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To arrive at GDP, the Bureau of Economic Analysis (BEA) counts:
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| The value of total sales. |
| The value of final sales. |
| The value of intermediate goods and final goods. |
| Total value added plus the value of sales at the retail level. |
| Any of the above. |
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Which of the following is counted in GDP?
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| The sale of a used car. |
| The sale of an old house. |
| The sale of stocks and bonds. |
| The fee paid to a broker for selling a stock. |
| None of the above. |
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Which of the following is counted in GDP?
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| The output produced by U.S. citizens abroad. |
| The profits earned abroad by U.S. companies. |
| The output produced by foreigners working in U.S. companies abroad. |
| The profits earned in the Unites States by foreign-owned companies. |
| All of the above. |
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Which statement(s) below is/are true about the difference(s) between GDP and GNP?
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| GNP measures output produced by factors of production owned by U.S. citizens within the United States. |
| There is a substantial difference between GDP and GNP for most countries. |
| When a Japanese company earns profits in the United States, those profits are counted as part of Japanese GDP, but not as part of Japanese GNP. |
| The wages paid to U.S. workers working in a Japanese factory in the United States are counted as part of U.S. GNP, but the profits from the factory are not. |
| All of the above. |
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For the year 2000, the percentages of C, I, G, and (EX - IM) in U.S. aggregate expenditure are roughly as follows:
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| 68%, 15%, 18%, and -1%. |
| 40%, 18%, 25%, and 17%. |
| 24%, 35%, 45%, and -4% |
| 35%, 27%, 41%, and -3%. |
| 50%, 22%, 30%, and -2%. |
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The largest component of Personal Consumption Expenditures (C) is:
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| Durable goods. |
| Nondurable goods. |
| Services. |
| Residential Investment. |
| Imports. |
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Which of the following categories are included in gross private domestic investment?
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| Nonresidential investment. |
| Residential investment. |
| Change in business inventories. |
| Depreciation. |
| All of the above. |
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Changes in inventories are:
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| Counted as a component of the capital stock. |
| Counted as a component of investment. |
| Negative when production exceeds final sales. |
| Not counted in the value of GDP. |
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Which of the following is the closest definition of the term "capital"?
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| Financial investment |
| Depreciation |
| Goods produced for present consumption |
| Goods used to produce other goods. |
| Money. |
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Which of the following is the closest definition of the term "investment"?
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| Investment is the purchase of financial assets, such as stocks and bonds. |
| Investment is the value of newly produced capital goods. |
| Investment is the purchase of goods for present consumption. |
| Investment is the accumulation of previous capital. |
| Investment refers to the purchase of public goods. |
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What is the relationship between the stock of capital and investment?
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| Capital at the beginning of this period equals capital at the end of this period plus net investment. |
| Capital at the beginning of this period equals gross investment plus net investment this period. |
| Capital at the end of this period equals capital at the beginning of this period plus net investment. |
| Capital at the end of this period equals capital at the beginning of this period plus gross investment. |
| Gross investment equals net investment minus depreciation. |
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Which of the following expenditures are counted as part of government consumption and investment (G)?
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| Transfer payments. |
| Interest payments on the government debt. |
| Expenditures by state and local governments. |
| Social Security benefits. |
| All of the above. |
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Which of the following statements about net exports is/are correct?
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| The term C + I + G understates domestic production of goods and services because it leaves out exports, which must be subtracted out of GDP to obtain the correct figure. |
| The term C + I + G overstates domestic production of goods and services because it contains imports, which must be subtracted out of GDP to obtain the correct figure. |
| The difference between exports and imports is negative when the country is a net exporter. |
| Before 1976, the United States was generally a net importer. Only after 1976, exports began to exceed imports. |
| All of the above. |
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Which of the following statements is/are correct about the components of GDP using the income approach?
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| Compensation of employees is the largest item in national income. |
| Proprietor's income refers to the profits earned by corporations. |
| Net interest refers to interest paid by households, business firms, and the government. |
| Rental income is a major component of national income. |
| All of the above. |
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In order to arrive at U.S. GDP using the income approach, we must:
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| Subtract depreciation from national income. |
| Add indirect taxes to national income. |
| Add subsidies, or payments made by government to farmers, seniors, etc. |
| Add the income earned by U.S. citizens abroad. |
| Subtract the income earned by foreigners in the United States. |
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An increase of 10% in nominal GDP indicates that:
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| Real output has increased by 10%. |
| The aggregate price level has increased by 10%. |
| Real output and the aggregate price level have increased by 5% each. |
| It is possible that all of the increase was caused by an increase in the aggregate price level. |
| The increase must have been caused by a variable other than real output or the aggregate price level. |
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Which of the following is/are true about the calculations of real GDP, nominal GDP, and the aggregate price level?
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| Prior to 1996, the BEA used a fixed-weight procedure to calculate GDP, where the prices that prevailed in the base year are used as weights to calculate changes in real GDP. |
| The choice of a particular base year can alter the growth rates of nominal and real GDP. |
| The new procedure to adjust nominal GDP for price changes is to use two base years to compute a series of percentage changes, which amount to a series of growth rates of real GDP. |
| The new procedure to calculate the GDP price index is to use two consecutive years as base years to compute percentage changes in prices, or a series of inflation rates of the overall price level. |
| All of the above are correct. |
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What are the limitations of the GDP concept?
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| Domestic activities such as childcare and housework are not counted in GDP, although they amount to real production. |
| GDP does not reflect social losses associated with changes in output, such as crime and pollution although they represent real social losses. |
| GDP does not measure the effects of redistributive policies or the distribution of output and income among individuals in a society. |
| GDP is neutral about the kinds of goods the economy produces. |
| All of the above. |
