Question 1

If you take national income and add transfer payments, then subtract income earned but not received, the result will be

Accepted Answer

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

Question 2

Real GDP is

Accepted Answer

A)  nominal GDP adjusted for depreciation. 
B)  nominal GDP adjusted for price changes. 
C)  nominal GDP adjusted for transfer payments. 
D)  nominal GDP adjusted for indirect business taxes. 
A)  nominal GDP adjusted for depreciation. 
B)  nominal GDP adjusted for price changes. 
C)  nominal GDP adjusted for transfer payments. 
D)  nominal GDP adjusted for indirect business taxes.

Question 3

Assume that the nominal GDP for a given year is equal to $12,400 billion and the GDP deflator equals 112. Real GDP for that year is approximately

Accepted Answer

A)  $13,888.0 billion. 
B)  $12,512.0 billion. 
C)  $11,071.4 billion. 
D)  $12,228.1 billion. 
A)  $13,888.0 billion. 
B)  $12,512.0 billion. 
C)  $11,071.4 billion. 
D)  $12,228.1 billion.

Question 4

An example of a durable good is

Accepted Answer

A)  items purchased at a grocery store. 
B)  a refrigerator. 
C)  the purchase of labor for a business. 
D)  the services of a cleaning person. 
A)  items purchased at a grocery store. 
B)  a refrigerator. 
C)  the purchase of labor for a business. 
D)  the services of a cleaning person.

Question 5

C + I + G + X equals

Accepted Answer

A)  GDP. 
B)  DPI. 
C)  NDP. 
D)  PI. 
A)  GDP. 
B)  DPI. 
C)  NDP. 
D)  PI.

Question 6

The total value added

Accepted Answer

A)  equals the retail price. 
B)  equals the wholesale price. 
C)  equals the sum of the prices on the intermediate goods. 
D)  equals the retail price less the wholesale price. 
A)  equals the retail price. 
B)  equals the wholesale price. 
C)  equals the sum of the prices on the intermediate goods. 
D)  equals the retail price less the wholesale price.

Question 7

If you buy stocks and bonds, the dollar value of those stocks and bonds is

Accepted Answer

A)  included in Gross Domestic Product (GDP) under investment. 
B)  included in Gross Domestic Product (GDP) under consumer expenditures. 
C)  not included in calculating Gross Domestic Product (GDP) for they merely represent a transfer of ownership. 
D)  included in Gross Domestic Product (GDP) if the stocks and bonds were issued by business firms but not if they were issued by governments. 
A)  included in Gross Domestic Product (GDP) under investment. 
B)  included in Gross Domestic Product (GDP) under consumer expenditures. 
C)  not included in calculating Gross Domestic Product (GDP) for they merely represent a transfer of ownership. 
D)  included in Gross Domestic Product (GDP) if the stocks and bonds were issued by business firms but not if they were issued by governments.

Question 8

National income is income ________ the factors of production.

Accepted Answer

A)  paid by 
B)  earned by 
C)  invested in 
D)  households owe to 
A)  paid by 
B)  earned by 
C)  invested in 
D)  households owe to

Question 9

Disposable personal income is equal to

Accepted Answer

A)  national income minus personal income taxes. 
B)  personal income plus transfer payments. 
C)  Gross Domestic Product (GDP) minus depreciation. 
D)  personal income minus personal income tax payments. 
A)  national income minus personal income taxes. 
B)  personal income plus transfer payments. 
C)  Gross Domestic Product (GDP) minus depreciation. 
D)  personal income minus personal income tax payments.

Question 10

The real value of an economic variable is

Accepted Answer

A)  the consumer price index. 
B)  the producer price. 
C)  expressed in terms of actual market prices at which goods are sold. 
D)  computed by taking the nominal value and dividing by the appropriate price index. 
A)  the consumer price index. 
B)  the producer price. 
C)  expressed in terms of actual market prices at which goods are sold. 
D)  computed by taking the nominal value and dividing by the appropriate price index.

Question 11

A farmer buys seed for 20 cents that is used to grow wheat. The farmer sells the wheat to the miller for 35 cents, and the miller makes flour, which is then sold to the baker for 55 cents. The baker makes bread and sells it to the grocer for 80 cents, and the grocer sells the bread to a family for $1. What is the value added of the baker and what is the sum of the value added at each stage of production?

Accepted Answer

A)  80 cents; $1 
B)  80 cents; $2.90 
C)  25 cents; $2.90 
D)  25 cents; $1 
A)  80 cents; $1 
B)  80 cents; $2.90 
C)  25 cents; $2.90 
D)  25 cents; $1

Question 12

GDP is a measure of all of the following EXCEPT

Accepted Answer

A)  the overall level of economic activity 
B)  the total of production 
C)  overall welfare 
D)  the total value of expenditures 
A)  the overall level of economic activity 
B)  the total of production 
C)  overall welfare 
D)  the total value of expenditures

Question 13

-Using the above table, the GDP is (in billions of dollars)

Accepted Answer

A)  10,200. 
B)  8,200. 
C)  8,900. 
D)  9,500. 
A)  10,200. 
B)  8,200. 
C)  8,900. 
D)  9,500.

Question 14

Which of the following is counted in the GDP in a given year?

Accepted Answer

A)  the sale of Microsoft stock 
B)  the sale of a used Mustang convertible 
C)  the dollar value of the housework done by a stay-at-home mom 
D)  the sale of a new handmade ukulele 
A)  the sale of Microsoft stock 
B)  the sale of a used Mustang convertible 
C)  the dollar value of the housework done by a stay-at-home mom 
D)  the sale of a new handmade ukulele

Question 15

Which of the following is an example of the gross private domestic investment component of Gross Domestic Product (GDP)?

Accepted Answer

A)  You buy a share of GM stock. 
B)  GM buys a new drill press. 
C)  You put money into your savings account. 
D)  You put money into your checking account. 
A)  You buy a share of GM stock. 
B)  GM buys a new drill press. 
C)  You put money into your savings account. 
D)  You put money into your checking account.

Question 16

If Jack refinished his basement himself, the value of his work

Accepted Answer

A)  is not included in Gross Domestic Product (GDP). 
B)  is included in Gross Domestic Product (GDP). 
C)  is only included in Gross Domestic Product (GDP) if he uses U.S. made components. 
D)  is included in the next year's Gross Domestic Product (GDP). 
A)  is not included in Gross Domestic Product (GDP). 
B)  is included in Gross Domestic Product (GDP). 
C)  is only included in Gross Domestic Product (GDP) if he uses U.S. made components. 
D)  is included in the next year's Gross Domestic Product (GDP).

Question 17

Which of the following statements is NOT true about the relationship between the dollar value of total output and total income?

Accepted Answer

A)  The dollar value of total output equals total income because the spending of one group is the income of another. 
B)  The dollar value of total output equals total income because profit is considered a cost of production. 
C)  The dollar value of total output equals total income because profit is not considered a cost of production. 
D)  The dollar value of total output equals total income because of the economic definition of profit. 
A)  The dollar value of total output equals total income because the spending of one group is the income of another. 
B)  The dollar value of total output equals total income because profit is considered a cost of production. 
C)  The dollar value of total output equals total income because profit is not considered a cost of production. 
D)  The dollar value of total output equals total income because of the economic definition of profit.

Question 18

Many economists argue that real GDP is

Accepted Answer

A)  not a good measure of economic well-being because it overvalues increases in leisure time. 
B)  not a good measure of economic well-being because it excludes increases in leisure time. 
C)  a good measure of economic well-being because it includes increases in leisure time. 
D)  a good measure of economic well-being because it includes changes in personal safety. 
A)  not a good measure of economic well-being because it overvalues increases in leisure time. 
B)  not a good measure of economic well-being because it excludes increases in leisure time. 
C)  a good measure of economic well-being because it includes increases in leisure time. 
D)  a good measure of economic well-being because it includes changes in personal safety.

Question 19

Assume that a GM car sells for $20,000 in the United States and that the exchange rate is $1 = 1.3 euros. For purchasing power parity to hold, the same car in Italy should sell for

Accepted Answer

A)  20,000 euros. 
B)  15,385 euros. 
C)  26,000 euros. 
D)  16,542 euros. 
A)  20,000 euros. 
B)  15,385 euros. 
C)  26,000 euros. 
D)  16,542 euros.

Question 20

The amount earned by owners of the nation's factors of production is

Accepted Answer

A)  the wages and fringe benefits received by the nation's workers. 
B)  all profits received by businesses. 
C)  total income. 
D)  private and government transfer payments. 
A)  the wages and fringe benefits received by the nation's workers. 
B)  all profits received by businesses. 
C)  total income. 
D)  private and government transfer payments.

Exam 8: Measuring the Economys Performance

If you take national income and add transfer payments, then subtract income earned but not received, the result will be

Real GDP is

Assume that the nominal GDP for a given year is equal to $12,400 billion and the GDP deflator equals 112. Real GDP for that year is approximately

An example of a durable good is

C + I + G + X equals

The total value added

If you buy stocks and bonds, the dollar value of those stocks and bonds is

National income is income ________ the factors of production.

Disposable personal income is equal to

The real value of an economic variable is

GDP is a measure of all of the following EXCEPT

-Using the above table, the GDP is (in billions of dollars)

Which of the following is counted in the GDP in a given year?

Which of the following is an example of the gross private domestic investment component of Gross Domestic Product (GDP)?

If Jack refinished his basement himself, the value of his work

Which of the following statements is NOT true about the relationship between the dollar value of total output and total income?

Many economists argue that real GDP is

Assume that a GM car sells for $20,000 in the United States and that the exchange rate is $1 = 1.3 euros. For purchasing power parity to hold, the same car in Italy should sell for

The amount earned by owners of the nation's factors of production 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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