Question 1

The difference between gross investment and net investment is the stock of inventory.

Accepted Answer

A) True 
 B)False

Question 2

Gross private domestic investment does not include:

Accepted Answer

A) spending for new houses. 
B) spending to build up inventories. 
C) unintentional inventory investment. 
D) spending on employee salaries. 
E) spending for office supplies. 
A) spending for new houses. 
B) spending to build up inventories. 
C) unintentional inventory investment. 
D) spending on employee salaries. 
E) spending for office supplies.

Question 3

Real GDP can be calculated using which of the following formulas?

Accepted Answer

A) (Nominal GDP / real GDP) ´ 100. 
B) (GDP chain price index / nominal GDP) ´ 100. 
C) (Nominal GDP x100) / (GDP implicit price deflator). 
D) (Nominal GDP / inflation rate) ´ 100. 
A) (Nominal GDP / real GDP) ´ 100. 
B) (GDP chain price index / nominal GDP) ´ 100. 
C) (Nominal GDP x100) / (GDP implicit price deflator). 
D) (Nominal GDP / inflation rate) ´ 100.

Question 4

Exhibit 11-1 Expenditure approach
  
-As shown in Exhibit 11-1,total expenditures by businesses for fixed investment and inventories are:

Accepted Answer

A) $15 billion. 
B) $50 billion. 
C) $65 billion. 
D) $200 billion. 
E) $500 billion. 
A) $15 billion. 
B) $50 billion. 
C) $65 billion. 
D) $200 billion. 
E) $500 billion.

Question 5

Current account deficits:

Accepted Answer

A) also result in a capital account deficit of the same size. 
B) result in a capital account surplus of the same size. 
C) may result in either a capital account surplus or deficit. 
D) result because exports exceed imports. 
E) result because government spending exceeds tax revenue. 
A) also result in a capital account deficit of the same size. 
B) result in a capital account surplus of the same size. 
C) may result in either a capital account surplus or deficit. 
D) result because exports exceed imports. 
E) result because government spending exceeds tax revenue.

Question 6

Net domestic product (NDP)is equal to gross domestic product (GDP)plus indirect business taxes.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 11-1 Expenditure approach
  
-As shown in Exhibit 11-1,total expenditures by households for domestically produced goods are:

Accepted Answer

A) $15 billion. 
B) $50 billion. 
C) $300 billion. 
D) $500 billion. 
A) $15 billion. 
B) $50 billion. 
C) $300 billion. 
D) $500 billion.

Question 8

Resources that flow through the circular flow model include all of the following except:

Accepted Answer

A) land. 
B) labour. 
C) capital. 
D) creativity. 
E) entrepreneurship. 
A) land. 
B) labour. 
C) capital. 
D) creativity. 
E) entrepreneurship.

Question 9

The payment of welfare benefits by the government:

Accepted Answer

A) increases the value of GDP. 
B) reduces the value of GDP. 
C) is not included in the calculation of GDP. 
D) is only included in the calculation of GDP if it is for unemployment benefits. 
E) is only included in the calculation of GDP if it is for pension payments. 
A) increases the value of GDP. 
B) reduces the value of GDP. 
C) is not included in the calculation of GDP. 
D) is only included in the calculation of GDP if it is for unemployment benefits. 
E) is only included in the calculation of GDP if it is for pension payments.

Question 10

In an economy with persistent inflation:

Accepted Answer

A) real GDP will grow faster than nominal GDP. 
B) nominal GDP will grow faster than real GDP. 
C) nominal and real GDP will grow at the same rate. 
D) nominal and real GDP will both fall. 
A) real GDP will grow faster than nominal GDP. 
B) nominal GDP will grow faster than real GDP. 
C) nominal and real GDP will grow at the same rate. 
D) nominal and real GDP will both fall.

Question 11

GDP understates national wellbeing because:

Accepted Answer

A) there is not enough data on working hours. 
B) no allowance is made for leisure time. 
C) people can afford leisure time now. 
D) people are working more now than they did a century ago. 
A) there is not enough data on working hours. 
B) no allowance is made for leisure time. 
C) people can afford leisure time now. 
D) people are working more now than they did a century ago.

Question 12

Gross domestic product (GDP)includes:

Accepted Answer

A) all goods and services. 
B) newly produced foreign goods as well as used goods. 
C) used goods sold in the current time period. 
D) only final goods and services. 
A) all goods and services. 
B) newly produced foreign goods as well as used goods. 
C) used goods sold in the current time period. 
D) only final goods and services.

Question 13

Which of the following statements is true?

Accepted Answer

A) The inclusion of intermediate goods and services into GDP calculations would underestimate our nation's production level. 
B) The expenditure approach sums the compensation of employees, rents, profits, net interest and non-income expenses for depreciation and indirect business taxes. 
C) Real GDP has been adjusted for changes in the general level of prices due to inflation. 
D) Real GDP equals nominal GDP multiplied by the GDP deflator. 
A) The inclusion of intermediate goods and services into GDP calculations would underestimate our nation's production level. 
B) The expenditure approach sums the compensation of employees, rents, profits, net interest and non-income expenses for depreciation and indirect business taxes. 
C) Real GDP has been adjusted for changes in the general level of prices due to inflation. 
D) Real GDP equals nominal GDP multiplied by the GDP deflator.

Question 14

Exhibit 11-2 GDP data (billions of dollars)
  
-In Exhibit 11-2,GDP is:

Accepted Answer

A) $6807.6 billion. 
B) $7082.9 billion. 
C) $7636.0 billion. 
D) $7637.7 billion. 
E) $7730.8 billion. 
A) $6807.6 billion. 
B) $7082.9 billion. 
C) $7636.0 billion. 
D) $7637.7 billion. 
E) $7730.8 billion.

Question 15

Based on the circular flow model,money flows from households to businesses in:

Accepted Answer

A) factor markets. 
B) product markets. 
C) neither factor nor product markets. 
D) both factor and product markets. 
A) factor markets. 
B) product markets. 
C) neither factor nor product markets. 
D) both factor and product markets.

Question 16

GDP is equal to:

Accepted Answer

A) GNP minus net income payable to foreigners. 
B) NNP plus depreciation, minus net income payable to foreigners. 
C) C + I + G - NX. 
D) C + I + G + NX. 
A) GNP minus net income payable to foreigners. 
B) NNP plus depreciation, minus net income payable to foreigners. 
C) C + I + G - NX. 
D) C + I + G + NX.

Question 17

Government spending on teachers and university lecturers is counted in GDP figures as:

Accepted Answer

A) human capital investment. 
B) private consumption expenditure. 
C) public consumption expenditure. 
D) transfer payments. 
A) human capital investment. 
B) private consumption expenditure. 
C) public consumption expenditure. 
D) transfer payments.

Question 18

Consumption includes expenditure on:

Accepted Answer

A) durable goods and services. 
B) non-durable goods and services. 
C) both durable and non-durable expenditure. 
D) tangible items only. 
E) goods and services valued at less than $10 000. 
A) durable goods and services. 
B) non-durable goods and services. 
C) both durable and non-durable expenditure. 
D) tangible items only. 
E) goods and services valued at less than $10 000.

Question 19

Which of the following is a shortcoming of GDP?

Accepted Answer

A) It measures used goods and services. 
B) It includes changes in inventories. 
C) It includes the value of net exports. 
D) It does not make an allowance for leisure time. 
A) It measures used goods and services. 
B) It includes changes in inventories. 
C) It includes the value of net exports. 
D) It does not make an allowance for leisure time.

Question 20

All final goods and services that make up GDP can be expressed in the form:

Accepted Answer

A) GDP = C + I - G + (X + M). 
B) GDP = C + I + G + (X + M). 
C) GDP = C + I + G + (X - M). 
D) GDP = C + I + (X - M). 
E) GDP = C + I + 
A) GDP = C + I - G + (X + M). 
B) GDP = C + I + G + (X + M). 
C) GDP = C + I + G + (X - M). 
D) GDP = C + I + (X - M). 
E) GDP = C + I +

The difference between gross investment and net investment is the stock of inventory.

Gross private domestic investment does not include:

Real GDP can be calculated using which of the following formulas?

Exhibit 11-1 Expenditure approach -As shown in Exhibit 11-1,total expenditures by businesses for fixed investment and inventories are:

Current account deficits:

Net domestic product (NDP)is equal to gross domestic product (GDP)plus indirect business taxes.

Exhibit 11-1 Expenditure approach -As shown in Exhibit 11-1,total expenditures by households for domestically produced goods are:

Resources that flow through the circular flow model include all of the following except:

The payment of welfare benefits by the government:

In an economy with persistent inflation:

GDP understates national wellbeing because:

Gross domestic product (GDP)includes:

Which of the following statements is true?

Exhibit 11-2 GDP data (billions of dollars) -In Exhibit 11-2,GDP is:

Based on the circular flow model,money flows from households to businesses in:

GDP is equal to:

Government spending on teachers and university lecturers is counted in GDP figures as:

Consumption includes expenditure on:

Which of the following is a shortcoming of GDP?

All final goods and services that make up GDP can be expressed in the form:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

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Exam 11: Measuring the size of the economy

The difference between gross investment and net investment is the stock of inventory.

Gross private domestic investment does not include:

Real GDP can be calculated using which of the following formulas?

Exhibit 11-1 Expenditure approach -As shown in Exhibit 11-1,total expenditures by businesses for fixed investment and inventories are:

Current account deficits:

Net domestic product (NDP)is equal to gross domestic product (GDP)plus indirect business taxes.

Exhibit 11-1 Expenditure approach -As shown in Exhibit 11-1,total expenditures by households for domestically produced goods are:

Resources that flow through the circular flow model include all of the following except:

The payment of welfare benefits by the government:

In an economy with persistent inflation:

GDP understates national wellbeing because:

Gross domestic product (GDP)includes:

Which of the following statements is true?

Exhibit 11-2 GDP data (billions of dollars) -In Exhibit 11-2,GDP is:

Based on the circular flow model,money flows from households to businesses in:

GDP is equal to:

Government spending on teachers and university lecturers is counted in GDP figures as:

Consumption includes expenditure on:

Which of the following is a shortcoming of GDP?

All final goods and services that make up GDP can be expressed in the form:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters