1) A measure of a country's production is its

A) gross daily production.

B) general daily product.

C) general domestic production.

D) gross domestic product.

E) gross total output.

2) The total production within an economy is measured as

A) Gross Home Product.

B) Total Domestic Output.

C) Annual Production Value.

D) Gross Domestic Product.

E) Total Annual Output.

3) Gross Domestic Product is equal to the market value of all the final goods and services ________ in a given period of time.

A) produced within a country

B) consumed within a country

C) consumed by the citizens of a country

D) produced by the citizens of a country

E) produced and consumed within a country

4) Gross Domestic Product measures the

A) quantity of the goods and services produced in a given year, listed item by item, within a country.

B) income of the business sector within a country.

C) market value of the final goods and services produced in a given year within a country.

D) measures the market value of the domestic labor in a given year within a country.

E) market value of the final goods and services consumed by households in a given year within a country.

5) Gross Domestic Product is the market value of all ________ produced within a country in a given period of time.

A) final goods

B) intermediate goods

C) final services

D) intermediate services

E) final goods and services

6) To calculate GDP it is necessary to

A) add the total amounts of all the goods produced.

B) use the market price to place a dollar value on each good produced.

C) use production cost to place a dollar value on all goods produced.

D) use the average market price over the last five years to place a dollar value on all goods produced.

E) average the cost of producing a good with the price of the good to place a dollar value on all goods produced.

7) How are final goods and services valued when measuring nominal GDP?

A) at current market prices

B) at base year prices

C) at foreign exchange parity

D) at factor market prices

E) at producer cost

8) Measuring total production by valuing items at their market value allows us to

A) separate the value of different goods with identical prices.

B) separate the value of different goods with different prices.

C) add together the value of different goods that have different prices.

D) add together the value of identical goods that have identical prices.

E) ignore the problem that goods and services differ in how long they last.

9) Wobet is a small country that produces only steak and potatoes. Steaks have a price of $10 each and potatoes have a price of $1 each. Suppose that Wobet produces 10 steaks and 20 potatoes in 2010. Using ________, Wobet has GDP equal to ________.

A) market value; 30 units

B) a market basket; 30 units

C) market value; $120

D) real value; $120

E) a price index; $120

10) To calculate GDP it is necessary to add up the market value of all the ________ produced within a country during a year.

A) goods but not services produced

B) goods and services produced

C) intermediate goods and services produced

D) final goods and services produced

E) intermediate goods and services produced and all the final goods and services produced

11) Gross domestic product is

A) the market value of all goods and services produced in a country during a given time period. B) the final value of all goods produced in a country in a given time period. C) the market value of all the intermediate goods and services produced in a country during a given time period. D) the average value of output produced in a country in a given time period. E) the market value of all the final goods and services produced in a country during a given time period.

12) In calculating GDP, economists use the value of final goods and services because

A) by using final goods and services, they avoid double counting. B) intermediate goods are imported from other countries. C) final goods can be exported to other countries. D) GDP is underestimated if intermediate goods are used instead. E) none of the above.

13) Complete the following sentence. Net exports equals

A) exports divided by imports. B) imports minus exports. C) exports plus imports. D) foreign borrowing by residents of Canada minus domestic borrowing by nonresidents of Canada. E) exports minus imports.

14) For the aggregate economy, income equals

A) expenditure equals GDP. B) expenditure equals GDP only if there is no government or foreign sectors. C) expenditure equals GDP only if there is no depreciation. D) expenditure, but these are not generally equal to GDP. E) GDP, but expenditure is generally less than these.

15) Which one of the following is true?

A) Y = C + I + G + X - M B) Y = C + I + G + M - X C) Y = C + S + I D) Y + M = C + I + G E) I + G + X = Y + I + M

Use the table below to answer the following questions.

Table 20.2.2

Government expenditures on goods and services	$ 500
Wages, salaries, and supplementary labor income	2,000
Depreciation	400
Investment	400
Consumption expenditure	2,200
Net exports	-50
Indirect taxes	150
Statistical discrepancy	0

16) Refer to Table 20.2.2. Gross domestic product equals

A) $3,400. B) $3,150. C) $3,050. D) $5,050. E) $5,600.

17) When all of the economy's labor, land, capital and entrepreneurial ability are fully employed, the value of production is called

A) potential GDP. B) real GDP. C) nominal GDP. D) actual GDP. E) productive GDP.

18) The business cycle is defined as the

A) short term fluctuations in the economy relative to the long-term trend in output B) regular fluctuations of real GDP below potential GDP. C) regular growth rate of the real GDP. D) irregular fluctuations of prices around real GDP. E) periodic and regular up-and-down movement of total production.

19) A recession is a period with

A) a slowdown in real GDP growth but not necessarily negative real GDP growth. B) negative growth rate in real GDP that lasts at least one quarter. C) positive growth rate in real GDP that lasts at least two quarters. D) positive growth rate in real GDP that lasts at least one quarter. E) a period of significant decline in output and employment

20) The working-age population is the total number of people

A) aged 15 years and over. B) in the labor force. C) in the labor force, aged 15 years and over. D) in the labor force, aged 15 years and over, and employed. E) in the labor force who are employed.