Question 1

Which of the following items is a final good?

Accepted Answer

A)  mustard in a deli 
B)  tin purchased by a can company 
C)  a sweater purchased by someone in a department store 
D)  a and b 
E)  a, b, and c 
A)  mustard in a deli 
B)  tin purchased by a can company 
C)  a sweater purchased by someone in a department store 
D)  a and b 
E)  a, b, and c

Question 2

In the United States,the largest expenditure component in GDP is

Accepted Answer

A)  gross private domestic investment. 
B)  government purchases of goods and services. 
C)  consumption expenditures. 
D)  net exports. 
E)  none of the above 
A)  gross private domestic investment. 
B)  government purchases of goods and services. 
C)  consumption expenditures. 
D)  net exports. 
E)  none of the above

Question 3

Which of the following is a nonmarket good?

Accepted Answer

A)  the corn you grow in your home garden and consume 
B)  the clothes you sew and sell to a neighbor who pays you by writing you a check 
C)  the self-portrait hanging in your den 
D)  a and c 
E)  a, b, and c 
A)  the corn you grow in your home garden and consume 
B)  the clothes you sew and sell to a neighbor who pays you by writing you a check 
C)  the self-portrait hanging in your den 
D)  a and c 
E)  a, b, and c

Question 4

Macroeconomists define consumption as

Accepted Answer

A)  purchases by the business sector. 
B)  wearing away and breakdown of capital goods. 
C)  the difference between imports and exports. 
D)  purchases by the household sector. 
A)  purchases by the business sector. 
B)  wearing away and breakdown of capital goods. 
C)  the difference between imports and exports. 
D)  purchases by the household sector.

Question 5

Corporate profits can be broken into three categories: dividends,undistributed profits,and corporate profits taxes.

Accepted Answer

A) True 
 B)False

Question 6

Country A has a higher GDP than country B.What does this mean?

Accepted Answer

A)  It means that on a per-capita basis the residents of country A are relatively better off (in terms of the goods and services they have available to them) than the residents of country B. 
B)  It means that on a per-capita basis the residents of country A are richer than the residents of country B. 
C)  It means that more goods and services were produced in country A than country B. 
D)  It means that the total market value of the final goods and services produced in country A is greater than the total market value of the final goods and services produced in country B. 
E)  a and d 
A)  It means that on a per-capita basis the residents of country A are relatively better off (in terms of the goods and services they have available to them) than the residents of country B. 
B)  It means that on a per-capita basis the residents of country A are richer than the residents of country B. 
C)  It means that more goods and services were produced in country A than country B. 
D)  It means that the total market value of the final goods and services produced in country A is greater than the total market value of the final goods and services produced in country B. 
E)  a and d

Question 7

Exhibit 7-5
  
-Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 1 and year 2?

Accepted Answer

A)  7.3% 
B)  8.3% 
C)  5.3% 
D)  6.8% 
A)  7.3% 
B)  8.3% 
C)  5.3% 
D)  6.8%

Question 8

If the GDP in one year is greater than it was in the previous year,then economic growth must have occurred.

Accepted Answer

A) True 
 B)False

Question 9

List and explain the two different approaches used to measure GDP.

Accepted Answer

The two different approaches are: the ex

Question 10

Sales tax is an example of an indirect business tax.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 7-2
  
-Refer to Exhibit 7-2.GDP in 2012 is

Accepted Answer

A)  $49. 
B)  $51. 
C)  $86. 
D)  $92. 
E)  not possible to calculate without the CPI. 
A)  $49. 
B)  $51. 
C)  $86. 
D)  $92. 
E)  not possible to calculate without the CPI.

Question 12

Look at the following data: consumption = $915 billion; exports = $40 billion; imports = $33 billion; inventory investment = $123 billion; fixed investment = $500 billion; government purchases = $300 billion. GDP is equal to

Accepted Answer

A)  $1,632 billion. 
B)  $1,466 billion. 
C)  $1,911 billion. 
D)  $1,845 billion. 
E)  none of the above 
A)  $1,632 billion. 
B)  $1,466 billion. 
C)  $1,911 billion. 
D)  $1,845 billion. 
E)  none of the above

Question 13

Why do economists prefer to compare Real GDP figures for various years instead of GDP figures?

Accepted Answer

A)  Because when GDP in one year is higher than in another year, there is no way to tell why it is higher. Is it because output is higher, prices are higher, etc.? This is not the case with Real GDP. If Real GDP is higher in one year than in another year, it is because output is higher. 
B)  Because when GDP in one year is higher than in another year, there is no way of knowing if the quality of goods produced is higher in one year than the other. This is not the case with Real GDP. If Real GDP is higher in one year than in another year, it is because the quality of the goods produced is higher. 
C)  Actually the question is incorrect. Economists prefer to compare GDP figures instead of Real GDP figures. 
D)  Because Real GDP is easier to compute than GDP. 
E)  Because when GDP in one year is higher than in another year, there is no way to tell if the quality of life is higher in one year than the other. This is not the case with Real GDP. If Real GDP is higher in one year than in another year, it is because the quality of life is higher. 
A)  Because when GDP in one year is higher than in another year, there is no way to tell why it is higher. Is it because output is higher, prices are higher, etc.? This is not the case with Real GDP. If Real GDP is higher in one year than in another year, it is because output is higher. 
B)  Because when GDP in one year is higher than in another year, there is no way of knowing if the quality of goods produced is higher in one year than the other. This is not the case with Real GDP. If Real GDP is higher in one year than in another year, it is because the quality of the goods produced is higher. 
C)  Actually the question is incorrect. Economists prefer to compare GDP figures instead of Real GDP figures. 
D)  Because Real GDP is easier to compute than GDP. 
E)  Because when GDP in one year is higher than in another year, there is no way to tell if the quality of life is higher in one year than the other. This is not the case with Real GDP. If Real GDP is higher in one year than in another year, it is because the quality of life is higher.

Question 14

In the business cycle,what is the difference between the recovery phase and the expansion phase?

Accepted Answer

A)  The expansion phase occurs in the rising portion of the business cycle, while the recovery phase occurs in the falling portion of the business cycle. 
B)  The expansion phase occurs in the falling portion of the business cycle, while the recovery phase occurs in the rising portion of the business cycle. 
C)  The expansion phase is the period when Real GDP increases beyond the recovery phase. 
D)  The expansion phase must always preceed the recovery phase. 
A)  The expansion phase occurs in the rising portion of the business cycle, while the recovery phase occurs in the falling portion of the business cycle. 
B)  The expansion phase occurs in the falling portion of the business cycle, while the recovery phase occurs in the rising portion of the business cycle. 
C)  The expansion phase is the period when Real GDP increases beyond the recovery phase. 
D)  The expansion phase must always preceed the recovery phase.

Question 15

Corporate profits is the largest category of national income.

Accepted Answer

A) True 
 B)False

Question 16

Capital consumption allowance refers to

Accepted Answer

A)  capital goods being used up in production through natural wear, obsolescence, and accidental destruction. 
B)  people sending money between countries. 
C)  the purchase of used factories. 
D)  the purchase of goods that allow households to consume more services. 
A)  capital goods being used up in production through natural wear, obsolescence, and accidental destruction. 
B)  people sending money between countries. 
C)  the purchase of used factories. 
D)  the purchase of goods that allow households to consume more services.

Question 17

Suppose that nondurable goods spending is $200 billion,durable goods spending is $400 billion,new residential housing spending is $500 billion,and spending on services is $700 billion. What does consumption equal?

Accepted Answer

A)  $600 billion 
B)  $1,100 billion 
C)  $1,800 billion 
D)  $1,300 billion 
E)  There is not enough information to answer this question. 
A)  $600 billion 
B)  $1,100 billion 
C)  $1,800 billion 
D)  $1,300 billion 
E)  There is not enough information to answer this question.

Question 18

Exhibit 7-3
  
-Refer to Exhibit 7-3. Consumption is equal to

Accepted Answer

A)  $3,700. 
B)  $9,000. 
C)  $10,150. 
D)  $8,200. 
E)  $9,700. 
A)  $3,700. 
B)  $9,000. 
C)  $10,150. 
D)  $8,200. 
E)  $9,700.

Question 19

Underground activities are not counted in GDP because

Accepted Answer

A)  some underground activities are illegal and the government doesn't want to place, for instance, drug dealers on an equal footing with small businesses. 
B)  there are no written records of underground activities. 
C)  of a decision made in the 1930s and no one has gotten around to changing it yet. 
D)  although it is possible to accurately measure underground activities, it is harder than measuring above-ground activities because with the latter, one doesn't have to dig as deep. 
A)  some underground activities are illegal and the government doesn't want to place, for instance, drug dealers on an equal footing with small businesses. 
B)  there are no written records of underground activities. 
C)  of a decision made in the 1930s and no one has gotten around to changing it yet. 
D)  although it is possible to accurately measure underground activities, it is harder than measuring above-ground activities because with the latter, one doesn't have to dig as deep.

Question 20

The GDP of country A may be higher than that of country B because the workers in country A work more hours per week than workers in country B.

Accepted Answer

A) True 
 B)False

Exam 7: Macroeconomic Measurements: GDP and Real GDP

Which of the following items is a final good?

In the United States,the largest expenditure component in GDP is

Which of the following is a nonmarket good?

Macroeconomists define consumption as

Corporate profits can be broken into three categories: dividends,undistributed profits,and corporate profits taxes.

Country A has a higher GDP than country B.What does this mean?

Exhibit 7-5 -Refer to Exhibit 7-5. What was Country Z's economic growth rate between year 1 and year 2?

If the GDP in one year is greater than it was in the previous year,then economic growth must have occurred.

List and explain the two different approaches used to measure GDP.

Sales tax is an example of an indirect business tax.

Exhibit 7-2 -Refer to Exhibit 7-2.GDP in 2012 is

Look at the following data: consumption = $915 billion; exports = $40 billion; imports = $33 billion; inventory investment = $123 billion; fixed investment = $500 billion; government purchases = $300 billion. GDP is equal to

Why do economists prefer to compare Real GDP figures for various years instead of GDP figures?

In the business cycle,what is the difference between the recovery phase and the expansion phase?

Corporate profits is the largest category of national income.

Capital consumption allowance refers to

Suppose that nondurable goods spending is $200 billion,durable goods spending is $400 billion,new residential housing spending is $500 billion,and spending on services is $700 billion. What does consumption equal?

Exhibit 7-3 -Refer to Exhibit 7-3. Consumption is equal to

Underground activities are not counted in GDP because

The GDP of country A may be higher than that of country B because the workers in country A work more hours per week than workers in country B.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

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