a. Using the data in the table above, GDP is equal to _______. b. Using the data in the table above, NX (Net exports) is equal to ________. c. Using the data in the table above, PCE (Personal...

Chapter 5
GDP: A Measure of Total Production and Income
1) The total production within an economy is measured as
A) Gross Home Product.
B) Total Domestic Output.
C) Annual Production Value.
D) Gross Domestic Product.
E) Total Annual Output.
Answer: D
2) Gross Domestic Product is equal to the market value of all the final goods and services ________ in a given period of time.
A) produced within a country
B) consumed within a country
C) consumed by the citizens of a country
D) produced by the citizens of a country
E) produced and consumed within a country
Answer: A
3) Wobet is a small country that produces only steak and potatoes. Steaks have a price of $10 each and potatoes have a price of $1 each. Suppose that Wobet produces 10 steaks and 20 potatoes in 2010. Using ________, Wobet has GDP equal to ________.
A) market value; 30 units
B) a market basket; 30 units
C) market value; $120
D) real value; $120
E) a price index; $120
Answer: C
4) To calculate GDP it is necessary to add up the market value of all the ________ produced within a country during a year.
A) goods but not services produced
B) goods and services produced
C) intermediate goods and services produced
D) final goods and services produced
E) intermediate goods and services produced and all the final goods and services produced
Answer: D
5) If you make dinner for yourself
A) the market value of your dinner is added to GDP.
B) your service in preparing the meal is valued at a cook's wage and added to GDP.
C) none of what you bought to prepare for dinner is included in GDP.
D) only the market value of ingredients that you purchased this year is added to GDP.
E) the difference between the cost of the ingredients that you purchased this year and the market value of the dinner is added to GDP.
Answer: D
6) Consumption expenditure includes spending
A) on intermediate goods and services by firms.
B) on office supplies by firms.
C) by households.
D) by households and spending on office supplies by firms.
E) by governments when they are buying goods and services that consumers also buy.
Answer: C
7) Investment is the expenditure done by
A) savers.
B) firms.
C) governments.
D) the rest of the world.
E) Both answers A and B are correct.
Answer: B
8) Investment is defined as the purchase of
A) any financial asset only.
B) additions to inventories only.
C) financial assets and inventories only.
D) the purchase of new capital goods and additions to inventories.
E) the purchase of new capital goods but not additions to inventories.
Answer: D
9) In measuring GDP, which of the following is included?
A) the value of preparing meals at home
B) the value of stocks and bonds bought and sold
C) the value of used goods when they are sold
D) the value of increases in business inventories
E) the value of durable consumption goods but not the value of nondurable consumption goods.
Answer: D
10) In calculating GDP, we must
A) add the market value of imports and subtract the market value of exports.
B) add the market value of exports and subtract the market value of imports.
C) exclude net exports of goods and services (NX).
D) add the value of the goods produced outside of the United States by American firms.
E) subtract the market value of imports, because these goods are produced in a country other than the United States, and subtract the market value of exports, because these goods are consumed in a country other than the United States.
Answer: B
11) Which of the following expenditure components of GDP can be negative or positive?
A) Consumption expenditure
B) Investment
C) Government expenditure on goods and services
D) Net exports of goods and services
E) None of the above because expenditure can never be negative.
Answer: D
12) Undistributed profits ________ counted as part of GDP because ________.
A) are not; households are not paid by the firms.
B) are; they can be used to buy other goods.
C) are ; they are considered income paid to households and loaned back to firms.
D) are not; they are considered an intermediate good.
E) are; firms are required to pay corporate income taxes on them.
Answer: C
13) The abbreviation "GDP" stands for
A) Gross Domestic Product.
B) Gross Domestic Prices.
C) General Domestic Prices.
D) Great Domestic Prices.
E) Government's Domestic Politics.
Answer: A
14) The expenditure approach to measuring GDP is done by using data on only
A) consumption expenditure.
B) consumption expenditure and investment.
C) consumption expenditure, investment, government expenditure on goods and services, and net exports of goods and services.
D) consumption expenditure, investment, and government expenditures.
E) wages, rent, interest, and profit.
Answer: C
15) In 2009 in the kingdom of Saudi Arabia , consumption expenditure was $9,996 billion, investment was $1,559 billion, government expenditures on goods and services were $2,927 billion, and total exports were $1,492 billion. GDP equaled
A) $12,641 billion.
B) $10,120 billion.
C) $11,488 billion.
D) $14, 415 billion.
E) some amount, but there is not enough information given to calculate GDP.
Answer: E
16) Based on the data in the table above, what does GDP equal?
A) $10,200 billion
B) $10,400 billion
C) $10,000 billion
D) $9,800 billion
E) $8,900 billion
Answer: C
17) The table gives data for a nation. What is the amount of the country's GDP?
A) $6,000 billion
B) $6,200 billion
C) $6,600 billion
D) $6,900...