Question 1

National income accounting is

Accepted Answer

A)  how the amount of unemployment in the system is measured. 
B)  used only to determine the government deficit. 
C)  an approach to measuring an economy's aggregate performance. 
D)  the system that measures the value of the Dow Jones average. 
A)  how the amount of unemployment in the system is measured. 
B)  used only to determine the government deficit. 
C)  an approach to measuring an economy's aggregate performance. 
D)  the system that measures the value of the Dow Jones average.

Question 2

Which of the following occurs in the factor market?

Accepted Answer

A)  firms exchange goods and services for resources. 
B)  households exchange resources for goods and services. 
C)  households exchange money for goods and services. 
D)  firms exchange money for resources. 
A)  firms exchange goods and services for resources. 
B)  households exchange resources for goods and services. 
C)  households exchange money for goods and services. 
D)  firms exchange money for resources.

Question 3

The sum of the value added at all stages of production for a product is

Accepted Answer

A)  the product's final price. 
B)  the product's price plus the value of intermediate goods. 
C)  the product's price minus the value of intermediate goods. 
D)  the sum of all the transactions in the production of the product. 
A)  the product's final price. 
B)  the product's price plus the value of intermediate goods. 
C)  the product's price minus the value of intermediate goods. 
D)  the sum of all the transactions in the production of the product.

Question 4

Why are exports added to (rather than subtracted from) the other expenditure components to arrive at GDP using the expenditure method?

Accepted Answer

A)  because exports account for those goods that were produced in the economy but that were not devoted to domestic consumption, used for domestic investment, or provided as government goods 
B)  because exports have a higher profit margin for manufacturers than do similar products sold in domestic markets 
C)  because exported goods are not valued properly, due to problems with the purchasing power parity index 
D)  because it is only through exporting that we can generate jobs in our own economy 
A)  because exports account for those goods that were produced in the economy but that were not devoted to domestic consumption, used for domestic investment, or provided as government goods 
B)  because exports have a higher profit margin for manufacturers than do similar products sold in domestic markets 
C)  because exported goods are not valued properly, due to problems with the purchasing power parity index 
D)  because it is only through exporting that we can generate jobs in our own economy

Question 5

Which one of the following is NOT included in GDP?

Accepted Answer

A)  You look after your neighbor's plants during her vacation in exchange for her agreement to feed your fish while you are gone. 
B)  A homeowner hires a cleaning service to take care of household chores she chooses not to do because of the demands of her job. 
C)  A bicycle manufacturer pays an advertising agency to develop a new promotional campaign. 
D)  You purchase new tires for your old car. 
A)  You look after your neighbor's plants during her vacation in exchange for her agreement to feed your fish while you are gone. 
B)  A homeowner hires a cleaning service to take care of household chores she chooses not to do because of the demands of her job. 
C)  A bicycle manufacturer pays an advertising agency to develop a new promotional campaign. 
D)  You purchase new tires for your old car.

Question 6

A capital good is

Accepted Answer

A)  one produced by the government. 
B)  part of investment spending when purchased by either private businesses or by the federal government. 
C)  one that is purchased in order to make other goods and services. 
D)  not part of Gross Domestic Product (GDP) because it is an intermediate product. 
A)  one produced by the government. 
B)  part of investment spending when purchased by either private businesses or by the federal government. 
C)  one that is purchased in order to make other goods and services. 
D)  not part of Gross Domestic Product (GDP) because it is an intermediate product.

Question 7

What is the difference between personal income and disposable personal income?

Accepted Answer

A)  the amount of personal income taxes 
B)  indirect personal taxes and transfers 
C)  net U.S. income earned abroad 
D)  depreciation 
A)  the amount of personal income taxes 
B)  indirect personal taxes and transfers 
C)  net U.S. income earned abroad 
D)  depreciation

Question 8

GDP can be calculated using

Accepted Answer

A)  the expenditure approach and the production approach. 
B)  the expenditure approach and the income approach. 
C)  the expenditure approach and the factor of production approach. 
D)  the expenditure approach and the resource approach. 
A)  the expenditure approach and the production approach. 
B)  the expenditure approach and the income approach. 
C)  the expenditure approach and the factor of production approach. 
D)  the expenditure approach and the resource approach.

Question 9

Gross Domestic Product (GDP) = $13.0 trillion, consumption = $9.5 trillion, depreciation = $1.8 trillion, other business income adjustments less indirect business taxes = $0.2 trillion, and net U.S. income earned abroad = $0.1 trillion. Use this information to calculate national income (NI).

Accepted Answer

A)  NI = $11.0 billion 
B)  NI = $11.3 billion 
C)  NI = $11.4 billion 
D)  NI = $11.5 billion 
A)  NI = $11.0 billion 
B)  NI = $11.3 billion 
C)  NI = $11.4 billion 
D)  NI = $11.5 billion

Question 10

The expenditure approach to measuring GDP

Accepted Answer

A)  adds the dollar value of final goods and services. 
B)  adds the income received by all factors of production. 
C)  excludes durable consumer goods since they last more than a year. 
D)  excludes profits since profits are a cost of production. 
A)  adds the dollar value of final goods and services. 
B)  adds the income received by all factors of production. 
C)  excludes durable consumer goods since they last more than a year. 
D)  excludes profits since profits are a cost of production.

Question 11

Disposable personal income is found by taking

Accepted Answer

A)  personal income taxes minus personal income. 
B)  personal income minus personal income taxes. 
C)  personal income taxes plus personal income. 
D)  personal income times personal income taxes. 
A)  personal income taxes minus personal income. 
B)  personal income minus personal income taxes. 
C)  personal income taxes plus personal income. 
D)  personal income times personal income taxes.

Question 12

Net exports for the United States

Accepted Answer

A)  are always positive numbers. 
B)  may be negative. 
C)  are a result of decreasing investment in the manufacturing industries. 
D)  are a result of decreasing domestic consumption. 
A)  are always positive numbers. 
B)  may be negative. 
C)  are a result of decreasing investment in the manufacturing industries. 
D)  are a result of decreasing domestic consumption.

Question 13

Because of improved productivity, wages increase 10 percent. As a result, gross domestic income increases. What happens to Gross Domestic Product?

Accepted Answer

A)  Gross Domestic Product also increases since consumption expenditures would increase. 
B)  Gross Domestic Product decreases as people pay more taxes on their higher incomes. 
C)  Gross Domestic Product would not change since consumption expenditures would rise but investment spending would fall. 
D)  Gross Domestic Product would decrease because businesses are spending more on wages. 
A)  Gross Domestic Product also increases since consumption expenditures would increase. 
B)  Gross Domestic Product decreases as people pay more taxes on their higher incomes. 
C)  Gross Domestic Product would not change since consumption expenditures would rise but investment spending would fall. 
D)  Gross Domestic Product would decrease because businesses are spending more on wages.

Question 14

The total market value of final goods and services produced in an economy during a one-year period is

Accepted Answer

A)  Gross Domestic Product. 
B)  net national product. 
C)  profit. 
D)  personal income. 
A)  Gross Domestic Product. 
B)  net national product. 
C)  profit. 
D)  personal income.

Question 15

Suppose 2009 is the base year. From 2009 to 2010, the price index increases from 100 to 102.5. If nominal Gross Domestic Product (GDP) is $2,800 in 2010, then the real Gross Domestic Product (GDP) in 2010 is

Accepted Answer

A)  $2,700. 
B)  $2,800. 
C)  $2,732. 
D)  $2,870. 
A)  $2,700. 
B)  $2,800. 
C)  $2,732. 
D)  $2,870.

Question 16

The circular flow of income shows

Accepted Answer

A)  goods, services, and money payments flowing in the same direction. 
B)  goods and money payments flowing in one direction and services flowing in the opposite direction. 
C)  goods and services flowing in one direction and money payments in the other direction. 
D)  goods flowing in one direction and services and money payments flowing in the other direction. 
A)  goods, services, and money payments flowing in the same direction. 
B)  goods and money payments flowing in one direction and services flowing in the opposite direction. 
C)  goods and services flowing in one direction and money payments in the other direction. 
D)  goods flowing in one direction and services and money payments flowing in the other direction.

Question 17

Food and gasoline can be classified as

Accepted Answer

A)  nondurable goods. 
B)  durable goods. 
C)  capital goods. 
D)  long-term goods. 
A)  nondurable goods. 
B)  durable goods. 
C)  capital goods. 
D)  long-term goods.

Question 18

Personal income taxes are the difference between

Accepted Answer

A)  national income and personal income. 
B)  personal income and disposable personal income. 
C)  national income and disposable personal income. 
D)  net domestic product and personal income. 
A)  national income and personal income. 
B)  personal income and disposable personal income. 
C)  national income and disposable personal income. 
D)  net domestic product and personal income.

Question 19

When economists discuss the nominal value of an economic variable, the variable is

Accepted Answer

A)  expressed in current dollars. 
B)  expressed as an index figure. 
C)  adjusted for a changing price level. 
D)  expressed as a percentage. 
A)  expressed in current dollars. 
B)  expressed as an index figure. 
C)  adjusted for a changing price level. 
D)  expressed as a percentage.

Question 20

The components of the expenditure approach to measuring GDP include all of the following EXCEPT

Accepted Answer

A)  net exports. 
B)  government purchases of goods and services. 
C)  expenditures for business investments. 
D)  the implicit payments for unpaid household work. 
A)  net exports. 
B)  government purchases of goods and services. 
C)  expenditures for business investments. 
D)  the implicit payments for unpaid household work.

Exam 8: Measuring the Economys Performance

National income accounting is

Which of the following occurs in the factor market?

The sum of the value added at all stages of production for a product is

Why are exports added to (rather than subtracted from) the other expenditure components to arrive at GDP using the expenditure method?

Which one of the following is NOT included in GDP?

A capital good is

What is the difference between personal income and disposable personal income?

GDP can be calculated using

Gross Domestic Product (GDP) = $13.0 trillion, consumption = $9.5 trillion, depreciation = $1.8 trillion, other business income adjustments less indirect business taxes = $0.2 trillion, and net U.S. income earned abroad = $0.1 trillion. Use this information to calculate national income (NI).

The expenditure approach to measuring GDP

Disposable personal income is found by taking

Net exports for the United States

Because of improved productivity, wages increase 10 percent. As a result, gross domestic income increases. What happens to Gross Domestic Product?

The total market value of final goods and services produced in an economy during a one-year period is

Suppose 2009 is the base year. From 2009 to 2010, the price index increases from 100 to 102.5. If nominal Gross Domestic Product (GDP) is $2,800 in 2010, then the real Gross Domestic Product (GDP) in 2010 is

The circular flow of income shows

Food and gasoline can be classified as

Personal income taxes are the difference between

When economists discuss the nominal value of an economic variable, the variable is

The components of the expenditure approach to measuring GDP include all of the following EXCEPT

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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