Question 1

Which of the following is included in measuring GDP?

Accepted Answer

A)  The value added at each stage of production of a final product 
B)  The buying and selling of securities 
C)  The transfer of secondhand goods 
D)  Household services rendered by homemakers 
A)  The value added at each stage of production of a final product 
B)  The buying and selling of securities 
C)  The transfer of secondhand goods 
D)  Household services rendered by homemakers

Question 2

U.S. Gross Domestic Product (GDP) does NOT include which of the following?

Accepted Answer

A)  business investment 
B)  the value of goods produced in Canada by U.S. owned firms 
C)  net exports 
D)  the purchase of all final goods and services by U.S. households 
A)  business investment 
B)  the value of goods produced in Canada by U.S. owned firms 
C)  net exports 
D)  the purchase of all final goods and services by U.S. households

Question 3

In the simple circular flow,

Accepted Answer

A)  businesses trade goods and services for resources in the product market. 
B)  consumers trade resources for goods and services in the factor market. 
C)  consumers trade goods and services for monetary payments in the factor market. 
D)  producers trade goods and services for monetary payments in the product market. 
A)  businesses trade goods and services for resources in the product market. 
B)  consumers trade resources for goods and services in the factor market. 
C)  consumers trade goods and services for monetary payments in the factor market. 
D)  producers trade goods and services for monetary payments in the product market.

Question 4

Gross domestic product is the

Accepted Answer

A)  market value of all intermediate and final goods produced in a year. 
B)  market value of all final goods produced in a year. 
C)  total spending in an economy in a year. 
D)  value of total exports in a year. 
A)  market value of all intermediate and final goods produced in a year. 
B)  market value of all final goods produced in a year. 
C)  total spending in an economy in a year. 
D)  value of total exports in a year.

Question 5

Purchasing power parity refers to

Accepted Answer

A)  adjustments in GDP figures to put everything into one common currency for comparison sake. 
B)  adjustments in exchange rate conversions that take into account differences in inflation rates across countries. 
C)  adjustments in exchange rate conversions that take into account the differences in true cost of living across countries. 
D)  calculating real, per capita GDP in dollars. 
A)  adjustments in GDP figures to put everything into one common currency for comparison sake. 
B)  adjustments in exchange rate conversions that take into account differences in inflation rates across countries. 
C)  adjustments in exchange rate conversions that take into account the differences in true cost of living across countries. 
D)  calculating real, per capita GDP in dollars.

Question 6

In the simple circular flow model, the funds received by a carmaker when it sells a car goes to

Accepted Answer

A)  the workers who helped build the car. 
B)  the owners of firms who sold materials to the carmaker, and the rest stays with the firm. 
C)  only the owners of the carmaker. 
D)  the owners of all of the resources used to make the car. 
A)  the workers who helped build the car. 
B)  the owners of firms who sold materials to the carmaker, and the rest stays with the firm. 
C)  only the owners of the carmaker. 
D)  the owners of all of the resources used to make the car.

Question 7

A nondurable 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 8

Gross Domestic Product measures

Accepted Answer

A)  the total value of labor used in the economy. 
B)  the total market value of final goods and services produced within a nation's borders. 
C)  the total income received by residents of a nation. 
D)  the total worth of all goods consumed within the borders of a nation. 
A)  the total value of labor used in the economy. 
B)  the total market value of final goods and services produced within a nation's borders. 
C)  the total income received by residents of a nation. 
D)  the total worth of all goods consumed within the borders of a nation.

Question 9

Goods and services are sold

Accepted Answer

A)  in the product markets. 
B)  in the factor markets. 
C)  by households. 
D)  only as intermediate goods. 
A)  in the product markets. 
B)  in the factor markets. 
C)  by households. 
D)  only as intermediate goods.

Question 10

Which of the following items are included in GDP?

Accepted Answer

A)  a used cars 
B)  all transactions involving bonds 
C)  all new homes 
D)  all food stamps 
A)  a used cars 
B)  all transactions involving bonds 
C)  all new homes 
D)  all food stamps

Question 11

Because of terrible winter storms, gross domestic product for the first quarter of the calendar year falls by 10 percent. As a result, gross domestic income

Accepted Answer

A)  falls by less than 10 percent. 
B)  also falls by 10 percent because they always have to be equal. 
C)  falls by more than 10 percent because incomes always vary more than GDP. 
D)  would not change since the time span is less than a year. 
A)  falls by less than 10 percent. 
B)  also falls by 10 percent because they always have to be equal. 
C)  falls by more than 10 percent because incomes always vary more than GDP. 
D)  would not change since the time span is less than a year.

Question 12

Durable consumer goods are goods that

Accepted Answer

A)  last for more than three years. 
B)  last for more than one year. 
C)  are used up within three years. 
D)  are used up within one year. 
A)  last for more than three years. 
B)  last for more than one year. 
C)  are used up within three years. 
D)  are used up within one year.

Question 13

Adjusting nominal Gross Domestic Product (GDP) for price changes from a base year yields

Accepted Answer

A)  current Gross Domestic Product (GDP). 
B)  real Gross Domestic Product (GDP). 
C)  constant disposable income. 
D)  Gross Domestic Product (GDP) net of relative price changes. 
A)  current Gross Domestic Product (GDP). 
B)  real Gross Domestic Product (GDP). 
C)  constant disposable income. 
D)  Gross Domestic Product (GDP) net of relative price changes.

Question 14

Which one of the following is NOT included in GDP?

Accepted Answer

A)  You pay a roofer $3,000 to repair your roof after it is damaged in a hailstorm. 
B)  You pay a roofer $3,000 to repair your roof after you discover leaks have appeared due to normal wear and tear. 
C)  You give up a weekend of leisure to repair your roof yourself. 
D)  You purchase $60 worth of first aid supplies at the local drugstore to treat the cuts and scrapes you suffered while crawling around on the roof. 
A)  You pay a roofer $3,000 to repair your roof after it is damaged in a hailstorm. 
B)  You pay a roofer $3,000 to repair your roof after you discover leaks have appeared due to normal wear and tear. 
C)  You give up a weekend of leisure to repair your roof yourself. 
D)  You purchase $60 worth of first aid supplies at the local drugstore to treat the cuts and scrapes you suffered while crawling around on the roof.

Question 15

Which one of the following is a durable consumer good?

Accepted Answer

A)  Furniture 
B)  Gasoline 
C)  Food 
D)  Office supplies that will be used up this year 
A)  Furniture 
B)  Gasoline 
C)  Food 
D)  Office supplies that will be used up this year

Question 16

Value added is

Accepted Answer

A)  the price of an intermediate product. 
B)  the amount of dollar value contributed to a product at each stage of its production. 
C)  the sum of the prices of intermediate products. 
D)  the dollar value contributed to a product at the last stage of its production. 
A)  the price of an intermediate product. 
B)  the amount of dollar value contributed to a product at each stage of its production. 
C)  the sum of the prices of intermediate products. 
D)  the dollar value contributed to a product at the last stage of its production.

Question 17

An increase in corporate income taxes would reduce

Accepted Answer

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

Question 18

Non-income expense items included in the Gross Domestic Product (GDP) calculation include

Accepted Answer

A)  depreciation and indirect business taxes. 
B)  depreciation and corporate profits. 
C)  corporate profits tax and indirect business taxes. 
D)  indirect business taxes and corporate profits. 
A)  depreciation and indirect business taxes. 
B)  depreciation and corporate profits. 
C)  corporate profits tax and indirect business taxes. 
D)  indirect business taxes and corporate profits.

Question 19

A farmer buys seed for 15 cents that is used to grow wheat. The farmer sells the wheat to the miller for 30 cents, who makes flour. The flour is sold to the baker for 60 cents and the baker makes bread, which is sold to the grocer for 90 cents. The grocer sells the bread for $1.25. What is the value added for the miller?

Accepted Answer

A)  60 cents 
B)  45 cents 
C)  30 cents 
D)  90 cents 
A)  60 cents 
B)  45 cents 
C)  30 cents 
D)  90 cents

Question 20

Indirect business taxes include

Accepted Answer

A)  property taxes and corporate income taxes. 
B)  sales taxes and income taxes. 
C)  business property taxes and sales taxes. 
D)  income taxes and Social Security taxes. 
A)  property taxes and corporate income taxes. 
B)  sales taxes and income taxes. 
C)  business property taxes and sales taxes. 
D)  income taxes and Social Security taxes.

Exam 8: Measuring the Economys Performance

Which of the following is included in measuring GDP?

U.S. Gross Domestic Product (GDP) does NOT include which of the following?

In the simple circular flow,

Gross domestic product is the

Purchasing power parity refers to

In the simple circular flow model, the funds received by a carmaker when it sells a car goes to

A nondurable good

Gross Domestic Product measures

Goods and services are sold

Which of the following items are included in GDP?

Because of terrible winter storms, gross domestic product for the first quarter of the calendar year falls by 10 percent. As a result, gross domestic income

Durable consumer goods are goods that

Adjusting nominal Gross Domestic Product (GDP) for price changes from a base year yields

Which one of the following is NOT included in GDP?

Which one of the following is a durable consumer good?

Value added is

An increase in corporate income taxes would reduce

Non-income expense items included in the Gross Domestic Product (GDP) calculation include

Indirect business taxes include

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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