Question 1

If a man marries his hired housekeeper, the value of GDP:

Accepted Answer

A)  rises. 
B)  falls. 
C)  is unchanged. 
D)  rises, but the value of GDP falls. 
A)  rises. 
B)  falls. 
C)  is unchanged. 
D)  rises, but the value of GDP falls. B

Question 2

When net exports are negative,

Accepted Answer

A)  exports are greater than investment. 
B)  depreciation is greater than net investment. 
C)  imports are greater than investment. 
D)  exports are greater than imports. 
E)  imports are greater than exports. 
A)  exports are greater than investment. 
B)  depreciation is greater than net investment. 
C)  imports are greater than investment. 
D)  exports are greater than imports. 
E)  imports are greater than exports. E

Question 3

In the circular flow model, who is a seller in the factor markets and a buyer in the product markets?

Accepted Answer

A)  Businesses. 
B)  Transnational corporations. 
C)  Foreign producers who export final goods and services into the U.S. 
D)  Households. 
A)  Businesses. 
B)  Transnational corporations. 
C)  Foreign producers who export final goods and services into the U.S. 
D)  Households. D

Question 4

Economic values that are measured in units per period of time are referred to as:

Accepted Answer

A)  stocks. 
B)  flows. 
C)  unit values. 
D)  dollars. 
A)  stocks. 
B)  flows. 
C)  unit values. 
D)  dollars.

Question 5

Exhibit 11-5  GDP data (billions of dollars)   In Exhibit 11-5, and using the expenditures approach, gross domestic product (GDP) is:

Accepted Answer

A)  $6,807 billion. 
B)  $7,082 billion. 
C)  $7,634 billion. 
D)  $7,637 billion. 
E)  $7,730 billion. 
A)  $6,807 billion. 
B)  $7,082 billion. 
C)  $7,634 billion. 
D)  $7,637 billion. 
E)  $7,730 billion.

Question 6

Gross domestic product is a measure of both the:

Accepted Answer

A)  market value of a nation's capital assets (physical capital). 
B)  expenditures on and sales revenues derived from all goods and services exchanged during a period. 
C)  market value of the output produced during a period. 
D)  asset holdings of people and the happiness that they derived from the ownership of those assets. 
A)  market value of a nation's capital assets (physical capital). 
B)  expenditures on and sales revenues derived from all goods and services exchanged during a period. 
C)  market value of the output produced during a period. 
D)  asset holdings of people and the happiness that they derived from the ownership of those assets.

Question 7

If the underground economy is sizable, then GDP will:

Accepted Answer

A)  understate the economy's performance. 
B)  overstate the economy's performance. 
C)  fluctuate unpredictably. 
D)  accurately reflect this subterranean activity. 
A)  understate the economy's performance. 
B)  overstate the economy's performance. 
C)  fluctuate unpredictably. 
D)  accurately reflect this subterranean activity.

Question 8

Which of the following items is included in the calculation of GDP?

Accepted Answer

A)  Purchase of 100 shares of General Motors stock. 
B)  Purchase of a used car. 
C)  The value of a homemaker's services. 
D)  Sale of Gulf War military surplus. 
E)  None of the above would be included. 
A)  Purchase of 100 shares of General Motors stock. 
B)  Purchase of a used car. 
C)  The value of a homemaker's services. 
D)  Sale of Gulf War military surplus. 
E)  None of the above would be included.

Question 9

The circular flow model assumes:

Accepted Answer

A)  businesses and households own the factors of production. 
B)  businesses own the factors of production. 
C)  government owns the factors of production. 
D)  households own the factors of production. 
E)  firms, households, and the government own the factors of production. 
A)  businesses and households own the factors of production. 
B)  businesses own the factors of production. 
C)  government owns the factors of production. 
D)  households own the factors of production. 
E)  firms, households, and the government own the factors of production.

Question 10

Which of the following is a shortcoming of GDP?

Accepted Answer

A)  GDP excludes changes in inventories. 
B)  GDP includes an estimate of illegal transactions. 
C)  GDP excludes nonmarket transactions. 
D)  GDP excludes business investment spending. 
A)  GDP excludes changes in inventories. 
B)  GDP includes an estimate of illegal transactions. 
C)  GDP excludes nonmarket transactions. 
D)  GDP excludes business investment spending.

Question 11

The lower portion of the circular flow model contains factor markets in which households provide:

Accepted Answer

A)  labor, money, and machines. 
B)  savings, spending, and investment. 
C)  natural resources, labor, and capital. 
D)  output of all final goods and services produced. 
A)  labor, money, and machines. 
B)  savings, spending, and investment. 
C)  natural resources, labor, and capital. 
D)  output of all final goods and services produced.

Question 12

Exhibit 11-4   Refer to Exhibit 11-4. Between Year 1 and Year 2, the general level of prices increased by approximately:

Accepted Answer

A)  16.7 percent. 
B)  33.3 percent. 
C)  66.7 percent. 
D)  133.3 percent. 
A)  16.7 percent. 
B)  33.3 percent. 
C)  66.7 percent. 
D)  133.3 percent.

Question 13

Which one of the following statements is true in the four-sector circular model?

Accepted Answer

A)  Money flows from government to households for taxes. 
B)  Money flows from foreign economies to households for exports. 
C)  Money flows from government to firms for goods and services. 
D)  Money flows from firms to foreign economies for exports. 
E)  Money flows from households to foreign economies for resources. 
A)  Money flows from government to households for taxes. 
B)  Money flows from foreign economies to households for exports. 
C)  Money flows from government to firms for goods and services. 
D)  Money flows from firms to foreign economies for exports. 
E)  Money flows from households to foreign economies for resources.

Question 14

Which one of the following statements is true ?

Accepted Answer

A)  Money flows from households to firms for resources. 
B)  Money flows from households to foreign economies for exports. 
C)  Money flows from government to firms for resources. 
D)  Money flows from foreign economies to firms for imports. 
E)  Money flows from firms to households for resources. 
A)  Money flows from households to firms for resources. 
B)  Money flows from households to foreign economies for exports. 
C)  Money flows from government to firms for resources. 
D)  Money flows from foreign economies to firms for imports. 
E)  Money flows from firms to households for resources.

Question 15

Which of the following spending is larger for U.S. GDP?

Accepted Answer

A)  State and local government. 
B)  Federal government. 
C)  Net exports. 
D)  Change in business inventories. 
A)  State and local government. 
B)  Federal government. 
C)  Net exports. 
D)  Change in business inventories.

Question 16

If you buy a brand new, American-made laptop computer to use for taking notes in your economics class, then it will be counted as:

Accepted Answer

A)  none of the following. 
B)  C. 
C)  I. 
D)  G. 
E)  (X − M). 
A)  none of the following. 
B)  C. 
C)  I. 
D)  G. 
E)  (X − M).

Question 17

In a given year, U.S. nominal GDP was $5,744 billion and the GDP chain price index for that year is 93.6. Real GDP is:

Accepted Answer

A)  $6,137 billion. 
B)  $5,376 billion. 
C)  $6,000 billion. 
D)  $6,376 billion. 
A)  $6,137 billion. 
B)  $5,376 billion. 
C)  $6,000 billion. 
D)  $6,376 billion.

Question 18

If the GDP chain price index in a given year is less than 100, real GDP in that year would be greater than nominal GDP.

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 11-1   Refer to Exhibit 11-1. What is this country's net exports?

Accepted Answer

A)  $35. 
B)  $-35. 
C)  $379. 
D)  $-379. 
A)  $35. 
B)  $-35. 
C)  $379. 
D)  $-379.

Question 20

Personal income is:

Accepted Answer

A)  total income received by households before taxes. 
B)  the amount households have available for consumption, savings, and payment of personal taxes. 
C)  national income minus corporate profits and Social Security (FIC
A)  plus transfer payments, and other income. 
D)  all of the above. 
A)  total income received by households before taxes. 
B)  the amount households have available for consumption, savings, and payment of personal taxes. 
C)  national income minus corporate profits and Social Security (FIC
A)  plus transfer payments, and other income. 
D)  all of the above.

Exam 11: Gross Domestic Product

If a man marries his hired housekeeper, the value of GDP:

When net exports are negative,

In the circular flow model, who is a seller in the factor markets and a buyer in the product markets?

Economic values that are measured in units per period of time are referred to as:

Exhibit 11-5 GDP data (billions of dollars) In Exhibit 11-5, and using the expenditures approach, gross domestic product (GDP) is:

Gross domestic product is a measure of both the:

If the underground economy is sizable, then GDP will:

Which of the following items is included in the calculation of GDP?

The circular flow model assumes:

Which of the following is a shortcoming of GDP?

The lower portion of the circular flow model contains factor markets in which households provide:

Exhibit 11-4 Refer to Exhibit 11-4. Between Year 1 and Year 2, the general level of prices increased by approximately:

Which one of the following statements is true in the four-sector circular model?

Which one of the following statements is true ?

Which of the following spending is larger for U.S. GDP?

If you buy a brand new, American-made laptop computer to use for taking notes in your economics class, then it will be counted as:

In a given year, U.S. nominal GDP was $5,744 billion and the GDP chain price index for that year is 93.6. Real GDP is:

If the GDP chain price index in a given year is less than 100, real GDP in that year would be greater than nominal GDP.

Exhibit 11-1 Refer to Exhibit 11-1. What is this country's net exports?

Personal income is:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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