Question 1

The U.S. experienced a severe depression during:

Accepted Answer

A)  the March 2001 to November 2001 period. 
B)  the 1973- 1975 period. 
C)  the 1929- 1933 period. 
D)  all of the above. 
A)  the March 2001 to November 2001 period. 
B)  the 1973- 1975 period. 
C)  the 1929- 1933 period. 
D)  all of the above. C

Question 2

Briefly explain under what condition, if any, net investment can be negative. If so, explain what this implies about the capital stock.

Accepted Answer

Net investment equals gross investment minus depreciation. If depreciation is greater than gross investment, net investment will be negative. In such a situation, there is insufficient gross investment to offset the effects of the depreciation of the capital stock. In this case, the capital stock would diminish in size during that period.

Question 3

If you take a walk in the park during your coffee break, this activity _______ the measurement of real GDP and _______ social welfare.

Accepted Answer

A)  decreases; has no effect on 
B)  has no effect on; increases 
C)  increases; decreases 
D)  decreases; increases. 
A)  decreases; has no effect on 
B)  has no effect on; increases 
C)  increases; decreases 
D)  decreases; increases. B

Question 4

If net national product is $250 billion and indirect taxes are $5 billion, then national income is:

Accepted Answer

A)  $245 billion. 
B)  $285 billion. 
C)  $255 billion. 
D)  $405 billion. 
A)  $245 billion. 
B)  $285 billion. 
C)  $255 billion. 
D)  $405 billion.

Question 5

Depreciation is:

Accepted Answer

A)  the amount of decline in business inventories. 
B)  the additional capital stock in a year. 
C)  the wear and tear of capital as it is used in production. 
D)  the decrease in the overall price level. 
A)  the amount of decline in business inventories. 
B)  the additional capital stock in a year. 
C)  the wear and tear of capital as it is used in production. 
D)  the decrease in the overall price level.

Question 6

Suppose you buy a $40,000 BMW from your local dealership. The car was built completely in Germany. Assuming no dealer mark- up on the car, how would your purchase be recorded in US GDP accounts? By how much would US GDP increase as a result of your purchase?

Accepted Answer

Your purchase increases Consumption Expe

Question 7

Which of the following is included in both the U.S. GDP and GNP?

Accepted Answer

A)  the value of all cars produced by Toyota in the U.S. 
B)  the value of all cars produced by Ford in Mexico 
C)  the value of all cars produced by General Motors in the U.S. 
D)  the value of cars produced by Nissan in Japan and the U.S. 
A)  the value of all cars produced by Toyota in the U.S. 
B)  the value of all cars produced by Ford in Mexico 
C)  the value of all cars produced by General Motors in the U.S. 
D)  the value of cars produced by Nissan in Japan and the U.S.

Question 8

Identify which of the following item(s) would be included in U.S. GDP:
(a) the salary of an American consultant hired by a British firm to go to Europe and analyze their operations there.
(b) the output of a U.S.- owned family farm in Kansas.
(c) food stamp payments.
(d) welfare checks.
(e) the wages of a field worker in Louisiana.

Accepted Answer

The output of a U.S.- owned family farm

Question 9

Which of the following is not included in private investment expenditure?

Accepted Answer

A)  changes in business inventories 
B)  the purchase of common stock 
C)  the purchase of a newly built home 
D)  the purchase of a newly built factory 
A)  changes in business inventories 
B)  the purchase of common stock 
C)  the purchase of a newly built home 
D)  the purchase of a newly built factory

Question 10

A company produced 10 dishwasher machines in 1998. The company sold 8 in 1998 and added 2 to its inventories. The market value of the dishwasher machines in 1998 was $200 per unit. What is the value of this company's output that will be included in the 1998 GDP?

Accepted Answer

A)  $1,800 
B)  $400 
C)  $1,600 
D)  $2,000 
A)  $1,800 
B)  $400 
C)  $1,600 
D)  $2,000

Question 11

The largest component of aggregate expenditure is consumption expenditure.

Accepted Answer

A) True 
 B)False

Question 12

Inflation is:

Accepted Answer

A)  sustained decreases in the total prices of all goods and services. 
B)  sustained decreases in the average prices of all goods and services. 
C)  sustained increases in the average prices of all goods and services. 
D)  sustained increases in the total prices of all goods and services. 
A)  sustained decreases in the total prices of all goods and services. 
B)  sustained decreases in the average prices of all goods and services. 
C)  sustained increases in the average prices of all goods and services. 
D)  sustained increases in the total prices of all goods and services.

Question 13

Net national product (NNP) is equal to:

Accepted Answer

A)  GNP minus net investment. 
B)  GNP plus depreciation. 
C)  GNP minus depreciation. 
D)  GDP minus depreciation. 
A)  GNP minus net investment. 
B)  GNP plus depreciation. 
C)  GNP minus depreciation. 
D)  GDP minus depreciation.

Question 14

In the circular flow diagram, firms:

Accepted Answer

A)  demand the inputs that households supply in product markets. 
B)  demand the goods and services that households supply in product markets. 
C)  supply the goods and services that households demand in product markets. 
D)  supply the inputs that households demand in factor markets. 
A)  demand the inputs that households supply in product markets. 
B)  demand the goods and services that households supply in product markets. 
C)  supply the goods and services that households demand in product markets. 
D)  supply the inputs that households demand in factor markets.

Question 15

In macroeconomics, underground activities include:

Accepted Answer

A)  illegal activities. 
B)  mining. 
C)  non- market transactions. 
D)  A and C are correct. 
A)  illegal activities. 
B)  mining. 
C)  non- market transactions. 
D)  A and C are correct.

Question 16

More abundant leisure time increases _______, but it _______ real GDP.

Accepted Answer

A)  nominal GDP; decreases 
B)  economic welfare; decreases 
C)  nominal GDP; leaves unchanged 
D)  social welfare; decreases 
A)  nominal GDP; decreases 
B)  economic welfare; decreases 
C)  nominal GDP; leaves unchanged 
D)  social welfare; decreases

Question 17

Refer to Application 2, "Comparing the Severity of Recessions," to answer the following questions:
-According to the application, the recession that started in December 2007 is comparable to the recession in:

Accepted Answer

A)  1980. 
B)  1981- 1982. 
C)  1990- 1991. 
D)  1973- 1975. 
A)  1980. 
B)  1981- 1982. 
C)  1990- 1991. 
D)  1973- 1975.

Question 18

From World War II until 2008, the U.S. has experienced:

Accepted Answer

A)  eleven recessions. 
B)  nine recessions and one depression. 
C)  a continuous period of economic growth. 
D)  ten recessions. 
A)  eleven recessions. 
B)  nine recessions and one depression. 
C)  a continuous period of economic growth. 
D)  ten recessions.

Question 19

Gross domestic product measures:

Accepted Answer

A)  the total income earned from current production of final goods and services in the country. 
B)  the total spending on currently- produced final goods and services in the country. 
C)  the total market value of all currently- produced final output in the country. 
D)  all of the above. 
A)  the total income earned from current production of final goods and services in the country. 
B)  the total spending on currently- produced final goods and services in the country. 
C)  the total market value of all currently- produced final output in the country. 
D)  all of the above.

Question 20

In 1929- 1933, the U.S. experienced unemployment rates exceeding _______.

Accepted Answer

A)  50 percent 
B)  25 percent 
C)  90 percent 
D)  33 percent 
A)  50 percent 
B)  25 percent 
C)  90 percent 
D)  33 percent

The U.S. experienced a severe depression during:

Briefly explain under what condition, if any, net investment can be negative. If so, explain what this implies about the capital stock.

If you take a walk in the park during your coffee break, this activity _ the measurement of real GDP and _ social welfare.

If net national product is $250 billion and indirect taxes are $5 billion, then national income is:

Depreciation is:

Suppose you buy a $40,000 BMW from your local dealership. The car was built completely in Germany. Assuming no dealer mark- up on the car, how would your purchase be recorded in US GDP accounts? By how much would US GDP increase as a result of your purchase?

Which of the following is included in both the U.S. GDP and GNP?

Which of the following is not included in private investment expenditure?

A company produced 10 dishwasher machines in 1998. The company sold 8 in 1998 and added 2 to its inventories. The market value of the dishwasher machines in 1998 was $200 per unit. What is the value of this company's output that will be included in the 1998 GDP?

The largest component of aggregate expenditure is consumption expenditure.

Inflation is:

Net national product (NNP) is equal to:

In the circular flow diagram, firms:

In macroeconomics, underground activities include:

More abundant leisure time increases _, but it _ real GDP.

Refer to Application 2, "Comparing the Severity of Recessions," to answer the following questions: -According to the application, the recession that started in December 2007 is comparable to the recession in:

From World War II until 2008, the U.S. has experienced:

Gross domestic product measures:

In 1929- 1933, the U.S. experienced unemployment rates exceeding _______.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 5: Measuring a Nations Production and Income

The U.S. experienced a severe depression during:

Briefly explain under what condition, if any, net investment can be negative. If so, explain what this implies about the capital stock.

If you take a walk in the park during your coffee break, this activity _______ the measurement of real GDP and _______ social welfare.

If net national product is $250 billion and indirect taxes are $5 billion, then national income is:

Depreciation is:

Suppose you buy a $40,000 BMW from your local dealership. The car was built completely in Germany. Assuming no dealer mark- up on the car, how would your purchase be recorded in US GDP accounts? By how much would US GDP increase as a result of your purchase?

Which of the following is included in both the U.S. GDP and GNP?

Which of the following is not included in private investment expenditure?

A company produced 10 dishwasher machines in 1998. The company sold 8 in 1998 and added 2 to its inventories. The market value of the dishwasher machines in 1998 was $200 per unit. What is the value of this company's output that will be included in the 1998 GDP?

The largest component of aggregate expenditure is consumption expenditure.

Inflation is:

Net national product (NNP) is equal to:

In the circular flow diagram, firms:

In macroeconomics, underground activities include:

More abundant leisure time increases _______, but it _______ real GDP.

Refer to Application 2, "Comparing the Severity of Recessions," to answer the following questions: -According to the application, the recession that started in December 2007 is comparable to the recession in:

From World War II until 2008, the U.S. has experienced:

Gross domestic product measures:

In 1929- 1933, the U.S. experienced unemployment rates exceeding _______.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

If you take a walk in the park during your coffee break, this activity _ the measurement of real GDP and _ social welfare.

More abundant leisure time increases _, but it _ real GDP.