ECON 304 ACTUAL EXAM TEST 2025/2026 QUESTIONS
WITH ANSWERS GRADED A+
✔✔Product Approach - ✔✔The approach to GDP measurement that determines GDP
as the sum of value added to goods and services in production across all productive
units in the economy.
✔✔Expenditure Approach - ✔✔The approach to GDP measurement that determines DP
as total spending on all final goods and services production in the economy.
✔✔Intermediate Good - ✔✔A good that is produced and then used as an input in
another production process.
✔✔Value Added - ✔✔the value of goods produced minus the value of intermediate
goods used in production.
✔✔Income-expenditure identity - ✔✔Y=C+I+G+NX, were Y is aggregate income
(output), C is consumption expenditures, I is investment expenditures, G is government
expenditures, and NX is net exports.
✔✔Gross National Product (GNP) - ✔✔GNP=GDP plus net factor payments to U.S.
residents from abroad.
✔✔Underground Economy - ✔✔All unreported economic activity.
✔✔Consumption - ✔✔Goods and services produced and consumed during the current
period.
✔✔Investment - ✔✔Goods produced in the current period but not consumed in the
current period.
✔✔Fixed Investment - ✔✔Investment in plant, equipment, and housing.
✔✔Inventory Investment - ✔✔Goods produced in the current period that are set aside
for future periods.
✔✔Government Expenditures - ✔✔Expenditures by federal, state, and local
governments on final goods and services.
✔✔Transfers - ✔✔Government outlays that are transfers of purchasing power from one
group of private economic agents to another.
✔✔Price Index - ✔✔A weighted average of prices of some set of goods produced in the
economy during a particular period.
, ✔✔Price Level - ✔✔The average level of prices across all goods and services in the
economy.
✔✔Inflation Rate - ✔✔The rate of change in the price level from one period to another.
✔✔Nominal Change - ✔✔The change in the dollar value of a good, service, or asset.
✔✔Real Change - ✔✔The change in the quantity of a good, series, or asset.
✔✔Chain-Weighting - ✔✔An approach to calculating real GDP that uses a rolling base
year.
✔✔Implicit GDP Price Deflator - ✔✔Nominal GDP divided by real GDP, all multiplied by
100.
✔✔Consumer Price Index (CPI) - ✔✔Expenditures on base year quantities at current
year prices divided by total expenditures on base year quantities at base year prices.
✔✔Flow - ✔✔A rate per unit time.
✔✔Stock - ✔✔Quantity in existence of some object at a point in time.
✔✔Private Disposable Income - ✔✔GDP plus net factor payments, plus transfers from
the government, plus interest on the government debt, minus taxes.
✔✔Private Sector Saving - ✔✔Private disposable income minus consumption
expenditures.
✔✔National Saving - ✔✔Private sector saving plus government saving.
✔✔Capital Stock - ✔✔The quantity of plant, equipment, housing, and inventories in
existence in an economy at a point in time.
✔✔Employed - ✔✔In the Bureau of Labor Statistics household survey, those worked
part-time or full-time during the past week.
✔✔Unemployed - ✔✔In the Bureau of Labor Statistics household survey, those who
were not employed during the past week but actively searched for work at some time
during the last four weeks.
✔✔Not in the Labor Force - ✔✔In the Bureau of Labor Statistics household survey,
those who are neither employed or unemployed.
WITH ANSWERS GRADED A+
✔✔Product Approach - ✔✔The approach to GDP measurement that determines GDP
as the sum of value added to goods and services in production across all productive
units in the economy.
✔✔Expenditure Approach - ✔✔The approach to GDP measurement that determines DP
as total spending on all final goods and services production in the economy.
✔✔Intermediate Good - ✔✔A good that is produced and then used as an input in
another production process.
✔✔Value Added - ✔✔the value of goods produced minus the value of intermediate
goods used in production.
✔✔Income-expenditure identity - ✔✔Y=C+I+G+NX, were Y is aggregate income
(output), C is consumption expenditures, I is investment expenditures, G is government
expenditures, and NX is net exports.
✔✔Gross National Product (GNP) - ✔✔GNP=GDP plus net factor payments to U.S.
residents from abroad.
✔✔Underground Economy - ✔✔All unreported economic activity.
✔✔Consumption - ✔✔Goods and services produced and consumed during the current
period.
✔✔Investment - ✔✔Goods produced in the current period but not consumed in the
current period.
✔✔Fixed Investment - ✔✔Investment in plant, equipment, and housing.
✔✔Inventory Investment - ✔✔Goods produced in the current period that are set aside
for future periods.
✔✔Government Expenditures - ✔✔Expenditures by federal, state, and local
governments on final goods and services.
✔✔Transfers - ✔✔Government outlays that are transfers of purchasing power from one
group of private economic agents to another.
✔✔Price Index - ✔✔A weighted average of prices of some set of goods produced in the
economy during a particular period.
, ✔✔Price Level - ✔✔The average level of prices across all goods and services in the
economy.
✔✔Inflation Rate - ✔✔The rate of change in the price level from one period to another.
✔✔Nominal Change - ✔✔The change in the dollar value of a good, service, or asset.
✔✔Real Change - ✔✔The change in the quantity of a good, series, or asset.
✔✔Chain-Weighting - ✔✔An approach to calculating real GDP that uses a rolling base
year.
✔✔Implicit GDP Price Deflator - ✔✔Nominal GDP divided by real GDP, all multiplied by
100.
✔✔Consumer Price Index (CPI) - ✔✔Expenditures on base year quantities at current
year prices divided by total expenditures on base year quantities at base year prices.
✔✔Flow - ✔✔A rate per unit time.
✔✔Stock - ✔✔Quantity in existence of some object at a point in time.
✔✔Private Disposable Income - ✔✔GDP plus net factor payments, plus transfers from
the government, plus interest on the government debt, minus taxes.
✔✔Private Sector Saving - ✔✔Private disposable income minus consumption
expenditures.
✔✔National Saving - ✔✔Private sector saving plus government saving.
✔✔Capital Stock - ✔✔The quantity of plant, equipment, housing, and inventories in
existence in an economy at a point in time.
✔✔Employed - ✔✔In the Bureau of Labor Statistics household survey, those worked
part-time or full-time during the past week.
✔✔Unemployed - ✔✔In the Bureau of Labor Statistics household survey, those who
were not employed during the past week but actively searched for work at some time
during the last four weeks.
✔✔Not in the Labor Force - ✔✔In the Bureau of Labor Statistics household survey,
those who are neither employed or unemployed.
