Question 1 (1 point) What is the difference between gross domestic product (GDP)

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Question 1 (1 point)

What is the difference between gross domestic product (GDP) and gross national product (GNP)?

Question 1 options:

A) GDP measures only final goods output while GNP includes intermediate goods.

B) GNP includes the sale of used goods; GDP doesn't.

C) GDP includes production within a nation; GNP includes production by a nation's residents, regardless of their location.

D) GNP is usually more accurate than GDP because GNP is adjusted for inflation.

Question 2 (1 point)

Which of the following purchases would be classified as an intermediate good not included in the GDP calculation?

Question 2 options:

A) A family's purchase of a used car.

B) A speculator's purchase of 100 shares of Apple Computer stock.

C) A deli's purchase of bread for making its sandwiches.

D) A business's purchase of new office equipment.

Question 3 (1 point)

Which of the following would not be included in the government consumption expenditures and gross investment (G) category of GDP?

Question 3 options:

A) The payments made to Social Security recipients.

B) The expenditures made to repair a highway.

C) The spending for professors at state universities.

D) The purchase of new china for White House functions.

Question 4 (1 point)

Which of the following is the largest component of the expenditure approach to calculating GDP?

Question 4 options:

A) Net exports (X - M).

B) Government consumption expenditures and gross investment (G).

C) Gross private domestic investment (I).

D) Personal consumption expenditures (C).

Question 5 (1 point)

What are indirect business taxes?

Question 5 options:

A) Taxes on the capital consumption allowances taken by businesses.

B) Taxes paid on any income earned by resource suppliers.

C) Taxes collected by businesses then paid to the government.

D) Taxes and fines levied on firms that pollute in excess of government standards.

Question 6 (1 point)

If the underground economy is sizable, then the GDP statistic will

Question 6 options:

A) understate the economy's performance.

B) overstate the economy's performance.

C) fluctuate unpredictably.

D) accurately reflect this subterranean activity.

Question 7 (1 point)

Which national income account should be examined to discover trends in the after-tax income that people have to save and spend?

Question 7 options:

A) Gross domestic product (GDP).

B) National income (NI).

C) Disposable personal income (DI).

D) Gross national product (GNP).

Question 8 (1 point)

If nominal GDP grows significantly faster than real GDP, then the economy has a problem with

Question 8 options:

A) inflation.

B) unemployment.

C) trade deficits.

D) high tax rates.

Question 9 (1 point)

The GDP chain price index is a statistic that

Question 9 options:

A) measures how the prices of consumer goods change over time.

B) reconciles the statistical discrepancies between the expenditure and income approaches to calculating GDP.

C) adjusts nominal GDP for price changes so we can make meaningful GDP comparisons over time.

D) eliminates distortions in import and export figures caused by exchange-rate fluctuations.

Question 10 (1 point)

The three sources of leakages in the circular flow model are (use appendix chapter 5)

Question 10 options:

A) land, labor, and capital.

B) durable goods, nondurable goods, and services.

C) savings, taxes, and imports.

D) gifts, transfer payments, and foreign aid.

A) GDP measures only final goods output while GNP includes intermediate goods.

B) GNP includes the sale of used goods; GDP doesn't.

C) GDP includes production within a nation; GNP includes production by a nation's residents, regardless of their location.

D) GNP is usually more accurate than GDP because GNP is adjusted for inflation.

Explanation / Answer

1 (c) The difference between gross domestic product (GDP) and gross national product (GNP) is that GDP includes production within a nation; GNP includes production by a nation's residents, regardless of their location.

2 (a) A family's purchase of a used car would be classified as an intermediate good not included in the GDP calculation.

3 (a) The payments made to Social Security recipients would not be included in the government consumption expenditures and gross investment (G) category of GDP because the social security transfers are made out of past savings.

4 (d) Personal consumption expenditures (C) is the largest component of the expenditure approach to calculating GDP.

5 (c) Indirect business taxes also called sales tax are taxes collected by businesses then paid to the government.

6 (a) If the underground economy is sizable, then the GDP statistic will understate the economy's performance because the underground economy is not reported in the national income account statistics.

7 (c)  Disposable personal income (DI) should be examined to discover trends in the after-tax income that people have to save and spend.

8 (a) Nominal GDP= Price*Real GDP. If nominal GDP grows significantly faster than real GDP, then the economy has a problem with inflation.

9 (a) The GDP chain price index is a statistic that measures how the prices of consumer goods change over time.

10 (c) The three sources of leakages in the circular flow model are savings, taxes, and imports.

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