Question 1

Exhibit 18-4
  
-According to the data in Exhibit 18-4, 2015 national saving equaled ____.

Accepted Answer

A) $717 billion 
B) $1,079 billion 
C) $737 billion 
D) $1,816 billion 
E) Not enough information is given. 
A) $717 billion 
B) $1,079 billion 
C) $737 billion 
D) $1,816 billion 
E) Not enough information is given.

Question 2

New homes purchased by households are part of investment expenditures.

Accepted Answer

A) True 
 B)False

Question 3

In 2015, the United States imported more than it exported. As a result,

Accepted Answer

A) the sum of consumption plus investment plus government purchases overstated what was produced in America. 
B) the sum of consumption plus investment plus government purchases understated what was produced in America. 
C) the sum of consumption plus investment plus government purchases equaled what was produced in America. 
D) the sum of consumption minus investment minus government purchases overstated what was produced in America. 
A) the sum of consumption plus investment plus government purchases overstated what was produced in America. 
B) the sum of consumption plus investment plus government purchases understated what was produced in America. 
C) the sum of consumption plus investment plus government purchases equaled what was produced in America. 
D) the sum of consumption minus investment minus government purchases overstated what was produced in America.

Question 4

A measure of production that does not correct for inflation is

Accepted Answer

A) real GDP. 
B) nominal GDP. 
C) value added. 
D) the CPI. 
E) the GDP price deflator. 
A) real GDP. 
B) nominal GDP. 
C) value added. 
D) the CPI. 
E) the GDP price deflator.

Question 5

Simon Kuznets won a Nobel Prize in economics for his work on

Accepted Answer

A) monetary theory. 
B) measuring national output. 
C) real business cycle theory. 
D) health-care economics. 
E) growth theory. 
A) monetary theory. 
B) measuring national output. 
C) real business cycle theory. 
D) health-care economics. 
E) growth theory.

Question 6

Where are the goods and services included in a country's GDP produced?

Accepted Answer

A) Within the borders of that country plus those goods produced abroad by that country's residents, less domestic goods produced by foreign residents 
B) Within the borders of that country except for those goods produced in the country by nonresidents or with capital owned by foreigners 
C) Anywhere that country's residents produce goods and services 
D) Within that country's borders 
E) Anywhere that country's businesses produce goods and services 
A) Within the borders of that country plus those goods produced abroad by that country's residents, less domestic goods produced by foreign residents 
B) Within the borders of that country except for those goods produced in the country by nonresidents or with capital owned by foreigners 
C) Anywhere that country's residents produce goods and services 
D) Within that country's borders 
E) Anywhere that country's businesses produce goods and services

Question 7

A soft-drink bottling company supplies six-packs of cola to retailers for $2.5 each. If the components in each six-pack cost the bottling company $1.50, how much value added per six-pack does the bottling company create?

Accepted Answer

$.50
Value added is the value

Question 8

The total amount of saving in an economy is a measure of the amount of resources that a country has available for investment, either in its own country or abroad.

Accepted Answer

A) True 
 B)False

Question 9

If a parent spends one hour each weekday transporting her children to school, this activity

Accepted Answer

A) is not included in GDP because it is not productive. 
B) could be included in GDP if the parent reports this activity in his or her income taxes. 
C) is not included in GDP because it does not involve a market transaction. 
D) is included in GDP because statisticians know that this activity has to take place. 
E) is included in GDP if the school system does not provide transportation for these children. 
A) is not included in GDP because it is not productive. 
B) could be included in GDP if the parent reports this activity in his or her income taxes. 
C) is not included in GDP because it does not involve a market transaction. 
D) is included in GDP because statisticians know that this activity has to take place. 
E) is included in GDP if the school system does not provide transportation for these children.

Question 10

Suppose you are given the following information about Country A:

Accepted Answer

The answer of Suppose you are given the following information...

Question 11

In 2015, the labor income component of GDP was equal to

Accepted Answer

A) $9.7 trillion. 
B) $97 billion. 
C) $9,700 million. 
D) $9,693 trillion. 
E) None of these 
A) $9.7 trillion. 
B) $97 billion. 
C) $9,700 million. 
D) $9,693 trillion. 
E) None of these

Question 12

Which of the following would not be captured by a perfect measure of the production of goods and services in the economy?

Accepted Answer

A) The underground economy 
B) Improvements in goods and services 
C) A healthy life expectancy 
D) Home production 
E) None of these 
A) The underground economy 
B) Improvements in goods and services 
C) A healthy life expectancy 
D) Home production 
E) None of these

Question 13

Profits include depreciation.

Accepted Answer

A) True 
 B)False

Question 14

GDP can be calculated only by using the ____ approach.

Accepted Answer

A) spending 
B) income 
C) spending, income, production, or the NIPA 
D) spending, income, or production 
E) production 
A) spending 
B) income 
C) spending, income, production, or the NIPA 
D) spending, income, or production 
E) production

Question 15

The largest component of GDP is

Accepted Answer

A) government purchases. 
B) investment. 
C) exports. 
D) consumption. 
E) government expenditures. 
A) government purchases. 
B) investment. 
C) exports. 
D) consumption. 
E) government expenditures.

Question 16

Which of the following best explains what happens when a business firm purchases a drill press manufactured in Germany?

Accepted Answer

A) There will be an increase in exports. 
B) There will be an increase in import spending. 
C) There will be an increase in investment expenditures. 
D) There will be an increase in both investment expenditures and import spending. 
E) There will be a decline in investment expenditures and an increase in import spending. 
A) There will be an increase in exports. 
B) There will be an increase in import spending. 
C) There will be an increase in investment expenditures. 
D) There will be an increase in both investment expenditures and import spending. 
E) There will be a decline in investment expenditures and an increase in import spending.

Question 17

Exhibit 18-4
  
-According to the data in Exhibit 18-4, national saving between 2015 and 2016 changed by

Accepted Answer

A)  $83 billion. 
B)  $50 billion. 
C)  0. 
D)  $60 billion. 
E)  Not enough information is given. 
A)  $83 billion. 
B)  $50 billion. 
C)  0. 
D)  $60 billion. 
E)  Not enough information is given.

Question 18

Investment in the United States was about 27 percent of GDP in 2015.

Accepted Answer

A) True 
 B)False

Question 19

Suppose that, in response to a new government policy, some businesses are forced to go underground.

Accepted Answer

The answer of Suppose that, in response to a new...

Question 20

Two components of investment expenditures are new homes purchased by consumers and increases in inventories. Explain why these two components are included in investment expenditures when calculating GDP using the spending approach.

Accepted Answer

For inventories, the important point is

Exam 18: Measuring the Production, Income, and Spending of Nations

Exhibit 18-4 -According to the data in Exhibit 18-4, 2015 national saving equaled ____.

New homes purchased by households are part of investment expenditures.

In 2015, the United States imported more than it exported. As a result,

A measure of production that does not correct for inflation is

Simon Kuznets won a Nobel Prize in economics for his work on

Where are the goods and services included in a country's GDP produced?

A soft-drink bottling company supplies six-packs of cola to retailers for $2.5 each. If the components in each six-pack cost the bottling company $1.50, how much value added per six-pack does the bottling company create?

The total amount of saving in an economy is a measure of the amount of resources that a country has available for investment, either in its own country or abroad.

If a parent spends one hour each weekday transporting her children to school, this activity

Suppose you are given the following information about Country A:

In 2015, the labor income component of GDP was equal to

Which of the following would not be captured by a perfect measure of the production of goods and services in the economy?

Profits include depreciation.

GDP can be calculated only by using the ____ approach.

The largest component of GDP is

Which of the following best explains what happens when a business firm purchases a drill press manufactured in Germany?

Exhibit 18-4 -According to the data in Exhibit 18-4, national saving between 2015 and 2016 changed by

Investment in the United States was about 27 percent of GDP in 2015.

Suppose that, in response to a new government policy, some businesses are forced to go underground.

Two components of investment expenditures are new homes purchased by consumers and increases in inventories. Explain why these two components are included in investment expenditures when calculating GDP using the spending approach.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

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