Question 1

The gross domestic product (GDP) concept accounts for society's valuation of the relative worth of goods and services by using

Accepted Answer

A) a measure of physical weight. 
B) a measure of volume. 
C) a utility measure. 
D) a monetary measure. 
A) a measure of physical weight. 
B) a measure of volume. 
C) a utility measure. 
D) a monetary measure.

Question 2

The largest component of total expenditures in the United States is

Accepted Answer

A) net exports. 
B) government purchases. 
C) consumption. 
D) gross investment. 
A) net exports. 
B) government purchases. 
C) consumption. 
D) gross investment.

Question 3

If prices increased, we need to adjust nominal GDP values to give us a measure of GDP for various years in constant-dollar terms.We refer to that adjustment as

Accepted Answer

A) inflating GDP. 
B) deflating GDP. 
C) compounding GDP. 
D) indexing GDP. 
A) inflating GDP. 
B) deflating GDP. 
C) compounding GDP. 
D) indexing GDP.

Question 4

Which of the following is not a component of GDP in the expenditures approach?

Accepted Answer

A) government purchases 
B) workers' wages and other compensation 
C) gross private domestic investment 
D) the difference between exports and imports 
A) government purchases 
B) workers' wages and other compensation 
C) gross private domestic investment 
D) the difference between exports and imports

Question 5

A nation's capital stock was valued at $300 billion at the start of the year and $350 billion at the end.Consumption of private fixed capital in the year was $25 billion.Assuming stable prices, gross investment was

Accepted Answer

A) $25 billion. 
B) $50 billion. 
C) $75 billion. 
D) $90 billion. 
A) $25 billion. 
B) $50 billion. 
C) $75 billion. 
D) $90 billion.

Question 6

Which would be considered an investment according to economists?

Accepted Answer

A) A fishing-company owner buys Google shares. 
B) A fishing company buys a few boats from another fishing company that was closing out. 
C) A fishing-company owner buys new fishing gear. 
D) A fishing-company owner buys fuel to run the boats. 
A) A fishing-company owner buys Google shares. 
B) A fishing company buys a few boats from another fishing company that was closing out. 
C) A fishing-company owner buys new fishing gear. 
D) A fishing-company owner buys fuel to run the boats.

Question 7

The consumption of fixed capital in each year's production is called

Accepted Answer

A) indirect business taxes. 
B) inventory reduction. 
C) depreciation. 
D) net investment. 
A) indirect business taxes. 
B) inventory reduction. 
C) depreciation. 
D) net investment.

Question 8

The following are national income account data for a hypothetical economy in billions of dollars: gross private domestic investment ($320), imports ($35), exports ($22), personal consumption expenditures ($2,460), and government purchases ($470).What is GDP in this economy?

Accepted Answer

A) $3,250 billion 
B) $3,263 billion 
C) $3,237 billion 
D) $3,290 billion 
A) $3,250 billion 
B) $3,263 billion 
C) $3,237 billion 
D) $3,290 billion

Question 9

In determining GDP by the expenditures method, it is appropriate to use net investment rather than gross investment as a measure of investment spending.

Accepted Answer

A) True 
 B)False

Question 10

Disposable income measures the before-tax income received by resource suppliers.

Accepted Answer

A) True 
 B)False

Question 11

In 1933, net private domestic investment was a minus $6.0 billion.This means that

Accepted Answer

A) gross private domestic investment exceeded depreciation by $6.0 billion. 
B) the economy was expanding in that year. 
C) the production of 1933's GDP used up more capital goods than were produced in that year. 
D) the economy produced no capital goods at all in 1933. 
A) gross private domestic investment exceeded depreciation by $6.0 billion. 
B) the economy was expanding in that year. 
C) the production of 1933's GDP used up more capital goods than were produced in that year. 
D) the economy produced no capital goods at all in 1933.

Question 12

Net exports are positive when exports are greater than imports.

Accepted Answer

A) True 
 B)False

Question 13

"Net foreign factor income" in the national income accounts refers to the difference between

Accepted Answer

A) the income Americans gain from supplying resources abroad and the income that foreigners earn by supplying resources in the U.S. 
B) the value of products sold by Americans to other nations and the value of products bought by Americans from other nations. 
C) the value of investments that Americans made abroad and the value of investments made by foreigners in the U.S. 
D) the income earned by Americans in the U.S.minus the income earned by foreigners in the U.S. 
A) the income Americans gain from supplying resources abroad and the income that foreigners earn by supplying resources in the U.S. 
B) the value of products sold by Americans to other nations and the value of products bought by Americans from other nations. 
C) the value of investments that Americans made abroad and the value of investments made by foreigners in the U.S. 
D) the income earned by Americans in the U.S.minus the income earned by foreigners in the U.S.

Question 14

"GDP price index" measures changes in the

Accepted Answer

A) value of final output produced in the nation. 
B) prices of the output produced in the nation. 
C) amount of resources available in the nation. 
D) cost of resources employed in the nation. 
A) value of final output produced in the nation. 
B) prices of the output produced in the nation. 
C) amount of resources available in the nation. 
D) cost of resources employed in the nation.

Question 15

Money spent on the purchase of a new house is included in the GDP as a part of

Accepted Answer

A) household expenditures on durable goods. 
B) personal consumption expenditures. 
C) personal saving. 
D) gross domestic private investment. 
A) household expenditures on durable goods. 
B) personal consumption expenditures. 
C) personal saving. 
D) gross domestic private investment.

Question 16

In an economy that is experiencing inflation and output growth, nominal GDP will rise faster than real GDP.

Accepted Answer

A) True 
 B)False

Question 17

If depreciation (consumption of fixed capital) exceeds gross domestic investment, we can conclude that

Accepted Answer

A) nominal GDP is rising but real GDP is declining. 
B) net investment is negative. 
C) the economy is importing more than it exports. 
D) the economy's production capacity is expanding. 
A) nominal GDP is rising but real GDP is declining. 
B) net investment is negative. 
C) the economy is importing more than it exports. 
D) the economy's production capacity is expanding.

Question 18

Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories increased by $10 billion.GDP in year 2 is

Accepted Answer

A) $180 billion. 
B) $190 billion. 
C) $200 billion. 
D) $210 billion. 
A) $180 billion. 
B) $190 billion. 
C) $200 billion. 
D) $210 billion.

Question 19

In the reservoir analogy for stock versus flow, the stock of capital is similar to the

Accepted Answer

A) quality of water. 
B) outflow of water. 
C) inflow of water. 
D) level of water. 
A) quality of water. 
B) outflow of water. 
C) inflow of water. 
D) level of water.

Question 20

If real GDP falls from one period to another, we can conclude that

Accepted Answer

A) deflation occurred. 
B) inflation occurred. 
C) nominal GDP fell. 
D) none of these necessarily occurred. 
A) deflation occurred. 
B) inflation occurred. 
C) nominal GDP fell. 
D) none of these necessarily occurred.

Exam 27: Measuring Domestic Output and National Income

The gross domestic product (GDP) concept accounts for society's valuation of the relative worth of goods and services by using

The largest component of total expenditures in the United States is

If prices increased, we need to adjust nominal GDP values to give us a measure of GDP for various years in constant-dollar terms.We refer to that adjustment as

Which of the following is not a component of GDP in the expenditures approach?

A nation's capital stock was valued at $300 billion at the start of the year and $350 billion at the end.Consumption of private fixed capital in the year was $25 billion.Assuming stable prices, gross investment was

Which would be considered an investment according to economists?

The consumption of fixed capital in each year's production is called

The following are national income account data for a hypothetical economy in billions of dollars: gross private domestic investment ($320), imports ($35), exports ($22), personal consumption expenditures ($2,460), and government purchases ($470).What is GDP in this economy?

In determining GDP by the expenditures method, it is appropriate to use net investment rather than gross investment as a measure of investment spending.

Disposable income measures the before-tax income received by resource suppliers.

In 1933, net private domestic investment was a minus $6.0 billion.This means that

Net exports are positive when exports are greater than imports.

"Net foreign factor income" in the national income accounts refers to the difference between

"GDP price index" measures changes in the

Money spent on the purchase of a new house is included in the GDP as a part of

In an economy that is experiencing inflation and output growth, nominal GDP will rise faster than real GDP.

If depreciation (consumption of fixed capital) exceeds gross domestic investment, we can conclude that

Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories increased by $10 billion.GDP in year 2 is

In the reservoir analogy for stock versus flow, the stock of capital is similar to the

If real GDP falls from one period to another, we can conclude that

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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