Question 1

Over a period of time, a nation's GDP increases by 8 percent in constant-price terms and by 6 percent in current-price terms.Other things being equal, the price level must have changed by about

Accepted Answer

A)  14 percent.
B)  4 percent.
C)  2 percent.
D)  −2 percent.E) B) and C)
F) A) and B)

Question 2

If personal income exceeds national income in a particular year, we can conclude that

Accepted Answer

A)  transfer payments exceeded the sum of Social Security contributions, corporate income taxes, and taxes on production and imports.
B)  the sum of Social Security contributions, corporate income taxes, and undistributed corporate profits exceeded transfer payments.
C)  consumption of fixed capital and taxes on production and imports exceeded personal taxes.
D)  transfer payments exceeded the sum of Social Security contributions, corporate income taxes, and undistributed corporate profits.E) B) and C)
F) A) and D)

Question 3

(Consider This)  When making a capital stock and reservoir analogy, the

Accepted Answer

A)  outflow below the dam is gross investment.
B)  inflow from the river is the stock of capital.
C)  level of water in the reservoir is the stock of capital.
D)  level of water in the reservoir is net investment.E) B) and C)
F) All of the above

Question 4

In an economy experiencing a persistently falling price level,

Accepted Answer

A)  potential GDP will necessarily exceed actual GDP.
B)  changes in nominal GDP may either overstate or understate changes in real GDP.
C)  changes in nominal GDP understate changes in real GDP.
D)  changes in nominal GDP overstate changes in real GDP.E) B) and C)
F) A) and B)

Question 5

In the reservoir analogy of stock and flow for the economy,

Accepted Answer

A)  gross investment is an outflow and depreciation is an inflow.
B)  the stock of capital is an outflow and depreciation is an inflow.
C)  net investment is an inflow and the stock of capital is an outflow.
D)  gross investment is an inflow and depreciation is an outflow.E) C) and D)
F) A) and C)

Question 6

All of the following are examples of intermediate goods, except

Accepted Answer

A)  flour bought by a bakery.
B)  an oven bought by a bakery.
C)  office supplies bought by an accounting firm.
D)  gasoline bought by a trucking company.E) None of the above
F) B) and C)

Question 7

GDP understates the amount of economic production in the United States because it excludes

Accepted Answer

A)  spending for the U.S.military.
B)  transfer payments.
C)  purchases of stocks and bonds.
D)  work performed by people for their own benefit.E) None of the above
F) B) and C)

Question 8

The agency responsible for compiling the National Income Product Accounts for the U.S.economy is the

Accepted Answer

A)  Council of Economic Advisers.
B)  Bureau of Economic Analysis.
C)  National Bureau of Economic Research.
D)  Bureau of Labor Statistics.E) A) and D)
F) B) and D)

Question 9

NDP can be determined by adding taxes on production and imports to GDP.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not economic investment?

Accepted Answer

A)  the purchase of a new drill press by the Ajax Manufacturing Company
B)  the purchase of 100 shares of AT&T by a retired business executive
C)  construction of a suburban housing project
D)  the piling up of inventories on a grocer's shelfE) All of the above
F) C) and D)

Question 11

If real GDP rises and the GDP price index has increased,

Accepted Answer

A)  the percentage increase in nominal GDP must have been less than the percentage increase in the price level.
B)  nominal GDP may have either increased or decreased.
C)  nominal GDP must have increased.
D)  nominal GDP must have fallen.E) C) and D)
F) A) and D)

Question 12

(Last Word)  Which of the following is a source of data for the investment component of U.S.GDP?

Accepted Answer

A)  the Census Bureau's Retail Trade Survey
B)  the Census Bureau's Housing Starts Survey and Housing Sales Survey
C)  the Conference Board's Survey of Consumer Sentiment
D)  the Bureau of Labor Statistics' Consumer Price IndexE) A) and C)
F) A) and B)

Question 13

In 2014, China's GDP was bigger than that of the Unites States.

Accepted Answer

A) True 
 B)False

Question 14

In the expenditures approach of national income accounting, C, Ig, and G include expenditures for

Accepted Answer

A)  domestically produced goods and services only.
B)  domestically produced as well as imported goods and services.
C)  exported goods and services.
D)  the private sector of the economy only.E) A) and C)
F) All of the above

Question 15

The value of a price index in the base year is always 100.

Accepted Answer

A) True 
 B)False

Question 16

The total volume of business sales in our economy is several times larger than GDP because

Accepted Answer

A)  the GDP does not take taxes into account.
B)  the GDP excludes intermediate transactions.
C)  the GDP grossly understates the value of our annual output.
D)  total sales are in money terms and GDP is always stated in real terms.E) All of the above
F) C) and D)

Question 17

In the second quarter (three-month period)  of 2001, U.S.nominal GDP increased but U.S.real GDP declined.We can conclude that

Accepted Answer

A)  nominal income declined by more than personal income.
B)  the price level rose by more than nominal GDP.
C)  real wages declined by more than real GDP.
D)  the price level fell by more than real GDP.E) None of the above
F) C) and D)

Question 18

If nominal GDP is 150 and the GDP price index is 200, real GDP is 75.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not included in personal consumption expenditures?

Accepted Answer

A)  new furniture and appliances bought by homeowners
B)  payments for cable and Internet services to homes
C)  purchases of mutual funds by consumers
D)  food purchased at supermarketsE) A) and D)
F) A) and C)

Question 20

A price index is

Accepted Answer

A)  a comparison of the current price of a market basket to a fixed point of reference.
B)  a comparison of real GDP in one period relative to another.
C)  the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period.
D)  a ratio of real GDP to nominal GDP.E) B) and D)
F) A) and C)

Exam 27: Measuring Domestic Output and National Income

GDP understates the amount of economic production in the United States because it excludes

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In the second quarter (three-month period) of 2001, U.S.nominal GDP increased but U.S.real GDP declined.We can conclude that

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The total volume of business sales in our economy is several times larger than GDP because

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All of the following are examples of intermediate goods, except

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(Consider This) When making a capital stock and reservoir analogy, the

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If personal income exceeds national income in a particular year, we can conclude that

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In the expenditures approach of national income accounting, C, Ig, and G include expenditures for

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In 2014, China's GDP was bigger than that of the Unites States.

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A price index is

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Which of the following is not economic investment?

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In an economy experiencing a persistently falling price level,

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The agency responsible for compiling the National Income Product Accounts for the U.S.economy is the

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In the reservoir analogy of stock and flow for the economy,

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The value of a price index in the base year is always 100.

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Which of the following is not included in personal consumption expenditures?

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NDP can be determined by adding taxes on production and imports to GDP.

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(Last Word) Which of the following is a source of data for the investment component of U.S.GDP?

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If nominal GDP is 150 and the GDP price index is 200, real GDP is 75.

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Over a period of time, a nation's GDP increases by 8 percent in constant-price terms and by 6 percent in current-price terms.Other things being equal, the price level must have changed by about

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If real GDP rises and the GDP price index has increased,

Correct AnswerverifiedShow Answer

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