question
GDP measures total market value of all final goods and services produced in an economy in a
answer
One-year period
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Which of the following is an expenditure category of GDP?
answer
- Net exports
-Government spending
- Investment
- Consumption
-Government spending
- Investment
- Consumption
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Which of the following is an example of a stock concept?
answer
Volume of water in a lake
-measure at only a point in time
-measure at only a point in time
question
Which of the following is a flow concept?
answer
GDP
- When measured, it is associated with a time interval (one-year period), which makes it a flow concept
- When measured, it is associated with a time interval (one-year period), which makes it a flow concept
question
Wealth is a stock concept
answer
True
- Expressed as an amount at a point in time, not over a time interval
- Expressed as an amount at a point in time, not over a time interval
question
GDP measures total market value of all
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Final goods
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Which of the following correctly distinguishes between a flow and stock concept?
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A flow concept is stated over a period of time while a stock concept is stated at a point in time.
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GDP measures all
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goods and services purchased for their final use
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GDP represents an amount
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Per year
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Wealth is measured
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At a point in time
- Stock concept
- Stock concept
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Which of the following is a flow concept?
answer
GDP
- Associated with a time interval
- Associated with a time interval
question
If one were to count intermediate goods to calculate GDP,
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when one firm that produced inputs for the other merged measured GDP would decline.
-How intermediate goods are treated would not affect inventories
-How intermediate goods are treated would not affect inventories
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Value added is the increase in the value that
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A firm contributes to a product or service
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If one were to count intermediate goods to calculate GDP,
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a change in organization would result in a change in output.
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Which of the following is included in GDP?
answer
-The cost of transferring a bond from one investor to another
-The income of a house cleaner
- The commission earned by a real estate agent
-The income of a house cleaner
- The commission earned by a real estate agent
question
Intermediate goods are products
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used as an input in the production of some other product.
-Wheat (intermediate good) sold to a cereal (final good) company to make cereal
-Wheat (intermediate good) sold to a cereal (final good) company to make cereal
question
Which of the following correctly distinguishes nominal and real GDP?
answer
Real GDP is the total amount of goods and services produced adjusted for price-level changes whereas nominal GDP is measured at current prices.
-Nominal GDP is measured at current prices and Real GDP is adjusted for price level changes
-Nominal GDP is measured at current prices and Real GDP is adjusted for price level changes
question
The GDP deflator measures prices of
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Final goods and services produced in an economy
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Adding up all transactions to calculate GDP would
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Double count some production to calculate GDP
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The consumer price index measures a
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fixed basket of consumer goods weighted according to each component's share of an average consumer's expenditures.
-CPI measures a fixed basket of consumer goods weighted according to each component's share of average consumer's expenditures
-CPI measures a fixed basket of consumer goods weighted according to each component's share of average consumer's expenditures
question
Which of the following is included in GDP?
answer
The purchase of a new car
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Real GDP adjusts nominal GDP for
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Inflation
-Real GDP keep prices constant and is therefore adjusted for price-level changes (inflation)
-Real GDP keep prices constant and is therefore adjusted for price-level changes (inflation)
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Which of the following is most specifically designed to measure the prices of all goods and services produced in an economy?
answer
GDP deflator
-The GDP deflator is the price index that includes all goods and services in the economy. The PPI includes only producer goods
-The GDP deflator is the price index that includes all goods and services in the economy. The PPI includes only producer goods
question
The real interest rate is the nominal interest rate adjusted for
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Inflation
-The real interest rate is the nominal interest rate adjusted for inflation. Real measures adjust nominal measures for inflation.
-The real interest rate is the nominal interest rate adjusted for inflation. Real measures adjust nominal measures for inflation.
question
GDP is a good way to measure welfare
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False
- GDP is not a good way to measure welfare because welfare is a much broader concept that GDP
- GDP is not a good way to measure welfare because welfare is a much broader concept that GDP
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The GDP deflator measures prices of
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Double count some production
-To count intermediate goods as well as final goods as part of GDP would be to double count them
-To count intermediate goods as well as final goods as part of GDP would be to double count them
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If GDP rises, society’s welfare will definitely rise
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False
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The GPI is a better measure than GDP.
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False
-GPI is only best to measure societal welfare
-GPI is only best to measure societal welfare
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The real interest rate is the interest rate posted by banks people pay to borrow money
answer
False
-The real interest rate is the nominal interest rate adjusted for inflation
-The real interest rate is the nominal interest rate adjusted for inflation
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Which of the following are limitations of aggregate accounting?
answer
- GDP measures market activity, not welfare
-Measurement problems
-Subcategories are often interdependent
-Measurement problems
-Subcategories are often interdependent
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If GDP rises, society’s welfare will likely rise
answer
True
-While there is not strict correlation between welfare and GDP, as a first approximation most people would agree that when GDP rises, society is better off
-While there is not strict correlation between welfare and GDP, as a first approximation most people would agree that when GDP rises, society is better off
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Because of all its problems, national income accounting should not be used.
answer
False
-National income accounting has many problems, if used with sophistication, it can be a. useful tool
-National income accounting has many problems, if used with sophistication, it can be a. useful tool
question
The subcategories of aggregate accounting are often interdependent
answer
True
question
If pollution worsens, the Genuine Progress Indicator (GPI) will likely fall.
answer
True
GPI adjusts for pollution, and subtracts the cost of pollution, so it will likely fall
GPI adjusts for pollution, and subtracts the cost of pollution, so it will likely fall
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