ECON 110: EXAM 2 QUIZ QUESTIONS
AND CORRECT ANSWERS
Real GDP means GDP:
-valued at prices in a base year.
-that does not change from year to year.
-corrected for changes in quality.
-valued at prices at which goods are actually sold. ✅✅CORRECT ANSW-valued at prices in a base
year
GDP does not count:
-the estimated value of homemaker production.
-state and local government purchases.
-spending for new homes.
-changes in inventories. ✅✅CORRECT ANSW-the estimated value of homemaker production
Which of the following is a shortcoming of GDP?
-GDP measures used goods and services.
-GDP includes changes in inventories.
-GDP includes the value of net exports.
-GDP does not make an allowance for leisure time. ✅✅CORRECT ANSW-GDP does not make an
allowance for leisure time.
Which of the following is the most likely side effect of an increase in the relative size of the
underground economy with the passage of time?
-The growth rate of real GDP will tend to understate the growth rate of total output.
-The growth rate of real GDP will tend to overstate the growth rate of total output.
-The GDP deflator will tend to overstate any increase in inflation.
-The GDP deflator will tend to understate any increase in inflation. ✅✅CORRECT ANSW-The
growth rate of real GDP will tend to understate the growth rate of total output.
If exports rise and imports fall, then:
, -GDP will increase.
-GDP will decrease.
-GDP may remain unchanged.
-net exports will fall. ✅✅CORRECT ANSW-GDP will increase
Which of the following expenditures would not be included in GDP?
-Purchase of a new lawnmower.
-Purchase of a silver cup previously sold new in 1950.
-Purchase of a ticket to the latest movie.
-Purchase of a landscaping service. ✅✅CORRECT ANSW-Purchase of a silver cup previously sold
new in 1950
Which one of the following would count as investment in the GDP accounts?
-Purchase of a new airplane by an airline.
-Purchase of a U.S. government bond.
-Purchase of 100 shares of Wal-Mart stock.
-Purchase of an existing house. ✅✅CORRECT ANSW-Purchase of a new airplane by an airline
The largest component of GDP is:
-personal consumption expenditures.
-government spending.
-durable goods.
-net exports. ✅✅CORRECT ANSW-personal consumption expenditures.
Which of the following would be classified as a personal consumption expenditure?
-Your purchase of this economics course.
-Your purchase of a newly constructed house
-Your purchase of a preowned house.
-Your purchase of one share of Microsoft stock. ✅✅CORRECT ANSW-Your purchase of this
economics course.
Intermediate goods are goods and services used:
AND CORRECT ANSWERS
Real GDP means GDP:
-valued at prices in a base year.
-that does not change from year to year.
-corrected for changes in quality.
-valued at prices at which goods are actually sold. ✅✅CORRECT ANSW-valued at prices in a base
year
GDP does not count:
-the estimated value of homemaker production.
-state and local government purchases.
-spending for new homes.
-changes in inventories. ✅✅CORRECT ANSW-the estimated value of homemaker production
Which of the following is a shortcoming of GDP?
-GDP measures used goods and services.
-GDP includes changes in inventories.
-GDP includes the value of net exports.
-GDP does not make an allowance for leisure time. ✅✅CORRECT ANSW-GDP does not make an
allowance for leisure time.
Which of the following is the most likely side effect of an increase in the relative size of the
underground economy with the passage of time?
-The growth rate of real GDP will tend to understate the growth rate of total output.
-The growth rate of real GDP will tend to overstate the growth rate of total output.
-The GDP deflator will tend to overstate any increase in inflation.
-The GDP deflator will tend to understate any increase in inflation. ✅✅CORRECT ANSW-The
growth rate of real GDP will tend to understate the growth rate of total output.
If exports rise and imports fall, then:
, -GDP will increase.
-GDP will decrease.
-GDP may remain unchanged.
-net exports will fall. ✅✅CORRECT ANSW-GDP will increase
Which of the following expenditures would not be included in GDP?
-Purchase of a new lawnmower.
-Purchase of a silver cup previously sold new in 1950.
-Purchase of a ticket to the latest movie.
-Purchase of a landscaping service. ✅✅CORRECT ANSW-Purchase of a silver cup previously sold
new in 1950
Which one of the following would count as investment in the GDP accounts?
-Purchase of a new airplane by an airline.
-Purchase of a U.S. government bond.
-Purchase of 100 shares of Wal-Mart stock.
-Purchase of an existing house. ✅✅CORRECT ANSW-Purchase of a new airplane by an airline
The largest component of GDP is:
-personal consumption expenditures.
-government spending.
-durable goods.
-net exports. ✅✅CORRECT ANSW-personal consumption expenditures.
Which of the following would be classified as a personal consumption expenditure?
-Your purchase of this economics course.
-Your purchase of a newly constructed house
-Your purchase of a preowned house.
-Your purchase of one share of Microsoft stock. ✅✅CORRECT ANSW-Your purchase of this
economics course.
Intermediate goods are goods and services used:
