Question 1

Goods produced for the purpose of producing other goods are known as

Accepted Answer

Goods produced for the purpose of producing other goods are known as investment goods or capital goods. They are used in the production process to create other goods and services. Examples include machinery, equipment, and tools.

Question 2

If a friend helps you with your homework,it will not be calculated in the GDP accounts.But if you hire a tutor who reports the income,the services will be counted in GDP.
Nonmarket production does not get counted in official GDP figures.

Accepted Answer

True. Nonmarket production, such as household work or volunteer activities, is not included in the calculation of GDP because no money is exchanged in these transactions. Only market transactions that involve the exchange of money are included in GDP.

Question 3

A major diversion that is not of the income flow to the private sector is

Accepted Answer

Indirect business taxes are paid to the government and do not contribute to the income flow of the private sector. Investment and wages are both sources of income for the private sector.

Question 4

If the price level is increasing at 4% and output is increasing at 5%,then

Accepted Answer

The answer of If the price level is increasing at...

Question 5

Comparisons of per capita GDP across international boundaries provide information on the distribution of GDP within each country.
Per capita GDP is simply the average; it does not take into account the actual distribution of income.

Accepted Answer

Per capita GDP is an average measure and does not reflect income distribution within a country.

Question 6

The GDP is

Accepted Answer

The GDP is geographically focused because it includes all final output within a nation's borders regardless of whose factors of production are used to produce it.

Question 7

GDP is the total market value of all final goods and services produced in a given time period within a nation's borders.
GDP tracks production and is an important barometer of the economy's strength.

Accepted Answer

This statement correctly defines GDP and its role in measuring a nation's economic activity.

Question 8

The increase in the market value of a good at a particular stage of production is known as

Accepted Answer

Value added refers to the increase in the market value of a good at a particular stage of production. It is calculated by subtracting the total cost of inputs used at that stage from the total revenue generated by the sale of the output produced at that stage. Profit, on the other hand, is the difference between total revenue and total cost at the end of the production process. Cost-based accounting refers to a method of accounting where costs are used as the basis for determining the selling price of a product. The input price refers to the cost of the inputs used in the production process. Therefore, the correct answer is B) Value added.

Question 9

One In the News article titled "A Lot Going on Under the Table" reports that 83 percent of households make untaxed or unmeasured purchases.This is an example of

Accepted Answer

The article is discussing untaxed or unmeasured purchases, which are a major aspect of the underground economy. This type of economic activity is not officially recognized or reported, and therefore not included in GDP calculations.

Question 10

In the calculation of real GDP,the value of goods and services is measured in the current prices for each year.
Nominal GDP measures production using current prices,whereas real GDP using constant prices.

Accepted Answer

Real GDP measures the value of goods and services using constant prices from a base year, not current prices.

Question 11

If a nation has a population of 100 million,a labor force of 60 million,and GDP of $200 billion,then GDP per capita must be

Accepted Answer

The answer of If a nation has a population of...

Question 12

The social well-being of a country

Accepted Answer

The social well-being of a country cannot be fully measured by changes in real GDP alone. Other factors such as income inequality, access to healthcare, education, and social services also play a significant role in determining social well-being. Therefore, D is the correct answer.

Question 13

The base period is the time period used for comparative analysis.
We can use the base period to express GDP in constant dollars.

Accepted Answer

The statement is true. The base period is used as a standard or benchmark for comparison, and expressing GDP in constant dollars helps to eliminate the effects of inflation on the GDP growth rate.

Question 14

GDP can be calculated by summing up the "value added" at every stage of production.
The value added is the amount by which the price goes up from the sale of an intermediate or final good.

Accepted Answer

This is a correct statement about how GDP is calculated. Every stage of production adds value to the final product, and GDP is the total of all these values added together.

Question 15

To calculate real GDP,we

Accepted Answer

Real GDP is calculated by adjusting the nominal GDP (measured in current prices) for inflation, by using a price index such as the GDP deflator or the consumer price index (CPI). This allows for a comparison of economic activity across different time periods, as it reflects changes in the quantity of goods and services produced, rather than changes in prices.

Question 16

To measure an economy's output adjusted for changes in the price level,one would use

Accepted Answer

Real GDP measures an economy's output adjusted for changes in the price level, by accounting for inflation or deflation. GDP per capita and value added do not take into account changes in the price level, and nominal GDP only reflects the current prices and does not account for the impact of inflation or deflation.

Question 17

Nominal GDP is not used to determine recessions because inflation can disguise the occurrence of recessions.
Inflation can make it seem like production is rising when it is not.

Accepted Answer

Nominal GDP does not take inflation into account, so it can be misleading when trying to determine if there is actual growth in an economy. Inflation can cause prices to rise, leading to an increase in nominal GDP even if there is no real growth in production. Therefore, real GDP, which adjusts for inflation, is a better measure to use when determining recessions.

Question 18

GDP is geographically focused,including all output produced within a nation's borders.
GDP measures how well the economy is doing and so looks only at production within the nation's borders.

Accepted Answer

GDP is a measure of the value of goods and services produced within a country's borders. It reflects the economic output and performance of the country and does not take into account production outside the country's borders.

Question 19

A cartoon in the text shows two people watching television.On the screen are the words "Economic growth indicators are up,led by car repairs,divorce costs,open-heart surgeries,and toxic waste cleanups." The cartoon illustrates the

Accepted Answer

The cartoon is highlighting the disconnect between economic growth indicators, such as GDP, and social welfare indicators. While the economy may be growing as indicated by the increase in car repairs, divorce costs, open-heart surgeries, and toxic waste cleanups, these are not necessarily indicative of an increase in overall societal well-being. This reflects the difference between economic welfare, which is primarily concerned with the production and consumption of goods and services, and social welfare, which considers a broader range of factors, such as health, education, and environmental quality.

Question 20

One In the News article states that the underground economy includes transactions that are untaxed or unaccounted for in GDP.According to this article,the underground economy

Accepted Answer

The article states that the underground economy includes transactions that are untaxed, which means that they aren't included in the GDP or taxed, which impacts the amount of tax dollars collected. Failing to report income from legal sources occurs due to tax avoidance tactics that individuals might take. Therefore, option D is the most appropriate choice. Option A is incorrect because the article doesn't mention anything about the percentage of households involved. Option B is incorrect because the underground economy includes both legal and illegal transactions. Option C is incorrect because the article states that the underground economy is not captured in GDP.

Quiz 5: National Income Accounting

Goods produced for the purpose of producing other goods are known as

If a friend helps you with your homework,it will not be calculated in the GDP accounts.But if you hire a tutor who reports the income,the services will be counted in GDP. Nonmarket production does not get counted in official GDP figures.

A major diversion that is not of the income flow to the private sector is

If the price level is increasing at 4% and output is increasing at 5%,then

Comparisons of per capita GDP across international boundaries provide information on the distribution of GDP within each country. Per capita GDP is simply the average; it does not take into account the actual distribution of income.

The GDP is

GDP is the total market value of all final goods and services produced in a given time period within a nation's borders. GDP tracks production and is an important barometer of the economy's strength.

The increase in the market value of a good at a particular stage of production is known as

One In the News article titled "A Lot Going on Under the Table" reports that 83 percent of households make untaxed or unmeasured purchases.This is an example of

In the calculation of real GDP,the value of goods and services is measured in the current prices for each year. Nominal GDP measures production using current prices,whereas real GDP using constant prices.

If a nation has a population of 100 million,a labor force of 60 million,and GDP of $200 billion,then GDP per capita must be

The social well-being of a country

The base period is the time period used for comparative analysis. We can use the base period to express GDP in constant dollars.

GDP can be calculated by summing up the "value added" at every stage of production. The value added is the amount by which the price goes up from the sale of an intermediate or final good.

To calculate real GDP,we

To measure an economy's output adjusted for changes in the price level,one would use

Nominal GDP is not used to determine recessions because inflation can disguise the occurrence of recessions. Inflation can make it seem like production is rising when it is not.

GDP is geographically focused,including all output produced within a nation's borders. GDP measures how well the economy is doing and so looks only at production within the nation's borders.

A cartoon in the text shows two people watching television.On the screen are the words "Economic growth indicators are up,led by car repairs,divorce costs,open-heart surgeries,and toxic waste cleanups." The cartoon illustrates the

One In the News article states that the underground economy includes transactions that are untaxed or unaccounted for in GDP.According to this article,the underground economy