Question 1

Which of the following is NOT included in the income approach to calculating GDP?

Accepted Answer

A)  profits
B)  rent
C)  wages
D)  interest
E)  net exports of goods and services

Question 2

According to the income approach to measuring GDP, the largest income category is

Accepted Answer

A)  rent.
B)  wages.
C)  consumption expenditure.
D)  profits.
E)  interest.

Question 3

Which of the following is NOT directly included in Canadian GDP?

Accepted Answer

A)  the sale of tickets to the Vancouver Olympics to U.S. citizens
B)  gasoline purchased by a tour bus operator in Quebec
C)  the purchase of tickets to a Kanye West concert in Montreal
D)  bus tickets sold to tourists for a tour bus ride in Montreal
E)  All of the items would be included in Canadian GDP.

Question 4

Net exports of goods and services is equal to the value of

Accepted Answer

A)  exports plus the value of imports.
B)  exports minus the value of imports.
C)  domestic consumption minus the value of imports.
D)  imports minus the value of exports.
E)  domestic consumption minus the value of exports.

Question 5

During the business cycle,

Accepted Answer

A)  real GDP fluctuates around nominal GDP.
B)  real GDP falls after the trough.
C)  trend GDP fluctuates around real GDP.
D)  nominal GDP fluctuates around real GDP.
E)  real GDP fluctuates around its trend.

Question 6

Instead of taking the dirty laundry with you when you go back to visit your parents, you use a Laundromat. Your use of the Laundromat means that

Accepted Answer

A)  what you paid for use of the Laundromat will be included in GDP.
B)  real GDP does not change because the clothes are still being laundered but nominal GDP rises since you are now paying for the service.
C)  GDP will remain the same.
D)  your parents' contribution to GDP will increase.
E)  GDP will decrease and the country's standard of living will fall.

Question 7

Gross Domestic Product is defined to be the market value of all the final goods and services produced during a given time period

Accepted Answer

A)  within a country.
B)  by citizens of the country, regardless of their place of residence.
C)  within a county minus the market value of all the final goods and services produced by that country's citizens outside the country.
D)  by only legal residents of the country.
E)  within and outside a country by that country's citizens.

Question 8

If the purchase of used goods was to be incorporated into measuring GDP using the expenditure approach, then

Accepted Answer

A)  we also will have to account for spending on financial assets.
B)  we will be counting the value of the used goods both at the time of their production and at the time of their re-sale.
C)  we will have to account for the natural depreciation that a used good experiences.
D)  it will be very difficult to assign a fair market value to a used good.
E)  consumption spending would need to be adjusted for depreciation.

Question 9

How are final goods and services valued when measuring nominal GDP?

Accepted Answer

A)  at producer cost
B)  at base year prices
C)  at factor market prices
D)  at foreign exchange parity
E)  at current market prices

Question 10

One reason the total sum of the income categories does not equal GDP is that

Accepted Answer

A)  taxes are generally larger than subsidies and the depreciation of capital is negligible.
B)  people do not spend all their income, so the value of consumption expenditure is less than the value of wages.
C)  GDP values goods and services at market prices and the income approach values them at factor cost.
D)  GDP values goods and services at retail prices and the income approach values them at wholesale cost.
E)  GDP does not include depreciation, which is part of the income categories.

Question 11

In calculating GDP, we must

Accepted Answer

A)  add the market value of imports and subtract the market value of exports.
B)  add the market value of exports and subtract the market value of imports.
C)  exclude net exports of goods and services (NX) .
D)  subtract the market value of imports, because these goods are produced in a country other than the United States, and subtract the market value of exports, because these goods are consumed in a country other than the United States.
E)  add the value of the goods produced outside of the United States by American firms.

Question 12

Nominal GDP measures the value of goods and services produced in a given year valued using

Accepted Answer

A)  no prices.
B)  prices of the same year.
C)  base year prices.
D)  constant prices.
E)  future prices.

Question 13

The expenditure approach to measuring GDP is based on summing

Accepted Answer

A)  each industry's production.
B)  consumption expenditure, investment, government expenditure on goods and services, and net exports of goods and services minus wages, interest, rent, and profit.
C)  the total values of final goods, intermediate goods and services, used goods, and financial assets.
D)  wages, interest, rent, and profit.
E)  consumption expenditure, investment, government expenditure on goods and services, and net exports of goods and services.

Question 14

The NBER describes a recession as

Accepted Answer

A)  "a decrease in the standard of living for at least one year."
B)  "a decrease in real GDP for two successive quarters."
C)  "a period of significant decline in total output, income, employment, and trade, usually lasting from six months to a year."
D)  "a decrease in potential GDP for at least six months."
E)  "a one year period with increases in the unemployment rate."

Question 15

Data for 2009 Data for 2010 Item Quantity Price Quantity  Price  Bread 50$4.0070$3.00 Soda 50$5.0050$6.00\begin{array}{lllll}&	ext { Data for } 2009&&	ext { Data for } 2010\\hline	ext { Item}&	ext{ Quantity}&	ext{  Price}&	ext{  Quantity }&	ext{ Price }\\hline	ext { Bread } & 50 & \$ 4.00 & 70 & \$ 3.00 \	ext { Soda } & 50 & \$ 5.00 & 50 & \$ 6.00 \\hline\end{array} Item Bread  Soda ​ Data for 2009 Quantity5050​ Price$4.00$5.00​ Data for 2010 Quantity 7050​ Price $3.00$6.00​​ 
The table above gives the production and prices for a small nation that produces only bread and soda. 
-The base year is 2010. What is real GDP in 2010?

Accepted Answer

A)  $1080
B)  $530
C)  $210
D)  $510
E)  $300

Question 16

Undistributed profits-------------counted as part of GDP because-------------

Accepted Answer

A)  are; they can be used to buy other goods.
B)  are; firms are required to pay corporate income taxes on them.
C)  are ; they are considered income paid to households and loaned back to firms.
D)  are not; they are considered an intermediate good.
E)  are not; households are not paid by the firms.

Question 17

-------------is most likely to contribute to an improvement in our living standard.

Accepted Answer

A)  A decrease in nominal GDP
B)  An increase in the GDP deflator combined with a decrease in nominal GDP
C)  An increase in the price level
D)  An increase in depreciation
E)  An increase in real GDP

Question 18

Which of the following is NOT part of the income used in the income approach to measuring GDP?

Accepted Answer

A)  taxes paid by persons
B)  profit
C)  rent
D)  wages
E)  interest

Question 19

In one year, a firm increases its production by $9 million and increases sales by $8 million. All other things in the economy remaining the same, which of the following is true?

Accepted Answer

A)  GDP increases by $8 million and inventory investment decreases by $1 million.
B)  Inventory investment decreases by $1 million.
C)  GDP increases by $9 million and inventory investment increases by $1 million.
D)  GDP increases by $17 million.
E)  GDP increases by $8 million and investment increases by $1 million.

Question 20

When measuring GDP,

Accepted Answer

A)  the government sector is not included because it is the public sector not the private sector.
B)  only the federal government's expenditure on goods and services are included.
C)  the government sector is counted, and the value of the government sector in GDP is equal to its tax revenue.
D)  the expenditure on goods and services by all levels of government are included.
E)  the government sector is not counted because it does not produce goods and services.

Exam 5: GDP: a Measure of Total Production and Income

Gross Domestic Product is defined to be the market value of all the final goods and services produced during a given time period

Correct Answer
verified

Net exports of goods and services is equal to the value of

Correct Answer
verified

During the business cycle,

Correct Answer
verified

Which of the following is NOT part of the income used in the income approach to measuring GDP?

Correct Answer
verified

The NBER describes a recession as

Correct Answer
verified

Instead of taking the dirty laundry with you when you go back to visit your parents, you use a Laundromat. Your use of the Laundromat means that

Correct Answer
verified

Nominal GDP measures the value of goods and services produced in a given year valued using

Correct Answer
verified

_{-------------}is most likely to contribute to an improvement in our living standard.

Correct Answer
verified

Which of the following is NOT directly included in Canadian GDP?

Correct Answer
verified

According to the income approach to measuring GDP, the largest income category is

Correct Answer
verified

The expenditure approach to measuring GDP is based on summing

Correct Answer
verified

Correct Answer
verified

If the purchase of used goods was to be incorporated into measuring GDP using the expenditure approach, then

Correct Answer
verified

One reason the total sum of the income categories does not equal GDP is that

Correct Answer
verified

How are final goods and services valued when measuring nominal GDP?

Correct Answer
verified

Which of the following is NOT included in the income approach to calculating GDP?

Correct Answer
verified

In one year, a firm increases its production by $9 million and increases sales by $8 million. All other things in the economy remaining the same, which of the following is true?

Correct Answer
verified

When measuring GDP,

Correct Answer
verified

In calculating GDP, we must

Correct Answer
verified

Undistributed profits_{-------------}counted as part of GDP because_{-------------}

Correct Answer
verified

Exam 5: GDP: a Measure of Total Production and Income

Gross Domestic Product is defined to be the market value of all the final goods and services produced during a given time period

Correct AnswerverifiedShow Answer

Net exports of goods and services is equal to the value of

Correct AnswerverifiedShow Answer

During the business cycle,

Correct AnswerverifiedShow Answer

Which of the following is NOT part of the income used in the income approach to measuring GDP?

Correct AnswerverifiedShow Answer

The NBER describes a recession as

Correct AnswerverifiedShow Answer

Instead of taking the dirty laundry with you when you go back to visit your parents, you use a Laundromat. Your use of the Laundromat means that

Correct AnswerverifiedShow Answer

Nominal GDP measures the value of goods and services produced in a given year valued using

Correct AnswerverifiedShow Answer

-------------is most likely to contribute to an improvement in our living standard.

Correct AnswerverifiedShow Answer

Which of the following is NOT directly included in Canadian GDP?

Correct AnswerverifiedShow Answer

According to the income approach to measuring GDP, the largest income category is

Correct AnswerverifiedShow Answer

The expenditure approach to measuring GDP is based on summing

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the purchase of used goods was to be incorporated into measuring GDP using the expenditure approach, then

Correct AnswerverifiedShow Answer

One reason the total sum of the income categories does not equal GDP is that

Correct AnswerverifiedShow Answer

How are final goods and services valued when measuring nominal GDP?

Correct AnswerverifiedShow Answer

Which of the following is NOT included in the income approach to calculating GDP?

Correct AnswerverifiedShow Answer

In one year, a firm increases its production by $9 million and increases sales by $8 million. All other things in the economy remaining the same, which of the following is true?

Correct AnswerverifiedShow Answer

When measuring GDP,

Correct AnswerverifiedShow Answer

In calculating GDP, we must

Correct AnswerverifiedShow Answer

Undistributed profits-------------counted as part of GDP because-------------

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

_{-------------}is most likely to contribute to an improvement in our living standard.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Undistributed profits_{-------------}counted as part of GDP because_{-------------}

Correct Answer
verified