Question 1

The table below indicates the price and output data over a five-year period for an economy that produces only one good.  Refer to the above data.The nominal GDP for year 4:

Accepted Answer

A)  is $90.
B)  is $55.
C)  is $40.
D)  is $35.

Question 2

The purchase of Wal-Mart stock is a part of gross, but not of net, private domestic investment.

Accepted Answer

A) True 
 B)False

Question 3

Which would be considered an investment according to economists?

Accepted Answer

A)  the buying of shares of Janus mutual funds
B)  the purchase of a new machinery by Ford
C)  the purchase of stock of MacDonald's
D)  the selling of IBM corporate bonds

Question 4

A price index can rise from one year to the next even though:

Accepted Answer

A)  some individual prices in the economy fall.
B)  nominal GDP falls.
C)  real GDP falls.
D)  all of the above occur.

Question 5

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)  5

Question 6

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.The nominal GDP for year 3 is:

Accepted Answer

A)  125 percent higher than the nominal GDP for year 1.
B)  50 percent higher than the nominal GDP for year 1.
C)  120
D)  30

Question 7

Welfare payments to families with dependent children are included in GDP.

Accepted Answer

A) True 
 B)False

Question 8

The value added by firms A-E from the production of the product described below is:

Accepted Answer

A)  $3,000
B)  $3,800
C)  $6,500
D)  $10,300

Question 9

In an economy experiencing a declining production capacity:

Accepted Answer

A)  the nation's stock of capital goods is expanding.
B)  net exports are necessarily zero.
C)  Net Investment exceeds GDP.
D)  depreciation exceeds gross investment.

Question 10

Suppose Smith pays $100 to Jones.

Accepted Answer

A)  We can say with certainty that the GDP has increased by $100.
B)  We can say with certainty that the GDP has increased, but we cannot determine the amount.
C)  We can say with certainty that the nominal GDP has increased, but we can't say whether real GDP has increased or decreased.
D)  We need more information to determine whether GDP has changed.

Question 11

Assume that the size of the underground economy increases both absolutely and relatively over time.As a result:

Accepted Answer

A)  real GDP will rise more rapidly than nominal GDP.
B)  GDP will tend to increasingly understate the level of output through time.
C)  GDP will tend to increasingly overstate the level of output through time.
D)  the accuracy of GDP will be unaffected through time.

Question 12

Refer to the above information.Negative net investment is occurring in:

Accepted Answer

A)  economy A only.
B)  economy B only.
C)  economy C only.
D)  economies A and B only.

Question 13

Historically, real GDP has increased less rapidly than nominal GDP because:

Accepted Answer

A)  price indices have not reflected improvements in product quality.
B)  the general price level has increased.
C)  technological progress has resulted in more efficient production.
D)  the general price level has declined.

Question 14

Refer to the information below.Personal income is: All figures are in billions of dollars.

Accepted Answer

A)  $184
B)  $221
C)  $202
D)  $228

Question 15

Net investment refers to:

Accepted Answer

A)  the amount of machinery and equipment used up in producing GDP in a specific year.
B)  the difference between the market value and book value of outstanding capital stock.
C)  gross domestic investment less net exports.
D)  gross investment less consumption of fixed capital.

Question 16

The fact that nominal GDP has risen faster than real GDP:

Accepted Answer

A)  suggests that the base year of the GDP price index has been shifted.
B)  tells us nothing about what has happened to the price level.
C)  suggests that the general price level has fallen.
D)  suggests that the general price level has risen.

Question 17

Consider the following data for a hypothetical economy:  The economy's real GDP has declined between years:

Accepted Answer

A)  1 and 2.
B)  2 and 3.
C)  3 and 4.
D)  4 and 5.

Question 18

The before-tax income received by resource suppliers is measured by disposable income.

Accepted Answer

A) True 
 B)False

Question 19

Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is:

Accepted Answer

A)  $110
B)  $30
C)  $40
D)  $70

Question 20

Real GDP and nominal GDP differ because the real GDP:

Accepted Answer

A)  is adjusted for changes in the volume of intermediate transactions.
B)  includes the economic effects of international trade.
C)  has been adjusted for changes in the price level.
D)  excludes depreciation charges.

Exam 7: Part B: Measuring the Economys Output

Refer to the information below.Personal income is: All figures are in billions of dollars.

Correct Answer
verified

The fact that nominal GDP has risen faster than real GDP:

Correct Answer
verified

Welfare payments to families with dependent children are included in GDP.

Correct Answer
verified

Which would be considered an investment according to economists?

Correct Answer
verified

Net investment refers to:

Correct Answer
verified

The purchase of Wal-Mart stock is a part of gross, but not of net, private domestic investment.

Correct Answer
verified

In an economy experiencing a declining production capacity:

Correct Answer
verified

Historically, real GDP has increased less rapidly than nominal GDP because:

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.The nominal GDP for year 3 is:

Correct Answer
verified

Suppose Smith pays $100 to Jones.

Correct Answer
verified

Refer to the above information.Negative net investment is occurring in:

Correct Answer
verified

Assume that the size of the underground economy increases both absolutely and relatively over time.As a result:

Correct Answer
verified

Consider the following data for a hypothetical economy: The economy's real GDP has declined between years:

Correct Answer
verified

Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is:

Correct Answer
verified

Correct Answer
verified

A price index can rise from one year to the next even though:

Correct Answer
verified

The value added by firms A-E from the production of the product described below is:

Correct Answer
verified

The table below indicates the price and output data over a five-year period for an economy that produces only one good. Refer to the above data.The nominal GDP for year 4:

Correct Answer
verified

The before-tax income received by resource suppliers is measured by disposable income.

Correct Answer
verified

Real GDP and nominal GDP differ because the real GDP:

Correct Answer
verified

Exam 7: Part B: Measuring the Economys Output

Refer to the information below.Personal income is: All figures are in billions of dollars.

Correct AnswerverifiedShow Answer

The fact that nominal GDP has risen faster than real GDP:

Correct AnswerverifiedShow Answer

Welfare payments to families with dependent children are included in GDP.

Correct AnswerverifiedShow Answer

Which would be considered an investment according to economists?

Correct AnswerverifiedShow Answer

Net investment refers to:

Correct AnswerverifiedShow Answer

The purchase of Wal-Mart stock is a part of gross, but not of net, private domestic investment.

Correct AnswerverifiedShow Answer

In an economy experiencing a declining production capacity:

Correct AnswerverifiedShow Answer

Historically, real GDP has increased less rapidly than nominal GDP because:

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.The nominal GDP for year 3 is:

Correct AnswerverifiedShow Answer

Suppose Smith pays $100 to Jones.

Correct AnswerverifiedShow Answer

Refer to the above information.Negative net investment is occurring in:

Correct AnswerverifiedShow Answer

Assume that the size of the underground economy increases both absolutely and relatively over time.As a result:

Correct AnswerverifiedShow Answer

Consider the following data for a hypothetical economy: The economy's real GDP has declined between years:

Correct AnswerverifiedShow Answer

Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A price index can rise from one year to the next even though:

Correct AnswerverifiedShow Answer

The value added by firms A-E from the production of the product described below is:

Correct AnswerverifiedShow Answer

The table below indicates the price and output data over a five-year period for an economy that produces only one good. Refer to the above data.The nominal GDP for year 4:

Correct AnswerverifiedShow Answer

The before-tax income received by resource suppliers is measured by disposable income.

Correct AnswerverifiedShow Answer

Real GDP and nominal GDP differ because the real GDP:

Correct AnswerverifiedShow Answer

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