Economics chapter 9

MC Qu. 69 Suppose a farmer sells a bushel of wheat to a miller for $1; the miller makes it into flour and sells it to a baker for $2; the baker turns it into bread and sells it to a customer for $3. Calculating GDP the contribution of transactions would be

$3.00

MC Qu. 119 C is about _____ of GDP.

7/10

MC Qu. 153 If GDP falls by 25 percent since the base year and output remains the same, then the GDP deflator in the current year is

75

MC Qu. 157 National Income is about _____ percent of GDP.

85

MC Qu. 8 Which is not counted in GDP?

A Social Security check sent to a retiree

MC Qu. 163 Which of the following is a final good or service?

A box of brownies purchased by your instructor

MC Qu. 140 Which of the following is a true statement about the measurement of real GDP?

Current output should be calculated at base year prices.

MC Qu. 6 Which one of the following is taken into account by GDP?

Custom lawn care services

MC Qu. 107 Total value added in a nation over the period of 1 year is equal to

GDP

MC Qu. 60 The total market value of a nation's aggregate production of final output based on current prices for the goods and services produced during a given year is called

GDP

MC Qu. 25 When there is deflation,

GDP grows more slowly than real GDP.

MC Qu. 18 Which statement is true?

GDP is a single number that seeks to measure our national output.

MC Qu. 96 If real GDP increases and the price index has increased

GDP must have increased.

MC Qu. 148 Net domestic product is equal to

NI plus indirect business taxes.

MC Qu. 90 In any given year which of the following measures of aggregate output and income is likely to be the smallest?

National income

MC Qu. 57 For time series data, what is unique about a time period where real GDP equal nominal GDP?

The base year for the price index

MC Qu. 45 If GDP rises and the GDP deflator falls, then

real GDP definitely rose.

MC Qu. 46 If our output of goods and services rises, then

real GDP definitely rose.

MC Qu. 83 GDP has grown 5 percent over the last year. The GDP deflator, during the same period, has risen from 130 to 140. We could conclude then that

real GDP has fallen.

MC Qu. 166 When there is inflation

real GDP increases slower than GDP AND GDP increases faster than real GDP.

MC Qu. 19 If GDP rises,

real GDP may either rise or fall or stay the same.

MC Qu. 20 If GDP declined by 6 percent in real terms during one year, and population declined by 3 percent, then

real GDP per capita decreased.

MC Qu. 144 If real GDP grew by 5 percent in real terms during one year and population also grew by 5 percent, it can be stated that

real GDP per capita did not change at all.

MC Qu. 4 If GDP rose from $4 trillion to $6 trillion, and prices rose by 50 percent, over this period

real GDP stayed the same.

MC Qu. 5 If GDP increases faster than the GDP deflator,

real GDP will rise.

MC Qu. 115 GDP that has been adjusted for changes in the price level is called

real GDP.

MC Qu. 79 If the GDP deflator were 200 in the current year, prices have

risen by 100 percent since the base year.

MC Qu. 26 If the GDP deflator is now 125, we may conclude that since the base year prices have

risen by 25 percent.

MC Qu. 36 GDP can be used as a(n)

rough gauge of economic activity over time.

MC Qu. 95 For a given year, GDP includes the market value of the following:

services.

MC Qu. 110 The fact that GDP has risen faster than real GDP

suggests that the general price level has risen.

MC Qu. 126 If real GDP increased and GDP decreased during the same year, we could conclude that

the general price level fell during the year.

MC Qu. 72 If over a certain period of time "constant dollar" GDP grows more rapidly than "current dollar" GDP, this means that

the general price level has fallen.

MC Qu. 80 Historically, real GDP has risen less rapidly than nominal GDP because

the general price level has risen.

MC Qu. 37 GDP is

the market value of an economy's production of final goods and services.

MC Qu. 49 GDP is

the market value of final goods and services produced in a given year.

MC Qu. 101 In the treatment of American exports and imports, national income accountants

add exports, but subtract imports in calculating GDP.

MC Qu. 52 We use the value added approach in calculating GDP to

avoid double counting

MC Qu. 67 The underground economy

causes GDP to be underestimated by 10 to 15 percent.

MC Qu. 38 The change in the United States from a rural, self-sufficient economy to an urban, market-oriented economy had the effect of

causing the growth in GDP to overstate the growth in economic well-being.

MC Qu. 7 The difference between GDP and NDP is

depreciation

MC Qu. 125 The only difference between Gross Domestic Product and Net Domestic Product is that the latter excludes

depreciation of the nation's capital.

MC Qu. 98 Net investment equals

gross private domestic investment minus depreciation.

MC Qu. 106 GDP measures

the market value of final products and services produced in the nation during the year.

MC Qu. 62 In comparing GDP data over a period of years a difference between GDP and real GDP may arise because

the price level may change over time.

MC Qu. 104 In 1984, the base year, GDP was 3000. In 1988 the GDP deflator was 98. We may conclude that

there was some deflation between 1984 and 1988.

MC Qu. 47 The concept of "net domestic investment" refers to

total investment less the amount of investment goods used up in accomplishing the year's production.

MC Qu. 162 By adding together all market transactions in an economy, we would be

multiple counting.

MC Qu. 71 The value actually earned by members of households who supply the inputs necessary to produce GDP is called

national income.

MC Qu. 73 The smallest component of aggregate spending is

net exports.

MC Qu. 154 Susan works for no compensation at the Ronald McDonald's house near a children hospital. Her work in included in the GDP as

not included

MC Qu. 128 "Multiple counting" is avoided when calculating GDP by counting

only final goods.

MC Qu. 117 GDP can increase at a faster rate than real GDP

only if there is inflation.

MC Qu. 142 Suppose that GDP increases in 1999 but real GDP decreases during the year. It can be concluded that

output declined in 1999.

MC Qu. 15 Today our per capita real GDP is _______ what it was since World War II.

over three times

MC Qu. 85 The increase in the proportion of women in the labor force causes GDP to _____ the growth in economic well-being because _____.

overstate; some of the services that women formerly provided in the home are now purchased in the market

MC Qu. 141 The primary advantage of the GPI over the GDP as a measure of the production and well-being of the economy is that it accounts fo

productive non-market activities and depletion of resource base.

MC Qu. 31 Intermediate products are

products produced by business firms for resale to other firms for further processing before sold to the final consumer of the product.

MC Qu. 116 The growth of GDP may understate the economy's economic well-being if the

quality of products and services improves.

MC Qu. 16 If GDP doubled between 1990 and 1995, and prices doubled between 1990 and 1995, what happened to real GDP between 1990 and 1995?

It stayed the same.

MC Qu. 149 By what percent did real GDP rise between 1998 and 1999?

0

MC Qu. 161 If real GDP fell by 1 percent per year and the GDP deflator rose by 2 percent per year, the percentage change in GDP was

1%

MC Qu. 118 Government purchases are about _____ of GDP.

1/5

MC Qu. 51 In evaluating an economy's performance over a period of years, real GDP provides a better measuring rod than GDP because

GDP reflects changes in prices as well as changes in output, while real GDP only reflects changes in output.

MC Qu. 130 In evaluating an economy's performance over a period of years, real GDP provides a better measuring rod than GDP because

GDP reflects changes in prices as well as changes in output.

MC Qu. 105 Value added in a nation equals

GDP.

MC Qu. 12 Which one of the following is counted in GDP?

Government spending

MC Qu. 165 Which one of these is counted in GDP?

Government spending on a NASA project to go to Venus

MC Qu. 17 Which statement is true?

In recent years net exports have been negative.

MC Qu. 145 Which of the following would cause the GDP statistic to understate the growth in economic well-being over the past 50 years?

Increase in leisure time

MC Qu. 146 Which component of GDP is most likely to be negative?

Net exports

MC Qu. 156 Which is the least?

Net exports

MC Qu. 167 Which statement is true?

None of the statements are true.

MC Qu. 109 Which of the following items would be included in GDP?

Purchase of new military aircraft by the government.

MC Qu. 68 If there is a recession, which of the following will decline?

Real GDP

MC Qu. 113 Which statement is true?

Real GDP can increase faster than GDP if there is deflation.

MC Qu. 61 From one year to the next suppose GDP rises and the GDP deflator falls between those years.

Real GDP must have risen.

MC Qu. 24 Which of the following is an intermediate product?

Steel

MC Qu. 33 Which of the following would NOT be included in this year's GDP?

The purchase of 100 shares of Microsoft stock

MC Qu. 164 Which of the following statements is true?

The purchase of a new factory is counted in the investment sector of GDP.

MC Qu. 92 Which of the following exclusions from GDP suggests that GDP underestimates our material well-being?

The unreported earnings of people who work off the books

MC Qu. 91 Which of the following is NOT a part of GDP?

The value of sales of stocks and bonds bought and sold during the year

MC Qu. 137 Which of the following is currently not included in gross domestic product?

The value of the time a person spends painting his or her own garage

MC Qu. 50 Which of the following are excluded from GDP?

changes in the value of existing assets sales of used goods → All of the choices are excluded from GDP. financial transactions

MC Qu. 89 Transfer payments are

excluded from GDP.

MC Qu. 147 Transfer payments are

excluded from the gross domestic product account because they do not reflect current production.

MC Qu. 2 Net domestic product is usually preferred to GDP by economists because net national product

excludes depreciation.

MC Qu. 131 Net exports is a positive number in the national income accounts when

exports exceed imports.

MC Qu. 82 The term final goods and services refers to

good and services purchased by ultimate users, as opposed to resale or further processing

MC Qu. 97 What underlying factor causes the real GDP to be above the nominal GDP in early years of time series and below in the later years?

increasing price levels

MC Qu. 34 GDP will grow faster than real GDP if

inflation occurs in an economy

MC Qu. 132 When the Noodlemans purchase a new residential structure,

investment rises by the purchase price.

MC Qu. 93 Military goods purchased by the government are

measured in GDP by their cost of production.

MC Qu. 81 Gross Domestic Product is a measure of the

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

MC Qu. 86 Net domestic product measures

total output minus what was produced to replace capital goods that wore out during the year.

MC Qu. 103 The difference between the value of a product at the end of one stage of production and the cost of materials purchased from other firms at the beginning of this stage is the

value added.

MC Qu. 108 Real GDP is the

value of production of final output in one year after adjusting for changes in prices during the same period.

MC Qu. 1 The GDP is the value of all final goods and services produced

within a nation's boundaries.

MC Qu. 35 Which of the following circumstances would not cause GDP to either understate or overstate economic well-being today in comparison to that which existed 75 years ago?

→ A trend toward merger and consolidation of business firms