Question 1

In the United States, the largest component of GDP is

Accepted Answer

A)   consumption.
B)   investment.
C)   government purchases.
D)   net exports.E) A) and B)
F) A) and C)

Question 2

Use the information in this table to answer the following questions. a. What is nominal GDP for the year 2000? b. How much did nominal GDP grow between the year 1995 and the year 2000? c. How much did real GDP grow between the year 1995 and the year 2000, in 2000 prices?

Accepted Answer

a. The nominal GDP for the year 2000 is ...

Question 3

This summer you have a paid internship for Kia Motors in Canada. For which nation, or nations, are you contributing to GDP? Assume you are a U.S. citizen.

Accepted Answer

A)   United States
B)   United States and Canada
C)   Canada
D)   Canada and KoreaE) C) and D)
F) B) and D)

Question 4

Tim, a citizen of the United States living in Virginia, buys a computer that was made in South Korea by a Japanese firm. This transaction would affect the GDP of the United States in which way?

Accepted Answer

A)   Net exports would decrease and GDP would decrease.
B)   Net exports would decrease and GDP would be unaffected.
C)   Net exports would increase and GDP would increase.
D)   Net exports would increase and consumption would increase.E) B) and D)
F) None of the above

Question 5

A country experiencing high GDP growth and low population growth will have a

Accepted Answer

A)   low real GDP growth rate.
B)   low nominal GDP growth rate.
C)   low per capita GDP growth rate.
D)   high per capita GDP growth rate.E) All of the above
F) A) and D)

Question 6

Reference: Ref 6-5 (Table: Celebrity Income)  Refer to the table. GDP is seen as an imperfect measure of economic activity for several reasons. Which of the four reasons below is illustrated through the data in the table?

Accepted Answer

A)   GDP does not count nonmarket production.
B)   GDP does not make a positive adjustment for leisure.
C)   GDP does not account for environmental costs.
D)   GDP does not measure the distribution of income.E) A) and B)
F) A) and C)

Question 7

Which of the following statements is correct?

Accepted Answer

A)   Nominal GDP is always larger than real GDP.
B)   Nominal GDP can only rise from one year to the next because of price increases.
C)   Nominal GDP can rise from one year to the next because of price increases or because the country actually produces more, or both.
D)   All of the answers are correct.E) A) and B)
F) None of the above

Question 8

Economists prefer using real GDP because, other things held constant, increases in _____ represent true increases in the standard of living.

Accepted Answer

A)   production
B)   prices
C)   trade balances
D)   consumer spendingE) A) and C)
F) B) and C)

Question 9

Reference: Ref 6-2 (Table: Three-Product Economy)  Suppose an economy produces only the three final goods listed in the table. If 2008 is the base year, then the nominal GDP in 2009 is _________ and the real GDP in 2009 is

Accepted Answer

A)   $34,310; $33,700.
B)   $35,350; $34,310.
C)   $33,700; $35,000.
D)   $35,000; $33,700.E) B) and D)
F) B) and C)

Question 10

Which of the following choices shows a good or service (produced in the current period)  that is NOT counted in GDP for this year?

Accepted Answer

A)   a personal computer
B)   wood used for making furniture
C)   an oven for installation in a bakery
D)   flour sold in a grocery storeE) B) and C)
F) A) and B)

Question 11

Which of the following is the best definition of a recession?

Accepted Answer

A)   period that follows two consecutive quarters of declines in the level of real GDP
B)   significant, widespread decline in real income and employment
C)   period that follows a stock market crash
D)   period that has a persistent low employment rateE) C) and D)
F) A) and D)

Question 12

GDP per capita is GDP divided by

Accepted Answer

A)   population.
B)   the price level.
C)   the inflation rate.
D)   the unemployment rate.E) None of the above
F) A) and D)

Question 13

What data are used to calculate GDP?

Accepted Answer

A)   quantities of goods
B)   prices of goods
C)   both quantities and prices of goods
D)   costs of producing goodsE) A) and B)
F) A) and C)

Question 14

A computer chip that you purchase for use in your home computer is an example of

Accepted Answer

A)   a final good.
B)   an intermediate good.
C)   a service.
D)   economic growth.E) None of the above
F) All of the above

Question 15

Discuss how well gross domestic product measures well-being. In your discussion specifically define GDP and specifically state what it measures and what it does not measure.

Accepted Answer

Gross Domestic Product (GDP) is the mark...

Question 16

A business cycle is a fluctuation of real GDP around its long- term growth rate.

Accepted Answer

A) True 
 B)False

Question 17

A recession is a significant, widespread decline in

Accepted Answer

A)   interest rates and inflation.
B)   employment and inflation.
C)   employment and real income.
D)   inflation and real income.E) C) and D)
F) B) and D)

Question 18

Reference: Ref 6-4 (Table: Economic Data)  Use the factor income approach to national income accounting to calculate GDP for this country.

Accepted Answer

A)   $1,831
B)   $2,651
C)   $2,191
D)   $1,911.7E) None of the above
F) All of the above

Question 19

Final goods are goods

Accepted Answer

A)   used to produce other goods.
B)   consumed or held in personal inventories.
C)   used up in the production process.
D)   that cannot be exported.E) B) and D)
F) None of the above

Question 20

In general, during any given year

Accepted Answer

A)   GDP in the United States will exceed wealth in the United States
B)   wealth in the United States will exceed GDP.
C)   U.S. wealth and U.S. GDP will be approximately equal.
D)   U.S. wealth and U.S. GDP will be unrelated.E) A) and B)
F) A) and D)

Exam 24: Asymmetric Information: Moral Hazard and Adverse Selection

A computer chip that you purchase for use in your home computer is an example of

Correct AnswerverifiedShow Answer

Tim, a citizen of the United States living in Virginia, buys a computer that was made in South Korea by a Japanese firm. This transaction would affect the GDP of the United States in which way?

Correct AnswerverifiedShow Answer

Reference: Ref 6-2 (Table: Three-Product Economy) Suppose an economy produces only the three final goods listed in the table. If 2008 is the base year, then the nominal GDP in 2009 is _________ and the real GDP in 2009 is

Correct AnswerverifiedShow Answer

In the United States, the largest component of GDP is

Correct AnswerverifiedShow Answer

Economists prefer using real GDP because, other things held constant, increases in _____ represent true increases in the standard of living.

Correct AnswerverifiedShow Answer

GDP per capita is GDP divided by

Correct AnswerverifiedShow Answer

A business cycle is a fluctuation of real GDP around its long- term growth rate.

Correct AnswerverifiedShow Answer

In general, during any given year

Correct AnswerverifiedShow Answer

This summer you have a paid internship for Kia Motors in Canada. For which nation, or nations, are you contributing to GDP? Assume you are a U.S. citizen.

Correct AnswerverifiedShow Answer

Which of the following choices shows a good or service (produced in the current period) that is NOT counted in GDP for this year?

Correct AnswerverifiedShow Answer

A country experiencing high GDP growth and low population growth will have a

Correct AnswerverifiedShow Answer

Reference: Ref 6-5 (Table: Celebrity Income) Refer to the table. GDP is seen as an imperfect measure of economic activity for several reasons. Which of the four reasons below is illustrated through the data in the table?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

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Final goods are goods

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Discuss how well gross domestic product measures well-being. In your discussion specifically define GDP and specifically state what it measures and what it does not measure.

Correct AnswerverifiedGross Domestic Product (GDP) is the mark...View AnswerShow Answer

Which of the following is the best definition of a recession?

Correct AnswerverifiedShow Answer

Reference: Ref 6-4 (Table: Economic Data) Use the factor income approach to national income accounting to calculate GDP for this country.

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Use the information in this table to answer the following questions. a. What is nominal GDP for the year 2000? b. How much did nominal GDP grow between the year 1995 and the year 2000? c. How much did real GDP grow between the year 1995 and the year 2000, in 2000 prices?

Correct Answerverifieda. The nominal GDP for the year 2000 is ...View AnswerShow Answer

A recession is a significant, widespread decline in

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What data are used to calculate GDP?

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Gross Domestic Product (GDP) is the mark...
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a. The nominal GDP for the year 2000 is ...
View Answer

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