Question 1

Disposable income is equal to

Accepted Answer

A) Personal taxes + personal income. 
B) Personal taxes - personal income. 
C) Consumption - saving. 
D) Consumption + saving. 
A) Personal taxes + personal income. 
B) Personal taxes - personal income. 
C) Consumption - saving. 
D) Consumption + saving.

Question 2

In the calculation of real GDP,the value of goods and services is measured in the current prices for each year.

Accepted Answer

A) True 
 B)False

Question 3

Suppose the total market value of all the final goods and services produced in the country of Cannedada was $4 billion in 2008 (measured in 2008 prices)and $5 billion in 2009 (measured in 2009 prices).Which of the following statements is definitely correct?

Accepted Answer

A) Production increased in Cannedada between 2008 and 2009. 
B) Average price levels increased in Cannedada between 2008 and 2009. 
C) Nominal GDP decreased in Cannedada between 2008 and 2009. 
D) The change in real GDP cannot be determined without more information. 
A) Production increased in Cannedada between 2008 and 2009. 
B) Average price levels increased in Cannedada between 2008 and 2009. 
C) Nominal GDP decreased in Cannedada between 2008 and 2009. 
D) The change in real GDP cannot be determined without more information.

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 value of the income aggregate that is defined as "the part of disposable income not spent on current consumption" (also known as savings)is

Accepted Answer

A) -$500 billion. 
B) $500 billion. 
C) $370 billion. 
D) $8,570 billion. 
A) -$500 billion. 
B) $500 billion. 
C) $370 billion. 
D) $8,570 billion.

Question 5

According to the economy in Figure 5.3,net exports

Accepted Answer

A) Made a positive contribution to GDP from 1990 to 2000. 
B) Were a positive number from 1970 to 1990. 
C) Increased the size of GDP from 1970 to 1990. 
D) Remained constant from 1990 to 2000. 
A) Made a positive contribution to GDP from 1990 to 2000. 
B) Were a positive number from 1970 to 1990. 
C) Increased the size of GDP from 1970 to 1990. 
D) Remained constant from 1990 to 2000.

Question 6

Which of the following statements is true?

Accepted Answer

A) The production possibilities of the economy define the limits to real income. 
B) Consumption equals investment. 
C) Market incomes equal business expenditures. 
D) Every dollar spent on goods and services becomes income for the government. 
A) The production possibilities of the economy define the limits to real income. 
B) Consumption equals investment. 
C) Market incomes equal business expenditures. 
D) Every dollar spent on goods and services becomes income for the government.

Question 7

GDP can be calculated by summing up the "value added" at every stage of production.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a component included in the measure of GDP,according to the income approach?

Accepted Answer

A) Interest. 
B) Investment. 
C) Personal savings. 
D) Consumption expenditures. 
A) Interest. 
B) Investment. 
C) Personal savings. 
D) Consumption expenditures.

Question 9

When U.S.net exports are negative,the United States consumes more output than it produces.

Accepted Answer

A) True 
 B)False

Question 10

The addition to the economy's capital stock can be found by

Accepted Answer

A) Subtracting NDP from GDP. 
B) Subtracting depreciation from GDP. 
C) Subtracting depreciation from gross investment. 
D) Subtracting net income from gross investment. 
A) Subtracting NDP from GDP. 
B) Subtracting depreciation from GDP. 
C) Subtracting depreciation from gross investment. 
D) Subtracting net income from gross investment.

Question 11

Ceteris paribus,if imports increase in any given year,

Accepted Answer

A) Exports will increase. 
B) GDP will increase. 
C) GDP will decrease. 
D) NDP will increase. 
A) Exports will increase. 
B) GDP will increase. 
C) GDP will decrease. 
D) NDP will increase.

Question 12

GDP per capita

Accepted Answer

A) Is equal to a nation's GDP divided by its population. 
B) Does not permit comparisons of the economic welfare of different nations. 
C) Is real GDP corrected for price level changes. 
D) Indicates the most efficient use of resources. 
A) Is equal to a nation's GDP divided by its population. 
B) Does not permit comparisons of the economic welfare of different nations. 
C) Is real GDP corrected for price level changes. 
D) Indicates the most efficient use of resources.

Question 13

Which of the following statements is correct concerning GDP and GNP?

Accepted Answer

A) GDP measures output within the nation's borders only. 
B) GNP measures output within the nation's borders only. 
C) GDP measures output produced by a nation's factors even if they are outside the nation's borders. 
D) GNP measures output outside a nation's borders,but not inside it. 
A) GDP measures output within the nation's borders only. 
B) GNP measures output within the nation's borders only. 
C) GDP measures output produced by a nation's factors even if they are outside the nation's borders. 
D) GNP measures output outside a nation's borders,but not inside it.

Question 14

In Figure 5.1,during the 1980-1990 time periods,real GDP was relatively constant but nominal GDP increased.This can be explained by

Accepted Answer

A) Lower average price levels. 
B) Inflation. 
C) Higher levels of production. 
D) A decrease in production per capita. 
A) Lower average price levels. 
B) Inflation. 
C) Higher levels of production. 
D) A decrease in production per capita.

Question 15

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) $6,340 billion. 
B) $6,170 billion. 
C) $6,995 billion. 
D) $7,080 billion. 
A) $6,340 billion. 
B) $6,170 billion. 
C) $6,995 billion. 
D) $7,080 billion.

Question 16

GDP can be calculated by all of the following methods except

Accepted Answer

A) Adding up the spending on goods and services by business,government,households,and foreigners,and subtracting imports. 
B) Adding up the "value added" at every stage of production in the economy. 
C) Adding up all of the receipts of households,government,and business. 
D) Adding up all income and expenses by consumers and businesses. 
A) Adding up the spending on goods and services by business,government,households,and foreigners,and subtracting imports. 
B) Adding up the "value added" at every stage of production in the economy. 
C) Adding up all of the receipts of households,government,and business. 
D) Adding up all income and expenses by consumers and businesses.

Question 17

The stock of capital in the United States can grow only if

Accepted Answer

A) Depreciation is positive. 
B) Gross investment minus depreciation is positive. 
C) GDP minus depreciation is negative. 
D) The production possibilities curve shifts inward toward the origin. 
A) Depreciation is positive. 
B) Gross investment minus depreciation is positive. 
C) GDP minus depreciation is negative. 
D) The production possibilities curve shifts inward toward the origin.

Question 18

Which of the following types of government spending is included in the calculation of GDP?

Accepted Answer

A) Federal spending only. 
B) Federal,state,and local government spending for any purpose. 
C) Federal,state,and local government spending on goods and services only. 
D) Federal,state,and local spending on transfer payments only. 
A) Federal spending only. 
B) Federal,state,and local government spending for any purpose. 
C) Federal,state,and local government spending on goods and services only. 
D) Federal,state,and local spending on transfer payments only.

Question 19

Social Security payments to retired persons are included in

Accepted Answer

A) Both GDP and personal income. 
B) Personal income and disposable income. 
C) National income but not personal income. 
D) National income and subtracted to get personal income. 
A) Both GDP and personal income. 
B) Personal income and disposable income. 
C) National income but not personal income. 
D) National income and subtracted to get personal income.

Question 20

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 total market value of all final goods and services produced in a given time period" (also known as the GDP)is

Accepted Answer

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

Exam 5: National Income Accounting

Disposable income is equal to

In the calculation of real GDP,the value of goods and services is measured in the current prices for each year.

Suppose the total market value of all the final goods and services produced in the country of Cannedada was $4 billion in 2008 (measured in 2008 prices)and $5 billion in 2009 (measured in 2009 prices).Which of the following statements is definitely correct?

According to the economy in Figure 5.3,net exports

Which of the following statements is true?

GDP can be calculated by summing up the "value added" at every stage of production.

Which of the following is a component included in the measure of GDP,according to the income approach?

When U.S.net exports are negative,the United States consumes more output than it produces.

The addition to the economy's capital stock can be found by

Ceteris paribus,if imports increase in any given year,

GDP per capita

Which of the following statements is correct concerning GDP and GNP?

In Figure 5.1,during the 1980-1990 time periods,real GDP was relatively constant but nominal GDP increased.This can be explained by

GDP can be calculated by all of the following methods except

The stock of capital in the United States can grow only if

Which of the following types of government spending is included in the calculation of GDP?

Social Security payments to retired persons are included in

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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