Question 1

That portion of corporate profits which is included in personal income is

Accepted Answer

A) dividends. 
B) corporate income taxes. 
C) consumption of fixed capital. 
D) undistributed corporate profits. 
A) dividends. 
B) corporate income taxes. 
C) consumption of fixed capital. 
D) undistributed corporate profits.

Question 2

Which of the following transactions would be included in GDP?

Accepted Answer

A) Mary buys a used book for $5 at a garage sale. 
B) Nick buys $5,000 worth of stock in Microsoft. 
C) Olivia receives a tax refund of $500. 
D) Peter buys a newly constructed house. 
A) Mary buys a used book for $5 at a garage sale. 
B) Nick buys $5,000 worth of stock in Microsoft. 
C) Olivia receives a tax refund of $500. 
D) Peter buys a newly constructed house.

Question 3

The amount of after-tax income received by households is measured by

Accepted Answer

A) discretionary income. 
B) national income. 
C) disposable income. 
D) personal income. 
A) discretionary income. 
B) national income. 
C) disposable income. 
D) personal income.

Question 4

When U.S.households buy new imported European and Japanese cars, the total value of the cars is counted as part of C in the GDP accounts.

Accepted Answer

A) True 
 B)False

Question 5

Gross output (GO) reflects the overall status of the productive side of the economy better than GDP does.

Accepted Answer

A) True 
 B)False

Question 6

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

Question 7

Nominal GDP is less than real GDP in an economy in both year 1 and year 2.In year 3, nominal GDP is equal to real GDP.In year 4, nominal GDP is slightly greater than real GDP.In year 5, nominal GDP is significantly greater than real GDP.Which year is the base year being used to calculate the price index for this economy?

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
A) 2 
B) 3 
C) 4 
D) 5

Question 8

Value added refers to

Accepted Answer

A) any increase in GDP that has been adjusted for adverse environmental effects. 
B) the excess of gross investment over net investment. 
C) the difference between the value of a firm's output and the value of the inputs it has purchased from others. 
D) the portion of any increase in GDP that is caused by inflation as opposed to an increase in real output. 
A) any increase in GDP that has been adjusted for adverse environmental effects. 
B) the excess of gross investment over net investment. 
C) the difference between the value of a firm's output and the value of the inputs it has purchased from others. 
D) the portion of any increase in GDP that is caused by inflation as opposed to an increase in real output.

Question 9

Gross output (GO) and GDP both measure

Accepted Answer

A) resource extraction. 
B) production. 
C) distribution. 
D) final output. 
A) resource extraction. 
B) production. 
C) distribution. 
D) final output.

Question 10

Changes in business inventories are included as part of investment in the national income accounts.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is included in the expenditures approach to GDP?

Accepted Answer

A) spending on meals by consumers at restaurants 
B) expenditures on used clothing at garage sales 
C) the value of stocks and bonds bought by businesspersons 
D) government spending on welfare payments 
A) spending on meals by consumers at restaurants 
B) expenditures on used clothing at garage sales 
C) the value of stocks and bonds bought by businesspersons 
D) government spending on welfare payments

Question 12

Over a year, a nation's GDP at current prices rose by 15 percent, while the price index increased from 100 to 110.GDP at constant prices rose by about

Accepted Answer

A) 3 percent. 
B) 5 percent. 
C) 7 percent. 
D) 9 percent. 
A) 3 percent. 
B) 5 percent. 
C) 7 percent. 
D) 9 percent.

Question 13

Most activities in the so-called underground economy are illegal activities, such as drugs or gambling.

Accepted Answer

A) True 
 B)False

Question 14

Personal income usually exceeds disposable income.

Accepted Answer

A) True 
 B)False

Question 15

National income is the sum of employee compensation, profits, and the following items, except

Accepted Answer

A) rent. 
B) interest. 
C) depreciation or consumption of fixed capital. 
D) taxes on production and imports. 
A) rent. 
B) interest. 
C) depreciation or consumption of fixed capital. 
D) taxes on production and imports.

Question 16

If in some year gross investment was $120 billion and net investment was $65 billion, then in that year the country's capital stock

Accepted Answer

A) may have either increased or decreased. 
B) increased by $65 billion. 
C) increased by $55 billion. 
D) decreased by $55 billion. 
A) may have either increased or decreased. 
B) increased by $65 billion. 
C) increased by $55 billion. 
D) decreased by $55 billion.

Question 17

Gross domestic product (GDP) measures and reports output

Accepted Answer

A) as an index number. 
B) in percentage terms. 
C) in dollar amounts and percentage growth. 
D) in quantities of physical units (for example, pounds, gallons, and bushels). 
A) as an index number. 
B) in percentage terms. 
C) in dollar amounts and percentage growth. 
D) in quantities of physical units (for example, pounds, gallons, and bushels).

Question 18

Assume that a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is

Accepted Answer

A) $110. 
B) $30. 
C) $40. 
D) $70. 
A) $110. 
B) $30. 
C) $40. 
D) $70.

Question 19

If the University of Missouri, a public school, builds a new laboratory, then it will be counted as part of Ig in GDP.

Accepted Answer

A) True 
 B)False

Question 20

Suppose a nation's 2010 nominal GDP was $972 billion and the general price index was 90.To make the 2010 GDP comparable with the base year GDP, the 2010 GDP must be

Accepted Answer

A) deflated to $678 billion. 
B) deflated to $896 billion. 
C) inflated to $1,080 billion. 
D) deflated to $1,080 billion. 
A) deflated to $678 billion. 
B) deflated to $896 billion. 
C) inflated to $1,080 billion. 
D) deflated to $1,080 billion.

Exam 27: Measuring Domestic Output and National Income

That portion of corporate profits which is included in personal income is

Which of the following transactions would be included in GDP?

The amount of after-tax income received by households is measured by

When U.S.households buy new imported European and Japanese cars, the total value of the cars is counted as part of C in the GDP accounts.

Gross output (GO) reflects the overall status of the productive side of the economy better than GDP does.

When an economy's production capacity is expanding,

Value added refers to

Gross output (GO) and GDP both measure

Changes in business inventories are included as part of investment in the national income accounts.

Which of the following is included in the expenditures approach to GDP?

Over a year, a nation's GDP at current prices rose by 15 percent, while the price index increased from 100 to 110.GDP at constant prices rose by about

Most activities in the so-called underground economy are illegal activities, such as drugs or gambling.

Personal income usually exceeds disposable income.

National income is the sum of employee compensation, profits, and the following items, except

If in some year gross investment was $120 billion and net investment was $65 billion, then in that year the country's capital stock

Gross domestic product (GDP) measures and reports output

Assume that a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is

If the University of Missouri, a public school, builds a new laboratory, then it will be counted as part of Ig in GDP.

Suppose a nation's 2010 nominal GDP was $972 billion and the general price index was 90.To make the 2010 GDP comparable with the base year GDP, the 2010 GDP must be

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

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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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