Question 1

The purpose of chain-weighted price adjustments in the calculation of GDP is to

Accepted Answer

A) Adjust for changes in relative prices. 
B) Adjust for changes in average prices. 
C) Adjust for changes in production. 
D) Convert NDP to GDP. 
A) Adjust for changes in relative prices. 
B) Adjust for changes in average prices. 
C) Adjust for changes in production. 
D) Convert NDP to GDP.

Question 2

Explain the difference between intermediate goods and final goods and give an example of each.

Accepted Answer

Final goods are goods that are ready to

Question 3

The account that gives the most accurate understanding of the economy's potential for growth over the long term is

Accepted Answer

A) GDP. 
B) NDP. 
C) NI. 
D) GNP. 
A) GDP. 
B) NDP. 
C) NI. 
D) GNP.

Question 4

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,net exports are

Accepted Answer

A) $740 billion. 
B) $825 billion. 
C) -$85 billion. 
D) $85 billion. 
A) $740 billion. 
B) $825 billion. 
C) -$85 billion. 
D) $85 billion.

Question 5

A computer manufacturer sells laptops to retail stores for $450 each.If the manufacturer pays $200 for all of the components in each laptop and $75 in wages to it's workers,the value added to each computer by manufacturing is

Accepted Answer

A) $450. 
B) $250. 
C) $175. 
D) $75. 
A) $450. 
B) $250. 
C) $175. 
D) $75.

Question 6

To measure an economy's output adjusted for changes in the price level,one would use

Accepted Answer

A) GDP per capita. 
B) Value added. 
C) Real GDP. 
D) Nominal GDP. 
A) GDP per capita. 
B) Value added. 
C) Real GDP. 
D) Nominal GDP.

Question 7

For an economy with only two goods,skate boards can be added to bicycles to compute the GDP by

Accepted Answer

A) Multiplying output by price and adding the resulting dollar values. 
B) Dividing output by price and adding the resulting dollar values. 
C) Multiplying dollar values of output by price and adding the result. 
D) Dividing dollar values of output by price and adding the result. 
A) Multiplying output by price and adding the resulting dollar values. 
B) Dividing output by price and adding the resulting dollar values. 
C) Multiplying dollar values of output by price and adding the result. 
D) Dividing dollar values of output by price and adding the result.

Question 8

National income accounts assist

Accepted Answer

A) Market investors in making more profitable investments. 
B) Individuals in maximizing their incomes. 
C) Economic policy makers in formulating policies and evaluating performance. 
D) Analysts in measuring the performance of the stock market. 
A) Market investors in making more profitable investments. 
B) Individuals in maximizing their incomes. 
C) Economic policy makers in formulating policies and evaluating performance. 
D) Analysts in measuring the performance of the stock market.

Question 9

A major diversion that is not of the income flow to the private sector is

Accepted Answer

A) Indirect business taxes. 
B) Investment. 
C) Wages. 
D) None of the choices are correct. 
A) Indirect business taxes. 
B) Investment. 
C) Wages. 
D) None of the choices are correct.

Question 10

Disposable income is what households have to spend or to save.

Accepted Answer

A) True 
 B)False

Question 11

Comparisons of per capita GDP across international boundaries provide information on the distribution of GDP within each country.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not a final good or service?

Accepted Answer

A) A refrigerator purchased by a home owner. 
B) Paper purchased by a textbook company. 
C) A computer purchased by a local middle school. 
D) A flu shot purchased by a teacher. 
A) A refrigerator purchased by a home owner. 
B) Paper purchased by a textbook company. 
C) A computer purchased by a local middle school. 
D) A flu shot purchased by a teacher.

Question 13

In periods of rising prices,percentage increases in nominal GDP will

Accepted Answer

A) Exceed percentage increases in real GDP. 
B) Equal percentage increases in real GDP. 
C) Be less than percentage increases in real GDP. 
D) Not change in relationship to real GDP. 
A) Exceed percentage increases in real GDP. 
B) Equal percentage increases in real GDP. 
C) Be less than percentage increases in real GDP. 
D) Not change in relationship to real GDP.

Question 14

A nation's GDP is

Accepted Answer

A) C + I + G + (X - M). 
B) The sum of value added at some stages of the production process. 
C) The total market value of all intermediate goods and services. 
D) The total amount of money in circulation. 
A) C + I + G + (X - M). 
B) The sum of value added at some stages of the production process. 
C) The total market value of all intermediate goods and services. 
D) The total amount of money in circulation.

Question 15

The measure of GDP is

Accepted Answer

A) Geographically focused. 
B) Globally focused. 
C) Vertically focused. 
D) Horizontally focused. 
A) Geographically focused. 
B) Globally focused. 
C) Vertically focused. 
D) Horizontally focused.

Question 16

The base year for the calculation of real GDP for the hypothetical economy in Figure 5.2 is closest to

Accepted Answer

A) 1960. 
B) 1980. 
C) 1990. 
D) 2000. 
A) 1960. 
B) 1980. 
C) 1990. 
D) 2000.

Question 17

If for a given year gross investment is $300 billion and depreciation is $75 billion,then,for that year,the capital stock ________ and net investment was ________.

Accepted Answer

A) Increased by $250 billion;$225 billion 
B) Increased by $225 billion;$225 billion 
C) Decreased by $225 billion;$300 billion 
D) Decreased by $300 billion;$300 billion 
A) Increased by $250 billion;$225 billion 
B) Increased by $225 billion;$225 billion 
C) Decreased by $225 billion;$300 billion 
D) Decreased by $300 billion;$300 billion

Question 18

The measure of what households receive after personal income tax is deducted is

Accepted Answer

A) Gross domestic product. 
B) Personal income. 
C) National income. 
D) Disposable income. 
A) Gross domestic product. 
B) Personal income. 
C) National income. 
D) Disposable income.

Question 19

Inflation is

Accepted Answer

A) The increase in the market value of a product that takes place at each stage of the production process. 
B) Included in the calculation of real GDP. 
C) An increase in the average level of prices of goods and services. 
D) A decrease in the price of all goods and services. 
A) The increase in the market value of a product that takes place at each stage of the production process. 
B) Included in the calculation of real GDP. 
C) An increase in the average level of prices of goods and services. 
D) A decrease in the price of all goods and services.

Question 20

If GDP grows more rapidly than population for a particular country over a period of time,then we can determine that

Accepted Answer

A) Real GDP has decreased. 
B) All citizens of this country are better off. 
C) GDP per capita has increased. 
D) GDP must rise at a slower rate in the future. 
A) Real GDP has decreased. 
B) All citizens of this country are better off. 
C) GDP per capita has increased. 
D) GDP must rise at a slower rate in the future.

Exam 5: National Income Accounting

The purpose of chain-weighted price adjustments in the calculation of GDP is to

Explain the difference between intermediate goods and final goods and give an example of each.

The account that gives the most accurate understanding of the economy's potential for growth over the long term is

A computer manufacturer sells laptops to retail stores for $450 each.If the manufacturer pays $200 for all of the components in each laptop and $75 in wages to it's workers,the value added to each computer by manufacturing is

To measure an economy's output adjusted for changes in the price level,one would use

For an economy with only two goods,skate boards can be added to bicycles to compute the GDP by

National income accounts assist

A major diversion that is not of the income flow to the private sector is

Disposable income is what households have to spend or to save.

Comparisons of per capita GDP across international boundaries provide information on the distribution of GDP within each country.

Which of the following is not a final good or service?

In periods of rising prices,percentage increases in nominal GDP will

A nation's GDP is

The measure of GDP is

The base year for the calculation of real GDP for the hypothetical economy in Figure 5.2 is closest to

If for a given year gross investment is $300 billion and depreciation is $75 billion,then,for that year,the capital stock ________ and net investment was ________.

The measure of what households receive after personal income tax is deducted is

Inflation is

If GDP grows more rapidly than population for a particular country over a period of time,then we can determine that

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

Filters

If for a given year gross investment is $300 billion and depreciation is $75 billion,then,for that year,the capital stock and net investment was .