Question 1

Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's profit is

Accepted Answer

A)   $0.
B)   $2,000.
C)   $3,000.
D)   $15,000.
E)   $25,000.F) A) and E)
G) A) and B)

Question 2

For the following question(s) , suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below.
 
-When we try to measure real GDP and the price level, if we underestimate the growth in real GDP, we will

Accepted Answer

A)   always underestimate the rate of inflation.
B)   sometimes underestimate the rate of inflation.
C)   always overestimate the rate of inflation.
D)   sometimes overestimate the rate of inflation.
E)   not be able to measure the rate of inflation.F) B) and D)
G) A) and B)

Question 3

Investment spending is

Accepted Answer

A)   less volatile than consumption spending.
B)   much more volatile than consumption spending.
C)   equally as volatile as government spending.
D)   equally volatile as GDP.
E)   a larger fraction of GDP than consumption is.F) C) and D)
G) A) and D)

Question 4

GDP may inaccurately measure the value of aggregate output because it may not properly account for

Accepted Answer

A)   production in the underground economy and the true value of government production.
B)   the true value of government production and the proper value of purchases and sales of used goods.
C)   the proper value of purchases and sales of used goods and depreciation of consumer durables.
D)   the depreciation of consumer durables and production in the underground economy.
E)   all services produced.F) B) and C)
G) All of the above

Question 5

Approaches to measuring GDP include

Accepted Answer

A)   cost approach.
B)   GDP approach.
C)   income approach.
D)   trade approach.
E)   value-subtracted approach.F) A) and E)
G) A) and B)

Question 6

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's profit is

Accepted Answer

A)   $100.
B)   $200.
C)   $400.
D)   $800.
E)   $1,000.F) B) and C)
G) B) and E)

Question 7

Even when measured accurately, GDP may be a misleading measure of economic welfare because it cannot account for

Accepted Answer

A)   the value of government spending and how efficiently we produce goods and services.
B)   how efficiently we produce goods and services and the value of non-market production.
C)   the value of non-market production and the consequences of an unequal distribution of income.
D)   the consequences of an unequal distribution of income and the value of government spending.
E)   the cost of intermediate goods and services.F) None of the above
G) A) and C)

Question 8

The income approach to calculating GDP is

Accepted Answer

A)   the sum of all business income earned.
B)   the sum of all consumer income earned.
C)   all the spending on goods and services earned by consumer's income.
D)   the sum of all incomes earned from production.
E)   net of taxes.F) A) and C)
G) None of the above

Question 9

Real GDP values current production at

Accepted Answer

A)   current year prices.
B)   the best estimate of next year's prices.
C)   the average of price levels over the entire sample period.
D)   base year prices.
E)   the purchase price not the asking prices of goods and services.F) B) and E)
G) A) and D)

Question 10

The participation rate equals

Accepted Answer

A)   
B)   
C)   
D)   
E)   F) B) and C)
G) All of the above

Question 11

Suppose that GDP is equal to 1,000, national saving is equal to 200, the current account deficit is equal to 100, and the government budget deficit is equal to 50. Private savings must equal

Accepted Answer

A)   150.
B)   200.
C)   250.
D)   300.
E)   350.F) B) and C)
G) A) and E)

Question 12

For the following question(s) , suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below.
 
-Significant problems with measuring real GDP and the price level include

Accepted Answer

A)   changes in the importance of intermediate goods.
B)   purchases of used goods.
C)   changes in the population size.
D)   changes in the quality of goods over time.
E)   changes in the size of the government.F) B) and C)
G) A) and B)

Question 13

For the following question(s) , suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below.
 
-If a particular measure of real GDP consistently underestimates growth in real GDP, then the rate of inflation as measured by the GDP deflator

Accepted Answer

A)   will consistently be overestimated.
B)   will consistently be underestimated.
C)   will be overestimated and underestimated equally often.
D)   cannot be calculated.
E)   is not a good predictor of the inflation rate in the CPI.F) A) and C)
G) B) and D)

Question 14

National savings must equal

Accepted Answer

A)   I + NX + NFP.
B)   I - NX - NFP.
C)   Y - NFP + C + G.
D)   Yd - C.
E)   T - TR - INT - G.F) A) and D)
G) A) and C)

Question 15

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's contribution to GDP is

Accepted Answer

A)   $900.
B)   $1,000.
C)   $1,100.
D)   $1,800.
E)   $2,000.F) C) and D)
G) A) and E)

Question 16

Discouraged workers are

Accepted Answer

A)   those who have given up looking for work, even though they would like to be employed.
B)   those who quit working because they are dissatisfied with their jobs.
C)   those who unmotivated workers who bring down a country's productivity.
D)   those who would like to find a second job to supplement their income, but have not yet found one.
E)   those who only work in the summer months.F) A) and B)
G) A) and C)

Question 17

For the following question(s) , suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table:
 
-What is the real GDP in year 1 using base year 2?

Accepted Answer

A)   $418
B)   $300
C)   $360
D)   $338
E)   $294F) B) and E)
G) A) and B)

Question 18

The income approach to calculating GDP includes

Accepted Answer

A)   consumer spending.
B)   exports of income earned.
C)   net interest income.
D)   government surpluses.
E)   investment.F) A) and D)
G) C) and D)

Question 19

When there is rapid inflation,

Accepted Answer

A)   growth in nominal GDP exceeds growth in real GDP.
B)   growth in real GDP exceeds growth in nominal GDP.
C)   growth in real GDP and nominal GDP are roughly equal.
D)   there can never be any growth in nominal GDP.
E)   government tries to increase growth in real GDP.F) A) and B)
G) D) and E)

Question 20

Intermediate goods are

Accepted Answer

A)   irrelevant in the overall economy.
B)   purchased by consumers.
C)   goods that are produced and used as inputs into the production process.
D)   sold to foreigners.
E)   not a consumption good.F) B) and C)
G) None of the above

Exam 2: Measurement

The income approach to calculating GDP is

Correct Answer
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The participation rate equals

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GDP may inaccurately measure the value of aggregate output because it may not properly account for

Correct Answer
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For the following question(s) , suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table: -What is the real GDP in year 1 using base year 2?

Correct Answer
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National savings must equal

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Suppose that GDP is equal to 1,000, national saving is equal to 200, the current account deficit is equal to 100, and the government budget deficit is equal to 50. Private savings must equal

Correct Answer
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When there is rapid inflation,

Correct Answer
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Approaches to measuring GDP include

Correct Answer
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Intermediate goods are

Correct Answer
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Real GDP values current production at

Correct Answer
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The income approach to calculating GDP includes

Correct Answer
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Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's profit is

Correct Answer
verified

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's contribution to GDP is

Correct Answer
verified

Even when measured accurately, GDP may be a misleading measure of economic welfare because it cannot account for

Correct Answer
verified

For the following question(s) , suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below. -Significant problems with measuring real GDP and the price level include

Correct Answer
verified

Correct Answer
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Investment spending is

Correct Answer
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Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's profit is

Correct Answer
verified

Discouraged workers are

Correct Answer
verified

Exam 2: Measurement

The income approach to calculating GDP is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The participation rate equals

Correct AnswerverifiedShow Answer

GDP may inaccurately measure the value of aggregate output because it may not properly account for

Correct AnswerverifiedShow Answer

For the following question(s) , suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table: -What is the real GDP in year 1 using base year 2?

Correct AnswerverifiedShow Answer

National savings must equal

Correct AnswerverifiedShow Answer

Suppose that GDP is equal to 1,000, national saving is equal to 200, the current account deficit is equal to 100, and the government budget deficit is equal to 50. Private savings must equal

Correct AnswerverifiedShow Answer

When there is rapid inflation,

Correct AnswerverifiedShow Answer

Approaches to measuring GDP include

Correct AnswerverifiedShow Answer

Intermediate goods are

Correct AnswerverifiedShow Answer

Real GDP values current production at

Correct AnswerverifiedShow Answer

The income approach to calculating GDP includes

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Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's profit is

Correct AnswerverifiedShow Answer

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's contribution to GDP is

Correct AnswerverifiedShow Answer

Even when measured accurately, GDP may be a misleading measure of economic welfare because it cannot account for

Correct AnswerverifiedShow Answer

For the following question(s) , suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below. -Significant problems with measuring real GDP and the price level include

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Investment spending is

Correct AnswerverifiedShow Answer

Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's profit is

Correct AnswerverifiedShow Answer

Discouraged workers are

Correct AnswerverifiedShow Answer

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