Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Nominal GDP can be counted by calculating
a. | C + I + G + (T - S) | b. | (C - S) + I (G - T) + (X-M) | c. | C + I + G + (X -
M) | d. | C - I - G - (X + M) | e. | C + I + G + X +
M |
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2.
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Long-term growth in production can be explained by
a. | an improvement in the quality and quantity of capital and technology
available | b. | a gradual but consistent rise in the price level | c. | a rapid and
accelerating increase in the price level | d. | the peaks and troughs of economic
fluctuations | e. | a trade surplus that leads to the accumulation of
gold |
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3.
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Which of the following is the largest component of GDP?
a. | consumption (C) | b. | investment (I) | c. | government spending
(G) | d. | net exports (X - M) | e. | taxes (T) |
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4.
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A man marries his cook. What effect does this have on GDP?
a. | GDP decreases because her cooking was an intermediate good and is now a final
good. | b. | GDP decreases unless she is still paid to cook for him. | c. | GDP increases
because she is cooking for two. | d. | GDP decreases because there are fewer
households in the economy. | e. | None, since only their legal status
changes. |
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5.
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Gross Domestic Product measures the
a. | market value of all goods and services produced within a nation by resources owned by
residents and firms of that nation | b. | market value of all final goods and services
produced by resources located within a nation regardless of who owns those
resources | c. | market values of all goods and services produced by a nation's citizens and
firms regardless of the location of production | d. | market value of all goods and services produced
by resources located within a nation regardless of who owns those resources | e. | market value of all
final goods and services produced by a nation's citizens, residents and firms of a nation
regardless of the location of production |
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6.
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An increase in labor productivity means an increase in real GDP must happen
if
a. | inflation is low | b. | nominal GDP increases | c. | total employment
remains the same or increases | d. | population
grows |
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7.
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Which of the following would not increase labor productivity?
a. | increased capital per unit of labor | b. | a lower rate of
unemployment | c. | technological change | d. | greater job experience for the work
force | e. | all of the above increase labor productivity |
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8.
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If actual investment exceeds planned investment,
a. | injections must equal leakages | b. | firms must be accumulating inventory they do
not want | c. | consumption must equal investment | d. | the economy will grow faster than
anticipated | e. | firms have underestimated demand for their goods |
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9.
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Which of the following does not contribute to an improved standard of
living?
a. | increases in the quality of labor | b. | improvements in the rules of the
game | c. | increases in the amount and quality of resources | d. | a lower price for
the necessities of life | e. | better
technology |
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10.
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All of the items below affect our country's economic welfare, but only one
of them is included in
U.S. Gross Domestic Product. Which one is included?
a. | the total spending on defense in the U.S. | b. | the amount of
leisure households have | c. | the amount spent buying stocks and
bonds. | d. | the value of do-it-yourself lawn care by homeowners |
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11.
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When the United States' unemployment rate is calculated, people who have
part-time jobs but are actively seeking full-time jobs are
a. | counted as unemployed since they are obviously not in their best
employment. | b. | included in the labor force but not counted as either employed or
unemployed | c. | counted as one-half of a full-time employed person. | d. | counted the same as
a full-time worker. |
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12.
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Which of the following actions does not increase GDP?
a. | Tom's alarm clock breaks, so he buys a new one. | b. | Tom's alarm
clock breaks; now he oversleeps long enough that he buys a cup of coffee on the way to work instead
of making it for himself at home. | c. | Tom buys a new alarm clock because he routinely
sleeps through the first alarm. | d. | Tom gets fired for being late so often after
his alarm clock breaks, so he moves off to the wilderness. | e. | Tom sells his broken
alarm clock and uses the revenue to buy some French fries. |
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13.
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If 2005 GDP is adjusted for changes in the price level, the result
is
a. | 2005 GDP per capita. | b. | 2005 GDP at 2005 prices. | c. | 2005 nominal
(current dollar) GDP. | d. | 2005 Real Gross Domestic Product
(GDP) |
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