Econ. Keeping track of economy

The price index in the base year always equals

100

Which of the following is an example of a final good or service

A cup of coffee bought at a restaurant

The value added method to measure GDP does not avoid double counting.

False'

If the consumer price index (CPI) this year is 162 and last year it was 170, the inflation rate:

Is negative.

The GDP price index: Select one: a. is derived using the implicit prices of goods and services produced by the government. b. Is derived using the prices of only imported and exported goods and services. c. Measures the value of all intermediate goods and services sold in an economy. d. Measures the quality of goods produced in an economy. e. Measures the average price of final goods and services produced in an economy.

Measures the average price of final goods and services produced in an economy.

In order to convert nominal gross domestic product (GDP) to real gross domestic product (GDP), we must divide:

Nominal GDP by the price index.

f the consumer price index (CPI) is 200 one year and 206 the next year, the annual rate of inflation as measured by the CPI is approximately _____. Select one: a. 1 percent b. 103 percent c. 6 percent d. 3 percent e. 206 percent

The correct answer is: 3 percent

Which of the following is true about the consumer price index (CPI) and the GDP price index? Select one: a. Both yield identical numbers for price level changes for any two years. b. Both measures weigh prices by quantities consumed in some base year. c. CPI includes products that are widely used, while GDP price index includes all goods and services. d. Both CPI and GDP price index underestimate changes in the price level in an economy. e. The CPI measures changes in relative prices of goods, while the GDP price index measures changes in the absolute price level of a fixed basket of goods and services

The correct answer is: CPI includes products that are widely used, while GDP price index includes all goods and services.

Which of the following is true of exports and imports? Select one: a. Both imports and exports are added to a nation's gross domestic product (GDP). b. Both imports and exports are subtracted from a nation's gross domestic product (GDP). c. Imports are added and exports are subtracted from a nation's gross domestic product (GDP). d. Neither imports nor exports are included in a nation's gross domestic product (GDP). e. Exports are added and imports are subtracted from a nation's gross domestic product (GDP).

The correct answer is: Exports are added and imports are subtracted from a nation's gross domestic product (GDP).

Gross domestic product (GDP) figures tend to understate the quantity of goods and services available because: Select one: a. Many items are counted twice or more in the intermediate stages of production. b. GDP excludes the value of goods produced at home. c. Firms often add less to inventories than they planned to. d. More women are entering the labor force. e. Exports are subtracted from GDP but imports are not added

The correct answer is: GDP excludes the value of goods produced at home.

The circular flow model shows that: Select one: a. Firms and governments are on the supply side of the loanable funds market. b. Households are on the supply side of the resource market and the demand side of the product market. c. Households are on the demand side of the resource market. d. Firms are on the demand side of both the product and resource markets. e. Governments are on the demand side of the product market and the supply side of the resource market.

The correct answer is: Households are on the supply side of the resource market and the demand side of the product market.

Which of the following is true of the gross domestic product (GDP) of a nation? Select one: a. It can be measured by the stock of consumer goods in a nation at a particular point in time. b. It can be measured from the stock of wealth in the nation. c. It can be measured by the stock of capital goods in a nation at a particular point in time. d. It can be measured either by calculating the total spending on production or the total income from that production. e. It is the sum of total spending on production and total income from that production.

The correct answer is: It can be measured either by calculating the total spending on production or the total income from that production.

Which of the following is not true about gross domestic product (GDP)? Select one: a. Intermediate goods and services are excluded to prevent double counting. b. It includes transfer payments. c. It excludes purchases of financial assets. d. It includes only final goods and services. e. It reflects production in a particular yea

The correct answer is: It includes transfer payments.

Which of the following will be included in the current year's gross domestic product (GDP)? Select one: a. The opportunity cost of the time spent by Bruno cooking lunch for his neighbor. b. The sale price of equipment produced last year but sold this year. c. The sale price of the stock purchased by John d. The money spent by Barney on the purchase of his uncle's house. e. The money spent by Kate on the purchase of new furniture.

The correct answer is: The money spent by Kate on the purchase of new furniture.

Which of the following would be included in the calculation of gross domestic product (GDP)? Select one: a. The value of a used automobile purchased by Jim. b. The sale price of a new house purchased by Joe. c. The amount of money that Laurie receives as unemployment benefit after losing her job. d. The receipt of $100 in food stamps by Sandy. e. The $200 that Kurt spends on the purchase of bon

The correct answer is: The sale price of a new house purchased by Joe.

The gross domestic product (GDP) excludes: Select one: a. The increase in inventories during a given period. b. The value of intermediate goods produced in an economy during a given period. c. The value of final output during a given period. d. The expenditures by government for newly produced goods and services during a given period. e. Household expenditure on durable goods

The correct answer is: The value of intermediate goods produced in an economy during a given period.

The value added by a firm is defined as: Select one: a. The value of the product manufactured by the firm plus the transaction costs incurred by the firm. b. The increase in the value of the firm's stock or bond. c. The sum of all income earned by the workers in the firm. d. The value of the firm's product minus the cost of materials it bought from other firms. e. The firm's actual investment minus planned investment

The correct answer is: The value of the firm's product minus the cost of materials it bought from other firms.

Depreciation refers to a decrease in the value of a durable good caused by: Select one: a. Changes in the interest rate. b. A decrease in its resale value. c. Wear and tear over time. d. An increase in the price level. e. Changes in tax laws.

The correct answer is: Wear and tear over time.

The gross domestic product (GDP) of an economy for a particular year is likely to increase if _____. Select one: a. the length of an average work week decreases b. the sale of illegal drugs increases c. people cook food at home instead of buying restaurant meals d. workers go on longer vacations during that year e. homeowners hire lawn care services rather than maintaining the lawns themselve

The correct answer is: homeowners hire lawn care services rather than maintaining the lawns themselves

In the double-entry bookkeeping system used to track the economy, _____. Select one: a. government spending on transfer payment is recorded b. intermediate goods are counted twice, once as a type of output themselves and once as part of the final output c. the value of aggregate output equals the aggregate income paid for the resources used to produce that output d. the earnings of all shareholders in the economy from the sale of shares are recorded e. inventories are counted twice, once as investment and once as output

The correct answer is: the value of aggregate output equals the aggregate income paid for the resources used to produce that output

Net exports equals _____. Select one: a. the value of exports minus tariffs b. the value of exports minus the value of imports c. the value of exports plus the value of imports minus depreciation d. the value of imports minus tariffs e. the value of imports minus the value of exports

The correct answer is: the value of exports minus the value of imports

A shortcoming of national income accounting is that it ignores: Select one: a. Spending by poor households who are receiving government transfer payments. b. Spending on intermediate goods. c. U.S. products that are sold overseas. d. The depreciation of manufactured capital. e. The depletion of natural resources.

The depletion of natural resources.

Which of the following will be excluded from the measurement of gross domestic product (GDP)? Select one: a. The market value of automobiles purchased by the federal government. b. The market value of California wine purchased by a Canadian firm. c. The payment of employees' medical insurance. d. The market value of computers purchased by state governments. e. The market value of transactions in the underground economy.

The market value of transactions in the underground economy

Which of the following would be included in the gross domestic product (GDP)? Select one: a. The bricks purchased by a construction company to build a house. b. The $300 George saved because he painted his own garage. c. The monthly telephone bill paid by Mr. Jones. d. The corporate stock purchased by Steven. e. The used limousine purchased by Harold.

The monthly telephone bill paid by Mr. Jones.

The final market value of a good is

The sum of values added at all stages of production

​Which of the following is the best indicator of the performance of the national economy? Select one: a. ​The balance of trade with other nations. b. The budget deficit of the federal government. c. ​The stock of capital goods (machinery) in the nation. d. ​The nation's stock of money. e. ​The value of the final goods and services produced in the nation

The value of the final goods and services produced in the nation.

If the price index is 100 this year, then

There has been no inflation during the year

The value of tires purchased by a company to use on its cars is not included when calculating the gross domestic product (GDP).

True

Real gross domestic product (GDP) is measured in terms of

base-year prices

The largest component of aggregate expenditure is

consumption

Nominal gross domestic product (GDP) is measured in terms of the

current-year prices

We can conclude that there has been inflation since the base year if the GDP price index in the current year is

greater than 100

Nominal gross domestic product (GDP)

is measured in terms of current-year prices.

The base year for a price index is the year

that serves as a reference point