Econ 201 exam 5

As long as prices are increasing, real GDP will grow less rapidly than nominal GDP. (T/F)

true

In an open economy, the foreign sector must be included when GDP is calculated using the spending approach. (T/F)

true

The foreign sector does not contribute to the gross domestic product using the product approach. (T/F)

true

The identity used to represent the economy in the traditional macro model is Y = C + I + G + NX. (T/F)

true

The three methods for calculating GDP are referred to as the income approach, the spending approach, and the product approach. (T/F)

true

Using the product approach, which one of the following economic agents is the largest contributor to the gross domestic product of the United States? a) Businesses b) Non-profit institutions c) The federal government d) Private households e) State and local governments

a

Which one of the following statements is TRUE about the "traditional macroeconomic model"? a) It assumes that government expenditures are generally used for consumption rather than investment. b) It assumes that the majority of production is done by households. c) It simplifies by excluding the foreign sector. d) It assumes that investment in is done primarily by governments. e) In the model, the most important function of the household sector is savings.

a

Which one of the following would, in principle, be counted in an estimate of the gross domestic product of the United States? a) The value of the steel Ford Motor Company buys to make cars. b) The value of a new CD you buy from a store. c) The value of a CD you give a friend in exchange for having helped you study. d) The value of a book you buy from a used bookstore. e) The value of work you do as an intern in Europe.

b

Which one of the following is not included as part of the manufactured capital stock of the United States? a) Factories b) Consumer durable goods c) Stocks traded on the stock market d) Computer software e) Inventories

c

In an open economy, saving is equal to ... a) consumption minus investment. b) consumption minus net exports. c) the sum of private and government investment d) investment minus net exports. e) investment plus net exports.

e

In the "traditional macroeconomic model" investment is assumed to be done by which sector? a) Service sector b) Government sector c) Household sector d) Foreign sector e) Business sector

e

The three methods for calculating GDP are ... a) the spending approach, the investment approach, and the product approach. b) the spending approach, the imputation approach, and the investment approach. c) the spending approach, the income approach, and the investment approach. d) the spending approach, the imputation approach, and the product approach. e) the spending approach, the income approach, and the product approach.

e

A motor vehicle manufactured in Europe but sold in the United States would represent an addition to the gross domestic product of the United States. (T/F)

false

According to the income approach to measuring GDP, all of GDP creates income. (T/F)

false

Gross domestic product is defined as the value of all final and intermediate goods newly produced in an economy in a given period of time. (T/F)

false

In the traditional macro model government spending is assumed to be primarily investment expenditures. (T/F)

false

Suppose an economy is growing at a real rate of 2% per year. At this rate, the economy will double in size in about 50 years. (T/F)

false

The U.S. Census Bureau is the government agency in charge of compiling the national accounts of the United States. (T/F)

false

The difference between nominal and real GDP is that real GDP includes the foreign sector. (T/F)

false

The largest component of GDP attributed to the government sector is spending on Social Security. (T/F)

false

Using data from the product approach, the largest contributor to the gross domestic product of the United States is the federal government. (T/F)

false