Deck 9: Gross Domestic Product

Question 1

Which is the smallest?

A)Employees' compensation
B)Corporate profits
C)Net interest
D)Rental income

Answer 1

D

Question 2

In 2009,our per capita GDP was about

A)$25,000.
B)$35,800.
C)$46,400.
D)$55,600.
E)$65,000.

Answer 2

C

Question 3

The largest item amount among those listed here is

A)national income.
B)net interest.
C)net domestic product.
D)corporate profits.

Answer 3

C

Question 4

Which one of the following is counted in GDP?

A)Government spending
B)Transfer payments
C)Intermediate goods
D)Leisure time

Question 5

In the equation C + I + G + Xn,the I is defined as

A)total new investments less a wear out allowance.
B)total investments in new plant and equipment,business inventory changes and new residential housing.
C)domestic consumer income.
D)total investments in new plant and equipment.

Question 6

Which one of the following is taken into account by GDP?

A)Household production
B)Illegal production
C)Leisure time
D)Custom lawn care services

Question 7

Today our per capita real GDP is _______ what it was since World War II.

A)half
B)equal to
C)twice
D)over three times

Question 8

If GDP rose from $4 trillion to $6 trillion,and prices rose by 50 percent,over this period

A)real GDP fell by 100 percent.
B)real GDP fell by 50 percent.
C)real GDP stayed the same.
D)real GDP rose by 50 percent.
E)real GDP rose by 100 percent.

Question 9

Net domestic product is usually preferred to GDP by economists because net national product

A)includes depreciation.
B)excludes depreciation.
C)includes indirect business taxes.
D)excludes indirect business taxes.

Question 10

The GDP is the value of all final goods and services produced

A)within the nations boundaries.
B)by domestically owned companies.
C)by citizens of the country.
D)by domestically controlled companies.

Question 11

Which statement is true?

A)The sum of wages and salaries is equal to the total of rent,profits,and interest.
B)Americans earn about as much in profits as in rent and interest combined.
C)The largest sector of national income is profits.
D)None of the statements are true.

Question 12

Which is not counted in GDP?

A)A Social Security check sent to a retiree
B)Government spending on highway building
C)Money spent on an airline ticket
D)Money spent by a company to build a new office park

Question 13

Which statement is true?

A)GDP can never be greater than NDP.
B)NDP can never be greater than GDP.
C)GDP and NDP are always equal.
D)None of the statements are true.

Question 14

The difference between GDP and NDP is

A)Who has control of the company.
B)Who receives the profit from the sale.
C)Where the money is spent.
D)Depreciation.

Question 15

If GDP doubled between 1990 and 1995,and prices doubled between 1990 and 1995,what happened to real GDP between 1990 and 1995?

A)It doubled.
B)It stayed the same.
C)It increased.
D)It declineD.
E)There is not enough information to answer this question.

Question 16

In 2009 GDP in the U.S.was slightly over

A)$140 million.
B)$14 billion.
C)$140 billion.
D)$14 trillion.
E)$140 trillion.

Question 17

The smallest component of national income is

A)rent.
B)interest.
C)profits.
D)salaries and wages.

Question 18

The largest component of national income is

A)corporate profits.
B)compensation of employees.
C)rental income.
D)proprietors' income.

Question 19

If GDP increases faster than the GDP deflator,

A)real GDP will rise.
B)real GDP will fall.
C)real GDP will stay the same.
D)There is not enough information to determine what happens to real GDP.

Question 20

GDP takes into account

A)both psychic income and psychic cost.
B)neither psychic income nor psychic cost.
C)psychic income,but not psychic cost.
D)psychic cost,but not psychic income.

Question 21

Which of the following is an intermediate product?

A)A road
B)Steel
C)Bread
D)A TV set
E)An automobile

Question 22

If GDP rises,

A)real GDP may either rise or fall or stay the same.
B)we can be certain that the price level has risen.
C)real GDP must fall.
D)real GDP must also rise.

Question 23

If our population doubles,our GDP quadruples,and our GDP deflator doubles,our per capita real GDP will

A)quadruple.
B)double.
C)stay exactly the same.
D)decline by 25 percent.
E)decline by 50 percent.

Question 24

If the GDP deflator is now 115,then we may conclude that since the base year

A)GDP has grown faster than real GDP.
B)Real GDP has grown faster than GDP.
C)GDP and real GDP have grown at about the same rate.
D)There is no way to determine if GDP or real GDP grew faster.

Question 25

When there is deflation,

A)GDP grows faster than real GDP.
B)GDP grows more slowly than real GDP.
C)GDP and real GDP grow at the same rate.
D)There is no way to compare the growth rates of GDP and real GDP.

Question 26

If our GDP rises by 50 percent,our GDP deflator doubles,and our population stays the same,our real per capita GDP will

A)Decline by 75 percent
B)Decline by 50 percent
C)Decline by 25 percent
D)Stay exactly the same
E)Rise by 25 percent

Question 27

If GDP declined by 6 percent in real terms during one year,and population declined by 3 percent,then

A)real GDP per capita decreased.
B)real GDP per capita increased.
C)real GDP increased while nominal GDP decreased.
D)nominal GDP did not change at all.
E)prices went down by 3 percent.

Question 28

Which statement is true?

A)In recent years net exports have been negative.
B)Government spending is the largest sector of GDP.
C)Business investment is the largest sector of GDP.
D)None of the statements are true.

Question 29

In 2009,what percent of our GDP was consumer purchases of goods and services?

A)25.
B)57.
C)71.
D)82.

Question 30

Gross Domestic Product is the total market value of all

A)commodities sold in a year.
B)goods and services produced in a year within a country.
C)foods and services produced by domestic companies in a year.
D)consumer goods sold in a year.

Question 31

If real GDP falls from one period to another,we can conclude that

A)deflation occurred.
B)inflation occurred.
C)nominal GDP fell.
D)None of the choices are correct.

Question 32

If the nation's output of goods and services is increasing faster than the rate of inflation,then we can say that

A)real GDP is increasing faster than GDP.
B)GDP is increasing faster than real GDP.
C)GDP and real GDP are growing at about the same rate.
D)There is no way to determine if GDP or real GDP is growing faster.

Question 33

If our population doubles,our GDP doubles,and the GDP deflator doubles,our per capita real GDP will

A)quadruple.
B)double.
C)stay exactly the same.
D)decline by 25 percent.
E)decline by 50 percent.

Question 34

If our GDP triples,our GDP deflator stays the same,and our population doubles,our real per capital GDP will

A)stay exactly the same.
B)rise by 33 1/3 percent.
C)rise by 50%.
D)rise by 66 2/3 percent.
E)doublE.

Question 35

If the GDP deflator is now 125,we may conclude that since the base year prices have

A)risen by 25 percent.
B)risen by 125 percent.
C)fallen by 25 percent.
D)fallen by 125 percent.

Question 36

Our GDP includes all the output produced

A)by Americans and foreigners within our borders.
B)by Americans within our borders.
C)by Americans within our borders and abroad.
D)by Americans within our borders and by American-owned,multinational companies with offices and factories abroaD.

Question 37

For purposes of calculating GDP using the expenditure approach,which of the following payments is NOT included in the government spending component?

A)Social Security pensions
B)The wages paid by a local government to its road crew
C)The wages paid by a state government to the workers in its welfare department
D)The federal government's purchase of a submarine from a shipbuilder
E)None of the choices are correct

Question 38

If 1987 is the base year,then which statement could be made about the relationship between GDP and real GDP today?

A)Real GDP is higher than GDP
B)GDP is higher than real GDP
C)GDP is equal to real GDP
D)None of the choices are correct

Question 39

Gross private domestic investment is used to calculate

A)GDP by the income approach.
B)GDP by the expenditures approach.
C)net domestic product by the expenditures approach.
D)net domestic product by the flow of income approach.

Question 40

Which statement is true?

A)GDP is a virtually perfect measure of national output.
B)GDP takes into account pollution,crime,and even personal satisfaction.
C)GDP is a single number that seeks to measure our national output.
D)There is no relationship between our GDP and our national output.

Question 41

If GDP rose from $5 trillion in the base year to $7 trillion in the current year,and during this period the GDP deflator rose by less than 40 percent,the most accurate statement we can make about the change in real GDP from the base year to the current year is that

A)it rose by less than 40 percent.
B)it rose by 40 percent.
C)it rose by more than 40 percent.
D)it did not change.
E)it fell.

Question 42

Which of the following would increase GDP?

A)More imports
B)Additional leisure time
C)Government removing more litter from highway right of ways
D)People engaging in more "do-it-yourself" projects

Question 43

If GDP rose from $6 trillion in the base year to $8 trillion in the current year and there was deflation during this period,what is the most accurate statement we can make?

A)Real GDP declined between the base year and the current year.
B)Real GDP rose by less than one-third between the base year and the current year.
C)Real GDP rose by one-third between the base year and the current year.
D)Real GDP rose by more than one-third between the base year and the current year.

Question 44

Which of the following circumstances would cause current GDP to overstate economic well-being in comparison to 60 years ago?

A)An increase in the total output per person
B)An increase in military expenditures
C)An increase in welfare payments
D)The trend toward a shorter work week

Question 45

If GDP rose from $4 trillion in the base year to $6 trillion in the current year,and there was some inflation during this period,the most accurate statement that can be made about the change in real GDP between the base year and the current year is that

A)it rose.
B)it fell.
C)if it rose,it rose less than 50 percent.
D)it rose by 50 percent.
E)it rose by more than 50 percent.

Question 46

For purposes of calculating GDP using the expenditure approach,which of the following is NOT included in the government expenditures account?

A)The government's purchase of pencils
B)The payroll of the federal government
C)The welfare payments made to the poor
D)The government's purchase of a computer
E)None of the choices are correct

Question 47

Which of the following is not a component of national income?

A)Interest
B)Rental income
C)Wages and salaries
D)Gross investment expenditures

Question 48

The change in the United States from a rural,self-sufficient economy to an urban,market-oriented economy had the effect of

A)causing the growth in GDP to understate the growth in economic well-being.
B)inhibiting the growth of GDP.
C)causing the growth in GDP to overstate the growth in economic well-being.
D)increasing GDP primarily through the resulting increase in the general price level.

Question 49

GDP will grow faster than real GDP if

A)unemployment occurs in an economy.
B)imports exceed exports in an economy.
C)deflation occurs in an economy.
D)inflation occurs in an economy.
E)cost of production declines.

Question 50

Wages are used to calculate

A)GDP by the income approach.
B)GDP by the expenditures approach.
C)Net exports.
D)Net subsidies to government enterprises.
E)None of the choices are correct.

Question 51

National income is the sum of all of the following except

A)wages.
B)savings.
C)interest.
D)rent.
E)profits.

Question 52

National income measures

A)nominal GDP after it has been inflated or deflated for changes in the value of the dollar.
B)the inflation adjusted income of resource supplies.
C)the market value or cost of the resources used in the production of the national output.
D)tax receipts of the federal government.

Question 53

Which of the following would NOT be included in this year's GDP?

A)The purchase of 100 shares of Microsoft stock
B)The replacement of a muffler on a 1978 Chevy
C)The commission charged by a real estate agent
D)The services of a hair stylist
E)The tuition fee for a course in economics

Question 54

Which of the following circumstances would not cause GDP to either understate or overstate economic well-being today in comparison to that which existed 75 years ago?

A)A shorter workweek today
B)Greater military spending today
C)A trend toward merger and consolidation of business firms
D)More air and water pollution

Question 55

Intermediate products are

A)goods that are purchased by the government.
B)goods that are transferred to the states.
C)products produced by the federal government but consumed by the states.
D)products produced by business firms for resale to other firms for further processing before sold to the final consumer of the product.

Question 56

GDP is

A)the market value of an economy's production of final goods and services.
B)the sum of coins,bills,and demand deposits in an economy.
C)the total expenditures of the federal government over the period of 1 year.
D)the market value of an economy's production of intermediate goods and services.
E)the total amount the government owes to bondholders.

Question 57

In 1933 net private domestic investment was a minus $5.8 billion.This meant that

A)gross private domestic investment exceeded depreciation by $5.8 billion.
B)the economy was expanding in that year.
C)the production of 1933's GDP used up more capital goods than were produced in that year.
D)the economy produced no capital goods at all in 1933.

Question 58

National income accountants can avoid multiple accounting by

A)including transfers in their calculations.
B)counting both intermediate and final goods.
C)only counting final goods.
D)only counting intermediate goods.

Question 59

Gross Domestic Product would be a more accurate indicator of economic well-being of society if

A)military expenditures were included in GDP.
B)military expenditures were excluded from GDP.
C)the government did not purchase goods and services.
D)stock market transactions were excluded from GDP.

Question 60

GDP can be used as a(n)

A)extremely accurate measure of economic welfare.
B)rough gauge of economic activity over time.
C)precise measure of inflation.
D)accurate measure of a nation's international economic activities.

Question 61

GDP measures

A)the market value of intermediate products produced during the year.
B)the sum of the market value of both final and intermediate products produced during the year.
C)the sum of the market value of final products produced and imported during the year.
D)the market value of final products produced in the nation during the year.

Question 62

For time series data,what is unique about a time period where real GDP equal nominal GDP?

A)The base year for the price index
B)GDP = C + I + G + Xn
C)Exports exceed imports
D)A high rate of inflation exist

Question 63

In 2009,the largest share of the United States economy's allocation of national product to land,labor,capital,and management was primarily received by the suppliers of

A)Management.
B)Land.
C)Labor.
D)Capital.

Question 64

GDP is

A)the sum of all monetary transactions which occur in the economy in a given year.
B)the sum of all monetary transactions involving final goods and services which occur in the economy in a given year.
C)the amount of production which occurs when the economy is operating at full employment.
D)None of the choices are true of GDP.

Question 65

If our output of goods and services rises,then

A)real GDP definitely rose.
B)real GDP definitely fell.
C)GDP definitely rose.
D)GDP definitely stayed the same.

Question 66

Under what conditions would real GDP increase more than nominal GDP?

A)Price inflation
B)Rapidly increasing interest rates
C)Price deflation
D)A major decline in the stock market

Question 67

Real GDP is

A)the final estimate of GDP for a period.
B)GDP unadjusted for inflation.
C)GDP adjusted for inflation.
D)total income minus indirect business taxes.

Question 68

Which of the following are excluded from GDP?

A)Changes in the value of existing assets
B)Financial transactions
C)Sales of used goods
D)All of the choices are excluded from GDP.

Question 69

The effect of Hurricane Katrina from a national income accounting standpoint probably caused real GDP to

A)decrease.
B)increase.
C)stay the same.

Question 70

GDP is

A)national income after taxes.
B)the total value of all personal consumption expenditures.
C)the market value of final goods and services produced in a given year.
D)equivalent to unemployment.

Question 71

Suppose that GDP increases in 2015,but real GDP decreases during the year.It can be concluded that

A)output declined or we had deflation in 2015.
B)the price level fell in 2015.
C)inflation was zero in 2015.
D)output increased in 2015.

Question 72

The concept of "net domestic investment" refers to

A)the amount of machinery and equipment used up in producing the GDP in a given year.
B)the difference between the market value and book value of outstanding capital stock.
C)gross domestic investment less net exports.
D)total investment less the amount of investment goods used up in accomplishing the year's production.
E)The total output of capital equipment,construction,and additions to inventories which occur in a given year.

Question 73

We use the value added approach in calculating GDP to

A)avoid double counting.
B)account for market price differences.
C)account for changes in population.
D)account for consumer income differences.

Question 74

In evaluating an economy's performance over a period of years,real GDP provides a better measuring rod than GDP because

A)GDP is distorted by its failure to show qualitative improvements in the products we manufacture.
B)Real GDP is adjusted for the social and environmental costs of production,which are normally not compensated.
C)Real GDP includes such productive endeavors as housewife services and home repairs that are performed by households without payment.
D)Real GDP does not include the value of intermediate goods and services.
E)GDP reflects changes in prices as well as changes in output,while real GDP only reflects changes in output.

Question 75

GDP can increase at a faster rate than real GDP

A)only if there is a decline in the price level.
B)only if the unemployment rate is increasing.
C)only if the value of the dollar is stable.
D)only if the population is growing.
E)only if there is inflation.

Question 76

National income includes all of the following except

A)wages and salaries.
B)corporate profits before taxes.
C)rental income.
D)depreciation.

Question 77

Suppose that our GDP rose from $20 trillion in the year 2012 to $37 trillion in the year 2013.

A)Real GDP definitely increased.
B)Real GDP definitely decreased.
C)The GDP deflator definitely doubled.
D)The GDP deflator definitely increaseD.
E)The GDP deflator definitely decreased.

Question 78

If GDP rises and the GDP deflator falls,then

A)real GDP definitely rose.
B)real GDP definitely fell.
C)real GDP definitely remained the same.
D)there is not enough information to determine if real GDP rose,fell,or remained the same.

Question 79

The value added for a nation equals

A)all goods and services less the intermediate goods used in production.
B)the market value of all products and services less the market value of all intermediate goods.
C)input costs plus the value of intermediate goods.
D)the market value of intermediate goods less the value of all goods and services.

Question 80

Suppose that our GDP fell from one year to the next.

A)The GDP deflator definitely fell.
B)Real GDP definitely fell.
C)Both real GDP and the GDP deflator definitely fell.
D)None of the choices are correct.