Question 1

If flour is sold to a bread producing firm, then the value of that flour is not included in the GDP.

Accepted Answer

A) True 
 B)False

Question 2

Taxes imposed on firms on the production or sale of goods and services are called:

Accepted Answer

A)   output tax.
B)   profit tax.
C)   direct business taxes.
D)   indirect business taxes.

Question 3

The gross domestic product of an economy is defined as the:

Accepted Answer

A)   total value of all industrial goods produced and sold during a given period.
B)   total value of all final goods and services produced during a given period.
C)   value of all noneconomic transactions made among consumers during a particular period.
D)   value of all non-monetary transactions between consumers and firms during a given period.

Question 4

The value of income generated by the production of a given value of final goods and services is called:

Accepted Answer

A)   gross domestic income.
B)   net factor output.
C)   net foreign factor income.
D)   gross personal product.

Question 5

The total volume of sales in an economy is much larger than the value of GDP because:

Accepted Answer

A)   GDP understates the value of total output.
B)   the output approach to measuring GDP excludes intermediate transactions.
C)   GDP includes transfer payments.
D)   total sales include sales to foreign countries but GDP excludes sale of output to foreign countries.

Question 6

Daniel, an U.S. resident, purchases a Mercedes car from a dealer based in German and ships it to the U.S. This activity negatively affects the U.S. GDP.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is the best measure of a nation's standard of living?

Accepted Answer

A)   nominal GDP
B)   market GDP
C)   real GDP per capita
D)   nominal GDP per capita

Question 8

GDP does NOT include _____.

Accepted Answer

A)   government purchases
B)   investment by firms
C)   consumption spending
D)   transfer payments

Question 9

Table 6.2 shows data on the components of GDP in an economy. Use the table to answer questions 57-60.
Table 6-2
 
-Refer to Table 6-2. What is the value of government purchases of goods and services?

Accepted Answer

A)   $100 billion
B)   $160 billion
C)   $300 billion
D)   $192 billion

Question 10

The largest expenditure category in U.S. GDP in 2011 was:

Accepted Answer

A)   government purchases.
B)   personal consumption.
C)   net exports.
D)   gross private domestic investment.

Question 11

All of the following items are a flow variable EXCEPT _____.

Accepted Answer

A)   a savings account balance
B)   consumption expenditure
C)   government purchases
D)   gross private investment

Question 12

In the calculation of GDP, the value of a new house constructed by a firm is included in:

Accepted Answer

A)   personal consumption expenditures.
B)   personal saving.
C)   the depreciation of capital.
D)   private investment.

Question 13

If we sum up the value added at every stage of production of a good, we will get:

Accepted Answer

A)   the total cost of the labor used to produce the good.
B)   the prices of the factors of production used to produce the good.
C)   the final value of the good.
D)   the capital-labor ratio.

Question 14

A country's exports minus its imports measures:

Accepted Answer

A)   net exports.
B)   gross exports.
C)   net imports.
D)   gross imports.

Question 15

Table 6-3 shows data relating to the stages of production of toy model airplanes.
Table 6-3
 
-Refer to Table 6-3. The total value added in the production of a model airplane is _____.

Accepted Answer

A)   $16
B)   $17
C)   $21
D)   $77

Question 16

For a homeowner, the rental value of the home is estimated and included in GDP.

Accepted Answer

A) True 
 B)False

Question 17

An increase in real GDP

Accepted Answer

A)   reduces the amount of pollution.
B)   corresponds to an increase in leisure.
C)   may or may not correspond to an increase in human happiness.
D)   means that all people in the country are better off.

Question 18

Government purchases are defined as:

Accepted Answer

A)   the sum of purchases of goods and services from firms by government agencies and the total value of output produced by government agencies.
B)   the sum of purchases of goods and services from firms by the government and the value of transfer payments made to government to its citizens.
C)   the sum of purchase of final goods and service from firms by government agencies and the payment of interests on loans undertaken by the government.
D)   the purchase of final goods and service from firms by government agencies excluding the value of output produced by government agencies.

Question 19

Which of the following is an example of income earned but not received?

Accepted Answer

A)   Social security payroll taxes
B)   Farm subsidies
C)   Net factor earnings from abroad
D)   Disposable income

Question 20

An increase in real GDP from 2002 to 2006 necessarily indicates that

Accepted Answer

A)   people are better off in 2002 than they were in 2006.
B)   depreciation was lower in 2002 than it is in 2006.
C)   prices increased between 2002 and 2006.
D)   quantities of goods and services produced increased between 2002 and 2006.

Exam 21: Unemployment

The total volume of sales in an economy is much larger than the value of GDP because:

Correct AnswerverifiedShow Answer

Table 6-3 shows data relating to the stages of production of toy model airplanes. Table 6-3 -Refer to Table 6-3. The total value added in the production of a model airplane is _____.

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Which of the following is an example of income earned but not received?

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In the calculation of GDP, the value of a new house constructed by a firm is included in:

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Taxes imposed on firms on the production or sale of goods and services are called:

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Table 6.2 shows data on the components of GDP in an economy. Use the table to answer questions 57-60. Table 6-2 -Refer to Table 6-2. What is the value of government purchases of goods and services?

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The largest expenditure category in U.S. GDP in 2011 was:

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For a homeowner, the rental value of the home is estimated and included in GDP.

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An increase in real GDP from 2002 to 2006 necessarily indicates that

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Daniel, an U.S. resident, purchases a Mercedes car from a dealer based in German and ships it to the U.S. This activity negatively affects the U.S. GDP.

Correct AnswerverifiedShow Answer

If we sum up the value added at every stage of production of a good, we will get:

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All of the following items are a flow variable EXCEPT _____.

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Government purchases are defined as:

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GDP does NOT include _____.

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Which of the following is the best measure of a nation's standard of living?

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An increase in real GDP

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A country's exports minus its imports measures:

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The gross domestic product of an economy is defined as the:

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If flour is sold to a bread producing firm, then the value of that flour is not included in the GDP.

Correct AnswerverifiedShow Answer

The value of income generated by the production of a given value of final goods and services is called:

Correct AnswerverifiedShow Answer

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