Question 1

Nominal GDP is:

Accepted Answer

A)  the sum of all monetary transactions which occur in the economy in a year.
B)  the sum of all monetary transactions involving final goods and services which occur in the economy in a year.
C)  the amount of production which occurs when the economy is operating at full employment.
D)  money GDP adjusted for inflation.E) B) and D)
F) A) and C)

Question 2

Gross domestic product measures the monetary value of:

Accepted Answer

A)  finished goods.
B)  raw materials.
C)  intermediate goods.
D)  TaxesE) C) and D)
F) All of the above

Question 3

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) B) and D)
F) A) and B)

Question 4

GDP tends to overstate economic well-being because it takes into account:

Accepted Answer

A)  improvements in product quality over time.
B)  expenditures undertaken to correct pollution.
C)  illegal activities of individuals and businesses.
D)  nonmarket activities, such as the productive work of homemakers.E) All of the above
F) None of the above

Question 5

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)  100E) A) and B)
F) B) and C)

Question 6

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is:

Accepted Answer

A)  100
B)  200
C)  240
D)  300E) B) and D)
F) A) and D)

Question 7

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 C)
F) All of the above

Question 8

All expenditures on new construction are included as investment in calculating GDP.

Accepted Answer

A) True 
 B)False

Question 9

The growth of GDP may understate changes in the economy's well-being over time if the:

Accepted Answer

A)  distribution of income becomes increasingly unequal.
B)  quality of products and services improves.
C)  environment deteriorates because of pollution.
D)  amount of leisure decreases.E) A) and B)
F) All of the above

Question 10

Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of:

Accepted Answer

A)  net investment for a business.
B)  profit and cost.
C)  value added from the economic activity.
D)  surplus or deficit from the economic activity.E) A) and C)
F) B) and C)

Question 11

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) A) and B)
F) C) and D)

Question 12

If all the final goods and intermediate goods and services were included in GDP:

Accepted Answer

A)  the GDP would then have to be deflated for changes in the price level.
B)  nominal GDP would exceed real GDP.
C)  the GDP would be overstated.
D)  the GDP would be understated.E) A) and C)
F) C) and D)

Question 13

A distinguishing characteristic of public transfer payments is that:

Accepted Answer

A)  they are used to subsidize the major transportation carriers to reduce transportation costs.
B)  they are counted as part of government purchases in the calculation of the gross domestic product.
C)  there is a tax on the amount of the subsidy above a certain income level.
D)  the recipients make no contribution to current production in return for them.E) A) and C)
F) A) and D)

Question 14

Which of the following transactions is included in GDP?

Accepted Answer

A)  The production of text books
B)  Public transfer payments
C)  Private transfer payments
D)  Transactions in the stock marketE) A) and D)
F) A) and C)

Question 15

Refer to the information below.The gross domestic product for this economy is: All figures are in billions.

Accepted Answer

A)  $584
B)  $592
C)  $609
D)  $636E) B) and C)
F) A) and D)

Question 16

(GDP figures are in billions of dollars.)   Refer to the above table.What was real GDP in Year 2?

Accepted Answer

A)  $4,820 billion
B)  $4,875 billion
C)  $4,911 billion
D)  $5,320 billionE) A) and D)
F) B) and D)

Question 17

Exports are subtracted from imports in calculating Canadian GDP because exports are not available for domestic consumption.

Accepted Answer

A) True 
 B)False

Question 18

If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

Accepted Answer

A) True 
 B)False

Question 19

Gross domestic product is what type of measure?

Accepted Answer

A)  Monetary
B)  Fiscal
C)  Physical
D)  CashE) C) and D)
F) B) and D)

Question 20

Refer to the information below.The capital consumption allowance: All figures are in billions of dollars.

Accepted Answer

A)  cannot be calculated.
B)  is $23.
C)  is $14.
D)  is $32.E) None of the above
F) A) and B)

Exam 7: Part B: Measuring the Economys Output

The growth of GDP may understate changes in the economy's well-being over time if the:

Correct Answer
verified

Gross domestic product is what type of measure?

Correct Answer
verified

Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of:

Correct Answer
verified

Exports are subtracted from imports in calculating Canadian GDP because exports are not available for domestic consumption.

Correct Answer
verified

Gross domestic product measures the monetary value of:

Correct Answer
verified

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is:

Correct Answer
verified

GDP tends to overstate economic well-being because it takes into account:

Correct Answer
verified

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

Correct Answer
verified

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
verified

All expenditures on new construction are included as investment in calculating GDP.

Correct Answer
verified

Which is included in GDP?

Correct Answer
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Nominal GDP is:

Correct Answer
verified

Refer to the information below.The capital consumption allowance: All figures are in billions of dollars.

Correct Answer
verified

(GDP figures are in billions of dollars.) Refer to the above table.What was real GDP in Year 2?

Correct Answer
verified

If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

Correct Answer
verified

If all the final goods and intermediate goods and services were included in GDP:

Correct Answer
verified

Correct Answer
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Refer to the information below.The gross domestic product for this economy is: All figures are in billions.

Correct Answer
verified

A distinguishing characteristic of public transfer payments is that:

Correct Answer
verified

Which of the following transactions is included in GDP?

Correct Answer
verified

Exam 7: Part B: Measuring the Economys Output

The growth of GDP may understate changes in the economy's well-being over time if the:

Correct AnswerverifiedShow Answer

Gross domestic product is what type of measure?

Correct AnswerverifiedShow Answer

Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of:

Correct AnswerverifiedShow Answer

Exports are subtracted from imports in calculating Canadian GDP because exports are not available for domestic consumption.

Correct AnswerverifiedShow Answer

Gross domestic product measures the monetary value of:

Correct AnswerverifiedShow Answer

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is:

Correct AnswerverifiedShow Answer

GDP tends to overstate economic well-being because it takes into account:

Correct AnswerverifiedShow Answer

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

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

All expenditures on new construction are included as investment in calculating GDP.

Correct AnswerverifiedShow Answer

Which is included in GDP?

Correct AnswerverifiedShow Answer

Nominal GDP is:

Correct AnswerverifiedShow Answer

Refer to the information below.The capital consumption allowance: All figures are in billions of dollars.

Correct AnswerverifiedShow Answer

(GDP figures are in billions of dollars.) Refer to the above table.What was real GDP in Year 2?

Correct AnswerverifiedShow Answer

If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

Correct AnswerverifiedShow Answer

If all the final goods and intermediate goods and services were included in GDP:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Refer to the information below.The gross domestic product for this economy is: All figures are in billions.

Correct AnswerverifiedShow Answer

A distinguishing characteristic of public transfer payments is that:

Correct AnswerverifiedShow Answer

Which of the following transactions is included in GDP?

Correct AnswerverifiedShow Answer

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