ECO202 - Principles of Macroeconomics - First Midterm Exam - Spring 2011

Sep 30, 2026

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First Midterm Exam for ECO202: Principles of Macroeconomics (Spring 2011), taught by Prof. Bill Even. The document contains seven pages of instructions and 14 multiple-choice questions assessing core GDP concepts and measurement approaches. Topics include GDP definitions, depreciation and national income relationships, exclusion of intermediate goods, expenditure and income approaches, real GDP limitations as a welfare measure, inventory changes and their GDP implications, transfer payments treatment, and business cycle phases. Calculators are allowed; cell phones and devices storing text are prohibited.

LanguageEnglish

CategoryExam

FormatPDF

Pages12

Reading Time30 min

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GDP and Measurement Questions

GDP Definitions and Components

Expenditure and Income Approaches

Real GDP and Potential GDP

Inventory Changes and Transfer Payments

GDP Comparisons and Business Cycle Order

Name (Please print) Assigned Seat ECO202: PRINCIPLES OF MACROECONOMICS FIRST MIDTERM EXAM SPRING 2011 Prof. Bill Even FORM 1 Directions 1. Fill in your scantron with your unique id and form number. Doing this properly is worth the equivalent of one question. 2. There are 50 multiple choice questions. 3. Your grade is determined entirely upon the answers listed on your scantron. You will not receive your scantron back. Be sure to record your answers on your exam so that you will be able to check your answers once the key is posted. 5. You may use a calculator. Cell phones or other devices that may be used to store text are not allowed. 6. You have until the end of the period to finish the exam. Additional time may be purchased at a price of 5 percentage points per minute. 7. Academic dishonesty is a serious offense. In the event I find someone behaving in a dishonest manner, I will ask that the maximum penalty allowed by the university be imposed. 1) Gross domestic product (GDP) measures the A) market value of final goods and services produced in the economy in a given time period. B) number of final goods and services produced in the economy in a given time period. C) number of final goods and services sold in the economy in a given time period. D) market value of old and new final goods and services sold in the economy in a given time period. 2) In the nation of Nirvana, depreciation is $22 billion, GDP is $260.4 billion, and national income is $215.2 billion. Net domestic product is A) $215.2 billion. B) smaller than national income. C) $238.4 billion. D) $445.2 billion. 3) Intermediate goods are excluded from GDP because A) their inclusion would understate GDP B) the premise of the question is incorrect because intermediate goods are directly included in calculating GDP. C) their inclusion would involve double counting production of some goods. D) they represent goods that have never been purchased so they cannot be counted. 4) The expenditure approach measures GDP by adding A) compensation of employees, rental income, corporate profits, net interest, proprietorsʹ income, indirect taxes paid, and depreciation and subtracting subsidies paid by the government. B) compensation of employees, rental income, corporate profits, net interest, proprietorsʹ income, subsidies paid by the government, indirect taxes paid, and depreciation. C) compensation of employees, rental income, corporate profits, net interest, and proprietorsʹ income. D) consumption expenditure, gross private domestic investment, net exports of goods and services, and government expenditure on goods and services. 5) In the expenditure approach to GDP, the largest component is A) gross private domestic investment. B) personal consumption expenditures. C) government expenditure on goods and services. D) net exports. 6) Gross private domestic investment is all purchases of newly produced business capital goods and buildings A) plus purchases of capital goods produced in previous years to replace any depreciated capital goods. B) plus fixed investment minus inventory investment. C) plus the change in business inventories plus residential construction. D) minus the change in business inventories. 7) Transfer payments A) refer to payments made by the government that are not made to purchase a good or service. B) are included in the government expenditure category in gross domestic product. C) refer to all payments made to households by governments. D) are made by households to firms in exchange for goods and services. 8) The five categories of income used in the income approach to the measurement of GDP are A) employee compensation, consumption, rental income, corporate profits, and proprietorʹs income. B) employee compensation, saving, rental income, corporate profits, and investment. C) consumption, saving, rental income, corporate profits, and investment. D) emp

FAQs

What are the exam rules about devices and time?

A calculator may be used. Cell phones or other devices that may store text are not allowed, and you have until the end of the period to finish; additional time can be purchased at 5 percentage points per minute.

How does the expenditure approach measure GDP?

It measures GDP by adding the components of spending: consumption expenditure, gross private domestic investment, net exports of goods and services, and government expenditure on goods and services.

Why are intermediate goods excluded from GDP?

Intermediate goods are excluded to prevent double counting because their inclusion would count production multiple times when final goods are measured.

Sep 30, 2026

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