Question 1

The four categories of expenditures that make up GDP are consumption, investment,

Accepted Answer

A)   Exports, and government purchases.
B)   Imports, and government purchases.
C)   Net exports, and government purchases.
D)   Net exports, and government transfer payments.

Question 2

Identify the immediate effect of each of the following events on UK GDP and its components.
a. James receives a Social Security check.
b. John buys an Italian sports car.
c. Henry buys domestically produced tools for his construction company.

Accepted Answer

a. Since this is a transfer payment, the...

Question 3

Macroeconomists study

Accepted Answer

A)   The decisions of individual households and firms.
B)   The interaction between households and firms.
C)   Economy-wide phenomena.
D)   Regulations imposed on firms and unions.

Question 4

Suppose that an economy produces 40,000 units of good A which sells at €4 a unit and 20,000 units of good B which sells at €5 per unit. Production of good A contributes

Accepted Answer

A)   2 times as much to GDP as the production of good B.
B)   8/5 times as much to GDP as the production of good B.
C)   5/4 times as much to GDP as the production of good B.
D)   4/5 times as much to GDP as the production of good B.

Question 5

GDP is defined as the market value of all final goods and services produced within a country in a given period of time. In spite of this definition, some production is left out of GDP. Explain why some final goods and services are not included.

Accepted Answer

GDP excludes some products because they ...

Question 6

Nominal GDP employs current prices to value output while real GDP employs constant base-year prices to value output.

Accepted Answer

A) True 
 B)False

Question 7

For an economy as a whole, income equals expenditure because the income of the seller must be equal to the expenditure of the buyer.

Accepted Answer

A) True 
 B)False

Question 8

Real GDP is nominal GDP

Accepted Answer

A)   Plus depreciation.
B)   Adjusted for changes in the price level.
C)   Minus depreciation.
D)   Minus taxes. B

Question 9

The three sources of income for the household are

Accepted Answer

A)   taxes, subsidies from the government, and rent.
B)   wages, rent, and profit.
C)   wages, rent, and subsidies from the government.
D)   wages, rebates, and rent.

Question 10

Expenditures on a nation's domestic production

Accepted Answer

A)   Is less than its domestic production.
B)   are equal to its domestic production.
C)   are greater than its domestic production.
D)   could be less than, equal to, or greater than its domestic production.

Question 11

Which of the following statements about GDP is correct?

Accepted Answer

A)   GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services.
B)   Money continuously flows from households to firms and then back to households, and GDP measures this flow of money.
C)   GDP is generally regarded as the best single measure of a society's economic well-being.
D)   All of the above are correct.

Question 12

In the circular-flow diagram, payments for labour, land, and capital flow from firms to households through the markets for the factors of production.

Accepted Answer

A) True 
 B)False  True

Question 13

Suppose the government passes a law eliminating holidays resulting in increased, production of goods and services. Based on this scenario, which of the following statements is correct?

Accepted Answer

A)   GDP would definitely increase, despite the fact that GDP includes leisure.
B)   GDP would definitely increase because GDP excludes leisure.
C)   GDP could either increase or decrease because GDP includes leisure.
D)   GDP could either increase or decrease because GDP excludes leisure.

Question 14

Which of the following would be counted in France's GDP?

Accepted Answer

A)   The purchase of an historic chateau
B)   The purchase of a haircut
C)   The purchase of a €1,000 government savings bond
D)   The value generated when Pierre washes his car in his garden

Question 15

Why is GDP per capita a good measure of economic well-being?

Accepted Answer

GDP per capita is a good measure of economic well-being because people prefer higher to lower incomes. Governments with a greater GDP per capita can also spend better education and health care. But it is not a perfect measure of well-being. For example, GDP excludes the value of leisure and the value of a clean environment.

Question 16

Which of the following would be excluded from UK GDP for 2014? The sale of

Accepted Answer

A)   a haircut.
B)   the value of a lawyer's services.
C)   a 2014 Honda made in the UK.
D)   a loaf of bread
E)   a home built in 2013 and first sold in 2014.

Question 17

GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

Accepted Answer

A)   Saving per person.
B)   GDP per person.
C)   Government expenditures per person.
D)   Investment per business firm.

Question 18

Cigarettes should be valued in GDP at €7.50 per pack even though €5.00 of that price is tax because the buyers paid €7.50 per pack.

Accepted Answer

A) True 
 B)False

Question 19

Because every transaction has a buyer and a seller,

Accepted Answer

A)   GDP is more closely associated with an economy's income than it is with an economy's expenditure.
B)   every transaction contributes equally to an economy's income and to its expenditure.
C)   the number of firms must be equal to the number of households in a simple circular-flow diagram.
D)   firms' profits are necessarily zero in a simple circular-flow diagram.

Question 20

If your grandparents buy a newly built retirement home, this transaction would affect

Accepted Answer

A)   Investment.
B)   Net exports.
C)   Government purchases.
D)   Consumption.
E)   Disposable income.

Exam 20: Measuring a Nations Well-Being

The four categories of expenditures that make up GDP are consumption, investment,

Correct Answer
verified

Identify the immediate effect of each of the following events on UK GDP and its components. a. James receives a Social Security check. b. John buys an Italian sports car. c. Henry buys domestically produced tools for his construction company.

Correct Answer
verified
a. Since this is a transfer payment, the...
View Answer

Macroeconomists study

Correct Answer
verified

Suppose that an economy produces 40,000 units of good A which sells at €4 a unit and 20,000 units of good B which sells at €5 per unit. Production of good A contributes

Correct Answer
verified

GDP is defined as the market value of all final goods and services produced within a country in a given period of time. In spite of this definition, some production is left out of GDP. Explain why some final goods and services are not included.

Correct Answer
verified
GDP excludes some products because they ...
View Answer

Nominal GDP employs current prices to value output while real GDP employs constant base-year prices to value output.

Correct Answer
verified

For an economy as a whole, income equals expenditure because the income of the seller must be equal to the expenditure of the buyer.

Correct Answer
verified

Real GDP is nominal GDP

Correct Answer
verified
B

The three sources of income for the household are

Correct Answer
verified

Expenditures on a nation's domestic production

Correct Answer
verified

Which of the following statements about GDP is correct?

Correct Answer
verified

In the circular-flow diagram, payments for labour, land, and capital flow from firms to households through the markets for the factors of production.

Correct Answer
verified
True

Suppose the government passes a law eliminating holidays resulting in increased, production of goods and services. Based on this scenario, which of the following statements is correct?

Correct Answer
verified

Which of the following would be counted in France's GDP?

Correct Answer
verified

Why is GDP per capita a good measure of economic well-being?

Which of the following would be excluded from UK GDP for 2014? The sale of

Correct Answer
verified

GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

Correct Answer
verified

Cigarettes should be valued in GDP at €7.50 per pack even though €5.00 of that price is tax because the buyers paid €7.50 per pack.

Correct Answer
verified

Because every transaction has a buyer and a seller,

Correct Answer
verified

If your grandparents buy a newly built retirement home, this transaction would affect

Correct Answer
verified

Exam 20: Measuring a Nations Well-Being

The four categories of expenditures that make up GDP are consumption, investment,

Correct AnswerverifiedShow Answer

Identify the immediate effect of each of the following events on UK GDP and its components. a. James receives a Social Security check. b. John buys an Italian sports car. c. Henry buys domestically produced tools for his construction company.

Correct Answerverifieda. Since this is a transfer payment, the...View AnswerShow Answer

Macroeconomists study

Correct AnswerverifiedShow Answer

Suppose that an economy produces 40,000 units of good A which sells at €4 a unit and 20,000 units of good B which sells at €5 per unit. Production of good A contributes

Correct AnswerverifiedShow Answer

GDP is defined as the market value of all final goods and services produced within a country in a given period of time. In spite of this definition, some production is left out of GDP. Explain why some final goods and services are not included.

Correct AnswerverifiedGDP excludes some products because they ...View AnswerShow Answer

Nominal GDP employs current prices to value output while real GDP employs constant base-year prices to value output.

Correct AnswerverifiedShow Answer

For an economy as a whole, income equals expenditure because the income of the seller must be equal to the expenditure of the buyer.

Correct AnswerverifiedShow Answer

Real GDP is nominal GDP

Correct AnswerverifiedB

The three sources of income for the household are

Correct AnswerverifiedShow Answer

Expenditures on a nation's domestic production

Correct AnswerverifiedShow Answer

Which of the following statements about GDP is correct?

Correct AnswerverifiedShow Answer

In the circular-flow diagram, payments for labour, land, and capital flow from firms to households through the markets for the factors of production.

Correct AnswerverifiedTrue

Suppose the government passes a law eliminating holidays resulting in increased, production of goods and services. Based on this scenario, which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following would be counted in France's GDP?

Correct AnswerverifiedShow Answer

Why is GDP per capita a good measure of economic well-being?

Which of the following would be excluded from UK GDP for 2014? The sale of

Correct AnswerverifiedShow Answer

GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

Correct AnswerverifiedShow Answer

Cigarettes should be valued in GDP at €7.50 per pack even though €5.00 of that price is tax because the buyers paid €7.50 per pack.

Correct AnswerverifiedShow Answer

Because every transaction has a buyer and a seller,

Correct AnswerverifiedShow Answer

If your grandparents buy a newly built retirement home, this transaction would affect

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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a. Since this is a transfer payment, the...
View Answer

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Correct Answer
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GDP excludes some products because they ...
View Answer

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Correct Answer
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B

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True

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