Question 1

A time series graph can show both the level of a variable and the speed with which the variable changes over time.

Accepted Answer

A) True 
 B)False

Question 2

GDP is defined as the market value of all ________ in a given time period.

Accepted Answer

A)   final goods produced in a country
B)   final goods and services produced by citizens of a particular country regardless of where in the world they are located
C)   final goods and services produced in a country by only the citizens of the country
D)   final goods and services produced in a countryE) B) and C)
F) A) and D)

Question 3

An example of "investment" in the national income accounts is the purchase of

Accepted Answer

A)   a new van by a potter, who packs it with his wares and travels to art shows.
B)   100 shares of Intel stock on the New York Stock Exchange.
C)   a 100-year-old house that was just put on the protected historic sites list in the year in question.
D)   a U.S. government bond.E) A) and B)
F) A) and C)

Question 4

It is estimated that in 2007, Mexico had a population of 110 million and GDP of $1 trillion. In 2006, Mexico's population was 104 million and GDP was $839 billion. Per GDP person ________ by ________ between 2006 and 2007 in Mexico.

Accepted Answer

A)   increased; $1038
B)   increased; 5 percent
C)   decreased; $2013
D)   decreased; 5 percentE) A) and B)
F) A) and C)

Question 5

-The approach to GDP that sums compensation of employees, rental income, corporate profits, net interest, proprietors' income, depreciation, and indirect taxes and subtracts subsidies is the

Accepted Answer

A)   opportunity cost approach.
B)   expenditure approach.
C)   added cost approach.
D)   income approach.E) None of the above
F) C) and D)

Question 6

The circular flow shows that aggregate spending is larger than aggregate income because people save.

Accepted Answer

A) True 
 B)False

Question 7

What is the relationship between gross investment, net investment, and depreciation? Which measures the change in the capital stock?

Accepted Answer

Gross investment minus depreciation equa...

Question 8

The largest component of national income is

Accepted Answer

A)   compensation of employees.
B)   rental income.
C)   corporate profits.
D)   proprietors' income.E) A) and D)
F) A) and C)

Question 9

-If consumption expenditures are $500 million, net investment is $100 million, depreciation equals $5 million, imports are $50 million, exports are $55 million, government expenditure on goods and services is $220 million, and government transfer payments are $20 million, then GDP is

Accepted Answer

A)   $790 million.
B)   $800 million.
C)   $830 million.
D)   $850 million.E) A) and B)
F) A) and C)

Question 10

Choose the best statement.

Accepted Answer

A)   GDP equals aggregate expenditure and equals aggregate income.
B)   An increase in government purchases increases aggregate expenditure but does not change GDP.
C)   An increase in compensation of employees increases aggregate income but does not change GDP.
D)   GDP always equals aggregate expenditure and sometimes equals aggregate income.E) B) and D)
F) A) and C)

Question 11

What would happen to measured GDP if more people started hiring workers to do house chores such as cooking and cleaning?

Accepted Answer

GDP is the value of the final goods and ...

Question 12

Real GDP

Accepted Answer

A)   fluctuates from year to year but is always below potential GDP.
B)   fluctuates around potential GDP.
C)   grows at a constant 3 to 4 percent per year.
D)   can be called potential GDP when it is adjusted for price changes.E) B) and C)
F) C) and D)

Question 13

Rental income includes

Accepted Answer

A)   the payment for the use of land.
B)   the payment for the use of all rented inputs.
C)   no income from rental housing because most houses are occupied by their owners.
D)   Both answers A and B are correct.E) None of the above
F) All of the above

Question 14

-From the data in the above table, GDP equals

Accepted Answer

A)   $1,120.
B)   $1,280.
C)   $1,290.
D)   $1,360.E) A) and B)
F) C) and D)

Question 15

-Which of the following items is NOT a component of the income approach to measuring U.S. GDP?

Accepted Answer

A)   interest earned on savings deposits
B)   profits made by businesses
C)   income earned by businesses that export goods
D)   investmentE) A) and B)
F) A) and D)

Question 16

Investment, as included in GDP, consists of what?

Accepted Answer

Investment is the purchase of ...

Question 17

In the circular flow of economic activity

Accepted Answer

A)   aggregate expenditure measures the dollar value of purchases of factors.
B)   aggregate expenditure measures the dollar value of purchases of final goods and services.
C)   aggregate income measures the dollar value of labor resources only.
D)   aggregate expenditure is measured as it moves through the financial markets.E) A) and B)
F) A) and C)

Question 18

Household production is not measured in the GDP.

Accepted Answer

A) True 
 B)False

Question 19

-Which of the following is CORRECT about a time-series graph?
I.The x-axis measures time.
II.A time-series graph can reveal if there is a trend in the variable.

Accepted Answer

A)   only I
B)   only II
C)   both I and II
D)   neither I nor IIE) A) and D)
F) B) and D)

Question 20

The largest component of income is proprietors' income.

Accepted Answer

A) True 
 B)False

Exam 4: Measuring GDP and Economic Growth

-Which of the following is CORRECT about a time-series graph? I.The x-axis measures time. II.A time-series graph can reveal if there is a trend in the variable.

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-From the data in the above table, GDP equals

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Household production is not measured in the GDP.

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-Which of the following items is NOT a component of the income approach to measuring U.S. GDP?

Correct AnswerverifiedShow Answer

GDP is defined as the market value of all ________ in a given time period.

Correct AnswerverifiedShow Answer

What is the relationship between gross investment, net investment, and depreciation? Which measures the change in the capital stock?

Correct AnswerverifiedGross investment minus depreciation equa...View AnswerShow Answer

What would happen to measured GDP if more people started hiring workers to do house chores such as cooking and cleaning?

Correct AnswerverifiedGDP is the value of the final goods and ...View AnswerShow Answer

-The approach to GDP that sums compensation of employees, rental income, corporate profits, net interest, proprietors' income, depreciation, and indirect taxes and subtracts subsidies is the

Correct AnswerverifiedShow Answer

Choose the best statement.

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In the circular flow of economic activity

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The circular flow shows that aggregate spending is larger than aggregate income because people save.

Correct AnswerverifiedShow Answer

The largest component of income is proprietors' income.

Correct AnswerverifiedShow Answer

A time series graph can show both the level of a variable and the speed with which the variable changes over time.

Correct AnswerverifiedShow Answer

Rental income includes

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An example of "investment" in the national income accounts is the purchase of

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It is estimated that in 2007, Mexico had a population of 110 million and GDP of $1 trillion. In 2006, Mexico's population was 104 million and GDP was $839 billion. Per GDP person ________ by ________ between 2006 and 2007 in Mexico.

Correct AnswerverifiedShow Answer

The largest component of national income is

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Investment, as included in GDP, consists of what?

Correct AnswerverifiedInvestment is the purchase of ...View AnswerShow Answer

-If consumption expenditures are $500 million, net investment is $100 million, depreciation equals $5 million, imports are $50 million, exports are $55 million, government expenditure on goods and services is $220 million, and government transfer payments are $20 million, then GDP is

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Real GDP

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Gross investment minus depreciation equa...
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GDP is the value of the final goods and ...
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It is estimated that in 2007, Mexico had a population of 110 million and GDP of $1 trillion. In 2006, Mexico's population was 104 million and GDP was $839 billion. Per GDP person by between 2006 and 2007 in Mexico.

Correct Answer
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Investment is the purchase of ...
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