DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
United States – BPRPOG: Analysis
Aggregate demand and aggregate s – Aggregate demand and aggregate supply
Supply and Demand in Macroeconomics
69. The vertical axis of the aggregate demand-aggregate supply model measures the amount of
a.
total employment.
b.
total final output.
c.
the price level.
d.
net exports.
DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
United States – BPROG: Analytic
Aggregate demand and aggregate s – Aggregate demand and aggregate supply
Supply and Demand in Macroeconomics
BLOOMS: Application
70. In the aggregate demand-aggregate supply model, economic growth can be illustrated by an
a.
outward shift of the aggregate demand curve.
b.
inward shift of the aggregate demand curve.
c.
inward shift of the aggregate supply curve.
d.
All of the above.
DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
United States – BPROG: Analytic
Aggregate demand and aggregate s – Aggregate demand and aggregate supply
Supply and Demand in Macroeconomics
BLOOMS: Application
71. The clearest sign of inflation would be a(n)
a.
increase in the price level.
b.
increase in the quantity of total final output.
c.
decrease in the quantity of total final output.
d.
simultaneous increase in both output and prices.
DISC: Supply and demand
United States – BPROG: Analytic
Supply and demand
Supply and Demand in Macroeconomics
72. Gross Domestic Product is best described as the
a.
b.
c.
d.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
73. Nominal GDP is
a.
also called real GDP.
b.
a more accurate measure than real GDP.
c.
real GDP adjusted for changes in the price level.
d.
GDP measured in current prices.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
74. Real GDP
a.
is nominal GDP adjusted for changes in the price level.
b.
is also called nominal GDP.
c.
measures GDP minus depreciation of capital.
d.
will always change when prices change.
United States – BPROG: Analytic
Gross Domestic Product
75. Which of the following is a true measure of national output?
a.
GDP at market price
b.
Nominal GDP
c.
GDP in current dollars
d.
GDP in constant dollars
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
76. Gross Domestic Product is the
a.
least inclusive aggregate used to measure the economy.
b.
total of goods and services desired by consumers.
c.
most comprehensive measure of total output in the United States.
d.
most accurate measure of the trade balance of the United States.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
77. Gross Domestic Product is calculated by adding together
a.
the number of goods and services produced in the economy.
b.
money value of final goods and services.
c.
number of workers employed in national production.
d.
all commodities but not services produced in the economy.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
78. If the prices of all goods and services rise during the year,
a.
real GDP may fall.
b.
nominal GDP must rise.
c.
nominal GDP may increase.
d.
real GDP must rise.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
79. The clearest sign of economic growth is a(n)
a.
increase in nominal GDP.
b.
increase in real GDP.
c.
decrease in nominal GDP.
d.
increase in nominal GDP.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
80. A good produced in 2009 and held in inventory until it is sold in 2010 would be included in which measure of GDP?
a.
Half the value in 2009 and half the value in 2010
b.
In 2010 GDP
c.
In both 2009 and 2010 GDP
d.
In 2009 GDP
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
81. A real estate salesperson sells a house in 2015 that was built in 2005. How does this transaction get counted in the
GDP statistics?
a.
The price of the house and the real estate salesperson’s commission are both included in 2015’s GDP.
b.
Neither the price of the house or the commission is included in 2015’s GDP.
c.
The real estate salesperson’s commission but not the price of the house is included in 2015’s GDP.
d.
The price of the house would be included in both 2005’s GDP and the GDP for 2015.
c
Difficult
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
82. In 2015, you buy a beautiful vintage 1965 Thunderbird convertible. This purchase would
a.
be included in the GDP for 2015.
b.
not be included in the GDP for 2015.
c.
be included in both the GDP for 1965 and 2015.
d.
be in the GDP for 2015 at a depreciated value.
Moderate
DISC: Measuring the Economy
United States – BPROG: Reflective Thinking – BPROG: Analysis
Measuring the Economy
Gross Domestic Product
83. Macroeconomic models use abstract concepts such as “price level” and “national income” that are calculated by
combining many markets into one. This process is known as
a.
analysis and synthesis.
b.
integration and derivation.
c.
conceptualization.
d.
aggregation.
Moderate
DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
United States – BPROG: Analytic
Aggregate demand and aggregate s – Aggregate demand and aggregate supply
Gross Domestic Product
84. You are a collector of antique coins. You purchase a silver dollar minted in 1898. Is this sale included in GDP for the
current year?
a.
Yes, provided the coin is in mint condition.
b.
No, it is not.
c.
No, unless the coin has been in circulation.
d.
Yes, it is.
e.
Only if it is part of the current money supply.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
85. Aneta has owned an Italian sports car for several years and now she wants to sell it. She paid $8,500 for it in 1993 and
she has just sold it for $39,000 in 2015. How is this sale included in the GDP for 2015?
a.
$8,500 is included in 2015 GDP
b.
$39,000 is included in 2015 GDP
c.
The increase in value of $10,500 is included in 2015 GDP
d.
It is not included in 2015 GDP
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
86. Real GDP differs from nominal GDP in that nominal GDP measures
a.
output adjusted for inflation.
b.
real output of goods and services.
c.
output of goods and services at current prices.
d.
real income adjusted for changes in the price level.
United States – Analytic – BB-Legal
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
87. Intermediate goods, like milk sold by a farmer to a supermarket, are
a.
included in GDP.
b.
included in GDP at market value.
c.
included if it is imported.
d.
are not included in GDP.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
88. General Motors Corporation (a U.S.-based firm) produces a Saab vehicle in Sweden, and sells it in the United States.
In which country’s GDP is it included?
a.
Sweden and the United States
b.
The United States because it was sold there
c.
The United States because GM is a U.S. company
d.
Sweden because it was produced there
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
89. If Honda (a Japan-based firm) produces a car in Ohio and exports it to Japan, in which country’s GDP will the car be
counted?
a.
Japan’s, because Honda is a Japanese company
b.
Japan’s because that is where the car is purchased
c.
The GDP of the United States because that is where it was built
d.
Both Japan and the United States
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
90. Which of the following transactions would be included in GDP for 2015?
a.
On January 5, 2015, Chris Carter sold 100 shares of stock in IBM Corporation.
b.
Bonita Delgado purchases a new 2015 Chevrolet on March 10, 2015.
c.
Nadav Daniel buys a used desk from the “Struggling Students Used Furniture” store on May 9, 2015.
d.
Levi Lathan purchases a 75-year-old penthouse on Lake Shore Drive in Chicago, Illinois, on June 23, 2015.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
91. If hot dogs cost $2 this year and $3 next year, then 100 hotdogs will contribute
a.
$200 to this year’s nominal GDP and $166 to next year’s nominal GDP.
b.
$200 to this year’s real GDP and $300 to next year’s real GDP.
c.
the same dollar amount to each year’s nominal GDP because hotdogs are intermediate goods.
d.
$200 to this year’s nominal GDP and $300 to next year’s nominal GDP.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
92. E&S Cooling Co. installs air conditioning systems in new houses for homebuilders, and replacement systems for
homeowners. Sales of which systems are included in this year’s GDP?
a.
Sales of replacement systems
b.
Sales of both systems
c.
Sales of systems in new houses
d.
Neither system would be included, because they are always intermediate goods.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
93. In periods of generally rising prices,
a.
real GDP will grow faster than nominal GDP.
b.
nominal GDP will grow slower than real GDP.
c.
real GDP will grow slower than nominal GDP.
d.
real GDP and nominal GDP will grow at the same rate.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
94. Inflation refers to an increase in the
a.
price level.
b.
rate of inflation.
c.
total income.
d.
real GDP.
a
Easy
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
95. The major difference between nominal GDP and real GDP is that
a.
real GDP is the absolute value of goods and services and nominal GDP is a relative value.
b.
real GDP refers to products made in the United States and nominal GDP refers to both exports and imports.
c.
nominal GDP is the market value and real GDP has been adjusted for inflation.
d.
real GDP is a relative value and nominal GDP is an absolute value.
c
Moderate
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
96. Suppose that in 2015 you paid $150,000 for a house that was built in 2005 and sold that year for $210,000. The
amount this transaction would add to the GDP in 2015 is
a.
$0.
b.
$60,000.
c.
$210,000.
d.
−$60,000
a
Easy
DISC: Measuring the Economy
United States – BPROG: Analytic
Gross Domestic Product
97. Which of the following would tend to increase the value of officially measured GDP?
a.
decriminalization of drugs such as marijuana and cocaine
b.
decriminalization of prostitution
c.
decriminalization of gambling on basketball and football
d.
all of the above
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
98. Gross Domestic Product is a monetary measure of
a.
total consumption in the economy.
b.
the total value of all final goods and services.
c.
total industrial output.
d.
the total value of all foreign sales and purchases.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
99. An example of an intermediate good would be a(n)
a.
new car.
b.
used car.
c.
new tire for a used car.
d.
tire for a new car.
e.
All of the above.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
100. Real GDP is another term for
a.
current dollar GDP.
b.
actual GDP.
c.
constant dollar GDP.
d.
tangible GDP.
DISC: The study of economics, an – DISC: The study of economics, and definitions in
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
101. Nominal GDP is another term for
a.
current dollar GDP.
b.
constant dollar GDP.
c.
adjusted dollar GDP.
d.
relative value GDP.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
102. The definition of Gross Domestic Product is
a.
the total value of all sales in the economy.
b.
the total value of production in the domestic economy plus the production of domestic firms in foreign
countries.
c.
the total value of all sales of final and intermediate goods in the domestic economy.
d.
the total of the money values of all final goods and services produced in the domestic economy within a
specific time period.
DISC: The study of economics, an – DISC: The study of economics, and definitions in
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
103. Does GDP for a particular year include items produced in a previous year?
a.
Nominal GDP will not and real GDP will
b.
Real GDP will and nominal GDP will not
c.
Yes for both nominal and real GDP
d.
No for both nominal and real GDP
Easy
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
104. A product that is produced in 2015 and not sold until 2016 will be counted in the GDP for
a.
both 2015 and 2016.
b.
neither 2015 nor 2016.
c.
2015.
d.
2016.
c
Easy
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
105. Trish grows oregano in her backyard to use in her homemade pesto sauce. How is this gardening included in GDP?
a.
It is included in real GDP.
b.
It is included in nominal GDP.
c.
It is not included in GDP.
d.
It is included as an intermediate good.
c
Moderate
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
106. Dissatisfaction with public school education has led many parents to try home schooling for their children. If parents
cut back on their jobs outside the home in order to spend time teaching their children at home, how will this affect GDP?
a.
GDP will increase.
b.
Real GDP will increase and nominal GDP will decrease.
c.
Both real and nominal GDP will increase.
d.
GDP will decrease.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
107. Which of the following is counted in GDP?
a.
the cost of the reconstruction and cleanup following September 11, 2001.
b.
the value of leisure time
c.
the value of a househusband’s work at home
d.
the value of your do–it-yourself work
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
108. Which of the following is included in GDP?
a.
the value of illegally produced goods
b.
the value of housework by a stay-at–home dad
c.
the value of volunteer work done at a local homeless shelter
d.
the cost of government-provided social services
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
109. In 2015, Richard buys a 2003 Chevrolet minivan from a neighbor. Will this be counted in the GDP for 2015?
a.
Yes
b.
No
c.
Yes, if sales tax is paid
d.
No, because the purchase was from an individual not a dealer
Easy
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
110. Amazon.com, an Internet retailer of books, buys a shipment of economics textbooks from a publisher. Is this
included in GDP?
a.
Yes
b.
No
c.
It depends on how the payment is made
d.
Yes, in real but not nominal GDP
e.
Yes, in nominal but not real GDP
Easy
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
111. In March 2015, many college students bet on the NCAA finals in dorm gambling pools. This is an example of
a.
real vs. nominal GDP.
b.
the assumed value of household production.
c.
underground economic activity.
d.
the implicit value of leisure time.
e.
a “bad” versus a “good.”
c
Moderate
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
112. Mitsubishi Corporation of America builds a car in Normal, Illinois, and ships it to Japan for sale. In which country’s
GDP is this production included?
a.
Japan
b.
both Japan and the United States
c.
in Japan as retail value and the United States as wholesale value
d.
half the value in Japan and half in the United States
e.
the United States
e
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
113. Gross Domestic Product is an economic aggregate that represents the
a.
potential output of a country.
b.
total product of a nation’s economy.
c.
total income earned from all sales.
d.
total product that a country exports.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
114. Gross Domestic Product is a dollar measure of
a.
total gross investment in an economy.
b.
total industrial sales in a particular time period.
c.
the total physical product of the economy.
d.
the value of all final goods and services produced in one time period.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
115. Nominal GDP is calculated by using
a.
prices set in a base year.
b.
average prices in all major cities.
c.
current prices
d.
prices charged by initial producers.
DISC: The study of economics, an – DISC: The study of economics, and definitions in
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
116. Phoebe and Rachel quit running in Central Park and join a health club to run on treadmills. This decision
a.
has no effect on GDP.
b.
increases GDP.
c.
decreases GDP.
d.
increases nominal but not real GDP.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
117. Poor Asian countries may have per-capita GDP’s that may be less than $250. Why is this somewhat misleading for
comparative purposes?
a.
Most rich country GDP is nonmarket activity.
b.
A significant amount of poor country GDP is nonmarket activity.
c.
Poor countries do not use dollars.
d.
Poor countries have few resources.
DISC: Measuring the Economy
United States – BPROG: Reflective Thinking – BPROG: Analysis
Measuring the Economy
Gross Domestic Product
118. Is GDP an accurate measure of a country’s well being?
a.
Yes, it is the best measure of national well being.
b.
Yes, provided we use real GDP and not nominal GDP.
c.
The answer is uncertain, depending on whether GDP is rising or falling.
d.
No, it is not.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
119. The Italian government collects a smaller amount of the taxes it is owed than the U.S. government. Other things
being equal,
a.
U.S. and Italian GDP should be equal.
b.
U.S. GDP should be higher than Italian GDP.
c.
U.S. GDP should be lower than Italian GDP.
d.
U.S. residents are better off than Italian residents.
DISC: Measuring the Economy
United States – BPROG: Reflective Thinking – BPROG: Analysis
Measuring the Economy
Gross Domestic Product
120. Growth in GDP systematically understates the growth in national well being because
a.
ecological costs are netted out of GDP.
b.
“bads” as well as “goods” get included in GDP.
c.
investment is not included in GDP.
d.
as a country gets richer, leisure time increases.
DISC: Measuring the Economy
United States – BPROG: Reflective Thinking – BPROG: Analysis
Measuring the Economy
Gross Domestic Product
121. Consider the economic effects of the September 11, 2001 terrorist attacks. Which of the following statements is
correct?
a.
Reconstruction would lead to an increase in GDP.
b.
Increased government spending on relief efforts in the U.S. would decrease GDP.
c.
Lost items and buildings would lead to a decrease in GDP.
d.
U.S. well-being was improved, despite the loss in GDP.
DISC: Measuring the Economy
United States – BPROG: Reflective Thinking – BPROG: Analysis
Measuring the Economy
Gross Domestic Product
122. International per capita GDP comparisons are misleading when countries involved differ greatly in
a.
the type of economic system each country uses to solve its economic problem.
b.
the freedom of their election processes.
c.
the percentage of economic activity that is transacted in organized markets.
d.
the quantity of human and natural resources they possess.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
123. Since countries differ in the amount of economic activity that is transacted in organized markets,
a.
some countries are more productive than others.
b.
persons live better in some countries than others.
c.
international comparisons of per capita GDP are often misleading.
d.
comparisons between countries are totally impossible.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
124. “Underground” economic activity can best be described as
a.
the construction of subway transportation.
b.
the building of foundation structures for skyscrapers.
c.
the mining and oil industries.
d.
barter or cash activity that is not reported as income.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Gross Domestic Product
125. In her book on the American work week, economist Juliet Schorr argues that Americans work too much. Her
argument may be interpreted as concluding that this behavior
a.
increases GDP but decreases well being.
b.
increases GDP and increases well-being.
c.
decreases GDP and decreases well being.
d.
decreases GDP but increases well being.
DISC: Measuring the Economy
United States – BPROG: Reflective Thinking – BPROG: Analysis
Measuring the Economy
Gross Domestic Product
126. In 2001 the United States and its NATO allies dropped millions of dollars’ worth of bombs on Afghanistan. These
bombs and the aircraft from which they were dropped
a.
were netted out of GDP.
b.
increased GDP and increased personal welfare.
c.
decreased GDP and decreased personal welfare.
d.
were added to GDP.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
127. When people smoke cigarettes, their friends and family members may become sick. This affects GDP by
a.
reducing GDP by the amount of medical care needed.
b.
reducing GDP by the cost of the cigarettes purchased.
c.
increasing GDP by the cost of the medical care and the cost of the cigarettes purchased.
d.
decreasing GDP by the cost of the medical care and increasing GDP by the cost of the cigarettes purchased.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
128. Large sport utility vehicles (SUVs) add significantly to air pollution because they do not have to meet passenger auto
emission standards. The purchase of an SUV
a.
adds less to GDP since the pollution costs are subtracted from GDP.
b.
adds to nominal but not real GDP because of the pollution costs.
c.
is a net loss to GDP because the pollution costs are so large.
d.
increases GDP.
DISC: Measuring the Economy
United States – BPROG: Reflective Thinking – BPROG: Analysis
Measuring the Economy
Gross Domestic Product
129. How does the calculation of GDP include the costs of natural resource depletion that occurs when output is
produced?
a.
The value of resource depletion is added to GDP.
b.
The cost of resource depletion is not measured in GDP.
c.
The cost of resource depletion is added to real but not nominal GDP.
d.
Resource depletion causes GDP to overstate well being.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Gross Domestic Product
130. The Great Depression of the 1930s
a.
confirmed the value of a “hands off” policy for governments.
b.
was exacerbated by an expansionary monetary policy.
c.
was a worldwide event.
d.
continued throughout the 1940s without any interruption.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
The Economy on a Roller Coaster
131. One major effect of the Great Depression was
a.
it reaffirmed everyone’s faith that capitalism was a self-correcting system.
b.
it encouraged voters to limit the role of government.
c.
the creation of the rational expectations school of economic theory.
d.
a decreased faith in the ability of economies to automatically correct major problems.