Question 1

Actual investment purchases in a given period are measured by:

Accepted Answer

A)  net investment. 
B)  the change in business inventories. 
C)  gross investment. 
D)  depreciation. 
A)  net investment. 
B)  the change in business inventories. 
C)  gross investment. 
D)  depreciation.

Question 2

The largest component of GDP based on the expenditures approach is government spending (at all levels: federal, state, and local).

Accepted Answer

A) True 
 B)False

Question 3

Recall Application 3, "The Links Between Self- Reported Happiness and GDP," to answer the following questions:
-According to the Application 3, self- reported levels of happiness in the U.S. and the U.K. increased over the last 30 years as per capita incomes in those countries increased.

Accepted Answer

A) True 
 B)False

Question 4

What is the difference between GDP and GNP?

Accepted Answer

GDP represents the market value of all f

Question 5

If net investment is zero, then:

Accepted Answer

A)  gross investment is less than depreciation. 
B)  gross investment equals depreciation. 
C)  depreciation is zero. 
D)  gross investment is greater than depreciation. 
A)  gross investment is less than depreciation. 
B)  gross investment equals depreciation. 
C)  depreciation is zero. 
D)  gross investment is greater than depreciation.

Question 6

Consumption Expenditures can be broken down into three categories:

Accepted Answer

A)  land, labor and capital. 
B)  luxury goods, normal goods and inferior goods. 
C)  food, shelter and appliances. 
D)  durable goods, nondurable goods and services. 
A)  land, labor and capital. 
B)  luxury goods, normal goods and inferior goods. 
C)  food, shelter and appliances. 
D)  durable goods, nondurable goods and services.

Question 7

BMW sells cars fully assembled in Germany to the United States. In GDP accounts, BMW cars are included in US _______ and Germany's _______.

Accepted Answer

A)  exports, imports 
B)  exports, exports 
C)  imports, imports. 
D)  imports, exports 
A)  exports, imports 
B)  exports, exports 
C)  imports, imports. 
D)  imports, exports

Question 8

If a farmer buys a new tractor from John Deere for use on her cotton farm, it is included in GDP as:

Accepted Answer

A)  a nondurable consumption good. 
B)  part of private investment. 
C)  a durable consumption good. 
D)  a service. 
A)  a nondurable consumption good. 
B)  part of private investment. 
C)  a durable consumption good. 
D)  a service.

Question 9

Refer to Application 2, "Comparing the Severity of Recessions," to answer the following questions:
-According to the application, the recession that started in 1973 lasted:

Accepted Answer

A)  16 months. 
B)  9 months. 
C)  24 months. 
D)  6 months. 
A)  16 months. 
B)  9 months. 
C)  24 months. 
D)  6 months.

Question 10

The diagram that shows the flow of income, spending, goods and services between markets is called the:

Accepted Answer

A)  aggregate demand- aggregate supply diagram. 
B)  income flow diagram. 
C)  income- production diagram. 
D)  circular flow diagram. 
A)  aggregate demand- aggregate supply diagram. 
B)  income flow diagram. 
C)  income- production diagram. 
D)  circular flow diagram.

Question 11

Expenditures on which of the following would not be counted in private investment expenditure?

Accepted Answer

A)  new factories 
B)  stocks and bonds 
C)  inventory changes 
D)  new housing 
A)  new factories 
B)  stocks and bonds 
C)  inventory changes 
D)  new housing

Question 12

Which of the following is not a durable good?

Accepted Answer

A)  household appliances 
B)  clothing 
C)  furniture 
D)  automobiles 
A)  household appliances 
B)  clothing 
C)  furniture 
D)  automobiles

Question 13

Gross National Product (GNP) is equal to GDP minus net exports.

Accepted Answer

A) True 
 B)False

Question 14

If a power plant that pollutes the air produces $10 million in electricity. It the pollution causes a decline of $100 million to the value of the air we breathe, then this activity will cause a/an in real GDP and a/an _______ in social welfare.

Accepted Answer

A)  increase; increase 
B)  decrease;increase 
C)  increase; decrease 
D)  decrease; decrease 
A)  increase; increase 
B)  decrease;increase 
C)  increase; decrease 
D)  decrease; decrease

Question 15

Underground activities pertain to all unreported economic activity in the economy.

Accepted Answer

A) True 
 B)False

Question 16

Suppose economists find a way to include all economic activity (underground or otherwise) in GDP. How will this affect the GDP of rich and poor countries? Will the new GDP per capita exhibit more income inequality across countries? Explain.

Accepted Answer

If underground economies were measured a

Question 17

Which of the following is a nondurable good?

Accepted Answer

A)  washing machine 
B)  food 
C)  truck 
D)  laptop computer 
A)  washing machine 
B)  food 
C)  truck 
D)  laptop computer

Question 18

If a country is experiencing inflation, nominal GDP is always greater than real GDP.

Accepted Answer

A) True 
 B)False

Question 19

One major lesson that we learn from the circular flow diagram is that:

Accepted Answer

A)  total income in the economy must always equal total spending. 
B)  saving must always be less than investment. 
C)  taxes must always be greater than government expenditures. 
D)  all of the above 
A)  total income in the economy must always equal total spending. 
B)  saving must always be less than investment. 
C)  taxes must always be greater than government expenditures. 
D)  all of the above

Question 20

Which of the following is a transfer payment and is not counted as part of government purchases?

Accepted Answer

A)  defense spending 
B)  government spending on federal prisons 
C)  government welfare payments 
D)  government worker salaries 
A)  defense spending 
B)  government spending on federal prisons 
C)  government welfare payments 
D)  government worker salaries

Actual investment purchases in a given period are measured by:

The largest component of GDP based on the expenditures approach is government spending (at all levels: federal, state, and local).

Recall Application 3, "The Links Between Self- Reported Happiness and GDP," to answer the following questions: -According to the Application 3, self- reported levels of happiness in the U.S. and the U.K. increased over the last 30 years as per capita incomes in those countries increased.

What is the difference between GDP and GNP?

If net investment is zero, then:

Consumption Expenditures can be broken down into three categories:

BMW sells cars fully assembled in Germany to the United States. In GDP accounts, BMW cars are included in US _ and Germany's _.

If a farmer buys a new tractor from John Deere for use on her cotton farm, it is included in GDP as:

Refer to Application 2, "Comparing the Severity of Recessions," to answer the following questions: -According to the application, the recession that started in 1973 lasted:

The diagram that shows the flow of income, spending, goods and services between markets is called the:

Expenditures on which of the following would not be counted in private investment expenditure?

Which of the following is not a durable good?

Gross National Product (GNP) is equal to GDP minus net exports.

If a power plant that pollutes the air produces $10 million in electricity. It the pollution causes a decline of $100 million to the value of the air we breathe, then this activity will cause a/an in real GDP and a/an _______ in social welfare.

Underground activities pertain to all unreported economic activity in the economy.

Suppose economists find a way to include all economic activity (underground or otherwise) in GDP. How will this affect the GDP of rich and poor countries? Will the new GDP per capita exhibit more income inequality across countries? Explain.

Which of the following is a nondurable good?

If a country is experiencing inflation, nominal GDP is always greater than real GDP.

One major lesson that we learn from the circular flow diagram is that:

Which of the following is a transfer payment and is not counted as part of government purchases?

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

Actual investment purchases in a given period are measured by:

The largest component of GDP based on the expenditures approach is government spending (at all levels: federal, state, and local).

Recall Application 3, "The Links Between Self- Reported Happiness and GDP," to answer the following questions: -According to the Application 3, self- reported levels of happiness in the U.S. and the U.K. increased over the last 30 years as per capita incomes in those countries increased.

What is the difference between GDP and GNP?

If net investment is zero, then:

Consumption Expenditures can be broken down into three categories:

BMW sells cars fully assembled in Germany to the United States. In GDP accounts, BMW cars are included in US _______ and Germany's _______.

If a farmer buys a new tractor from John Deere for use on her cotton farm, it is included in GDP as:

Refer to Application 2, "Comparing the Severity of Recessions," to answer the following questions: -According to the application, the recession that started in 1973 lasted:

The diagram that shows the flow of income, spending, goods and services between markets is called the:

Expenditures on which of the following would not be counted in private investment expenditure?

Which of the following is not a durable good?

Gross National Product (GNP) is equal to GDP minus net exports.

If a power plant that pollutes the air produces $10 million in electricity. It the pollution causes a decline of $100 million to the value of the air we breathe, then this activity will cause a/an in real GDP and a/an _______ in social welfare.

Underground activities pertain to all unreported economic activity in the economy.

Suppose economists find a way to include all economic activity (underground or otherwise) in GDP. How will this affect the GDP of rich and poor countries? Will the new GDP per capita exhibit more income inequality across countries? Explain.

Which of the following is a nondurable good?

If a country is experiencing inflation, nominal GDP is always greater than real GDP.

One major lesson that we learn from the circular flow diagram is that:

Which of the following is a transfer payment and is not counted as part of government purchases?

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

BMW sells cars fully assembled in Germany to the United States. In GDP accounts, BMW cars are included in US _ and Germany's _.