Question 1

The traditional definition of a recession is a decline in real GDP lasting for

Accepted Answer

A)   at least one year.
B)   at least one month.
C)   at least two consecutive quarters.
D)   at least two consecutive years.E) B) and C)
F) B) and D)

Question 2

Explain how real GDP could be increased without using additional inputs.

Accepted Answer

Real GDP could be increased even though ...

Question 3

Real GDP is gross domestic product measured:

Accepted Answer

A)   at a constant output level but at current prices.
B)   using the prices of a specified base year.
C)   in current dollars.
D)   as the difference between the current year's GDP and last year's GDP.E) A) and B)
F) A) and D)

Question 4

The U.S. experienced a recession in 2001 and 2007. During the period 2002- 2006, the U.S. economy was in a:

Accepted Answer

A)   peak.
B)   recession.
C)   trough.
D)   period of expansion.E) C) and D)
F) B) and D)

Question 5

In the circular flow diagram, households demand _______ and supply _______.

Accepted Answer

A)   inputs; goods and services
B)   goods and services; goods and services
C)   inputs; inputs
D)   goods and services; inputsE) A) and B)
F) A) and C)

Question 6

Explain why the following items are included in GDP:
(a) depreciation
(b) change in business inventories
(c) indirect taxes

Accepted Answer

(a) Depreciation is included in GDP beca...

Question 7

Which of the following is not a topic studied in macroeconomics?

Accepted Answer

A)   the inflation rate
B)   the unemployment rate
C)   the relative price of IBM computers
D)   Gross Domestic ProductE) A) and D)
F) A) and C)

Question 8

Based on the expenditure approach, discuss and explain each of the components of GDP.

Accepted Answer

Personal consumption expenditures repres...

Question 9

If net investment is negative, then

Accepted Answer

A)   gross investment is less than zero.
B)   gross investment is less than depreciation.
C)   gross investment is greater than depreciation.
D)   depreciation is less than zero.E) None of the above
F) B) and C)

Question 10

Final goods and services include:

Accepted Answer

A)   those produced by one firm for use in further processing by another firm.
B)   intermediate goods.
C)   goods and services produced for final use by households and firms.
D)   raw materials.E) B) and D)
F) B) and C)

Question 11

Net investment equals:

Accepted Answer

A)   gross investment minus depreciation.
B)   GDP minus final sales.
C)   depreciation plus GDP.
D)   gross investment minus final sales.E) A) and B)
F) B) and C)

Question 12

_______ is commonly defined as six consecutive months of declining real GDP.

Accepted Answer

A)   A trough
B)   An expansion
C)   A peak
D)   A recessionE) All of the above
F) None of the above

Question 13

The profit from IBM's production in Italy is included in the U.S. _ _ and in the Italian .

Accepted Answer

A)   GNP; GDP
B)   GDP; GDP
C)   GNP; GNP
D)   GDP; GNPE) B) and D)
F) All of the above

Question 14

Refer to Table 5.4. Suppose this economy produces only the two goods X and Y. If year 2 is the base year, then the percentage growth rate in Real GDP between year 1 and year 2 is approximately:

Accepted Answer

A)   1.3 percent.
B)   29 percent.
C)   3 percent.
D)   60 percent.E) B) and D)
F) C) and D)

Question 15

Refer to Application 1, "Using Value Added to Measure the True Size of Wal- Mart," to answer the following questions:
-If we try to estimate what Wal- Mart produces, we must measure its "value added," which is defined as the:

Accepted Answer

A)   value of sales + cost of sales.
B)   value of sales - cost of sales.
C)   value of total sales.
D)   cost of sales.E) A) and B)
F) C) and D)

Question 16

Which of the following is not counted in the GNP of the United States?

Accepted Answer

A)   the wage of a U.S. citizen who works in a foreign country for a foreign firm
B)   the value of services that are produced by state and local governments in the United States
C)   the profit earned by a restaurant located in the United States but owned by a Mexican company
D)   the interest earned by a U.S. bank on loans to a business firm located in BrazilE) A) and B)
F) None of the above

Question 17

Which of the following is not a transfer payment?

Accepted Answer

A)   Medicaid
B)   Social Security benefits
C)   government welfare payments
D)   corporate dividendsE) C) and D)
F) B) and D)

Question 18

This year's nominal GDP is this year's output of final goods and services evaluated in base year dollars.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not an example of a final good or service?

Accepted Answer

A)   the popcorn you bought before watching the new Harry Potter movie
B)   coffee beans Starbucks purchases to make coffee
C)   the gasoline you bought at the pump
D)   the economics class that you are taking to complete your degreeE) None of the above
F) A) and B)

Question 20

The largest component of national income is compensation of employees.

Accepted Answer

A) True 
 B)False

Exam 5: Measuring a Nations Production and Income

Final goods and services include:

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Which of the following is not a transfer payment?

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This year's nominal GDP is this year's output of final goods and services evaluated in base year dollars.

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Refer to Application 1, "Using Value Added to Measure the True Size of Wal- Mart," to answer the following questions: -If we try to estimate what Wal- Mart produces, we must measure its "value added," which is defined as the:

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Which of the following is not counted in the GNP of the United States?

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The largest component of national income is compensation of employees.

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The traditional definition of a recession is a decline in real GDP lasting for

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Refer to Table 5.4. Suppose this economy produces only the two goods X and Y. If year 2 is the base year, then the percentage growth rate in Real GDP between year 1 and year 2 is approximately:

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The profit from IBM's production in Italy is included in the U.S. _ _ and in the Italian .

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Explain why the following items are included in GDP: (a) depreciation (b) change in business inventories (c) indirect taxes

Correct Answerverified(a) Depreciation is included in GDP beca...View AnswerShow Answer

Which of the following is not an example of a final good or service?

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Real GDP is gross domestic product measured:

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The U.S. experienced a recession in 2001 and 2007. During the period 2002- 2006, the U.S. economy was in a:

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Based on the expenditure approach, discuss and explain each of the components of GDP.

Correct AnswerverifiedPersonal consumption expenditures repres...View AnswerShow Answer

Explain how real GDP could be increased without using additional inputs.

Correct AnswerverifiedReal GDP could be increased even though ...View AnswerShow Answer

In the circular flow diagram, households demand _______ and supply _______.

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_______ is commonly defined as six consecutive months of declining real GDP.

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Which of the following is not a topic studied in macroeconomics?

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Net investment equals:

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If net investment is negative, then

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(a) Depreciation is included in GDP beca...
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Personal consumption expenditures repres...
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Real GDP could be increased even though ...
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In the circular flow diagram, households demand _ and supply _.

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