Question 1

When an economy's production capacity is expanding:

Accepted Answer

A) nominal GDP, but not necessarily real GDP, is rising. 
B) net exports is always a positive amount. 
C) disposable income exceeds personal income. 
D) gross investment exceeds depreciation. 
A) nominal GDP, but not necessarily real GDP, is rising. 
B) net exports is always a positive amount. 
C) disposable income exceeds personal income. 
D) gross investment exceeds depreciation.

Question 2

All expenditures on new construction are included as investment in calculating GDP.

Accepted Answer

A) True 
 B)False

Question 3

All figures are in billions of dollars.   Refer to the above information.Canadian imports:

Accepted Answer

A) cannot be calculated 
B) are $26. 
C) are $16. 
D) are $11. 
A) cannot be calculated 
B) are $26. 
C) are $16. 
D) are $11.

Question 4

The term "real GDP" refers to:

Accepted Answer

A) the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. 
B) GDP data which embody changes in the price level, but not changes in physical output. 
C) GDP data which reflect changes in both physical output and the price level. 
D) GDP data which have been adjusted for changes in the price level. 
A) the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. 
B) GDP data which embody changes in the price level, but not changes in physical output. 
C) GDP data which reflect changes in both physical output and the price level. 
D) GDP data which have been adjusted for changes in the price level.

Question 5

Nondurable goods are products:

Accepted Answer

A) with expected lives of over three years. 
B) with expected lives of less than three years. 
C) with expected lives of over 2 years. 
D) with expected lives of under 2 years. 
A) with expected lives of over three years. 
B) with expected lives of less than three years. 
C) with expected lives of over 2 years. 
D) with expected lives of under 2 years.

Question 6

Economists define investment to include:

Accepted Answer

A) any increase in business inventories. 
B) the addition of cash to a savings account. 
C) the purchase of common or preferred stock. 
D) the purchase of any durable good, for example, an automobile or a refrigerator. 
A) any increase in business inventories. 
B) the addition of cash to a savings account. 
C) the purchase of common or preferred stock. 
D) the purchase of any durable good, for example, an automobile or a refrigerator.

Question 7

Welfare payments to families with dependent children are included in GDP.

Accepted Answer

A) True 
 B)False

Question 8

In an economy, the value of inventories rose from $275 billion in 2020 to $300 billion in 2021.In calculating the total investment for 2021, national income accountants would increase it by $25 billion.

Accepted Answer

A) True 
 B)False

Question 9

Disposable income differs from personal income by:

Accepted Answer

A) personal taxes. 
B) personal saving. 
C) transfer payments. 
D) personal consumption expenditures. 
A) personal taxes. 
B) personal saving. 
C) transfer payments. 
D) personal consumption expenditures.

Question 10

Durable goods are products with expected lives of less than three years.

Accepted Answer

A) True 
 B)False

Question 11

In comparing GDP data over a period of years a difference between nominal and real GDP may arise because:

Accepted Answer

A) of changes in our trade deficits and surpluses. 
B) the length of the workweek has declined historically. 
C) the price level may change over time. 
D) depreciation may be greater or smaller than gross investment. 
A) of changes in our trade deficits and surpluses. 
B) the length of the workweek has declined historically. 
C) the price level may change over time. 
D) depreciation may be greater or smaller than gross investment.

Question 12

GDP excludes most non-market transactions.Therefore, GDP tends to:

Accepted Answer

A) underestimate the rate of inflation in the economy. 
B) overestimate the rate of inflation in the economy. 
C) overestimate the amount of production of the economy. 
D) underestimate the amount of production in the economy. 
A) underestimate the rate of inflation in the economy. 
B) overestimate the rate of inflation in the economy. 
C) overestimate the amount of production of the economy. 
D) underestimate the amount of production in the economy.

Question 13

GDP excludes:

Accepted Answer

A) the market value of household production. 
B) the production of illegal goods. 
C) off-the-books production. 
D) all of the above. 
A) the market value of household production. 
B) the production of illegal goods. 
C) off-the-books production. 
D) all of the above.

Question 14

Nominal GDP is adjusted for price changes through the use of:

Accepted Answer

A) the Consumer Price Index (CPI). 
B) the Producer Price Index (PPI). 
C) the GDP price index. 
D) exchange rates. 
A) the Consumer Price Index (CPI). 
B) the Producer Price Index (PPI). 
C) the GDP price index. 
D) exchange rates.

Question 15

For the above economy, the real GDP in year 3 is:

Accepted Answer

A) $520 
B) $485 
C) $576 
D) $480 
A) $520 
B) $485 
C) $576 
D) $480

Question 16

Refer to the information below.Personal income is: All figures are in billions of dollars.

Accepted Answer

A) $184 
B) $221 
C) $202 
D) $228 
A) $184 
B) $221 
C) $202 
D) $228

Question 17

The fact that nominal GDP has risen faster than real GDP:

Accepted Answer

A) suggests that the base year of the GDP price index has been shifted. 
B) tells us nothing about what has happened to the price level. 
C) suggests that the general price level has fallen. 
D) suggests that the general price level has risen. 
A) suggests that the base year of the GDP price index has been shifted. 
B) tells us nothing about what has happened to the price level. 
C) suggests that the general price level has fallen. 
D) suggests that the general price level has risen.

Question 18

In national income accounting, G stands for:

Accepted Answer

A) government purchases. 
B) gross investment. 
C) government transfer payments. 
D) gross saving. 
A) government purchases. 
B) gross investment. 
C) government transfer payments. 
D) gross saving.

Question 19

Assume an economy which is producing only one product.Output and price data for a three-year period are as follows.   Refer to the above data.If year 2 is chosen as the base year, real GDP for year 1 is:

Accepted Answer

A) $25 
B) $100 
C) $50 
D) $80 
A) $25 
B) $100 
C) $50 
D) $80

Question 20

Profits of private corporations are divided into:

Accepted Answer

A) corporate income taxes, dividends and undistributed corporate profits. 
B) corporate income taxes, investment and distributed corporate profits. 
C) dividends, distributed and undistributed corporate profits. 
D) supplementary labour income, dividends, and distributed corporate profits. 
A) corporate income taxes, dividends and undistributed corporate profits. 
B) corporate income taxes, investment and distributed corporate profits. 
C) dividends, distributed and undistributed corporate profits. 
D) supplementary labour income, dividends, and distributed corporate profits.

Exam 7: B: Measuring the Economys Output

When an economy's production capacity is expanding:

All expenditures on new construction are included as investment in calculating GDP.

All figures are in billions of dollars. Refer to the above information.Canadian imports:

The term "real GDP" refers to:

Nondurable goods are products:

Economists define investment to include:

Welfare payments to families with dependent children are included in GDP.

In an economy, the value of inventories rose from $275 billion in 2020 to $300 billion in 2021.In calculating the total investment for 2021, national income accountants would increase it by $25 billion.

Disposable income differs from personal income by:

Durable goods are products with expected lives of less than three years.

In comparing GDP data over a period of years a difference between nominal and real GDP may arise because:

GDP excludes most non-market transactions.Therefore, GDP tends to:

GDP excludes:

Nominal GDP is adjusted for price changes through the use of:

For the above economy, the real GDP in year 3 is:

Refer to the information below.Personal income is: All figures are in billions of dollars.

The fact that nominal GDP has risen faster than real GDP:

In national income accounting, G stands for:

Assume an economy which is producing only one product.Output and price data for a three-year period are as follows. Refer to the above data.If year 2 is chosen as the base year, real GDP for year 1 is:

Profits of private corporations are divided into:

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

Filters