Question

Which of the following is NOT true about gross domestic product (GDP)?​

• a. ​It includes only final goods and services.
• b. The values are measured in current dollars
• c. Intermediate goods and services are excluded to prevent double counting.​
• d. It includes the value of transfer payments.​

The gross domestic product (GDP) excludes:​

• a. the value of intermediate goods produced.​
• b. the spending by government on new roads and bridges.​
• c. household spending on goods and services.​
• d. ​the increase in inventories during a given period.

Which of the following is included in "G" government purchases component of GDP?​

• a. Unemployment compensation benefits​
• b. Salaries paid to supreme court judges
• c. Welfare benefit payments​
• d. ​Social Security payments

Which of the following is NOT an example of an injection in the circular flow of income and expenditure?​

• a. ​Investment
• b. Exports​
• c. Government purchases​
• d. Imports​

Which of the following is NOT an example of a leakage out of the circular flow of income and expenditure?​

• a. Saving​
• b. Government purchases
• c. ​Net taxes
• d. Imports

Which of the following will be excluded from the measurement of gross domestic product (GDP)?​

• a. ​The value of "under the table" transactions or done it the "black market"
• b. The market value of household's payments of medical insurance premiums​
• c. The market value of new residential homes purchased
• d. The market value of new automobiles purchased by households

The national income accounting system measures economic activity based on the concept of _____.​

• a. the circular flow of precious metal and money through the different sectors of an economy​
• b. comparative advantage of different industries in an economy​
• c. the circular flow of stocks, bonds and money through the different sectors of an economy​
• d. the circular flow of spending and income through the different economic decision makers of an economy​
• e. ​absolute advantage of different industries in an economy

The Consumer Price Index (CPI) is a measure of the:​

• a. change in the average price of a market basket of necessary goods and services.​
• b. average price of all final goods and services relative to the average price in the previous year.​
• c. cost of a market basket of consumer goods relative to the previous year.​
• d. change in the average price of all intermediate goods and services.​
• e. ​cost of a market basket of consumer goods and services relative to its cost in a base year.

Perhaps the best measure for comparing one nation's economy to another nation's is

• a. ​Government spending because government is most important part of the economy
• b. ​Real GDP because it is adjusted for price changes
• c. ​Trade balance because net exports is the biggest percentage of GDP
• d. Real GDP per capita because it adjusts for price changes and population size differences
• e. ​Gross Domest Product because it is not adjusted and is a nominal figure

Answer 1

1. It includes the value of transfer payments.

2. Excludes the value of intermediate goods produced.

3. Salaries paid to supreme court judges.

4. Imports.