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Question 1 Not yet answered Points out of 1
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Question 1
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A measure of a country's production is its
Select one:
A.
general domestic production.
B.
gross daily production.
C.
gross total output.
D.
general daily product.
E.
gross domestic product.
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Question 2
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If you make dinner for yourself,
Select one:
A.
your service in preparing the meal is valued at a cook's wage and added to GDP.
B.
none of what you bought to prepare for dinner is included in GDP.
C.
only the market value of ingredients that you purchased this year is added to GDP.
D.
the market value of your dinner 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.
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Question 3
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Which of the following correctly describes a final good?
i.
A final good is bought by its final consumer.
ii.
A final good can be used by a firm as a component of another good or service.
iii.
Investment goods cannot be a final good.
Select one:
A.
i and ii
B.
i, ii and iii
C.
ii and iii
D.
i and iii
E.
i only
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Question 4
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A restaurant buys fish to offer as a daily menu special. The purchase of the fish by the restaurant is
Select one:
A.
an investment.
B.
an example of government expenditures on goods and services.
C.
part of net exports if the fish was caught beyond the U.S. border.
D.
a consumption expenditure.
E.
an intermediate good.
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Question 5
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One bag of coffee beans is sold for $7 to a cafe that uses it to brew coffee which it sells to customers for a total of $15. A second bag of coffee is sold directly to Joan for $7, who uses it to brew coffee for her family every morning. What is the contribution to GDP from the purchases of coffee beans and coffee?
Select one:
A.
$14
B.
$7
C.
$22
D.
$15
E.
$29
Question 6
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Gross Domestic Product is equal to the market value of all the final goods and services ________ in a given period of time.
Select one:
A.
produced within a country
B.
consumed within a country
C.
produced and consumed within a country
D.
produced by the citizens of a country
E.
consumed by the citizens of a country
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Question 7
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Expenditures on U.S. produced steaks, shoes, and doctor visits are most likely classified as
Select one:
A.
net imports of goods and services.
B.
government expenditure on goods and services.
C.
consumption expenditure.
D.
net exports of goods and services.
E.
investment.
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Question 8
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Investment is defined as the purchase of
Select one:
A.
new capital goods but not additions to inventories.
B.
additions to inventories only.
C.
new capital goods and additions to inventories.
D.
financial assets and inventories only.
E.
any financial asset only.
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Question 9
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When measuring GDP,
Select one:
A.
the government sector is not included because it is the public sector not the private sector.
B.
the government sector is counted, and the value of the government sector in GDP is equal to its tax revenue.
C.
only the federal government's expenditure on goods and services are included.
D.
the government sector is not counted because it does not produce goods and services.
E.
the expenditure on goods and services by all levels of government are included.
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Question 10
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Net exports of goods and services is equal to the value of
Select one:
A.
domestic consumption minus the value of exports.
B.
domestic consumption minus the value of imports.
C.
exports plus the value of imports.
D.
imports minus the value of exports.
E.
exports minus the value of imports.
Question 11
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U.S. net exports include
Select one:
A.
Honda automobiles produced and sold in Japan.
B.
the sale of U.S. government securities to U.S. citizens.
C.
the production of Ford Mustangs in China that are sold in China.
D.
the sale of shares of Nike stock on the New York Stock Exchange.
E.
sales of Hollywood movies to the rest of the world.
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Question 12
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Gross Domestic Product equals
Select one:
A.
Y = C + I - G + NX.
B.
Y = C + I + G + NX.
C.
Y = C - I + G + NX.
D.
Y = C + I + G - NX.
E.
Y = C - I - G - NX.
Question 13
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Total expenditure equals total income
Select one:
A.
because firms pay out everything they receive as income to the factors of production.
B.
if firms do not save for future investment.
C.
only if firms sell all the goods they produce in a given time period.
D.
if firms earn zero profit.
E.
only if net taxes equals government expenditures on goods and services.
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Question 14
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In order to measure gross domestic product, we can follow
Select one:
A.
three approaches: the expenditure approach, the income approach, and the production approach.
B.
three approaches: the expenditure approach, the income approach, and the market-based approach.
C.
two approaches: the expenditure approach and the income approach.
D.
only one approach: the national accounts approach.
E.
only one approach: the circular flow approach.
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Question 15
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The value of used goods ________ counted as part of GDP ________.
Select one:
A.
are; as long as they are classified as investment goods
B.
are not; because they were counted during the period when they were counted as new goods
C.
are; as long as they are classified as consumption goods
D.
may be; as long as their value has risen
E.
are not; because most fall in value and would cause a decrease in the value of GDP
Question 16
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If you buy a five-year-old TV from a friend, the amount you paid for the TV is
Select one:
A.
not included in this year's GDP.
B.
included in this year's GDP only if the TV set was manufactured in the United States.
C.
always added to investment but not consumption.
D.
added to investment if the TV is expected to last more than 5 additional years and added to consumption if the TV is expected to last less than 5 additional years.
E.
always added to consumption expenditures but not investment.
Question 17
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Adding wages, interest, rent, and profits yields
Select one:
A.
total expenditure.
B.
net domestic product at factor cost.
C.
gross domestic product at factor cost.
D.
gross domestic product.
E.
GNP.
Question 18
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Once the categories of income are totaled, the sum is called
Select one:
A.
"GDP measured by the income approach."
B.
"net domestic product at factor cost" and is not equal to GDP.
C.
"net domestic product at factor cost" and is equal to GDP.
D.
GNP and is not equal to GDP.
E.
"total income earned" and is equal to GDP.
Question 19
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Real GDP measures the value of goods and services produced in a given year valued using
Select one:
A.
future prices.
B.
base year prices.
C.
no prices.
D.
prices that prevail the same year.
E.
real rather than nominal prices.
Question 20
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________ is most likely to contribute to an improvement in our living standard.
Select one:
A.
An increase in real GDP
B.
A decrease in nominal GDP
C.
An increase in the GDP deflator combined with a decrease in nominal GDP
D.
An increase in depreciation
E.
An increase in the price level
Question 21
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The largest expenditure category in the United States is
Select one:
A.
wages.
B.
net exports of goods and services.
C.
consumption expenditure.
D.
investment.
E.
government expenditure on goods and services.
Question 22
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Which of the following statement is correct?
Select one:
A.
If nominal GDP decreases, then real GDP must increase.
B.
If nominal GDP increases, then real GDP must increase.
C.
Nominal and real GDP can change either in the same direction or the opposite direction.
D.
If nominal GDP does not change, then real GDP cannot change.
E.
If real GDP decreases, then nominal GDP must decrease.
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Question 23
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GDP is
Select one:
A.
a perfect measure of the standard of living.
B.
the only factor that affects our standard of living.
C.
a measure which includes the value of all newly produced goods and services.
D.
a perfect measure of the value of production.
E.
an imperfect measure of the standard of living.
Question 24
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The business cycle has two phases,
Select one:
A.
peak and trough.
B.
expansion and peak.
C.
expansion and trough.
D.
recession and expansion.
E.
recession and trough.
Question 25
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A standard definition of recession is
Select one:
A.
a decrease in real GDP for at least two successive quarters.
B.
a period of time when the unemployment rate exceeds 6.5 percent.
C.
an increase in unemployment from one month to the next.
D.
an increase in GDP that lasts for at least 6 months.
E.
a period of expansion in many sectors of the economy.
Question 26
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A recession runs from the
Select one:
A.
peak of the business cycle to its trough.
B.
expansion of a business cycle to its peak.
C.
peak of the business cycle to a recovery.
D.
trough of a business cycle to its peak.
E.
trough of a business cycle to its expansion.
Question 27
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The U.S. economy is experiencing falling output, falling employment, falling incomes and rising unemployment. These conditions best describe a business cycle
Select one:
A.
trend.
B.
peak.
C.
recession.
D.
expansion.
E.
trough.
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Question 28
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Although imperfect, which of the following is used as a measure of the standard of living?
Select one:
A.
real GDP ÷ population
B.
real GDP × population
C.
nominal GNP × population
D.
nominal GNP ÷ population
E.
nominal GDP × population
Question 29
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The measurement of GDP handles underground production by
Select one:
A.
adding it at fixed prices that change only infrequently.
B.
omitting it because underground production is unreported to the government by the people involved.
C.
omitting it because, being illegal, it has no effect on the nation's total production.
D.
including the amount produced in this sector of the economy in exactly the same way that all other production is included.
E.
adding an estimate of it because it is difficult to precisely measure underground production.
Question 30
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The business cycle is defined as
Select one:
A.
persistent growth in potential GDP.
B.
changes in the stock market.
C.
the period of time during which the unemployment rate is rising.
D.
irregular ups and downs in production and jobs.
E.
changes in financial markets.
