Question 1 Gross domestic product (GDP) measures the economy's production of
A) final goods and services.
B) intermediate goods.
C) consumer goods and services.
D) capital goods.
Question 2 Because GDP is measured in dollars per year, GDP is called a
A) stock.
B) flow.
C) cycle.
D) chain.
Question 3 Which of the following would not be included in the gross private domestic investment (I) category of GDP?
A) A retailer's additions to its inventories.
B) A bakery's purchase of a new oven.
C) A trader's purchase on NASDAQ stocks.
D) Newly built residential construction.
Question 4 Which of the following government payments would be included in the government consumption expenditures and gross investment (G) category of GDP?
A) A firefighter's monthly paycheck.
B) A retired grandmother's Social Security check.
C) A retired colonel's veteran's benefits.
D) A laid-off auto worker's unemployment conpensation check.
Question 5 The largest component in the income approach to measuring GDP is
A) compensation of employees.
B) rents.
C) profits.
D) net interest.
Question 6 Which approach to calculating GDP attempts to measure employee compensation, rents, profits, and net interest?
A) The circular-flow approach.
B) The product-market approach.
C) The income approach.
D) The expenditure approach.
Question 7 In recent years, people have benefited from greater amounts of leisure time. This trend
A) has caused GDP to rise.
B) has caused GDP to fall.
C) made GDP fluctuate randomly.
D) is not accounted for in the GDP statistic.
Question 8 National income (NI) is calculated by adjusting GDP for
A) depreciation of capital.
B) investment and net exports.
C) Social Security insurance contributions and transfer payments.
D) corporate and personal income taxes.
Question 9 If an economy's real GDP has increased, we can conclude that the economy
A) is inflationary.
B) has increased its production.
C) suffers from recession.
D) needs a tax cut.
Question 10 In the circular flow model, investment, government spending, and exports are classified as
A) injections.
B) leakages.
C) transfers.
D) consumption expenditures.
