Question 1

Would it be possible for an increase in taxation to decrease the gross domestic product measured in the U.S.? Why or why not?

Accepted Answer

Yes,it would be possible for an increase in taxation to decrease GDP.Higher levels of taxation would provide an incentive for more individuals and business to attempt to avoid taxation either legally or illegally.Such illegal activities would lead to an increase in the underground economy but a decrease in GDP.

Question 2

A price index can fall from one year to the next:

Accepted Answer

A)  even when nominal GDP falls. 
B)  even when real GDP falls. 
C)  even when some individual good's prices rise. 
D)  in any of the above circumstances. 
A)  even when nominal GDP falls. 
B)  even when real GDP falls. 
C)  even when some individual good's prices rise. 
D)  in any of the above circumstances. D

Question 3

In the national income accounts,investment includes:

Accepted Answer

A)  expenditures on durable consumer goods. 
B)  government construction of a new dam. 
C)  additions to business inventories. 
D)  purchases of used machinery by businesses. 
A)  expenditures on durable consumer goods. 
B)  government construction of a new dam. 
C)  additions to business inventories. 
D)  purchases of used machinery by businesses. C

Question 4

Which of the following is true about underground economies?

Accepted Answer

A)  Underground economies represent a greater percentage of GDP in developing countries than in developed countries. 
B)  Higher taxation and labor regulation are reasons why we see more underground activities. 
C)  The underground economy includes legal activities that are concealed for the purpose of tax evasion. 
D)  all of the above 
A)  Underground economies represent a greater percentage of GDP in developing countries than in developed countries. 
B)  Higher taxation and labor regulation are reasons why we see more underground activities. 
C)  The underground economy includes legal activities that are concealed for the purpose of tax evasion. 
D)  all of the above

Question 5

GDP does not directly include:

Accepted Answer

A)  the value of final goods and services produced, but not sold, during a period. 
B)  the value of services rendered during a period. 
C)  the value of intermediate goods sold during a period. 
D)  any of the above. 
A)  the value of final goods and services produced, but not sold, during a period. 
B)  the value of services rendered during a period. 
C)  the value of intermediate goods sold during a period. 
D)  any of the above.

Question 6

When real GDP declines in a particular year,nominal GDP:

Accepted Answer

A)  will decline at a faster rate than real GDP if there is inflation. 
B)  will decline at a slower rate than real GDP if there is inflation. 
C)  may increase or decrease if there is inflation. 
D)  will increase if there is deflation. 
A)  will decline at a faster rate than real GDP if there is inflation. 
B)  will decline at a slower rate than real GDP if there is inflation. 
C)  may increase or decrease if there is inflation. 
D)  will increase if there is deflation.

Question 7

The purchase of a new scanner by a computer graphics business is included in which expenditure category of GDP?

Accepted Answer

A)  consumption 
B)  investment 
C)  government purchases 
D)  net exports 
A)  consumption 
B)  investment 
C)  government purchases 
D)  net exports

Question 8

The underground economy includes:

Accepted Answer

A)  only illegal sources of unreported income. 
B)  both legal and illegal sources of unreported income. 
C)  both legal and illegal sources of reported income. 
D)  payments that are reported to the government. 
A)  only illegal sources of unreported income. 
B)  both legal and illegal sources of unreported income. 
C)  both legal and illegal sources of reported income. 
D)  payments that are reported to the government.

Question 9

Included in the investment category of GDP under the expenditure approach is the purchase of parcels of land for the purposes of realizing capital gains when real estate values rise.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true?

Accepted Answer

A)  Purchases of stock are included as part of investment in the national income accounts. 
B)  Fixed investments include all spending on capital goods, as well as residential construction. 
C)  Investment spending is the least volatile category of GDP. 
D)  All of the above are true. 
A)  Purchases of stock are included as part of investment in the national income accounts. 
B)  Fixed investments include all spending on capital goods, as well as residential construction. 
C)  Investment spending is the least volatile category of GDP. 
D)  All of the above are true.

Question 11

The expenditure method dictates that GDP is equal to C + I + G + (X - M).

Accepted Answer

A) True 
 B)False

Question 12

Measures of well-being include:

Accepted Answer

A)  pollution levels. 
B)  infant mortality rates. 
C)  literacy rates. 
D)  all of the above. 
A)  pollution levels. 
B)  infant mortality rates. 
C)  literacy rates. 
D)  all of the above.

Question 13

Household income after taxes is called:

Accepted Answer

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

Question 14

Which of the following is not a subcategory of consumption spending?

Accepted Answer

A)  consumer services 
B)  consumer investment 
C)  consumer durable goods 
D)  consumer nondurable goods 
A)  consumer services 
B)  consumer investment 
C)  consumer durable goods 
D)  consumer nondurable goods

Question 15

If nominal GDP in 2011 is greater than nominal GDP in 2010,the economy's real output of goods and services must have risen.

Accepted Answer

A) True 
 B)False

Question 16

Fixed investment includes all of the following except:

Accepted Answer

A)  all purchases by businesses that add to their inventories. 
B)  all spending on capital goods. 
C)  all spending on producer goods. 
D)  all spending on goods that increase future production capabilities. 
A)  all purchases by businesses that add to their inventories. 
B)  all spending on capital goods. 
C)  all spending on producer goods. 
D)  all spending on goods that increase future production capabilities.

Question 17

Which is greater,gross domestic product or national income? By how much?

Accepted Answer

A)  Gross domestic product  National income; net exports and indirect business taxes 
D)  Gross domestic product > National income; indirect business taxes, depreciation, and income earned by foreigners in the United States 
A)  Gross domestic product  National income; net exports and indirect business taxes 
D)  Gross domestic product > National income; indirect business taxes, depreciation, and income earned by foreigners in the United States

Question 18

Using the expenditure approach,calculate GDP using the following data.

Accepted Answer

GDP equals 11,175 (Consumption

Question 19

Fixed investment includes spending on all of the following goods except:

Accepted Answer

A)  machinery. 
B)  inventory. 
C)  tools. 
D)  factory buildings. 
A)  machinery. 
B)  inventory. 
C)  tools. 
D)  factory buildings.

Question 20

Depreciation is:

Accepted Answer

A)  income earned but not received. 
B)  an allowance for the replacement of capital. 
C)  income received but not earned. 
D)  an indirect business tax. 
A)  income earned but not received. 
B)  an allowance for the replacement of capital. 
C)  income received but not earned. 
D)  an indirect business tax.

Exam 19: Measuring Economic Performance

Would it be possible for an increase in taxation to decrease the gross domestic product measured in the U.S.? Why or why not?

A price index can fall from one year to the next:

In the national income accounts,investment includes:

Which of the following is true about underground economies?

GDP does not directly include:

When real GDP declines in a particular year,nominal GDP:

The purchase of a new scanner by a computer graphics business is included in which expenditure category of GDP?

The underground economy includes:

Included in the investment category of GDP under the expenditure approach is the purchase of parcels of land for the purposes of realizing capital gains when real estate values rise.

Which of the following is true?

The expenditure method dictates that GDP is equal to C + I + G + (X - M).

Measures of well-being include:

Household income after taxes is called:

Which of the following is not a subcategory of consumption spending?

If nominal GDP in 2011 is greater than nominal GDP in 2010,the economy's real output of goods and services must have risen.

Fixed investment includes all of the following except:

Which is greater,gross domestic product or national income? By how much?

Using the expenditure approach,calculate GDP using the following data.

Fixed investment includes spending on all of the following goods except:

Depreciation is:

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

Filters