ECON Final

In the circular flow of expenditure and​ income, why must the total value of production in an economy equal the total value of​ income? A. Every penny spent on a good or service must end up as​ someone's income. B. Domestic expenditures on imports generally equal foreign expenditures on U.S. exports. C. Taxes on the production of goods and services are determined according to individual income. D. People tend to spend all of their income on goods and services.

A. Every penny spent on a good or service must end up as​ someone's income.

Question content area Assuming that inflation has occurred over​ time, what is the relationship between nominal GDP and real GDP in each of the following​ situations? A. In years after the base​ year, nominal GDP is (greater/Less) than real GDP. B. In the base​ year, nominal GDP is (equal/not equal) to real GDP. C. In years prior to the base​ year, nominal GDP is (less/more) than real GDP.

A. Greater B. Equal C. Less

What are the four categories of​ income? A. Wages, Interest,​ Rent, and Profit. B. Consumption, Investment, Government​ Purchases, and Net Exports. C. Labor, Capital, Natural​ Resources, and Entrepreneurship. D. ​Wages, Salaries,​ Interest, and Dividends.

A. Wages, Interest,​ Rent, and Profit.

Which equation represents the relationship between GDP and the four major expenditure​ components? A. Y=C+I+G+NX B. Y=C(I+G+NX) C. Y=(C+I)-(G+NX)

A. Y=C+I+G+NX

Aggregate​ expenditure, or the total amount of spending in the​ economy, equals A. consumption spending plus planned investment spending plus government purchases plus net exports. Your answer is correct. B. household spending on durable goods plus household spending on nondurable goods. C. total spending by households plus total spending by businesses. D. household spending on durable goods plus business investment spending.

A. consumption spending plus planned investment spending plus government purchases plus net exports.

In calculating​ GDP, which levels of government spending are included in government​ purchases? A. spending by​ federal, state, and local governments B. spending by governments only on national​ security, social​ welfare, and other national programs C. spending by the federal government and some state​ governments, but not local governments D. spending by the federal government only

A. spending by​ federal, state, and local governments

Gross Domestic Product​ (GDP) is: A. the market value of all final goods and services produced in a country during a period of time. B. the amount of income generated from​ wages, rents, and profits in a country during a period of time. C. the value of all expenditures made by households and firms in a country during a period of time. D. the quantity of all final goods and services produced in a country during a period of time.

A. the market value of all final goods and services produced in a country during a period of time.

Using purchasing power parity exchange​ rates, which country has the largest GDP and which country has the second largest​ GDP? ​ ________ has the largest GDP and​ ________ has the second largest GDP. A. China; Russia B. China; United States C. United​ States; China D. United​ States; Russia

B. China; United States

What are the four major components of expenditures in​ GDP? A. Consumption, Intermediate​ Goods, Government​ Purchases, and New Expenditures B. Consumption, Investment, Government​ Purchases, and Net Exports C. Consumption, Intermediate​ Goods, Goods and​ Services, and Net Exports D. Consumption, Investment, Government​ Purchases, and​ Non-Durable Expenditures

B. Consumption, Investment, Government​ Purchases, and Net Exports

An article in the Wall Street Journal referred to​ "gross domestic product—the value of all goods and services produced in the​ U.S." Briefly explain whether you agree with this definition of GDP. A. Agree, because GDP is used to measure an​ economy's total​ productivity, which includes all the goods and services produced in an economy. B. Disagree, because GDP measures the value of all final goods and services produced in an​ economy, not all the goods and services produced. C. Uncertain, since the article should have referenced a more specific period of time to measure​ GDP, such as every three months. D. Disagree, because GDP​ doesn't include the value of services when measuring an​ economy's total productivity.

B. Disagree, because GDP measures the value of all final goods and services produced in an​ economy, not all the goods and services produced.

GDP is an imperfect measure of economic​ well-being because it fails to measure what types of​ production? A. Foreign production and the government sector. B. Household production and the underground economy. C. Business investment and foreign production. D. Household production and foreign production

B. Household production and the underground economy.

What is the key idea in the aggregate expenditure macroeconomic​ model? A. in any particular​ year, the inflation rate is determined only by the level of aggregate expenditure. B. in any particular​ year, the level of GDP is determined mainly by the level of aggregate expenditure. C. long-run economic growth is determined by the level of aggregate expenditure. D. in any particular​ year, the level of potential real GDP is determined by the level of aggregate expenditure.

B. in any particular​ year, the level of GDP is determined mainly by the level of aggregate expenditure.

Which of the following is included in the​ economist's definition of​ investment? A. the purchase of a rare coin or a deposit in a savings account B. the purchase of new​ machines, factories, or houses C. the purchase of a share of stock D. All of the above.

B. the purchase of new​ machines, factories, or houses

Of the eight largest​ economies, which country has the most equal distribution of income and which country has the most unequal distribution of​ income? ​ ________ has the most equal distribution of income and​ ________ has the most unequal distribution of income. A. China; Indonesia B. China; Russia C. Germany; Brazil D. Germany; Russia

C. Germany; Brazil

As of​ 2021, 19 European countries had adopted the euro as their common currency. These countries are called the eurozone. According to an article​, ​"The eurozone's gross domestic product contracted by​ 0.7% in the three months through December from the previous​ quarter, resulting in an annual decline of​ 6.8% for the bloc in​ 2020, the​ EU's statistics agency said on​ Tuesday." Is it a change in nominal GDP or real​ GDP? A. Nominal​ GDP, because it uses current prices to place a value on the​ economy's production of goods and services. B. Real​ GDP, because it does a better job of determining how much the prices of goods and services have changed in an economy. C. Real​ GDP, because it shows how the​ economy's overall production of goods and services changes over time. D. Nominal​ GDP, because it does a better job of separating the​ economy's production of goods from services.

C. Real​ GDP, because it shows how the​ economy's overall production of goods and services changes over time.

Of the eight largest economies in terms of GDP using purchasing power parity exchange​ rates, which country has the highest GDP per capita and which country has the lowest. ​ ________ has the highest GDP per capita and​ ________ has the lowest GDP per capita. A. Germany; India B. Germany; Brazil C. United​ States; India D. United​ States; Brazil

C. United States; India

Why does inflation make nominal GDPLOADING... a poor measure of the increase in total production from one year to the​ next? A. Nominal GDP separates increases in GDP as a result of price changes from increases in GDP as a result of quantity changes. B. GDP is a measure of production in quantity terms. C. When nominal GDP increases from year to​ year, the increase is due partly to changes in prices and partly to changes in quantities. D. All of the above E. A and B only

C. When nominal GDP increases from year to​ year, the increase is due partly to changes in prices and partly to changes in quantities.

How does real GDPLOADING... deal with the problem inflation causes with nominal​ GDP? A. By keeping prices​ constant, we know that changes in real GDP represent changes in the quantity of output produced. B. Real GDP separates price changes from quantity changes. C. Real GDP uses the prices of goods and services in the base year to calculate the value of goods in all other years. D. All of the above. E. A and C only.

D. All of the above

Even if GDP included these types of​ production, why would it still be an imperfect measure of economic​ well-being? A. GDP is not adjusted for pollution and it does not account for unequal income distribution. B. GDP is not adjusted for crime or other social problems. C. The value of leisure is not included in GDP. D. All of the above. E. A and C only.

D. All of the above.

What is the difference between gross domestic product​ (GDP) and gross domestic income​ (GDI)? A. GDP assumes that the more goods and services people​ have, the better off they​ are, whereas GDI assumes the more income people​ have, the better off they are. B. GDI focuses on measuring the​ economy's output from the production​ side, mainly relying on spending​ data, whereas GDP measures output from the income side. C. GDP is used to measure total production in an​ economy, whereas GDI is used to measure an​ economy's well-being. D. GDP focuses on measuring the​ economy's output from the production​ side, mainly relying on spending​ data, whereas GDI measures output from the income side.

D. GDP focuses on measuring the​ economy's output from the production​ side, mainly relying on spending​ data, whereas GDI measures output from the income side.

How does the size of a​ country's GDP affect the quality of life of the​ country's people? A. There is an inverse relationship between GDP and quality of life. B. When GDP is​ high, production from the underground​ economy, and therefore the crime​ rate, is high. C. Generally, the more goods and services people​ have, the worse off they are. D. Generally, the more goods and services people​ have, the better off they are.

D. Generally, the more goods and services people​ have, the better off they are.

What index measures the degree of inequality in the distribution of family income in a​ country? A. Distribution index B. Income index C. Equality index D. Gini index

D. Gini Index

Gross Domestic Product (GDP) is:

The market value of all final goods and services produced in a country during a period of time.