Question 1

If depreciation is smaller than gross investment,

Accepted Answer

A) Net investment exceeds depreciation. 
B) Gross investment is negative. 
C) Net investment is positive. 
D) The nation's capital stock is getting smaller. 
A) Net investment exceeds depreciation. 
B) Gross investment is negative. 
C) Net investment is positive. 
D) The nation's capital stock is getting smaller.

Question 2

Goods and services purchased from international sources are

Accepted Answer

A) Gross investment. 
B) Imports. 
C) Exports. 
D) Net exports. 
A) Gross investment. 
B) Imports. 
C) Exports. 
D) Net exports.

Question 3

Disposable income is

Accepted Answer

A) After-tax income of households;personal income less personal taxes. 
B) The amount the household sector earns in producing the GDP. 
C) The amount households have left to spend after savings are subtracted. 
D) Personal income plus income taxes. 
A) After-tax income of households;personal income less personal taxes. 
B) The amount the household sector earns in producing the GDP. 
C) The amount households have left to spend after savings are subtracted. 
D) Personal income plus income taxes.

Question 4

Table 5.3 National Income Accounts (dollar figures are in billions)
$$\begin{array} {| l | r| } 
\hline \text { Expenditures for consumer poods and services } & \$ 8,200 \
\hline \text { Exports } & \$ 1,700 \
\hline \text { Government purchases of poods and services } & \$ 2,500 \
\hline \text { Docial Security taxes } & \$ 1,900 \
\hline \text { Net irvestment } & \$ 1,400 \
\hline \text { Indirect business taxes } & \$ 1,400 \
\hline \text { Irnoorts } & \$ 1,900 \
\hline \text { Gross irvestment } & \$ 1,800 \
\hline \text { Corporate income taxes } & \$ 600 \
\hline \text { Personal income taxes } & \$ 1,500 \
\hline \text { Corporateretained earnings } & \$ 130 \
\hline \text { Net foreipn factor income } & \$ 100 \
\hline \text { Government transfer payments to households } & \$ 1600 \
\hline \text { Net interest paynnents to households } & \$ 500 \
\hline
\end{array}$$
 On the basis of Table 5.3,the net addition to the capital stock is

Accepted Answer

A) $1,000 billion. 
B) $400 billion. 
C) $1,400 billion. 
D) $370 billion. 
A) $1,000 billion. 
B) $400 billion. 
C) $1,400 billion. 
D) $370 billion.

Question 5

Depreciation represents

Accepted Answer

A) The consumption of capital in the production process. 
B) A loss of productive capability as a result of the inefficient use of resources. 
C) Wasted capital. 
D) Gross investment plus net investment. 
A) The consumption of capital in the production process. 
B) A loss of productive capability as a result of the inefficient use of resources. 
C) Wasted capital. 
D) Gross investment plus net investment.

Question 6

If the price level is 100 for 2005 and the price level is 106.5 in 2007,a nominal GDP in 2007 of $15,600 billion would mean that real GDP in 2007 (in 2005 prices)would be closest to

Accepted Answer

A) $14,647.9 billion. 
B) $15,600.0 billion. 
C) $14,751.3 billion. 
D) $13,971.2 billion. 
A) $14,647.9 billion. 
B) $15,600.0 billion. 
C) $14,751.3 billion. 
D) $13,971.2 billion.

Question 7

Table 5.1 National Income Accounts (dollar figures are in billions)
$\begin{array}{|l|r|}
\hline \text { Expenditures for consumer goods and services } & \$ 4,565 \
\hline \text { Exports } & \$ 740 \
\hline \text { Government purchases of goods and services } & \$ 1,465 \
\hline \text { Social Security taxes } & \$ 510 \
\hline\text { Net investment } & \$ 225 \
\hline\text { Indirect business taxes } & \$ 520 \
\hline\text { Imports } & \$ 825 \
\hline \text { Gross investment } & \$ 865 \
\hline \text { Corporate income taxes } & \$ 185 \
\hline \text { Personal incometaxes } & \$ 750 \
\hline \text { Corporateretained earnings } & \$ 45 \
\hline\text { Net foreign factor income } & \$ 20 \
\hline \text { Govermment transfer payments to households } & \$ 690 \
\hline \text { Net interest payments to households } & \$ 0 \
\hline
\end{array}$

On the basis of Table 5.1,gross domestic product is

Accepted Answer

A) $6,980 billion. 
B) $7,635 billion. 
C) $6,810 billion. 
D) $7,720 billion. 
A) $6,980 billion. 
B) $7,635 billion. 
C) $6,810 billion. 
D) $7,720 billion.

Question 8

A furniture factory produces dining room sets.The lumber it purchases from the lumberyard is a/an

Accepted Answer

A) Intermediate service. 
B) Final good. 
C) Intermediate good. 
D) Final service. 
A) Intermediate service. 
B) Final good. 
C) Intermediate good. 
D) Final service.

Question 9

If depreciation exceeds gross investment,

Accepted Answer

A) Net investment exceeds depreciation. 
B) The nations capital stock is increasing. 
C) The difference between GDP and NDP is smaller than gross investment. 
D) The nation's capital stock is decreasing. 
A) Net investment exceeds depreciation. 
B) The nations capital stock is increasing. 
C) The difference between GDP and NDP is smaller than gross investment. 
D) The nation's capital stock is decreasing.

Question 10

Which of the following is excluded from calculations of GDP?

Accepted Answer

A) Goods that are produced and sold during the time period. 
B) Income received by managers of corporations. 
C) The value of lawn mowing provided by a teenager for his own family. 
D) Goods that bring little value to society. 
A) Goods that are produced and sold during the time period. 
B) Income received by managers of corporations. 
C) The value of lawn mowing provided by a teenager for his own family. 
D) Goods that bring little value to society.

Question 11

Net domestic product is

Accepted Answer

A) Equal to GDP minus indirect business taxes. 
B) The total market value of all goods produced in the period. 
C) Equal to national income minus depreciation. 
D) The market value of all final goods and services produced in the economy after adjusting for depreciation. 
A) Equal to GDP minus indirect business taxes. 
B) The total market value of all goods produced in the period. 
C) Equal to national income minus depreciation. 
D) The market value of all final goods and services produced in the economy after adjusting for depreciation.

Question 12

Which of the following would be included in U.S.GNP but not in U.S.GDP?

Accepted Answer

A) The tips received by a waiter in New Jersey. 
B) Auto parts produced by a Japanese-owned firm operating in North Carolina. 
C) Sales of used cars in the United States. 
D) Chipsets produced by U.S.-owned firms operating in China. 
A) The tips received by a waiter in New Jersey. 
B) Auto parts produced by a Japanese-owned firm operating in North Carolina. 
C) Sales of used cars in the United States. 
D) Chipsets produced by U.S.-owned firms operating in China.

Question 13

Goods produced for the purpose of producing other goods are known as

Accepted Answer

A) Services. 
B) Exports. 
C) Consumption goods. 
D) Investment goods. 
A) Services. 
B) Exports. 
C) Consumption goods. 
D) Investment goods.

Question 14

Government spending in the national income accounts refers only to expenditures at the federal level.

Accepted Answer

A) True 
 B)False

Question 15

Suppose the total market value of all the final goods and services produced in the country of Rushya was $8 billion in 2008 (measured in 2008 prices)and $9 billion in 2009 (measured in 2009 prices).Which of the following statements is definitely correct?

Accepted Answer

A) Production increased in Rushya between 2008 and 2009. 
B) Real GDP increased in Rushya between 2008 and 2009. 
C) Average price levels increased in Rushya between 2008 and 2009. 
D) Whether real GDP increased cannot be determined with the information given. 
A) Production increased in Rushya between 2008 and 2009. 
B) Real GDP increased in Rushya between 2008 and 2009. 
C) Average price levels increased in Rushya between 2008 and 2009. 
D) Whether real GDP increased cannot be determined with the information given.

Question 16

Table 5.3 National Income Accounts (dollar figures are in billions)
$$\begin{array} {| l | r| } 
\hline \text { Expenditures for consumer poods and services } & \$ 8,200 \
\hline \text { Exports } & \$ 1,700 \
\hline \text { Government purchases of poods and services } & \$ 2,500 \
\hline \text { Docial Security taxes } & \$ 1,900 \
\hline \text { Net irvestment } & \$ 1,400 \
\hline \text { Indirect business taxes } & \$ 1,400 \
\hline \text { Irnoorts } & \$ 1,900 \
\hline \text { Gross irvestment } & \$ 1,800 \
\hline \text { Corporate income taxes } & \$ 600 \
\hline \text { Personal income taxes } & \$ 1,500 \
\hline \text { Corporateretained earnings } & \$ 130 \
\hline \text { Net foreipn factor income } & \$ 100 \
\hline \text { Government transfer payments to households } & \$ 1600 \
\hline \text { Net interest paynnents to households } & \$ 500 \
\hline
\end{array}$$
 On the basis of Table 5.3,the value of the income aggregate that is defined as "after-tax income of consumers" (also known as disposable income)is

Accepted Answer

A) $8,570 billion. 
B) $10,070 billion. 
C) $11,570 billion. 
D) $10,600 billion. 
A) $8,570 billion. 
B) $10,070 billion. 
C) $11,570 billion. 
D) $10,600 billion.

Question 17

National income accounting is defined as the

Accepted Answer

A) Use of economic theory to predict future income. 
B) Measurement of aggregate economic activity. 
C) Accounting cost associated with economic choices. 
D) Assessment of the distribution of output. 
A) Use of economic theory to predict future income. 
B) Measurement of aggregate economic activity. 
C) Accounting cost associated with economic choices. 
D) Assessment of the distribution of output.

Question 18

Net exports are

Accepted Answer

A) Goods sold to foreigners. 
B) Not included in GDP. 
C) The value of exports minus the value of imports. 
D) Exports that ultimately are imported back into the United States. 
A) Goods sold to foreigners. 
B) Not included in GDP. 
C) The value of exports minus the value of imports. 
D) Exports that ultimately are imported back into the United States.

Question 19

When calculating GDP,consumption makes up approximately

Accepted Answer

A) One-fifth of total output. 
B) One-half of total output. 
C) Two-thirds of total output. 
D) One-third of total output. 
A) One-fifth of total output. 
B) One-half of total output. 
C) Two-thirds of total output. 
D) One-third of total output.

Question 20

GDP is the total market value of all final goods and services produced in a given time period within a nation's borders.

Accepted Answer

A) True 
 B)False

Exam 5: National Income Accounting

If depreciation is smaller than gross investment,

Goods and services purchased from international sources are

Disposable income is

Depreciation represents

If the price level is 100 for 2005 and the price level is 106.5 in 2007,a nominal GDP in 2007 of $15,600 billion would mean that real GDP in 2007 (in 2005 prices)would be closest to

A furniture factory produces dining room sets.The lumber it purchases from the lumberyard is a/an

If depreciation exceeds gross investment,

Which of the following is excluded from calculations of GDP?

Net domestic product is

Which of the following would be included in U.S.GNP but not in U.S.GDP?

Goods produced for the purpose of producing other goods are known as

Government spending in the national income accounts refers only to expenditures at the federal level.

Suppose the total market value of all the final goods and services produced in the country of Rushya was $8 billion in 2008 (measured in 2008 prices)and $9 billion in 2009 (measured in 2009 prices).Which of the following statements is definitely correct?

National income accounting is defined as the

Net exports are

When calculating GDP,consumption makes up approximately

GDP is the total market value of all final goods and services produced in a given time period within a nation's borders.

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

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