Question 1

Value added is the value of a firm's output minus:

Accepted Answer

A) the value of intermediate goods purchased from other firms. 
B) the compensation it pays to employees. 
C) the value of its capital goods. 
D) its depreciation. 
A) the value of intermediate goods purchased from other firms. 
B) the compensation it pays to employees. 
C) the value of its capital goods. 
D) its depreciation.

Question 2

An example of an intermediate good or service would be:

Accepted Answer

A) bricks bought by a homeowner for constructing a patio. 
B) sacks of groceries bought by a dentist for his family. 
C) a car bought by a household for commuting to work. 
D) a desk bought by an accountant for her office. 
A) bricks bought by a homeowner for constructing a patio. 
B) sacks of groceries bought by a dentist for his family. 
C) a car bought by a household for commuting to work. 
D) a desk bought by an accountant for her office.

Question 3

Gross domestic product measures the monetary value of:

Accepted Answer

A) finished goods. 
B) raw materials. 
C) intermediate goods. 
D) Taxes 
A) finished goods. 
B) raw materials. 
C) intermediate goods. 
D) Taxes

Question 4

A price index is:

Accepted Answer

A) a comparison of the price of a market basket from a fixed point of reference. 
B) a comparison of real GDP in one period relative to another. 
C) the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period. 
D) a ratio of real GDP to nominal GDP. 
A) a comparison of the price of a market basket from a fixed point of reference. 
B) a comparison of real GDP in one period relative to another. 
C) the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period. 
D) a ratio of real GDP to nominal GDP.

Question 5

In an economy, the value of inventories rose from $100 billion in 2016 to $150 billion in 2017.In calculating the total investment for 2017, national income accountants would:

Accepted Answer

A) decrease it by $50 billion. 
B) increase it by $50 billion. 
C) decrease it by $100 billion. 
D) increase it by $150 billion. 
A) decrease it by $50 billion. 
B) increase it by $50 billion. 
C) decrease it by $100 billion. 
D) increase it by $150 billion.

Question 6

(GDP figures are in billions of dollars.)   Refer to the above table.What was real GDP in Year 2?

Accepted Answer

A) $4,820 billion 
B) $4,875 billion 
C) $4,911 billion 
D) $5,320 billion 
A) $4,820 billion 
B) $4,875 billion 
C) $4,911 billion 
D) $5,320 billion

Question 7

In November 2017, General Motors produced an automobile that was delivered to a local dealership in December 2017.The auto was sold to Sharon Smith for personal use in February 2018.Following national income accounting practices, this auto would be counted as:

Accepted Answer

A) consumption in 2017 and 2018. 
B) consumption in 2017 and investment in 2018. 
C) disinvestment in 2017 and consumption in 2018. 
D) investment in 2017 and disinvestment in 2018. 
A) consumption in 2017 and 2018. 
B) consumption in 2017 and investment in 2018. 
C) disinvestment in 2017 and consumption in 2018. 
D) investment in 2017 and disinvestment in 2018.

Question 8

In one-year nominal GDP was $286 billion and the price index was 88.Real GDP in that year was:

Accepted Answer

A) $252 billion. 
B) $325 billion. 
C) $308 billion. 
D) $262 billion. 
A) $252 billion. 
B) $325 billion. 
C) $308 billion. 
D) $262 billion.

Question 9

Suppose nominal GDP was $360 billion in 2010 and $450 billion in 2020.The appropriate price index was 100 in 2010 and 120 in 2020.It can be concluded that between 2010 and 2020 real GDP:

Accepted Answer

A) increased by about $15 billion. 
B) decreased by about $32 billion. 
C) increased by about $90 billion. 
D) increased by about $117 billion. 
A) increased by about $15 billion. 
B) decreased by about $32 billion. 
C) increased by about $90 billion. 
D) increased by about $117 billion.

Question 10

Real GDP measures:

Accepted Answer

A) current output at current prices. 
B) current output at base year prices. 
C) base year output at current prices. 
D) base year output at current exchange rates. 
A) current output at current prices. 
B) current output at base year prices. 
C) base year output at current prices. 
D) base year output at current exchange rates.

Question 11

Environmental pollution is accounted for in:

Accepted Answer

A) GDP. 
B) DI. 
C) PI. 
D) None of these. 
A) GDP. 
B) DI. 
C) PI. 
D) None of these.

Question 12

Which would be considered an investment according to economists?

Accepted Answer

A) the purchase of newly-issued shares of stock in Microsoft 
B) the construction of a new computer chip factory by Intel 
C) the purchase of shares of stock by Fidelity, a mutual fund company 
D) the sale of government bonds by the nation's central bank 
A) the purchase of newly-issued shares of stock in Microsoft 
B) the construction of a new computer chip factory by Intel 
C) the purchase of shares of stock by Fidelity, a mutual fund company 
D) the sale of government bonds by the nation's central bank

Question 13

A business buys $7,000 worth of resources to produce a product.The business makes 150 units of the product and each of them sells for $90.The value added by the business to these products is:

Accepted Answer

A) $13,500 
B) $6,500 
C) $7,000 
D) $6,850 
A) $13,500 
B) $6,500 
C) $7,000 
D) $6,850

Question 14

Gross investment refers to:

Accepted Answer

A) private investment minus public investment. 
B) net investment plus replacement investment. 
C) net investment after it has been "inflated" for changes in the price level. 
D) net investment plus net exports. 
A) private investment minus public investment. 
B) net investment plus replacement investment. 
C) net investment after it has been "inflated" for changes in the price level. 
D) net investment plus net exports.

Question 15

Refer to the information below.The capital consumption allowance: All figures are in billions of dollars.

Accepted Answer

A) cannot be calculated. 
B) is $23. 
C) is $14. 
D) is $32. 
A) cannot be calculated. 
B) is $23. 
C) is $14. 
D) is $32.

Question 16

The growth of GDP may understate changes in the economy's well-being over time if the:

Accepted Answer

A) distribution of income becomes increasingly unequal. 
B) quality of products and services improves. 
C) environment deteriorates because of pollution. 
D) amount of leisure decreases. 
A) distribution of income becomes increasingly unequal. 
B) quality of products and services improves. 
C) environment deteriorates because of pollution. 
D) amount of leisure decreases.

Question 17

GDP measured using current prices is called:

Accepted Answer

A) nominal GDP. 
B) real GDP. 
C) constant GDP. 
D) deflated GDP. 
A) nominal GDP. 
B) real GDP. 
C) constant GDP. 
D) deflated GDP.

Question 18

If nominal GDP rises:

Accepted Answer

A) real GDP may either rise or fall. 
B) we can be certain that the price level has risen. 
C) real GDP must fall. 
D) real GDP must also rise. 
A) real GDP may either rise or fall. 
B) we can be certain that the price level has risen. 
C) real GDP must fall. 
D) real GDP must also rise.

Question 19

Net income from farms and unincorporated businesses is defined as:

Accepted Answer

A) the earnings of investment of corporate businesses. 
B) the earnings of corporate stock holders. 
C) the earnings of government received from farmers. 
D) the earnings of farmers and proprietors from their own businesses. 
A) the earnings of investment of corporate businesses. 
B) the earnings of corporate stock holders. 
C) the earnings of government received from farmers. 
D) the earnings of farmers and proprietors from their own businesses.

Question 20

The table below indicates the price and output data over a five-year period for an economy that produces only one good.   Refer to the above data.If year 2 is the base year, the percentage increase in real GDP from year 2 to year 4 is:

Accepted Answer

A) 40 percent. 
B) 60 percent. 
C) 100 percent. 
D) 80 percent. 
A) 40 percent. 
B) 60 percent. 
C) 100 percent. 
D) 80 percent.

Exam 7: B: Measuring the Economys Output

Value added is the value of a firm's output minus:

An example of an intermediate good or service would be:

Gross domestic product measures the monetary value of:

A price index is:

In an economy, the value of inventories rose from $100 billion in 2016 to $150 billion in 2017.In calculating the total investment for 2017, national income accountants would:

(GDP figures are in billions of dollars.) Refer to the above table.What was real GDP in Year 2?

In November 2017, General Motors produced an automobile that was delivered to a local dealership in December 2017.The auto was sold to Sharon Smith for personal use in February 2018.Following national income accounting practices, this auto would be counted as:

In one-year nominal GDP was $286 billion and the price index was 88.Real GDP in that year was:

Suppose nominal GDP was $360 billion in 2010 and $450 billion in 2020.The appropriate price index was 100 in 2010 and 120 in 2020.It can be concluded that between 2010 and 2020 real GDP:

Real GDP measures:

Environmental pollution is accounted for in:

Which would be considered an investment according to economists?

A business buys $7,000 worth of resources to produce a product.The business makes 150 units of the product and each of them sells for $90.The value added by the business to these products is:

Gross investment refers to:

Refer to the information below.The capital consumption allowance: All figures are in billions of dollars.

The growth of GDP may understate changes in the economy's well-being over time if the:

GDP measured using current prices is called:

If nominal GDP rises:

Net income from farms and unincorporated businesses is defined as:

The table below indicates the price and output data over a five-year period for an economy that produces only one good. Refer to the above data.If year 2 is the base year, the percentage increase in real GDP from year 2 to year 4 is:

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

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