit 5-1 Use the information below to answer the following question(s) . Refer to Exhibit 5-1. What is this country's net exports?

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The Department of Commerce sums the payments made to resources to arrive at GDP in the form of wages, rents, interest, profits, indirect taxes, and depreciation. This method of deriving GDP is called the:

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The equation for determining real GDP for year X is:

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Exhibit 5-9 GDP data (billions of dollars) In Exhibit 5-10, compute national income (NI) . Which of the following is correct?

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If a man marries his hired housekeeper, the value of GDP:

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If the underground economy is sizable, then GDP will:

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Nominal gross domestic product is based on:

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