Question 1

Gross domestic product measures the

Accepted Answer

A)   market value of the final goods and services produced in a given year within a country.
B)   quantity of the goods and services produced in a given year, listed item by item, within a country.
C)   market value of domestic labour in a given year within a country.
D)   income of the business sector within a country.
E)   market value of the final goods and services consumed by households in a given year within a country.

Question 2

You hire some of your friends to help you move to a new house. You pay them a total of $200 and buy them dinner at Pizza Hut. Which of the following is true?

Accepted Answer

A)   If your friends do not report the $200 on their tax forms, it becomes part of the underground economy.
B)   Neither the $200 nor the dinner should be counted in GDP because both are household production.
C)   The dinner at Pizza Hut should be counted as part of GDP, but not the $200.
D)   Hiring your friends is an illegal activity and should not be counted in GDP.
E)   The $200 should be counted as part of GDP but not the dinner at Pizza Hut.

Question 3

John was researching the economic growth of a country between 2014 and 2019. Using 2014 as the base year, he calculated a 12 per cent increase for real GDP and a 10 per cent increase for nominal GDP. His results indicate that

Accepted Answer

A)   the quantity of goods and services produced and prices both decreased over the period.
B)   he made an error when calculating nominal GDP.
C)   the quantity of goods and services produced increased and prices decreased over the period.
D)   the quantity of goods and services produced did not change and prices decreased over the period.
E)   the quantity of goods and services produced decreased over the period.

Question 4

In calculating GDP, we must

Accepted Answer

A)   add the value of the goods produced outside of Australia by local firms.
B)   add the market value of imports and subtract the market value of exports.
C)   add the market value of exports and subtract the market value of imports.
D)   exclude net exports of goods and services (NX) .
E)   subtract the market value of imports, because these goods are produced in a country other than Australia, and subtract the market value of exports, because these goods are consumed in a country other than Australia.

Question 5

Gross domestic product is defined as the market value of all the final goods and services produced during a given time period

Accepted Answer

A)   within and outside a country by that country's citizens.
B)   by citizens of the country, regardless of their place of residence.
C)   by only legal residents of the country.
D)   within a country.
E)   within a county minus the market value of all the final goods and services produced by that country's citizens outside the country.

Question 6

Which of the following is a final good or service?

Accepted Answer

A)   A new replacement muffler installed by Midas Mufflers.
B)   The CPUs purchased by Dell to be used in their computers.
C)   The fertiliser purchased by farmers to produce wheat.
D)   The chicken purchased by Nandos for use in their Peri Peri Chicken.
E)   The DVDs purchased by JB Hi Fi for sale to their customers.

Question 7

In 2017/18, Australian GDP was

Accepted Answer

A)   $1,848 billion using the expenditure approach .
B)   $1,848 billion million using the income approach.
C)   $1,289 billion using the expenditure approach and $1,458 billion using the income approach.
D)   $2 trillion using the income approach and $1 trillion using the expenditure approach.
E)   Both A and B are correct.

Question 8

-The table above gives data for a nation. What is the amount of the country's GDP?

Accepted Answer

A)   $6,200 billion
B)   $5,800 billion
C)   $6,900 billion
D)   $6,600 billion
E)   $6,000 billion A

Question 9

Which of the following describes the Australian economy at the end of 1990 and the middle of 1991?

Accepted Answer

A)   Real GDP per person increased.
B)   The economy was in a recession.
C)   Real GDP reached a peak.
D)   The economy was in an expansion.
E)   None of the above answers is correct. B

Question 10

The calculation of GDP excludes the value of

Accepted Answer

A)   expenditure on durable goods.
B)   businesses' purchases of new machine tools.
C)   a family member painting the family home.
D)   government expenditure on office supplies.
E)   households' purchases of shampoo.

Question 11

A country with a real GDP per person similar to real GDP per person in Australia but with limited political freedom is generally considered to have

Accepted Answer

A)   a lower standard of living than Australia.
B)   a larger Human Development Index because the other country still needs to develop more political freedom.
C)   an overstated nominal GDP.
D)   the same standard of living as Australia.
E)   an understated GDP.

Question 12

The relationship between real GDP and potential GDP over the business cycle can be best summarised by which of the following statements?

Accepted Answer

A)   Real GDP cannot be greater than potential GDP.
B)   Real GDP cannot be less than potential GDP.
C)   Real GDP cannot be equal to potential GDP.
D)   Real GDP is always equal to potential GDP.
E)   Real GDP fluctuates around potential GDP.

Question 13

A restaurant buys fish to offer as a daily menu special. The purchase of the fish by the restaurant is

Accepted Answer

A)   an investment.
B)   a consumption expenditure.
C)   part of net exports if the fish were caught beyond Australia's borders.
D)   an example of government expenditures on goods and services.
E)   an intermediate good.

Question 14

-The table above gives the production and prices for a small nation that produces only bread and soda. The base year is 2015. What is nominal GDP in 2015?

Accepted Answer

A)   $410
B)   $550
C)   $450
D)   $900
E)   $460

Question 15

Leisure time is ignored when calculating GDP because leisure time

Accepted Answer

A)   is not bought in a market.
B)   is not an economic good.
C)   is not productive.
D)   has been declining over time.
E)   does not affect our standard of living.

Question 16

Gross domestic product is equal to the market value of all the final goods and services ________ in a given period of time.

Accepted Answer

A)   produced and consumed within a country
B)   consumed within a country
C)   consumed by the citizens of a country
D)   produced within a country
E)   produced by the citizens of a country

Question 17

The Human Development Index was proposed because

Accepted Answer

A)   of the limitations of real GDP as a measure comparing the standard of living in different nations.
B)   people confuse nominal GDP and real GDP.
C)   nominal GDP and real GDP are subjective measures.
D)   the GDP deflator changes if the base year is changed.
E)   different nations have different populations. A

Question 18

Nominal GDP increases

Accepted Answer

A)   only if the productivity of resources increases.
B)   only if prices increase.
C)   if either prices and/or total production increase.
D)   only if total production increases.
E)   only if depreciation decreases.

Question 19

Because of the circular flows of expenditure and income in the economy, total ________ equals total ________ equals total ________.

Accepted Answer

A)   investment; income; consumption
B)   expenditure; income; value of production
C)   expenditure; investment; income
D)   consumption; expenditure; value of production
E)   consumption; investment; expenditure

Question 20

The base year is 2018. A country only produces Blu-ray players. The price of a Blu-ray player in 2018 was $100. The price of a Blu-ray player was $90 in 2019. The quantity of Blu-ray players produced in 2018 was 10,000 units and in 2019 was 10,500 units. Real GDP in 2018 equals

Accepted Answer

A)   $1,050,000.
B)   $1,000,000.
C)   $900,000.
D)   $945,000.
E)   an amount that cannot be determined without information about real GDP in 2011 .

Exam 5: GDP: a Measure of Total Production and Income

Gross domestic product measures the

Correct AnswerverifiedShow Answer

You hire some of your friends to help you move to a new house. You pay them a total of $200 and buy them dinner at Pizza Hut. Which of the following is true?

Correct AnswerverifiedShow Answer

John was researching the economic growth of a country between 2014 and 2019. Using 2014 as the base year, he calculated a 12 per cent increase for real GDP and a 10 per cent increase for nominal GDP. His results indicate that

Correct AnswerverifiedShow Answer

In calculating GDP, we must

Correct AnswerverifiedShow Answer

Gross domestic product is defined as the market value of all the final goods and services produced during a given time period

Correct AnswerverifiedShow Answer

Which of the following is a final good or service?

Correct AnswerverifiedShow Answer

In 2017/18, Australian GDP was

Correct AnswerverifiedShow Answer

-The table above gives data for a nation. What is the amount of the country's GDP?

Correct AnswerverifiedA

Which of the following describes the Australian economy at the end of 1990 and the middle of 1991?

Correct AnswerverifiedB

The calculation of GDP excludes the value of

Correct AnswerverifiedShow Answer

A country with a real GDP per person similar to real GDP per person in Australia but with limited political freedom is generally considered to have

Correct AnswerverifiedShow Answer

The relationship between real GDP and potential GDP over the business cycle can be best summarised by which of the following statements?

Correct AnswerverifiedShow Answer

A restaurant buys fish to offer as a daily menu special. The purchase of the fish by the restaurant is

Correct AnswerverifiedShow Answer

-The table above gives the production and prices for a small nation that produces only bread and soda. The base year is 2015. What is nominal GDP in 2015?

Correct AnswerverifiedShow Answer

Leisure time is ignored when calculating GDP because leisure time

Correct AnswerverifiedShow Answer

Gross domestic product is equal to the market value of all the final goods and services ________ in a given period of time.

Correct AnswerverifiedShow Answer

The Human Development Index was proposed because

Correct AnswerverifiedA

Nominal GDP increases

Correct AnswerverifiedShow Answer

Because of the circular flows of expenditure and income in the economy, total ________ equals total ________ equals total ________.

Correct AnswerverifiedShow Answer

The base year is 2018. A country only produces Blu-ray players. The price of a Blu-ray player in 2018 was $100. The price of a Blu-ray player was $90 in 2019. The quantity of Blu-ray players produced in 2018 was 10,000 units and in 2019 was 10,500 units. Real GDP in 2018 equals

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Because of the circular flows of expenditure and income in the economy, total equals total equals total .

Correct Answer
verified

Correct Answer
verified