Question 1

Exports are

Accepted Answer

A) Goods and services sold to international buyers. 
B) Not included in GDP. 
C) Goods and services produced by the public sector. 
D) Goods and services purchased from foreign sources. 
A) Goods and services sold to international buyers. 
B) Not included in GDP. 
C) Goods and services produced by the public sector. 
D) Goods and services purchased from foreign sources.

Question 2

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,personal saving is

Accepted Answer

A) $5,620 billion. 
B) $5,790 billion. 
C) $6,530 billion. 
D) $6,445 billion. 
A) $5,620 billion. 
B) $5,790 billion. 
C) $6,530 billion. 
D) $6,445 billion.

Question 3

Gross investment is the

Accepted Answer

A) Total investment expenditure in a given time period. 
B) Consumption of capital in the production process. 
C) Wearing out of plant and equipment. 
D) Alternative combinations of final goods and services that can be produced with all available resources and technology. 
A) Total investment expenditure in a given time period. 
B) Consumption of capital in the production process. 
C) Wearing out of plant and equipment. 
D) Alternative combinations of final goods and services that can be produced with all available resources and technology.

Question 4

In the U.S.GDP,imports

Accepted Answer

A) Include smuggled goods. 
B) Include black-market goods. 
C) Are the total of U.S.goods sent abroad. 
D) Are goods purchased from foreign sources. 
A) Include smuggled goods. 
B) Include black-market goods. 
C) Are the total of U.S.goods sent abroad. 
D) Are goods purchased from foreign sources.

Question 5

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 "the amount of output we could consume without reducing our stock of capital" (also known as the net domestic product)is

Accepted Answer

A) $10,700 billion. 
B) $12,400 billion. 
C) $12,300 billion. 
D) $11,900 billion. 
A) $10,700 billion. 
B) $12,400 billion. 
C) $12,300 billion. 
D) $11,900 billion.

Question 6

Value added is the

Accepted Answer

A) Addition to GDP because nonmarket activities are captured. 
B) Increase in market value of a product that takes place at each stage of the production process. 
C) Difference between nominal GDP and real GDP. 
D) Impact on third parties caused by market activities. 
A) Addition to GDP because nonmarket activities are captured. 
B) Increase in market value of a product that takes place at each stage of the production process. 
C) Difference between nominal GDP and real GDP. 
D) Impact on third parties caused by market activities.

Question 7

National income is a measure of

Accepted Answer

A) How well the economy is doing on a gross basis. 
B) The income earned by the factors of production in producing GDP. 
C) The income received by the factors of production plus depreciation. 
D) The country's future productive capacity. 
A) How well the economy is doing on a gross basis. 
B) The income earned by the factors of production in producing GDP. 
C) The income received by the factors of production plus depreciation. 
D) The country's future productive capacity.

Question 8

Without foreign trade,the dollars used to buy goods and services are included in the circular flow as consumption,investment,and government spending.

Accepted Answer

A) True 
 B)False

Question 9

Nominal GDP is not used to determine recessions because inflation can disguise the occurrence of recessions.

Accepted Answer

A) True 
 B)False

Question 10

What are transfer payments,and how do they make their way into the GDP calculation?

Accepted Answer

Transfer payments are payments to indivi

Question 11

The value of total output must equal the value of total income in an economy for all of the following reasons except

Accepted Answer

A) One person's expenditures on goods and services is another person's income. 
B) Income earned is spent on goods and services,which creates additional production. 
C) For the circular nature of spending and income in the economy. 
D) Government expenditures must equal government revenues. 
A) One person's expenditures on goods and services is another person's income. 
B) Income earned is spent on goods and services,which creates additional production. 
C) For the circular nature of spending and income in the economy. 
D) Government expenditures must equal government revenues.

Question 12

Suppose Blu-Ray players cost consumers $300 and Blu-Ray disks cost consumers $30.What contribution does the production of 250 Blu-Ray players and 3,000 Blu-Ray disks make to the GDP?

Accepted Answer

A) $75,000. 
B) $165,000. 
C) $90,000. 
D) $125,000. 
A) $75,000. 
B) $165,000. 
C) $90,000. 
D) $125,000.

Question 13

According to the hypothetical economy in Figure 5.2,real GDP differs from nominal GDP from 1980 to 2000 because

Accepted Answer

A) Price level increases caused real GDP to increase. 
B) Population growth exceeded output growth. 
C) Inflation caused the dollar value of output to decrease. 
D) Inflation caused the dollar value of output to increase. 
A) Price level increases caused real GDP to increase. 
B) Population growth exceeded output growth. 
C) Inflation caused the dollar value of output to decrease. 
D) Inflation caused the dollar value of output to increase.

Question 14

Real GDP is more accurate than nominal GDP in making comparisons of output over time because

Accepted Answer

A) Nominal GDP may change simply because of price changes over time. 
B) Real GDP is not affected by output changes. 
C) Nominal GDP is the hypothetical output that would be produced at full employment. 
D) Real GDP is not affected by changes in productivity or the size of the labor force. 
A) Nominal GDP may change simply because of price changes over time. 
B) Real GDP is not affected by output changes. 
C) Nominal GDP is the hypothetical output that would be produced at full employment. 
D) Real GDP is not affected by changes in productivity or the size of the labor force.

Question 15

When we calculate GDP,imports are

Accepted Answer

A) Subtracted from total spending because they are part of another country's GDP. 
B) Added to exports because both represent purchases of final goods. 
C) Subtracted from exports to obtain gross exports. 
D) Subtracted from exports and included in gross investment. 
A) Subtracted from total spending because they are part of another country's GDP. 
B) Added to exports because both represent purchases of final goods. 
C) Subtracted from exports to obtain gross exports. 
D) Subtracted from exports and included in gross investment.

Question 16

If real GDP falls from one period to another and the price level stays the same,we can conclude that

Accepted Answer

A) Nominal GDP increased. 
B) Inflation increased. 
C) Nominal GDP also decreased. 
D) NDP also decreased. 
A) Nominal GDP increased. 
B) Inflation increased. 
C) Nominal GDP also decreased. 
D) NDP also decreased.

Question 17

A nation's GDP can be calculated as

Accepted Answer

A) The sum of value added and intermediate goods. 
B) The total value added at all stages of production. 
C) NI plus depreciation. 
D) PI plus depreciation. 
A) The sum of value added and intermediate goods. 
B) The total value added at all stages of production. 
C) NI plus depreciation. 
D) PI plus depreciation.

Question 18

The dollar value of output for an economy must always equal the dollar value of income.

Accepted Answer

A) True 
 B)False

Question 19

The increase in the market value of a good at a particular stage of production is known as

Accepted Answer

A) Profit. 
B) Value added. 
C) Cost based accounting. 
D) The input price. 
A) Profit. 
B) Value added. 
C) Cost based accounting. 
D) The input price.

Question 20

When we calculate GDP,government spending on goods and services makes up approximately

Accepted Answer

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

Exam 5: National Income Accounting

Exports are

Gross investment is the

In the U.S.GDP,imports

Value added is the

National income is a measure of

Without foreign trade,the dollars used to buy goods and services are included in the circular flow as consumption,investment,and government spending.

Nominal GDP is not used to determine recessions because inflation can disguise the occurrence of recessions.

What are transfer payments,and how do they make their way into the GDP calculation?

The value of total output must equal the value of total income in an economy for all of the following reasons except

Suppose Blu-Ray players cost consumers $300 and Blu-Ray disks cost consumers $30.What contribution does the production of 250 Blu-Ray players and 3,000 Blu-Ray disks make to the GDP?

According to the hypothetical economy in Figure 5.2,real GDP differs from nominal GDP from 1980 to 2000 because

Real GDP is more accurate than nominal GDP in making comparisons of output over time because

When we calculate GDP,imports are

If real GDP falls from one period to another and the price level stays the same,we can conclude that

A nation's GDP can be calculated as

The dollar value of output for an economy must always equal the dollar value of income.

The increase in the market value of a good at a particular stage of production is known as

When we calculate GDP,government spending on goods and services makes up approximately

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

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Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

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