Question

1. A self-employed woman marries the man she has been paying to do her accounting. After they marry they decide there is no point continuing to write a check to him since they are now one-household. What effect does this have on GDP?

Select one:

a. None, since only their legal status changes and the same amount of productive activity is being done.

b. GDP decreases because his accounting services were an intermediate good and are now a final good.

c. GDP increases because the woman will now have more money to spend.

d. GDP decreases because the accounting services are now considered household production and are not being sold.

e. GDP increases because the combined household is more productive.

Question 2

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All of the items below affect our country's economic welfare, but only one of them is included in
U.S. Gross Domestic Product.Which one is included?

Select one:

a. the total spending on new business machinery by corporations in the U.S.

b. the value of meals prepared and consumed by homeowners

c. the estimated total spending on used goods at garage sales

d. the total spending on illegal drugs

Question 3

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If total actual investment exceeds planned investment,

Select one:

a. consumption must equal investment

b. the economy will grow faster than anticipated

c. firms have underestimated demand for their goods

d. injections must equal leakages

e. firms must have an unplanned reduction in inventory

Question 4

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Long-term growth in production can be best explained by

Select one:

a. capital accumulation, both physical and human

b. moderate inflation

c. a rapid and accelerating increase in the price level

d. a trade surplus (exports exceed imports)

e. the peaks and troughs of economic fluctuations

Question 5

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Nominal GDP will rise faster than real GDP if

Select one:

a. the price level rises.

b. there is inflation.

c. the GDP Deflator price index also increased.

d. all of the above.

Real GDP can be counted by calculating

Select one:

a. nominal C + I + G + (X - M), and then adjusting for changes in productivity

b. nominal C + I + G + (X - M), and then adjusting for changes in employment

c. nominal C + I + G + (X - M), and then adjusting for changes in the price level

d. nominal C + I + G + (T - S), and then adjusting for changes in the price level

e. nominal (C - S) + I (G - T) + (X-M), and then adjusting for changes in the price level

Question 7

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Real Gross Domestic Product (real GDP) is the same as

Select one:

a. GDP adjusted for changes in the price level.

b. GDP adjusted for depreciation.

c. nominal (current dollar) GDP.

d. national income at current year prices.

Question 8

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Suppose GDP in the economy is currently $3,200 billion.If total consumption expenditures are $2,400 billion, planned investment expenditures are $300 billion, government purchases of goods and services are $700 billion, and net exports are -$100 billion, then

Select one:

a. firms are experiencing an unplanned increase in inventories.

b. firms are experiencing an unplanned decrease in inventories.

c. the economy is at equilibrium GDP.

d. firms are experiencing no unplanned change in inventories.

Question 9

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Which of the following are considered as part of investment spending in the calculation of GDP?

Select one:

a. construction of new residential housing

b. accumulation (additions to) of business inventories

c. business purchases of software to run their businesses

d. firm purchases of robots to replace workers

e. all of the above

Question 10

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Which of the following will increase labor productivity?

Select one:

a. technology improvements

b. a reduction in the capital available per worker

c. an increase in population

d. a lower retirement age that causes large numbers of experienced workers to retire

Answer 1

Q1. A) None

Q2. A) Total business spending on new machinery.

This is because illegal work, used goods and production for self-consumption is not included.

Q3. B) Economy will grow faster than anticipated

Q4. A) Capital accumulation both human and physical

Q5.. C) The Gdp deflator index is increased

Since,, Nominal Gdp/Price=Real Gdp

Q6. C) C+I+G+(X-M) and then adjusting for price level

Q7. A) GDP adjusted for changes in price level

Q8. A) Firms are experiencing an unplanned increase in inventory.

GDP= Consumption+investment+net exports+government spending=$3300>$3200

Q9.E) All of the above

Q10. A) Technology improvements