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  • ECO 372T Wk 1 – Apply: Output, Income, and Economic Growth Test

ECO 372T Wk 1 - Apply: Output, Income, and Economic Growth Test

What are net exports?  


The gross domestic product (GDP) concept accounts for society's valuation of the relative worth of goods and services by using a ___


If net exports is negative, it must be the case that ____


The broadest measure to adjust Nominal GDP for price changes is _____.


What is the largest expenditure component of GDP?


Nominal GDP is ____


What do government purchases include in national income accounting?


National income accounts are compiled by the ____


Economists refer to the talents, training, and education of workers as


Physical capital is 


Which of the following will not increase a nation’s real GDP?


Henry and his girlfriend ate dinner at the new Thai restaurant that recently opened in his neighborhood. This expenditure would be included in: 


GDP does not include which of the following activities?



To avoid multiple counting in national income accounts, _____.

 

Which of the following is not an example of an intermediate good?


The GDP price index measures changes in the _____.


Which of the following is not a component of GDP in the expenditures approach?



GDP excludes most nonmarket transactions. Therefore, GDP tends to _____.


Net exports is a positive number when a nation _____.


GDP measured using base year prices is called _____.


The base year is 2005, and the GDP price index in 2004 is 92.0. This implies that the _____.


Currently, the largest component of aggregate spending in the United States is _____.


Government expenditures for social security and unemployment insurance are, for GDP accounting purposes, considered ____



In the second quarter (three-month period) of 2016, U.S. nominal GDP increased but U.S. real GDP declined. 



Personal consumption expenditures consist of ___


The key variable in determining changes in a country’s standard of living is the


The benefits of economic growth are _____, while the costs of economic growth are _____.


Given the annual rate of economic growth, the "rule of 72" allows one to calculate the number of years required for real GDP to double..


Assume a nation's current production possibilities are represented by the curve AB in the above diagram. Economic growth would best be indicated by a


In the second quarter (three-month period) of 2016, U.S. nominal GDP increased but U.S. real GDP declined. What can we conclude?


Net exports is a positive number when a nation ___


Which of the following is not an example of an intermediate good?


Which of the following is not included in the sum of national income?


Which of the following is not a component of GDP in the expenditures approach?

Workers’ wages and other compensation



The gross domestic product (GDP) concept accounts for society's valuation of the relative worth of goods and services by using a ___


The GDP price index equals __



Which of the following is not an example of an intermediate good?


Which of the following will not increase a nation’s real GDP?


Real GDP refers to _____.


The consumption of fixed capital in each year's production is called _____.


Which of the following does not correctly characterize modern economic growth?


Which of the following scenarios would be included in GDP?

 

Sandra is a waitress at Morton’s Steakhouse. She receives a cash tip of $50 that she pockets and does not report.



Which of the following expenditures is an example of a consumer durable good?



Arti buys a new refrigerator from Sears. 


Latisha gets a manicure from the nail salon in the mall.



The equation for net investment is written as:

 


Net Investment = Nominal GDP - Gross Investment


Net Investment = Gross Investment - Depreciation 


Net Investment = Consumption - Gross Investment


Net Investment = Depreciation - Gross Investment



Which of the following ly describes GDP using the income approach?

 


GDP = Wages + Rents + Interest + Profits and Losses + National Income


GDP = Consumption + Gross Investment + Net Exports + Government Purchases


GDP = Wages + Rents + Interest + Profits and Losses


GDP = National Income + Indirect Business Taxes + Depreciation + Net Foreign Factor Income 



The major difference between nominal GDP and real GDP is:

 


nominal GDP measures the value of output with constant output levels, while real GDP measures output using current-year output levels.


nominal GDP measures the value of output in constant prices, while real GDP measures output using current-year prices.


nominal GDP measures the value of output with current-year output levels, while real GDP measures output using constant output levels. 


nominal GDP measures the value of output in current-year prices, while real GDP measures output using constant prices.



The U.S. produces and sells millions of different products. To aggregate them together into a single measure of domestic output, the quantity of each good produced is weighted by its _____.


Multiple Choice



utility to consumers


market price



contribution to corporate profits


cost of production



A nation’s nominal gross domestic product (GDP) _____.


Multiple Choice



is the dollar value of all final output produced within the borders of the nation during a specific period of time

is the dollar value of all final output produced by its citizens, regardless of where they are living

is always some amount less than C + I + G + NX


can be found by summing C + I + S + NX


Which of the following is not included in gross domestic private investment, as defined in national income accounts?


Multiple Choice



Changes to business inventories


The value of all new capital goods bought by business firms


Domestic home construction undertaken by and for the private sector


Government construction of new highways and dams



GDP measured using current prices is called _____

deflated GDP


constant GDP


real GDP


nominal GDP



Which of the following is a primary use for national income accounts?


Multiple Choice



To analyze the environmental cost of economic growth


To assess the economic efficiency of specific industries in the economy


To determine whether there is a fair and equitable distribution of income in the economy


To measure changes in the value of production and income in the economy



Final goods and services refer to _____.


Multiple Choice



goods and services that are unsold and therefore added to inventories


goods and services purchased by ultimate users, rather than for resale or further processing


goods and services whose value has been adjusted for changes in the price level


the excess of U.S. exports over U.S. imports



Nominal GDP differs from real GDP because _____.


Multiple Choice



nominal GDP is based on constant prices


nominal GDP results from adjusting for changes in the price level


real GDP results from adjusting for changes in the price level


real GDP is based on current prices




Which of the following is not an example of an intermediate good?


Multiple Choice



an oven bought by a homeowner


office supplies bought by an accounting firm


gasoline bought by a trucking company


flour bought by a bakery



In the treatment of U.S. exports and imports, national income accountants _____.


Multiple Choice



subtract exports but add imports in calculating GDP


subtract both exports and imports in calculating GDP


add both exports and imports in calculating GDP


add exports but subtract imports in calculating GDP



The value of corporate stocks and bonds traded in a given year is _____.


Multiple Choice



included in the calculation of net private domestic investment


excluded from the calculation of GDP because it does not represent new production


included in the calculation of GDP because it is a component of gross investment


included in the calculation of gross private domestic investment






Suppose that real GDP per capita in the United States is $49,000. If the long-term growth rate of real GDP per capita is 1.6% per year, how many years will it take for real GDP per capita to reach $98,000?

 

Instructions: Enter your answer as a whole number.

 

 years



The table below shows real GDP per capita for the United States between the years 1950–2016.


 

 Real GDP per Capita over Time

Year Real GDP per Capita (dollars)

1950 $13,819

1975 24,601

2000 43,935

2016 52,172

 

Instructions: Round your answers to one decimal place.

 

a. What is the growth rate in the standard of living from 1950 to 1975?

 

b. What is the growth rate in the standard of living from 1975 to 2000?

 

c. What is the growth rate in the standard of living from 2000 to 2016?

  







Suppose that Italy can produce either goods or services with its resources, and that its PPF curve is shown on the graph as PPF1.

 

Using the graph, for each of the following situations, determine whether the PPF curve shifts.

 

a. Suppose that Italy increases its spending on education, which increases the amount of human capital in Italy.  

 

     Italy's PPF curve would 

 

b. A recession causes Italy's unemployment rate to increase above the natural rate of unemployment.

 

     Italy's PPF curve would

 

c. Italy experiences an influx of immigrants from surrounding countries, which causes the population of Italy to increase.

 

     Italy's PPF curve would 



Which of the following is a measure of economic growth that is most useful for comparing changes in standards of living?


Multiple Choice



increases in real GDP


increases in real GDP per capita


growth in nominal GDP


decreases in the rate of unemployment



The benefits of economic growth are _____, while the costs of economic growth are _____.


Multiple Choice



increased output per person; the consumption sacrificed in exchange for capital formation


increased output per person; less future consumption


increased output per person; too small for concern


more current consumption; less future consumption



Use the following production possibilities frontiers to answer the next question.

 

Curve (a) is the current frontier for the economy. Focusing on curve (a), point N suggests that the economy currently produces


Multiple Choice



more goods for the future than at point P.


less goods for the present than at point P.


less goods for the future than at point P.


a combination of output that is less than its potential.


The application of new technologies to the production process will increase


Multiple Choice



labor productivity.


the share of the population employed.


the unemployment rate.


the quantity of human capital.



Real GDP per capita is found by


Multiple Choice



dividing real GDP by population.


subtracting population from real GDP.


dividing population by real GDP.


adding real GDP and population.





Human capital is


Multiple Choice



the financial resources available to humans for investment.


the talents, training, and education of workers.


the factories and machinery used by humans in the production process.


the factories and machinery made by workers.



To increase future living standards by pursuing higher current rates of investment spending, an economy must


Multiple Choice



reduce the current capital stock.


allow higher rates of current consumption.


reduce current rates of consumption spending.


decrease the amount of future research and development spending.



Which of the following is a measure of economic growth that is most useful for measuring changes in the overall size of an economy?


Multiple Choice



decreases in the rate of unemployment


increases in real GDP


increases in real GDP per capita


growth in nominal GD



Human capital refers to the


Multiple Choice



amount of financing available to start-up firms.


tools and equipment available to workers.


education, training, and skills of workers.


number of workers available in the economy.




Economic growth can best be portrayed as a(n)


Multiple Choic


outward shift of the production possibilities frontier.


movement from a point inside to a point outside of the production possibilities frontier.


inward shift of the production possibilities frontier.


movement from a point near the vertical axis to a point near the horizontal axis on the production possibilities front



The cost of a higher living standard in the future is giving up


Multiple Choice


current consumption.



current investment.


future consumption.


future investment.


The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the


Multiple Choice



the less an additional unit of capital adds to production.


less is produced.


the more an additional unit of capital adds to production.


less production is wasted.



ECO 372T Wk 1 – Apply: Output, Income, and Economic Growth Test

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