Question 1

Personal consumption expenditures include all of the following EXCEPT spending on

Accepted Answer

A)  consumer durable goods. 
B)  consumer nondurable goods. 
C)  consumer services. 
D)  new housing. 
A)  consumer durable goods. 
B)  consumer nondurable goods. 
C)  consumer services. 
D)  new housing.

Question 2

When IBM,an American firm,produces computer chips in another country,this production is not included in U.S.GDP because the production did not take place in the United States.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is true regarding the circular flow diagram?
I. "Aggregate income" is the flow of income earned by firms.
II. Retained earnings are considered income earned by firms rather than part of households' income.
III. The government,households,and firms all have transactions in the goods market.

Accepted Answer

A)  I only 
B)  I and II 
C)  I and III 
D)  III only 
A)  I only 
B)  I and II 
C)  I and III 
D)  III only

Question 4

$$\begin{array} { | l | c | } 
\hline  { \text { Component } } & \begin{array} { c } 
\text { Amount } \
\text { (billions of } \
\text { dollars) }
\end{array} \
\hline \text { Gross investment } & 1300 \
\hline \begin{array} { l } 
\text { Personal consumption } \
\text { expenditure }
\end{array} & 1475 \
\hline \text { Depreciation } & 25 \
\hline \begin{array} { l } 
\text { Government expenditure on } \
\text { goods and services }
\end{array} & 1315 \
\hline \text { U.S. imports } & 260 \
\hline \text { U.S. exports } & 249 \
\hline \text { Compensation of employees } & 65 \
\hline
\end{array}$$
-Normally in the United States the relationship between nominal and real GDP for a given year is

Accepted Answer

A)  real GDP is greater than nominal GDP because of price increases. 
B)  nominal GDP is greater than real GDP because of price increases. 
C)  nominal GDP equals real GDP. 
D)  nominal GDP is greater than real GDP because of price decreases. 
A)  real GDP is greater than nominal GDP because of price increases. 
B)  nominal GDP is greater than real GDP because of price increases. 
C)  nominal GDP equals real GDP. 
D)  nominal GDP is greater than real GDP because of price decreases.

Question 5

The circular flow model shows that consumer goods and services produced by business firms are sold in the

Accepted Answer

A)  goods market. 
B)  factor market. 
C)  labor market. 
D)  financial market. 
A)  goods market. 
B)  factor market. 
C)  labor market. 
D)  financial market.

Question 6

A ton of coal purchased by your local utility to burn to make electricity would be best described as

Accepted Answer

A)  an intermediate good. 
B)  a financial asset. 
C)  a used good. 
D)  a final product. 
A)  an intermediate good. 
B)  a financial asset. 
C)  a used good. 
D)  a final product.

Question 7

List and explain the two phases and two turning points of the business cycle.

Accepted Answer

The economy is defined as being an expan

Question 8

The underground economy means that GDP will overstate the actual level of economic welfare.

Accepted Answer

A) True 
 B)False

Question 9

The circular flow diagram shows that

Accepted Answer

A)  the flow of payments to the factors used to produce goods and services exceeds the flow of payments for final goods and services. 
B)  goods and factor markets are independent. 
C)  the total amount of income generated by the economy equals the total purchases of final goods and services. 
D)  consumption expenditure equals saving. 
A)  the flow of payments to the factors used to produce goods and services exceeds the flow of payments for final goods and services. 
B)  goods and factor markets are independent. 
C)  the total amount of income generated by the economy equals the total purchases of final goods and services. 
D)  consumption expenditure equals saving.

Question 10

$$\begin{array} { | l | c | } 
\hline  { \text { Component } } & \begin{array} { c } 
\text { Amount } \
\text { (billions of } \
\text { dollars) }
\end{array} \
\hline \text { Gross investment } & 1300 \
\hline \begin{array} { l } 
\text { Personal consumption } \
\text { expenditure }
\end{array} & 1475 \
\hline \text { Depreciation } & 25 \
\hline \begin{array} { l } 
\text { Government expenditure on } \
\text { goods and services }
\end{array} & 1315 \
\hline \text { U.S. imports } & 260 \
\hline \text { U.S. exports } & 249 \
\hline \text { Compensation of employees } & 65 \
\hline
\end{array}$$
-Nominal GDP is

Accepted Answer

A)  real GDP adjusted for price changes. 
B)  GDP valued at prices of that year. 
C)  GDP valued at constant prices. 
D)  real GDP valued at base year prices. 
A)  real GDP adjusted for price changes. 
B)  GDP valued at prices of that year. 
C)  GDP valued at constant prices. 
D)  real GDP valued at base year prices.

Question 11

The circular flow diagram shows

Accepted Answer

A)  how nominal GDP is distinct from real GDP. 
B)  how the prices of factors are determined. 
C)  the effects of inflation in a simple economy. 
D)  the flows between different sectors of the economy. 
A)  how nominal GDP is distinct from real GDP. 
B)  how the prices of factors are determined. 
C)  the effects of inflation in a simple economy. 
D)  the flows between different sectors of the economy.

Question 12

In the circular flow diagram,aggregate expenditure includes

Accepted Answer

A)  consumption expenditure, saving, investment and government expenditure 
B)  consumption expenditure, saving, investment and net exports 
C)  consumption expenditure, investment, government expenditure and net exports 
D)  consumption expenditure, saving, government expenditure and net exports 
A)  consumption expenditure, saving, investment and government expenditure 
B)  consumption expenditure, saving, investment and net exports 
C)  consumption expenditure, investment, government expenditure and net exports 
D)  consumption expenditure, saving, government expenditure and net exports

Question 13

Pollution is a by-product of some production processes,so on this count real GDP as measured

Accepted Answer

A)  is adjusted downward to take into account the pollution. 
B)  is adjusted upward to take into account the expenditures that will be made in the future to clean up the pollution. 
C)  tends to overstate economic welfare. 
D)  tends to understate economic welfare. 
A)  is adjusted downward to take into account the pollution. 
B)  is adjusted upward to take into account the expenditures that will be made in the future to clean up the pollution. 
C)  tends to overstate economic welfare. 
D)  tends to understate economic welfare.

Question 14

-In the above figure,the diagram shows

Accepted Answer

A)  a downward trend in x. 
B)  an upward trend in x. 
C)  a scatter diagram. 
D)  a two-variable scatter diagram. 
A)  a downward trend in x. 
B)  an upward trend in x. 
C)  a scatter diagram. 
D)  a two-variable scatter diagram.

Question 15

Intermediate goods and services are one of the largest components of the expenditure approach to measuring GDP.

Accepted Answer

A) True 
 B)False

Question 16

According to the BEA,in the second quarter of 2012 purchases of new residential structures rose by 8.9 percent.Using the expenditure approach,this change increases

Accepted Answer

A)  gross private domestic investment. 
B)  government expenditure on goods and services. 
C)  net exports of goods and services. 
D)  personal consumption expenditures. 
A)  gross private domestic investment. 
B)  government expenditure on goods and services. 
C)  net exports of goods and services. 
D)  personal consumption expenditures.

Question 17

$$\begin{array} { | l | c | } 
\hline  { \text { Item } } & \begin{array} { c } 
\text { Billions of } \
\text { dollars }
\end{array} \
\hline \text { Compensation of employees } & 80 \
\hline \begin{array} { l } 
\text { Net interest and rental } \
\text { income }
\end{array} & 30 \
\hline \text { Corporate profits } & 10 \
\hline \text { Proprietors income } & 20 \
\hline
\end{array}$$
-Use the information in the table above plus the fact that indirect taxes less subsidies are $10 billion and depreciation is $30 billion to calculate the value of GDP.

Accepted Answer

A)  $180 billion 
B)  $150 billion 
C)  $140 billion 
D)  $130 billion 
A)  $180 billion 
B)  $150 billion 
C)  $140 billion 
D)  $130 billion

Question 18

The following data show Uruguay's GDP using purchasing power parity in billions of dollars. Year 2000 2001 2002 2003 2004 2005 2006 2007 2008
GDP($) 26.1 25.8 23.3 24.3 27.9 30.1 33.9 37.2 40.2
Using the data,we can conclude that

Accepted Answer

A)  the standard of living did not change in Uruguay between 2000 and 2008. 
B)  Uruguay entered a recession in 2001. 
C)  potential GDP decreased in 2001. 
D)  Uruguay's economy reached a peak in 2005. 
A)  the standard of living did not change in Uruguay between 2000 and 2008. 
B)  Uruguay entered a recession in 2001. 
C)  potential GDP decreased in 2001. 
D)  Uruguay's economy reached a peak in 2005.

Question 19

The fact that prices for similar goods differ across nations complicates comparisons of real GDP across countries.

Accepted Answer

A) True 
 B)False

Question 20

In the computation of GDP,social security payments count as

Accepted Answer

A)  transfer payments and are included in GDP. 
B)  transfer payments and are not included in GDP. 
C)  government expenditure on goods and services and are included in GDP. 
D)  government expenditure on goods and services and are not included in GDP. 
A)  transfer payments and are included in GDP. 
B)  transfer payments and are not included in GDP. 
C)  government expenditure on goods and services and are included in GDP. 
D)  government expenditure on goods and services and are not included in GDP.

Personal consumption expenditures include all of the following EXCEPT spending on

When IBM,an American firm,produces computer chips in another country,this production is not included in U.S.GDP because the production did not take place in the United States.

The circular flow model shows that consumer goods and services produced by business firms are sold in the

A ton of coal purchased by your local utility to burn to make electricity would be best described as

List and explain the two phases and two turning points of the business cycle.

The underground economy means that GDP will overstate the actual level of economic welfare.

The circular flow diagram shows that

Component Amount (billions of dollars) Gross investment 1300 Personal consumption expenditure 1475 Depreciation 25 Government expenditure on goods and services 1315 U.S. imports 260 U.S. exports 249 Compensation of employees 65 -Nominal GDP is

The circular flow diagram shows

In the circular flow diagram,aggregate expenditure includes

Pollution is a by-product of some production processes,so on this count real GDP as measured

-In the above figure,the diagram shows

Intermediate goods and services are one of the largest components of the expenditure approach to measuring GDP.

According to the BEA,in the second quarter of 2012 purchases of new residential structures rose by 8.9 percent.Using the expenditure approach,this change increases

Item Billions of dollars Compensation of employees 80 Net interest and rental income 30 Corporate profits 10 Proprietors income 20 -Use the information in the table above plus the fact that indirect taxes less subsidies are $10 billion and depreciation is $30 billion to calculate the value of GDP.

The following data show Uruguay's GDP using purchasing power parity in billions of dollars. Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 GDP($) 26.1 25.8 23.3 24.3 27.9 30.1 33.9 37.2 40.2 Using the data,we can conclude that

The fact that prices for similar goods differ across nations complicates comparisons of real GDP across countries.

In the computation of GDP,social security payments count as

What Is Economics

The Economic Problem

Demand and Supply

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 4: Measuring GDP and Economic Growth

Personal consumption expenditures include all of the following EXCEPT spending on

When IBM,an American firm,produces computer chips in another country,this production is not included in U.S.GDP because the production did not take place in the United States.

The circular flow model shows that consumer goods and services produced by business firms are sold in the

A ton of coal purchased by your local utility to burn to make electricity would be best described as

List and explain the two phases and two turning points of the business cycle.

The underground economy means that GDP will overstate the actual level of economic welfare.

The circular flow diagram shows that

Component Amount (billions of dollars) Gross investment 1300 Personal consumption expenditure 1475 Depreciation 25 Government expenditure on goods and services 1315 U.S. imports 260 U.S. exports 249 Compensation of employees 65 -Nominal GDP is

The circular flow diagram shows

In the circular flow diagram,aggregate expenditure includes

Pollution is a by-product of some production processes,so on this count real GDP as measured

-In the above figure,the diagram shows

Intermediate goods and services are one of the largest components of the expenditure approach to measuring GDP.

According to the BEA,in the second quarter of 2012 purchases of new residential structures rose by 8.9 percent.Using the expenditure approach,this change increases

Item Billions of dollars Compensation of employees 80 Net interest and rental income 30 Corporate profits 10 Proprietors income 20 -Use the information in the table above plus the fact that indirect taxes less subsidies are $10 billion and depreciation is $30 billion to calculate the value of GDP.

The following data show Uruguay's GDP using purchasing power parity in billions of dollars. Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 GDP($) 26.1 25.8 23.3 24.3 27.9 30.1 33.9 37.2 40.2 Using the data,we can conclude that

The fact that prices for similar goods differ across nations complicates comparisons of real GDP across countries.

In the computation of GDP,social security payments count as

What Is Economics

The Economic Problem

Demand and Supply

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters