MACROECONOMICS BY OLIVIER BLANCHARD
ALL CHAPTERS 1 TO 24 COMPREHENSIVE TEST
PAPER 2026 COMPLETE QUESTIONS AND
ANSWERS EXPERT VERIFIED GRADED A+
◉ Important features of GDP: Answer: dollar value
goods and services
final products, within a country's borders, and in a given year
◉ 4 categories of spending: Answer: consumption
investment
government purchases
Xnet (net exports)
◉ Suppose a house is built and sold in the year 2000. If the house is
resold in the year 2013, is the value of the house included in Gross
Domestic Product for 2013? Answer: No. GDP for 2013 includes only
production that occurs during 2013
◉ Which equation represents the relationship between GDP and the
four major expenditure components? Answer: Y=C+I+G+NX
,◉ What is the difference between the value of a firm's final product
and the value added by the firm to the final product? Answer: The
value of a firm's final product is the sale price; value added is the
difference between the sale price and the price of intermediate
goods.
◉ Would the service of a real estate agent who helped sell (or helped
buy) the house be included in GDP for 2013? Answer: Yes. GDP for
2013 includes the market value of final goods and services. This
includes real estate services.
◉ What are the four categories of income? Answer: Wages
Interest
Rent
and Profit
◉ The circular flow diagram shows that _____ should equal _______
Answer: Total expenditure; Total income
◉ The circular flow diagram shows that all sources of income are
owned by Answer: households
◉ One major component of GDP that can be negative is Answer: net
exports
, ◉ The business cycle exists because: Answer: production experience
periods of increases and periods of decrease
◉ When would a recession occur? Answer: when an economy
experiences a period in which there is a decrease in total production
◉ Transfer payments are not included in GDP calculations because:
Answer: Transfer payments are simply transfers of income from one
group to another and not a purchase of a new good or service
◉ How does the size of a country's GDP affect the quality of life of
the country's people? Answer: Generally, the more goods and
services people have, the better off they are
◉ GDP is an imperfect measure of economic well being because it
fails to measure what types of production? Answer: Household
production and the underground economy
◉ Even if GDP included these types of production, why would it still
be an imperfect measure of economic well-being? Answer: 1. Value
or leisure not measured
2. GDP is not adjusted for pollution and it does not account for
unequal income distribution
3. GDP is not adjusted for crime or other social problems
ALL CHAPTERS 1 TO 24 COMPREHENSIVE TEST
PAPER 2026 COMPLETE QUESTIONS AND
ANSWERS EXPERT VERIFIED GRADED A+
◉ Important features of GDP: Answer: dollar value
goods and services
final products, within a country's borders, and in a given year
◉ 4 categories of spending: Answer: consumption
investment
government purchases
Xnet (net exports)
◉ Suppose a house is built and sold in the year 2000. If the house is
resold in the year 2013, is the value of the house included in Gross
Domestic Product for 2013? Answer: No. GDP for 2013 includes only
production that occurs during 2013
◉ Which equation represents the relationship between GDP and the
four major expenditure components? Answer: Y=C+I+G+NX
,◉ What is the difference between the value of a firm's final product
and the value added by the firm to the final product? Answer: The
value of a firm's final product is the sale price; value added is the
difference between the sale price and the price of intermediate
goods.
◉ Would the service of a real estate agent who helped sell (or helped
buy) the house be included in GDP for 2013? Answer: Yes. GDP for
2013 includes the market value of final goods and services. This
includes real estate services.
◉ What are the four categories of income? Answer: Wages
Interest
Rent
and Profit
◉ The circular flow diagram shows that _____ should equal _______
Answer: Total expenditure; Total income
◉ The circular flow diagram shows that all sources of income are
owned by Answer: households
◉ One major component of GDP that can be negative is Answer: net
exports
, ◉ The business cycle exists because: Answer: production experience
periods of increases and periods of decrease
◉ When would a recession occur? Answer: when an economy
experiences a period in which there is a decrease in total production
◉ Transfer payments are not included in GDP calculations because:
Answer: Transfer payments are simply transfers of income from one
group to another and not a purchase of a new good or service
◉ How does the size of a country's GDP affect the quality of life of
the country's people? Answer: Generally, the more goods and
services people have, the better off they are
◉ GDP is an imperfect measure of economic well being because it
fails to measure what types of production? Answer: Household
production and the underground economy
◉ Even if GDP included these types of production, why would it still
be an imperfect measure of economic well-being? Answer: 1. Value
or leisure not measured
2. GDP is not adjusted for pollution and it does not account for
unequal income distribution
3. GDP is not adjusted for crime or other social problems
