Question 1

GDP is the market value of all final goods and services produced within a country in a given period of time.

Accepted Answer

GDP (Gross Domestic Product) is defined as the monetary value of all the final goods and services produced within a country's borders in a specific time period, usually a year.

Question 2

Microeconomics and macroeconomics are closely linked.

Accepted Answer

Microeconomics and macroeconomics both deal with the study of economics, but microeconomics focuses on the behavior of individuals and firms, while macroeconomics looks at the entire economy as a whole. However, the two fields are interconnected, as macroeconomic trends can impact individual decision-making, and microeconomic actions can impact the overall economy.

Question 3

Both the value of hamburgers sold by a restaurant and the value of the beef it used to make these hamburgers are included in GDP.

Accepted Answer

Only the value of the final goods, in this case, the hamburgers sold, is included in GDP to avoid double counting. The value of the beef used is considered an intermediate good and is not directly included.

Question 4

GDP excludes the value of intermediate goods because their value is included in the value of final goods.

Accepted Answer

Intermediate goods are not directly sold to the end-user but are instead used in the production process to create final goods. Therefore, their value is already reflected in the value of the final goods, and including it again would result in double-counting.

Question 5

Macroeconomics is the study of the economy as a whole.

Accepted Answer

Macroeconomics is concerned with the study of the overall or aggregate economy, including issues such as inflation, unemployment, economic growth, and fiscal and monetary policies. It differs from microeconomics, which focuses on individual markets and individual economic agents, such as households and firms.

Question 6

GDP includes the value of paper clips but does not also count the value of the metal used to make them.

Accepted Answer

GDP only counts the final value of a product or service, not the intermediate inputs used in producing it. Therefore, the value of the paper clip is included in GDP, but not the value of the metal used to make it.

Question 7

GDP adds together many different kinds of products into a single measure of the value of economic activity by using market prices.

Accepted Answer

This is a true statement about how GDP is calculated. It reflects the total value of all goods and services produced within a country's borders, measured by their market price.

Question 8

The basic tools of supply and demand are central to microeconomic analysis but are of little use to macroeconomics.

Accepted Answer

The basic tools of supply and demand are applicable to macroeconomics, as they can be used to analyze the aggregate behavior of markets and economies. However, macroeconomics also involves analyzing factors such as inflation, unemployment, and economic growth, which require additional tools and concepts beyond supply and demand.

Question 9

Macroeconomic statistics tell us about a particular household,firm,or market.

Accepted Answer

Macroeconomic statistics provide data about the overall performance of an economy, such as gross domestic product (GDP), inflation rates, and unemployment rates. They do not focus on individual households, firms, or markets.

Question 10

U.S.GDP includes estimates of the value of items that are produced and consumed at home,such as housework and car maintenance.

Accepted Answer

GDP only includes goods and services that are traded in markets, not those produced and consumed at home (such as housework and car maintenance).

Question 11

GDP can measure either the total income of everyone in the economy or the total expenditure on the economy's output of goods and services,but GDP cannot measure both at the same time.

Accepted Answer

GDP can measure both total income and total expenditure, as the two measures should be equal in theory according to the circular flow of income and expenditure model.

Question 12

GDP is the market value of all final goods and services produced by a country's citizens in a given period of time.

Accepted Answer

GDP measures the market value of all final goods and services produced within a country's borders in a given period of time, regardless of the citizenship of the producers.

Question 13

The goal of macroeconomics is to explain the economic changes that affect many households,firms,and markets simultaneously.

Accepted Answer

This statement accurately defines the goal of macroeconomics, which is to study the economy as a whole and understand the aggregate changes that impact various sectors and groups within it.

Question 14

In years of economic contraction,firms throughout the economy increase their production of goods and services,employment rises,and jobs are easy to find.

Accepted Answer

In years of economic contraction, firms often decrease their production of goods and services, which leads to a decrease in employment opportunities and jobs.

Question 15

For an economy as a whole,income must exceed expenditure.

Accepted Answer

In an economy, total income and total expenditure are equal because every transaction involves a buyer spending money and a seller earning money, making the aggregate income equal to aggregate expenditure.

Question 16

U.S.GDP excludes the production of most illegal goods.

Accepted Answer

The production and sale of illegal goods is not included in the calculation of GDP because it is not officially recorded and taxed by the government.

Question 17

Macroeconomic statistics include GDP,the inflation rate,the unemployment rate,retail sales,and the trade deficit.

Accepted Answer

Macroeconomic statistics vary depending on the country but generally include GDP, inflation rate, unemployment rate, retail sales, and trade deficit.

Question 18

An economy's income is the same as its expenditure because every transaction has a buyer and a seller.

Accepted Answer

In an economy, every transaction involves a buyer who spends money and a seller who receives that money as income. Therefore, the total income in the economy must be equal to the total expenditure.

Question 19

U.S.GDP includes the market value of rental housing,but not the market value of owner-occupied housing services.

Accepted Answer

U.S. GDP includes both the market value of rental housing and an imputed value for owner-occupied housing services to account for the housing services consumed by homeowners.

Question 20

GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society's economic well-being.

Accepted Answer

GDP is widely considered as the most comprehensive measure of the overall economic activity and the standard measure of a country's economic health. It provides a snapshot of the total value of all goods and services produced in a country during a specific period, reflecting the size and growth of an economy.

Quiz 10: Measuring a Nations Income: Part B