Question 1

-According to the above table, net domestic product is

Accepted Answer

A)  $12,531 billion. 
B)  $11,998 billion. 
C)  $11,892 billion. 
D)  $11,811 billion. 
A)  $12,531 billion. 
B)  $11,998 billion. 
C)  $11,892 billion. 
D)  $11,811 billion.

Question 2

If no other national income variables change when ________ increase, then GDP will decrease.

Accepted Answer

A)  inventories 
B)  imports 
C)  investments 
D)  levels of pollution 
A)  inventories 
B)  imports 
C)  investments 
D)  levels of pollution

Question 3

The amount of income that households actually receive before they pay personal income taxes defines

Accepted Answer

A)  national income (NI). 
B)  personal income (PI). 
C)  disposable personal income (DPI). 
D)  net domestic product (NDP). 
A)  national income (NI). 
B)  personal income (PI). 
C)  disposable personal income (DPI). 
D)  net domestic product (NDP).

Question 4

Mental or physical labor or help purchased by consumers is a(n)

Accepted Answer

A)  durable consumer good. 
B)  nondurable consumer good. 
C)  service. 
D)  investment. 
A)  durable consumer good. 
B)  nondurable consumer good. 
C)  service. 
D)  investment.

Question 5

A firm produces a good and generates $5 million in receipts. Wages are $3 million, rent is $500,000, and interest payments are $1 million. Then

Accepted Answer

A)  profits are $500,000, the cost of production is $4.5 million, and households receive income equal to $4.5 million. 
B)  profits are $500,000, the cost of production is $5 million, and households receive income equal to $4.5 million. 
C)  profits are $500,000, the cost of production is $5 million, and households receive income equal to $5 million. 
D)  profits are $500,000, the cost of production is $5 million, and households receive income equal to $3.5 million. 
A)  profits are $500,000, the cost of production is $4.5 million, and households receive income equal to $4.5 million. 
B)  profits are $500,000, the cost of production is $5 million, and households receive income equal to $4.5 million. 
C)  profits are $500,000, the cost of production is $5 million, and households receive income equal to $5 million. 
D)  profits are $500,000, the cost of production is $5 million, and households receive income equal to $3.5 million.

Question 6

The problem with using foreign exchange rates to convert one country's GDP into dollars is that

Accepted Answer

A)  the values of currencies are not comparable. 
B)  exchange rates do not reflect differences in inflation rates. 
C)  not all goods and services are sold on world markets. 
D)  the dollar has been losing value over the last twenty years. 
A)  the values of currencies are not comparable. 
B)  exchange rates do not reflect differences in inflation rates. 
C)  not all goods and services are sold on world markets. 
D)  the dollar has been losing value over the last twenty years.

Question 7

The value added method of calculating GDP means

Accepted Answer

A)  adding up the market values of all intermediate goods. 
B)  calculating the percentage changes in the GDP between two years. 
C)  adding up the incomes of all businesses in a given year. 
D)  adding up the difference between the sale price and the value of intermediate goods of each product at every stage of production. 
A)  adding up the market values of all intermediate goods. 
B)  calculating the percentage changes in the GDP between two years. 
C)  adding up the incomes of all businesses in a given year. 
D)  adding up the difference between the sale price and the value of intermediate goods of each product at every stage of production.

Question 8

The simple circular flow of income shows that the total income in an economy equals

Accepted Answer

A)  total profits earned by firms. 
B)  all taxes paid by households. 
C)  the total amount of money supplied by the government. 
D)  total expenditures. 
A)  total profits earned by firms. 
B)  all taxes paid by households. 
C)  the total amount of money supplied by the government. 
D)  total expenditures.

Question 9

Any use of today's resources to expand tomorrow's production or consumption is a(n)

Accepted Answer

A)  durable consumer good. 
B)  nondurable consumer good. 
C)  service. 
D)  investment. 
A)  durable consumer good. 
B)  nondurable consumer good. 
C)  service. 
D)  investment.

Question 10

Indirect business taxes include all of the following EXCEPT

Accepted Answer

A)  sales taxes. 
B)  taxes on business property. 
C)  taxes on corporate profits. 
D)  taxes on business equipment. 
A)  sales taxes. 
B)  taxes on business property. 
C)  taxes on corporate profits. 
D)  taxes on business equipment.

Question 11

Which of the following statements is NOT true of GDP?

Accepted Answer

A)  GDP excludes nonmarket production. 
B)  There are no significant weaknesses in using GDP as a measure of the nation's economic performance. 
C)  GDP is the value of final goods and services produced in the economy. 
D)  GDP is not a measure of a nation's overall welfare. 
A)  GDP excludes nonmarket production. 
B)  There are no significant weaknesses in using GDP as a measure of the nation's economic performance. 
C)  GDP is the value of final goods and services produced in the economy. 
D)  GDP is not a measure of a nation's overall welfare.

Question 12

The most meaningful way to compare per capita Gross Domestic Product (GDP) across countries is to

Accepted Answer

A)  use foreign exchange rates to convert each country's per capita Gross Domestic Product (GDP) into dollars. Then compare. 
B)  first adjust each country's per capita Gross Domestic Product (GDP) to exclude all the goods and services that are not exchanged with other countries. 
C)  assume that the cost of living in each country is the same as the United States' cost of living. 
D)  first use purchasing power parity to factor in each country's true cost of living. 
A)  use foreign exchange rates to convert each country's per capita Gross Domestic Product (GDP) into dollars. Then compare. 
B)  first adjust each country's per capita Gross Domestic Product (GDP) to exclude all the goods and services that are not exchanged with other countries. 
C)  assume that the cost of living in each country is the same as the United States' cost of living. 
D)  first use purchasing power parity to factor in each country's true cost of living.

Question 13

If Net Domestic Product (NDP) is $50 less than Gross Domestic Product (GDP), we know that

Accepted Answer

A)  inventories increased over the year. 
B)  inventories decreased over the year. 
C)  net investment equals $50. 
D)  depreciation equals $50. 
A)  inventories increased over the year. 
B)  inventories decreased over the year. 
C)  net investment equals $50. 
D)  depreciation equals $50.

Question 14

Inventory investment occurs when

Accepted Answer

A)  grocers sell stocks of canned goods off their shelves. 
B)  individuals invest in an invention. 
C)  shopkeepers check their inventories. 
D)  automobile dealers add to their stocks of unsold cars. 
A)  grocers sell stocks of canned goods off their shelves. 
B)  individuals invest in an invention. 
C)  shopkeepers check their inventories. 
D)  automobile dealers add to their stocks of unsold cars.

Question 15

-Refer to the above table. The production of this good goes through 4 different stages of production. What is the total dollar value added when production is completed?

Accepted Answer

A)  $0.07 
B)  $0.32 
C)  $0.75 
D)  Cannot be computed without more information. 
A)  $0.07 
B)  $0.32 
C)  $0.75 
D)  Cannot be computed without more information.

Question 16

The nominal value of Gross Domestic Product (GDP) is expressed in

Accepted Answer

A)  inflation-adjusted prices. 
B)  constant dollars. 
C)  base-year dollars. 
D)  none of the above. 
A)  inflation-adjusted prices. 
B)  constant dollars. 
C)  base-year dollars. 
D)  none of the above.

Question 17

Suppose the total value of all assets in the Country X is $10 trillion. In 2013, the total value of all final services produced in Country X was $150 billion, the total value of all final goods produced in County X was $350 billion, and the total value of all final goods and services produced by County X's firms in other countries was $100 billion. In this situation, CountryX's Gross Domestic Product for 2013 was

Accepted Answer

A)  $600 billion. 
B)  $510 billion. 
C)  $500 billion. 
D)  $10.5 trillion. 
A)  $600 billion. 
B)  $510 billion. 
C)  $500 billion. 
D)  $10.5 trillion.

Question 18

"If we sum up all factor payments, we will get gross domestic income." Do you agree or disagree with this statement? Why?

Accepted Answer

Disagree. The sum of all facto

Question 19

Which of the following is included in gross private domestic investment? I. The purchase of new capital goods
II) An increase in business inventories

Accepted Answer

A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II

Question 20

If consumption expenditures are $500 million, spending on fixed investment is $100 million, the increase in inventories equals $5 million, imports are $50 million, exports are $55 million, government spending on goods and services is $200 million, than GDP is

Accepted Answer

A)  $790 million. 
B)  $800 million. 
C)  $810 million. 
D)  $830 million. 
A)  $790 million. 
B)  $800 million. 
C)  $810 million. 
D)  $830 million.

Exam 8: Measuring the Economys Performance

-According to the above table, net domestic product is

If no other national income variables change when ________ increase, then GDP will decrease.

The amount of income that households actually receive before they pay personal income taxes defines

Mental or physical labor or help purchased by consumers is a(n)

A firm produces a good and generates $5 million in receipts. Wages are $3 million, rent is $500,000, and interest payments are $1 million. Then

The problem with using foreign exchange rates to convert one country's GDP into dollars is that

The value added method of calculating GDP means

The simple circular flow of income shows that the total income in an economy equals

Any use of today's resources to expand tomorrow's production or consumption is a(n)

Indirect business taxes include all of the following EXCEPT

Which of the following statements is NOT true of GDP?

The most meaningful way to compare per capita Gross Domestic Product (GDP) across countries is to

If Net Domestic Product (NDP) is $50 less than Gross Domestic Product (GDP), we know that

Inventory investment occurs when

-Refer to the above table. The production of this good goes through 4 different stages of production. What is the total dollar value added when production is completed?

The nominal value of Gross Domestic Product (GDP) is expressed in

"If we sum up all factor payments, we will get gross domestic income." Do you agree or disagree with this statement? Why?

Which of the following is included in gross private domestic investment? I. The purchase of new capital goods II) An increase in business inventories

If consumption expenditures are $500 million, spending on fixed investment is $100 million, the increase in inventories equals $5 million, imports are $50 million, exports are $55 million, government spending on goods and services is $200 million, than GDP is

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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