Question 1

Why aren't financial transactions, sales of secondhand goods, and household production included in measuring GDP?

Accepted Answer

Financial transactions do not involve th

Question 2

Examples of nondurable consumer goods include all of the following EXCEPT

Accepted Answer

A)  a pizza delivered to your home. 
B)  a cup of coffee. 
C)  a stereo system. 
D)  a ticket to the movies. 
A)  a pizza delivered to your home. 
B)  a cup of coffee. 
C)  a stereo system. 
D)  a ticket to the movies.

Question 3

Households receive their income in the circular flow diagram by

Accepted Answer

A)  selling the use of their property. 
B)  selling the goods they produce at home. 
C)  obtaining dividends and interest payments. 
D)  selling resources they own to business firms. 
A)  selling the use of their property. 
B)  selling the goods they produce at home. 
C)  obtaining dividends and interest payments. 
D)  selling resources they own to business firms.

Question 4

If imports are $100 million less than exports, government spending is $500 million, consumer expenditures are $1 billion, and investment spending is $500 million, then GDP is

Accepted Answer

A)  $1 billion. 
B)  $1.9 billion. 
C)  $2 billion. 
D)  $2.1 billion. 
A)  $1 billion. 
B)  $1.9 billion. 
C)  $2 billion. 
D)  $2.1 billion.

Question 5

Depreciation is

Accepted Answer

A)  added to Gross Domestic Product (GDP) to reach Net Domestic Product (NDP). 
B)  the reduction in the value of capital goods due to physical wear and tear. 
C)  not included in Gross Domestic Product (GDP) from the income side. 
D)  always higher than the capital consumption allowance. 
A)  added to Gross Domestic Product (GDP) to reach Net Domestic Product (NDP). 
B)  the reduction in the value of capital goods due to physical wear and tear. 
C)  not included in Gross Domestic Product (GDP) from the income side. 
D)  always higher than the capital consumption allowance.

Question 6

Consumption expenditures do NOT include purchases of

Accepted Answer

A)  durable goods. 
B)  nondurable goods. 
C)  intermediate goods. 
D)  services. 
A)  durable goods. 
B)  nondurable goods. 
C)  intermediate goods. 
D)  services.

Question 7

-Refer to the above figure. The top two arrows of the figure refer to the product markets. The bottom arrows refer to the factor markets. Which arrow represents the total monetary value of all goods and services?

Accepted Answer

A)  Arrow A 
B)  Arrow B 
C)  Arrow C 
D)  Arrow D 
A)  Arrow A 
B)  Arrow B 
C)  Arrow C 
D)  Arrow D

Question 8

If nominal Gross Domestic Product (GDP) in 2005 was $500 billion with a price index of 100, what would be the real Gross Domestic Product (GDP) in 2013 if the 2013 nominal Gross Domestic Product (GDP) was $900 billion and the 2013 price index was 140?

Accepted Answer

A)  $900 billion 
B)  $540 billion 
C)  $800 billion 
D)  $643 billion 
A)  $900 billion 
B)  $540 billion 
C)  $800 billion 
D)  $643 billion

Question 9

Profits represent

Accepted Answer

A)  the income earned from a bond. 
B)  the payments firms make to their employees. 
C)  a reward to entrepreneurs. 
D)  the difference between total tax revenue and total government spending. 
A)  the income earned from a bond. 
B)  the payments firms make to their employees. 
C)  a reward to entrepreneurs. 
D)  the difference between total tax revenue and total government spending.

Question 10

The price-corrected value for Gross Domestic Product is

Accepted Answer

A)  real Gross Domestic Product (GDP). 
B)  net Gross Domestic Product (GDP). 
C)  net national product. 
D)  per capita income. 
A)  real Gross Domestic Product (GDP). 
B)  net Gross Domestic Product (GDP). 
C)  net national product. 
D)  per capita income.

Question 11

The income that individuals have after personal income taxes have been paid is called

Accepted Answer

A)  gross domestic income. 
B)  disposable personal income. 
C)  personal income. 
D)  national income. 
A)  gross domestic income. 
B)  disposable personal income. 
C)  personal income. 
D)  national income.

Question 12

How do economists view profits?

Accepted Answer

A)  Profits are an asset the business holds. 
B)  Profits are one of the costs paid to a factor of production. 
C)  Profits are guaranteed as long as a firm operates ethically. 
D)  The firm's profit equals the sum of all payments to the 5 factors of production. 
A)  Profits are an asset the business holds. 
B)  Profits are one of the costs paid to a factor of production. 
C)  Profits are guaranteed as long as a firm operates ethically. 
D)  The firm's profit equals the sum of all payments to the 5 factors of production.

Question 13

Purchasing power parity exists when domestic currency

Accepted Answer

A)  maintains a fixed exchange rate with a foreign currency. 
B)  is not convertible to a foreign currency. 
C)  buys more goods at home than abroad. 
D)  buys as many goods abroad as at home. 
A)  maintains a fixed exchange rate with a foreign currency. 
B)  is not convertible to a foreign currency. 
C)  buys more goods at home than abroad. 
D)  buys as many goods abroad as at home.

Question 14

Gross Domestic Product (GDP) exceeds net domestic product by an amount equal to

Accepted Answer

A)  indirect business taxes. 
B)  corporate profits plus personal taxes. 
C)  the capital consumption allowance (depreciation). 
D)  transfer payments minus personal taxes. 
A)  indirect business taxes. 
B)  corporate profits plus personal taxes. 
C)  the capital consumption allowance (depreciation). 
D)  transfer payments minus personal taxes.

Question 15

The difference between personal income and disposable personal income is that

Accepted Answer

A)  disposable personal income includes only the funds available to spend on non-necessities. 
B)  personal income taxes are not included in disposable personal income. 
C)  personal income includes personal income taxes and indirect business taxes, which are not included in disposable personal income. 
D)  personal income does not include transfer payments, such as Social Security payments or welfare payments and disposable personal income includes them. 
A)  disposable personal income includes only the funds available to spend on non-necessities. 
B)  personal income taxes are not included in disposable personal income. 
C)  personal income includes personal income taxes and indirect business taxes, which are not included in disposable personal income. 
D)  personal income does not include transfer payments, such as Social Security payments or welfare payments and disposable personal income includes them.

Question 16

If households pay $1,000 in interest payments and receive $1,200 in interest, wages equal $8,000, rental receipts on land are $200, total business profits before taxes are $2,200, depreciation is $1,750, and indirect business taxes are $1,000, then gross domestic income is

Accepted Answer

A)  $15,350. 
B)  $13,350. 
C)  $13,150. 
D)  $11,400. 
A)  $15,350. 
B)  $13,350. 
C)  $13,150. 
D)  $11,400.

Question 17

A durable good

Accepted Answer

A)  has a life span of more than 3 years. 
B)  is used up within 3 years. 
C)  applies only to services. 
D)  is an intangible commodity. 
A)  has a life span of more than 3 years. 
B)  is used up within 3 years. 
C)  applies only to services. 
D)  is an intangible commodity.

Question 18

Changes in the stocks of finished goods and goods in process as well as changes in the raw materials that businesses keep on hand is known as

Accepted Answer

A)  the expenditure approach. 
B)  the income approach. 
C)  fixed investment. 
D)  inventory investment. 
A)  the expenditure approach. 
B)  the income approach. 
C)  fixed investment. 
D)  inventory investment.

Question 19

Which of the following will be the smallest in value?

Accepted Answer

A)  National income 
B)  Net domestic product 
C)  Personal income 
D)  Disposable personal income 
A)  National income 
B)  Net domestic product 
C)  Personal income 
D)  Disposable personal income

Question 20

How much of each dollar spent by a consumer ultimately becomes income to someone else?

Accepted Answer

A)  100 percent 
B)  67 percent 
C)  It depends on how much labor was needed to produce the good the consumer buys. 
D)  It depends on how much overhead there is in the distribution channel that delivers the good from the manufacturer to the consumer. 
A)  100 percent 
B)  67 percent 
C)  It depends on how much labor was needed to produce the good the consumer buys. 
D)  It depends on how much overhead there is in the distribution channel that delivers the good from the manufacturer to the consumer.

Exam 8: Measuring the Economys Performance

Why aren't financial transactions, sales of secondhand goods, and household production included in measuring GDP?

Examples of nondurable consumer goods include all of the following EXCEPT

Households receive their income in the circular flow diagram by

If imports are $100 million less than exports, government spending is $500 million, consumer expenditures are $1 billion, and investment spending is $500 million, then GDP is

Depreciation is

Consumption expenditures do NOT include purchases of

-Refer to the above figure. The top two arrows of the figure refer to the product markets. The bottom arrows refer to the factor markets. Which arrow represents the total monetary value of all goods and services?

If nominal Gross Domestic Product (GDP) in 2005 was $500 billion with a price index of 100, what would be the real Gross Domestic Product (GDP) in 2013 if the 2013 nominal Gross Domestic Product (GDP) was $900 billion and the 2013 price index was 140?

Profits represent

The price-corrected value for Gross Domestic Product is

The income that individuals have after personal income taxes have been paid is called

How do economists view profits?

Purchasing power parity exists when domestic currency

Gross Domestic Product (GDP) exceeds net domestic product by an amount equal to

The difference between personal income and disposable personal income is that

If households pay $1,000 in interest payments and receive $1,200 in interest, wages equal $8,000, rental receipts on land are $200, total business profits before taxes are $2,200, depreciation is $1,750, and indirect business taxes are $1,000, then gross domestic income is

A durable good

Changes in the stocks of finished goods and goods in process as well as changes in the raw materials that businesses keep on hand is known as

Which of the following will be the smallest in value?

How much of each dollar spent by a consumer ultimately becomes income to someone else?

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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