1. Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant?
A. nominal GDP
B. real GDP
C. net national product
D. none of the above
E. all GDP measures represent changes in both prices and quantities
2. When a significant fraction of domestic production takes place in foreign-owned facilities,
A. GNP will be a more accurate measure of the level of production within the country’s borders
B. GNP will be much larger than GDP
C. GDP will be much larger than GNP
D. GNP and GDP will be almost identical
3. Which of the following do we subtract from GNP to obtain NNP?
A. The production of fixed capital
B. Consumption
C. Investment
D. Capital consumption
E. Inventory reduction
4. Which of the following is not a shortcoming of GDP as a measure of “economic well-being”
A. Exclusion of Value of Leisure
B. GDP not adjusted for the pollution
C. GDP is not adjusted for increased crime levels
D. GDP not adjusted for crime levels
E. GDP excludes household production
5. Using the year 2000 as the base year, and assuming that prices during the 1990s were lower on average than prices in 2000, we can conclude that
A. nominal GDP was lower than real GDP in the 1990s
B. nominal GDP was higher than real GDP in the 1990s
C. neither nominal GDP nor real GDP were good measures of GDP
D. the nominal and real GDP could be above or below one another depending on how high the rate of inflation is.
6. Over time prices may change relative to each other, In order to allow for this, the Bureau of Economic Analysis calculates
A. nominal GDP using chain weights
B. real GDP and the price deflator using chain weights
C. real GDP and nominal GDP using only base-year prices
D. real GDP using the prices in the current year.