Question 1

One method of calculating Gross Domestic Product (GDP) is to add together

Accepted Answer

A)  investment, consumption, gross profits, and net exports. 
B)  consumption, investment, government spending, and net exports. 
C)  wages, gross profits, net investment, and net exports. 
D)  consumption, wages, interest, rental income, and exports. 
A)  investment, consumption, gross profits, and net exports. 
B)  consumption, investment, government spending, and net exports. 
C)  wages, gross profits, net investment, and net exports. 
D)  consumption, wages, interest, rental income, and exports. B

Question 2

The circular flow of income assumes that

Accepted Answer

A)  profit is not a cost of production. 
B)  the national income accounting approach is not an adequate way to measure the economy's performance. 
C)  goods and services flow in one direction and money payments flow in the other. 
D)  total income is the sum of the value of intermediate goods and final goods and services. 
A)  profit is not a cost of production. 
B)  the national income accounting approach is not an adequate way to measure the economy's performance. 
C)  goods and services flow in one direction and money payments flow in the other. 
D)  total income is the sum of the value of intermediate goods and final goods and services. C

Question 3

The production of a certain good involves 5 stages. The value added after the first stage of production occurs is is $1.20. The sale price of the good is $2.50. What amount is used to measure GDP?

Accepted Answer

A)  $0.025 
B)  $1.20 
C)  $1.30 
D)  $2.50 
A)  $0.025 
B)  $1.20 
C)  $1.30 
D)  $2.50 D

Question 4

What constitutes investment when measuring gross private domestic investment?

Accepted Answer

Investment is the use of today's resourc

Question 5

Which of the following is consistent with the circular flow of income? I. Goods and services flow in one direction.
II) Payments and incomes flow in one direction.
III) Sellers receive less than what buyers spend.

Accepted Answer

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

Question 6

The dollar value of final output

Accepted Answer

A)  is less than total income. 
B)  is equal to total income. 
C)  is greater than total income. 
D)  equals profits. 
A)  is less than total income. 
B)  is equal to total income. 
C)  is greater than total income. 
D)  equals profits.

Question 7

-According to the above table, Gross Domestic Product as calculated by the income approach is

Accepted Answer

A)  $10,121 billion. 
B)  $10,646 billion. 
C)  $14,925 billion. 
D)  $15,619 billion. 
A)  $10,121 billion. 
B)  $10,646 billion. 
C)  $14,925 billion. 
D)  $15,619 billion.

Question 8

-According to the above table, national income is

Accepted Answer

A)  $2,190. 
B)  $2,550. 
C)  $2,465. 
D)  $2,750. 
A)  $2,190. 
B)  $2,550. 
C)  $2,465. 
D)  $2,750.

Question 9

-Refer to the above figure. Which arrows represent items that are measured in dollar terms?

Accepted Answer

A)  Arrows A and B 
B)  Arrows C and D 
C)  Arrows A and D 
D)  Arrows B and C 
A)  Arrows A and B 
B)  Arrows C and D 
C)  Arrows A and D 
D)  Arrows B and C

Question 10

The annual cost of producing the entire output of final goods and services in an economy is

Accepted Answer

A)  equal to the quantity of total output produced. 
B)  greater than the total income of households in the economy. 
C)  equal to total income. 
D)  equal to the total income of households in the economy only if profits are zero. 
A)  equal to the quantity of total output produced. 
B)  greater than the total income of households in the economy. 
C)  equal to total income. 
D)  equal to the total income of households in the economy only if profits are zero.

Question 11

Disposable personal income is

Accepted Answer

A)  the total of factor payments to owners of resources. 
B)  the dollar value of all final goods and services produced in a country in a year. 
C)  the amount of monetary payments households actually receive before paying personal income taxes. 
D)  the amount of monetary payments households actually receive after paying personal income taxes. 
A)  the total of factor payments to owners of resources. 
B)  the dollar value of all final goods and services produced in a country in a year. 
C)  the amount of monetary payments households actually receive before paying personal income taxes. 
D)  the amount of monetary payments households actually receive after paying personal income taxes.

Question 12

Explain the concept of the circular flow.

Accepted Answer

The circular flow refers to the interrel

Question 13

-Using the above table, the Disposable Personal Income (DPI) for the country is

Accepted Answer

A)  78. 
B)  220. 
C)  147. 
D)  293. 
A)  78. 
B)  220. 
C)  147. 
D)  293.

Question 14

-Using the above table, the national income is (in billions of dollars)

Accepted Answer

A)  8,950. 
B)  7,250. 
C)  6,850. 
D)  8,050. 
A)  8,950. 
B)  7,250. 
C)  6,850. 
D)  8,050.

Question 15

-Refer to the above table. The production of this good goes through 4 different stages of production. What is the value added at Stage 2?

Accepted Answer

A)  $0.02 
B)  $0.08 
C)  $0.10 
D)  $0.75 
A)  $0.02 
B)  $0.08 
C)  $0.10 
D)  $0.75

Question 16

In calculating GDP, the value of intermediate goods is eliminated by using the

Accepted Answer

A)  distributive method. 
B)  value association method. 
C)  value added method. 
D)  Federal Reserve method. 
A)  distributive method. 
B)  value association method. 
C)  value added method. 
D)  Federal Reserve method.

Question 17

When one uses the expenditure approach to calculate Gross Domestic Product (GDP), which of the following would be included?

Accepted Answer

A)  government spending at the state level 
B)  household purchases of legal services 
C)  inventory investment 
D)  all of the above 
A)  government spending at the state level 
B)  household purchases of legal services 
C)  inventory investment 
D)  all of the above

Question 18

Which of the following is included in Gross Domestic Product (GDP)?

Accepted Answer

A)  The buying and selling of securities 
B)  Government transfer payments 
C)  Private transfer payments 
D)  The sale of used goods 
E)  None of the above 
A)  The buying and selling of securities 
B)  Government transfer payments 
C)  Private transfer payments 
D)  The sale of used goods 
E)  None of the above

Question 19

Which of the following statements does NOT describe the real value of an economic variable?

Accepted Answer

A)  It is adjusted for changes in the price level. 
B)  It is expressed in constant dollars. 
C)  It is a measure of the purchasing power of the variable. 
D)  It is the variable's nominal value adjusted for unemployment. 
A)  It is adjusted for changes in the price level. 
B)  It is expressed in constant dollars. 
C)  It is a measure of the purchasing power of the variable. 
D)  It is the variable's nominal value adjusted for unemployment.

Question 20

A valid rationale for the decision NOT to include non-compensated housework in Gross Domestic Product (GDP) calculations is that

Accepted Answer

A)  it would decrease the employment rate for domestic work. 
B)  there is some difficulty in measuring quality and quantity. 
C)  it is not a product or service. 
D)  it would understate the value of production in the economy. 
A)  it would decrease the employment rate for domestic work. 
B)  there is some difficulty in measuring quality and quantity. 
C)  it is not a product or service. 
D)  it would understate the value of production in the economy.

Exam 8: Measuring the Economys Performance

One method of calculating Gross Domestic Product (GDP) is to add together

The circular flow of income assumes that

The production of a certain good involves 5 stages. The value added after the first stage of production occurs is is $1.20. The sale price of the good is $2.50. What amount is used to measure GDP?

What constitutes investment when measuring gross private domestic investment?

Which of the following is consistent with the circular flow of income? I. Goods and services flow in one direction. II) Payments and incomes flow in one direction. III) Sellers receive less than what buyers spend.

The dollar value of final output

-According to the above table, Gross Domestic Product as calculated by the income approach is

-According to the above table, national income is

-Refer to the above figure. Which arrows represent items that are measured in dollar terms?

The annual cost of producing the entire output of final goods and services in an economy is

Disposable personal income is

Explain the concept of the circular flow.

-Using the above table, the Disposable Personal Income (DPI) for the country is

-Using the above table, the national income is (in billions of dollars)

-Refer to the above table. The production of this good goes through 4 different stages of production. What is the value added at Stage 2?

In calculating GDP, the value of intermediate goods is eliminated by using the

When one uses the expenditure approach to calculate Gross Domestic Product (GDP), which of the following would be included?

Which of the following is included in Gross Domestic Product (GDP)?

Which of the following statements does NOT describe the real value of an economic variable?

A valid rationale for the decision NOT to include non-compensated housework in Gross Domestic Product (GDP) calculations is that

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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