Chapter 21 Preliminary Quiz
Measuring Economic Activity

Multiple Choice Questions:

Enter your answer to each of the questions in the blank to the left of the question. Be sure to use lowercase letters only!

	1. GDP = a. C + I + G b. C + G + X c. C + I + G + X d. none of the above
	2. Which of the following is a way to calculate GDP? a. Sum the annual flow of final goods and services. b. Sum all the costs of producing society's final products. c. Both a and b. d. Neither a nor b.
	3. Value added is: a. the final cost of producing a good. b. the difference between a firm's sales and its purchases of inputs to the production process. c. the final value of the good. d. none of the above.
	4. In order to avoid _______, when calculating GDP, one should include only the final goods and exclude the intermediate goods that are used in the production process. a. inflation b. statistical bias c. double counting d. value-added
	5. Which of the following is GDP at current prices? a. nominal GDP b. real GDP c. inflationary GDP d. value-added GDP
	6. Which of the following is an index of the volume or quantity of goods and services provided? a. GDP deflator b. real GDP c. CPI d. PPI
	7. Which of the following serves as a measure of the overall price level in an economy? a. CPI b. GDP deflator c. both a and b d. neither a nor b
	8. To calculate real GDP, a. divide the CPI by nominal GDP. b. divide nominal GDP by the GDP deflator. c. divide the GDP deflator by nominal GDP. d. none of the above.
	9. Which of the following is not a category of consumption expenditures? a. durable goods b. nondurable goods c. services d. imports
	10. Which of the following is the term used to describe an addition to a nation's capital stock? a. inflation b. real GDP c. nominal GDP d. investment
	11. Depreciation measures: a. the total number of inputs used in production. b. the amount of capital that has been used in a year. c. government payments to individuals that are not made in exchange for goods or services supplied. d. all of the above.
	12. Transfer payments are: a. the total number of inputs used in production. b. the amount of capital that has been used in a year. c. government payments to individuals that are not made in exchange for goods or services supplied. d. all of the above.
	13. The difference between exports and imports is called: a. the total number of inputs used in production. b. the amount of capital that has been used in a year. c. government payments to individuals that are not made in exchange for goods or services supplied. d. net exports.
	14. Subtracting depreciation from GDP yields: a. real GDP. b. the GDP deflator. c. net domestic product. d. gross national product.
	15. _______ is the total output produced with inputs owned by the residents of the country. ______ is the output produced with inputs located inside the country. a. Net domestic product; Gross national product b. Gross national product; Net domestic product c. Gross national product; Gross domestic product d. Gross domestic product; Gross national product
	16. Which of the following is not a price index? a. GDP deflator b. CPI c. PPI d. none of the above
	17. Which of the following measures the level of prices at the wholesale or producer level? a. GDP deflator b. CPI c. PPI d. none of the above