Question 1

-According to the above table, net domestic product (NDP) is

Accepted Answer

A)  $1,995. 
B)  $2,265. 
C)  $2,550. 
D)  $2,850. 
A)  $1,995. 
B)  $2,265. 
C)  $2,550. 
D)  $2,850.

Question 2

Why must total income be identical to the dollar value of total output?

Accepted Answer

Total income must be identical to the do

Question 3

To compute national income, which of the following items are added to net domestic product (NDP)? I. business income adjustments net of indirect business taxes and transfers
II) capital consumption allowance
III) U.S. net income earned abroad

Accepted Answer

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

Question 4

An example of an increase in gross private domestic investment spending that also increases Gross Domestic Product (GDP) is when

Accepted Answer

A)  a family sells its home because of a transfer. 
B)  a farmer buys a used tractor. 
C)  inventories of new cars accumulate on the lots of car dealers. 
D)  government increases spending on infrastructure. 
A)  a family sells its home because of a transfer. 
B)  a farmer buys a used tractor. 
C)  inventories of new cars accumulate on the lots of car dealers. 
D)  government increases spending on infrastructure.

Question 5

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

Accepted Answer

A)  includes financial transactions. 
B)  can be calculated entirely on the basis of financial transactions. 
C)  includes durable goods but excludes nondurable goods. 
D)  is total income. 
A)  includes financial transactions. 
B)  can be calculated entirely on the basis of financial transactions. 
C)  includes durable goods but excludes nondurable goods. 
D)  is total income.

Question 6

Net exports is equal to

Accepted Answer

A)  total exports minus total imports. 
B)  total imports minus total exports. 
C)  total exports adjusted for price changes. 
D)  total exports minus transfer payments. 
A)  total exports minus total imports. 
B)  total imports minus total exports. 
C)  total exports adjusted for price changes. 
D)  total exports minus transfer payments.

Question 7

Durable consumer goods are goods that last more than

Accepted Answer

A)  one year. 
B)  three years. 
C)  five years. 
D)  seven years. 
A)  one year. 
B)  three years. 
C)  five years. 
D)  seven years.

Question 8

The foreign exchange rate

Accepted Answer

A)  is the price of one good or service as compared to a similar good or service. 
B)  is the same as the price of a product in U.S. dollars. 
C)  is not relevant when comparing the GDPs of various countries. 
D)  is the price of one currency in terms of another. 
A)  is the price of one good or service as compared to a similar good or service. 
B)  is the same as the price of a product in U.S. dollars. 
C)  is not relevant when comparing the GDPs of various countries. 
D)  is the price of one currency in terms of another.

Question 9

The dollar value of total output

Accepted Answer

A)  equals the value of all physical goods sold in the United States. 
B)  equals the market value of all final goods and services produced in the United States. 
C)  equals only the value of stocks on the New York Stock Exchange. 
D)  equals only the value of new services in the economy. 
A)  equals the value of all physical goods sold in the United States. 
B)  equals the market value of all final goods and services produced in the United States. 
C)  equals only the value of stocks on the New York Stock Exchange. 
D)  equals only the value of new services in the economy.

Question 10

Suppose that the following occurred in two countries during the past decade. Country A, real Gross Domestic Product (GDP) rose 40 percent and population rose 46 percent; Country B, real Gross Domestic Product (GDP) increased 80 percent and population increased 75 percent. Based on this information, which is true?

Accepted Answer

A)  Both countries have experienced growth in per capita real Gross Domestic Product (GDP). 
B)  Neither country has experienced growth in per capita real Gross Domestic Product (GDP). 
C)  Chances for an improved standard of living are greater in Country A. 
D)  Only Country B has experienced growth in its per capita real Gross Domestic Product (GDP). 
A)  Both countries have experienced growth in per capita real Gross Domestic Product (GDP). 
B)  Neither country has experienced growth in per capita real Gross Domestic Product (GDP). 
C)  Chances for an improved standard of living are greater in Country A. 
D)  Only Country B has experienced growth in its per capita real Gross Domestic Product (GDP).

Question 11

The circular flow of income shows

Accepted Answer

A)  the dollar value of output is less than the total income. 
B)  the dollar value of output is more than the total income because of the existence of profits. 
C)  the dollar value of output is exactly equal to the total income. 
D)  the dollar value of output is more or less than the total income, depending on whether profits are positive or negative. 
A)  the dollar value of output is less than the total income. 
B)  the dollar value of output is more than the total income because of the existence of profits. 
C)  the dollar value of output is exactly equal to the total income. 
D)  the dollar value of output is more or less than the total income, depending on whether profits are positive or negative.

Question 12

The components of GDP using the income method (excluding indirect business taxes and depreciation) are

Accepted Answer

A)  consumption expenditures, investment expenditures, and government expenditures. 
B)  consumption expenditures, investment expenditures, government expenditures, and net exports. 
C)  wages and interest. 
D)  wages, interest, rents, and profits. 
A)  consumption expenditures, investment expenditures, and government expenditures. 
B)  consumption expenditures, investment expenditures, government expenditures, and net exports. 
C)  wages and interest. 
D)  wages, interest, rents, and profits.

Question 13

The appropriate formula for computing Gross Domestic Product using the income approach (excluding depreciation and indirect income taxes) is

Accepted Answer

A)  consumption + investment + government spending + net exports 
B)  wages + rent + interest + profits 
C)  wages + rent + interest + profits + indirect business taxes 
D)  wages + rent + interest + profits + indirect business taxes + depreciation 
A)  consumption + investment + government spending + net exports 
B)  wages + rent + interest + profits 
C)  wages + rent + interest + profits + indirect business taxes 
D)  wages + rent + interest + profits + indirect business taxes + depreciation

Question 14

-Refer to the above table. Real GDP in 2010 is

Accepted Answer

A)  190.8. 
B)  477. 
C)  500. 
D)  524.1. 
A)  190.8. 
B)  477. 
C)  500. 
D)  524.1.

Question 15

The computation of GDP by adding up all components of national income including wages, interest, rent and profits is

Accepted Answer

A)  the expenditure approach. 
B)  the income approach. 
C)  transfer payments. 
D)  the value of all securities. 
A)  the expenditure approach. 
B)  the income approach. 
C)  transfer payments. 
D)  the value of all securities.

Question 16

Which of the following items is NOT included in GDP?

Accepted Answer

A)  purchase of a hamburger at a fast-food restaurant 
B)  sales at a grocery store 
C)  sale of Microsoft stock 
D)  downloads of new music albums charged to a credit card 
A)  purchase of a hamburger at a fast-food restaurant 
B)  sales at a grocery store 
C)  sale of Microsoft stock 
D)  downloads of new music albums charged to a credit card

Question 17

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

Accepted Answer

A)  84. 
B)  228. 
C)  155. 
D)  301. 
A)  84. 
B)  228. 
C)  155. 
D)  301.

Question 18

One difference between net domestic product and national income is that

Accepted Answer

A)  net domestic product includes depreciation. 
B)  national income includes government and business transfer payments. 
C)  net domestic product includes indirect business taxes and transfers. 
D)  net domestic product doesn't include Social Security taxes or corporate retained earnings. 
A)  net domestic product includes depreciation. 
B)  national income includes government and business transfer payments. 
C)  net domestic product includes indirect business taxes and transfers. 
D)  net domestic product doesn't include Social Security taxes or corporate retained earnings.

Question 19

Explain how disposable personal income is derived from Gross Domestic Product.

Accepted Answer

Gross domestic product is the same thing

Question 20

Which of the following best describes a nation's Gross Domestic Product?

Accepted Answer

A)  The market value of all goods and services produced in the economy, including intermediate goods 
B)  The total market value of all final goods and services produced in the economy during a year 
C)  The constant dollar value of all goods produced in the economy during a year period 
D)  The market value of all goods and services less depreciation 
A)  The market value of all goods and services produced in the economy, including intermediate goods 
B)  The total market value of all final goods and services produced in the economy during a year 
C)  The constant dollar value of all goods produced in the economy during a year period 
D)  The market value of all goods and services less depreciation

Exam 8: Measuring the Economys Performance

-According to the above table, net domestic product (NDP) is

Why must total income be identical to the dollar value of total output?

To compute national income, which of the following items are added to net domestic product (NDP)? I. business income adjustments net of indirect business taxes and transfers II) capital consumption allowance III) U.S. net income earned abroad

An example of an increase in gross private domestic investment spending that also increases Gross Domestic Product (GDP) is when

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

Net exports is equal to

Durable consumer goods are goods that last more than

The foreign exchange rate

The dollar value of total output

The circular flow of income shows

The components of GDP using the income method (excluding indirect business taxes and depreciation) are

The appropriate formula for computing Gross Domestic Product using the income approach (excluding depreciation and indirect income taxes) is

-Refer to the above table. Real GDP in 2010 is

The computation of GDP by adding up all components of national income including wages, interest, rent and profits is

Which of the following items is NOT included in GDP?

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

One difference between net domestic product and national income is that

Explain how disposable personal income is derived from Gross Domestic Product.

Which of the following best describes a nation's Gross Domestic Product?

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

Filters