Question 1

In national income accounting,government purchases include:

Accepted Answer

A)  purchases by federal,state,and local governments. 
B)  purchases by the federal government only. 
C)  government transfer payments. 
D)  purchases of goods for consumption but not public capital goods. 
A)  purchases by federal,state,and local governments. 
B)  purchases by the federal government only. 
C)  government transfer payments. 
D)  purchases of goods for consumption but not public capital goods.

Question 2

An economy is enlarging its stock of capital goods:

Accepted Answer

A)  when net investment exceeds gross investment. 
B)  when gross investment exceeds replacement investment. 
C)  whenever gross investment is positive. 
D)  when replacement investment exceeds gross investment. 
A)  when net investment exceeds gross investment. 
B)  when gross investment exceeds replacement investment. 
C)  whenever gross investment is positive. 
D)  when replacement investment exceeds gross investment.

Question 3

If net foreign factor income is zero and there are no statistical discrepancies,the sum of national income and the consumption of fixed capital equals:

Accepted Answer

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

Question 4

Answer the question on the basis of the following national income data for the economy.All figures are in billions of dollars. $\begin{array} { l r } 
\text { Personal Consumption Expenditures } & \$ 400 \
\text { Government Purchases } & 128 \
\text { Gross Private Domestic Investment } & 88 \
\text { Net Exports } & 7 \
\text { Net Foreign Factor Income } & 0 \
\text { Consumption of Fixed Capital } & 43 \
\text { Taxes on Production and Imports } & 50 \
\text { Compensation of Employees } & 369 \
\text { Rents } & 12 \
\text { Interest } & 15 \
\text { Proprietors' Income } & 52 \
\text { Corporate Income Taxes } & 36 \
\text { Dividends } & 24 \
\text { Undistributed Corporate Profits } & 22 \
\text { Statistical Discrepancy } & 0
\end{array}$ Refer to the data.Disposable income:

Accepted Answer

A)  cannot be determined from the data given. 
B)  is $484. 
C)  is $416. 
D)  is $502. 
A)  cannot be determined from the data given. 
B)  is $484. 
C)  is $416. 
D)  is $502.

Question 5

In the treatment of U.S.exports and imports,national income accountants:

Accepted Answer

A)  subtract exports,but add imports,in calculating GDP. 
B)  subtract both exports and imports in calculating GDP. 
C)  add both exports and imports in calculating GDP. 
D)  add exports,but subtract imports,in calculating GDP. 
A)  subtract exports,but add imports,in calculating GDP. 
B)  subtract both exports and imports in calculating GDP. 
C)  add both exports and imports in calculating GDP. 
D)  add exports,but subtract imports,in calculating GDP.

Question 6

Suppose a nation's 2010 nominal GDP was $972 billion and the general price index was 90.To make the 2010 GDP comparable with the base year GDP,the 2010 GDP must be:

Accepted Answer

A)  deflated to $678 billion. 
B)  deflated to $896 billion. 
C)  inflated to $1,080 billion. 
D)  deflated to $1,080 billion. 
A)  deflated to $678 billion. 
B)  deflated to $896 billion. 
C)  inflated to $1,080 billion. 
D)  deflated to $1,080 billion.

Question 7

If in some year gross investment was $120 billion and net investment was $65 billion,then in that year the country's capital stock:

Accepted Answer

A)  may have either increased or decreased. 
B)  increased by $65 billion. 
C)  increased by $55 billion. 
D)  decreased by $55 billion. 
A)  may have either increased or decreased. 
B)  increased by $65 billion. 
C)  increased by $55 billion. 
D)  decreased by $55 billion.

Question 8

In calculating the GDP,national income accountants:

Accepted Answer

A)  treat inventory changes as an adjustment to personal consumption expenditures. 
B)  ignore inventories because they do not represent final goods. 
C)  subtract increases in inventories or add decreases in inventories. 
D)  add increases in inventories or subtract decreases in inventories. 
A)  treat inventory changes as an adjustment to personal consumption expenditures. 
B)  ignore inventories because they do not represent final goods. 
C)  subtract increases in inventories or add decreases in inventories. 
D)  add increases in inventories or subtract decreases in inventories.

Question 9

The GDP tends to:

Accepted Answer

A)  overstate economic welfare because it does not include certain nonmarket activities such as the productive work of housewives. 
B)  understate economic welfare because it includes expenditures undertaken to offset or correct pollution. 
C)  understate economic welfare because it does not take into account increases in leisure. 
D)  overstate economic welfare because it does not reflect improvements in product quality. 
A)  overstate economic welfare because it does not include certain nonmarket activities such as the productive work of housewives. 
B)  understate economic welfare because it includes expenditures undertaken to offset or correct pollution. 
C)  understate economic welfare because it does not take into account increases in leisure. 
D)  overstate economic welfare because it does not reflect improvements in product quality.

Question 10

Assume an economy that makes only one product and that year 3 is the base year.Output and price data for a five-year period are as follows.Answer the question on the basis of these data. $\begin{array}{c}
\begin{array}{c}
\
\underline{\text { Year }} \
1 \
2 \
3 \
4 \
5
\end{array}
\begin{array}{c}
\text { Units of}\
\underline{\text { Output}}\
3 \
4 \
6 \
7 \
8
\end{array}
\begin{array}{c}
\text { Price Per } \
\underline{\text { Unit } }\
 \$ 3 \
4 \
5 \
7 \
8
\end{array}
\end{array}$
  Refer to the data.Real GDP for year 5 is:

Accepted Answer

A)  $160. 
B)  $49. 
C)  $40. 
D)  $64. 
A)  $160. 
B)  $49. 
C)  $40. 
D)  $64.

Question 11

Answer the question on the basis of the following data.All figures are in billions of dollars. $\begin{array} { l r } 
\text { Gross Investment } & \$ 18 \
\text { National Income } & 100 \
\text { Net Exports } & 2 \
\text { Personal Income } & 85 \
\text { Personal Consumption Expenditures } & 70 \
\text { Saving } & 5 \
\text { Government Purchases } & 20 \
\text { Net Domestic Product } & 105 \
\text { Statistical Discrepancy } & 0
\end{array}$ Refer to the data.Disposable income is:

Accepted Answer

A)  $83. 
B)  $73. 
C)  $75. 
D)  $77. 
A)  $83. 
B)  $73. 
C)  $75. 
D)  $77.

Question 12

Which of the following do national income accountants consider to be investment?

Accepted Answer

A)  The purchase of an automobile for private,nonbusiness use. 
B)  The purchase of a new house. 
C)  The purchase of corporate bonds. 
D)  The purchase of gold coins. 
A)  The purchase of an automobile for private,nonbusiness use. 
B)  The purchase of a new house. 
C)  The purchase of corporate bonds. 
D)  The purchase of gold coins.

Question 13

Nominal GDP is adjusted for price changes through the use of:

Accepted Answer

A)  the Consumer Price Index (CPI). 
B)  the Producer Price Index (PPI). 
C)  the GDP price index. 
D)  exchange rates. 
A)  the Consumer Price Index (CPI). 
B)  the Producer Price Index (PPI). 
C)  the GDP price index. 
D)  exchange rates.

Question 14

Answer the question on the basis of the following data.All figures are in billions of dollars. $\begin{array}{llcc}
  \text {  Gross Private Domestic Investment} & \$46 \
 \text {  Exports of the U.S. } &9\
 \text {Disposable Income  } &190\
 \text { Personal Saving } &10\
 \text {Government Purchases  } &84\
 \text { Net Foreign Factor Income } &10\
  \text { Consumption of Fixed Capital } &52  \
 \text {Dividends  } &13\
 \text {  Imports of the U.S.} &12\
 \text {Taxes on Production and Imports  } &22\
 \text {  Personal Taxes} &38\
 \text {Social Security Contributions  } &23\
 \text {  Statistical Discrepancy} &0
\end{array}$
 Refer to the data.The gross domestic product is:

Accepted Answer

A)  $326. 
B)  $282. 
C)  $307. 
D)  $300. 
A)  $326. 
B)  $282. 
C)  $307. 
D)  $300.

Question 15

Disposable income measures the before-tax income received by resource suppliers.

Accepted Answer

A) True 
 B)False

Question 16

Net exports are negative when:

Accepted Answer

A)  a nation's imports exceed its exports. 
B)  the economy's stock of capital goods is declining. 
C)  depreciation exceeds domestic investment. 
D)  a nation's exports exceed its imports. 
A)  a nation's imports exceed its exports. 
B)  the economy's stock of capital goods is declining. 
C)  depreciation exceeds domestic investment. 
D)  a nation's exports exceed its imports.

Question 17

The ZZZ Corporation issued $25 million in new common stock in 2013.It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans.As a result,investment:

Accepted Answer

A)  of $7 million has occurred. 
B)  of $25 million has occurred. 
C)  of $18 million has occurred. 
D)  has not occurred. 
A)  of $7 million has occurred. 
B)  of $25 million has occurred. 
C)  of $18 million has occurred. 
D)  has not occurred.

Question 18

Government purchases include government spending on:

Accepted Answer

A)  government consumption goods and public capital goods. 
B)  government consumption goods only. 
C)  public capital goods only. 
D)  government consumption goods,public capital goods,and transfer payments. 
A)  government consumption goods and public capital goods. 
B)  government consumption goods only. 
C)  public capital goods only. 
D)  government consumption goods,public capital goods,and transfer payments.

Question 19

Answer the question on the basis of the following information: $\begin{array}{c}
\begin{array}{c}
\
\underline{\text { Year }} \
1 \
2 \
3 \
4 \
5
\end{array}
\begin{array}{c}
\text { Nominal}\
\underline{\text { GDP } }\
 \$ 550 \
560 \
576 \
586 \
604
\end{array}
\begin{array}{c}
\text { Price}\
\underline{\text { Index}}\
140 \
135 \
120 \
117 \
108
\end{array}
\end{array}$
 The economy above has experienced a:

Accepted Answer

A)  declining nominal GDP. 
B)  rising price level. 
C)  declining real GDP. 
D)  rising real GDP. 
A)  declining nominal GDP. 
B)  rising price level. 
C)  declining real GDP. 
D)  rising real GDP.

Question 20

In 1933,net private domestic investment was a minus $6.0 billion.This means that:

Accepted Answer

A)  gross private domestic investment exceeded depreciation by $6.0 billion. 
B)  the economy was expanding in that year. 
C)  the production of 1933's GDP used up more capital goods than were produced in that year. 
D)  the economy produced no capital goods at all in 1933. 
A)  gross private domestic investment exceeded depreciation by $6.0 billion. 
B)  the economy was expanding in that year. 
C)  the production of 1933's GDP used up more capital goods than were produced in that year. 
D)  the economy produced no capital goods at all in 1933.

In national income accounting,government purchases include:

An economy is enlarging its stock of capital goods:

If net foreign factor income is zero and there are no statistical discrepancies,the sum of national income and the consumption of fixed capital equals:

In the treatment of U.S.exports and imports,national income accountants:

Suppose a nation's 2010 nominal GDP was $972 billion and the general price index was 90.To make the 2010 GDP comparable with the base year GDP,the 2010 GDP must be:

If in some year gross investment was $120 billion and net investment was $65 billion,then in that year the country's capital stock:

In calculating the GDP,national income accountants:

The GDP tends to:

Assume an economy that makes only one product and that year 3 is the base year.Output and price data for a five-year period are as follows.Answer the question on the basis of these data. 1 2 3 4 5 Units of 3 4 6 7 8 Price Per \ 3 4 5 7 8 Refer to the data.Real GDP for year 5 is:

Which of the following do national income accountants consider to be investment?

Nominal GDP is adjusted for price changes through the use of:

Disposable income measures the before-tax income received by resource suppliers.

Net exports are negative when:

The ZZZ Corporation issued $25 million in new common stock in 2013.It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans.As a result,investment:

Government purchases include government spending on:

Answer the question on the basis of the following information: 1 2 3 4 5 Nominal \ 550 560 576 586 604 Price 140 135 120 117 108 The economy above has experienced a:

In 1933,net private domestic investment was a minus $6.0 billion.This means that:

Income Inequality Poverty and Discrimination

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An Introduction to Macroeconomics

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

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Exam 26: Measuring Domestic Output and National Income

In national income accounting,government purchases include:

An economy is enlarging its stock of capital goods:

If net foreign factor income is zero and there are no statistical discrepancies,the sum of national income and the consumption of fixed capital equals:

In the treatment of U.S.exports and imports,national income accountants:

Suppose a nation's 2010 nominal GDP was $972 billion and the general price index was 90.To make the 2010 GDP comparable with the base year GDP,the 2010 GDP must be:

If in some year gross investment was $120 billion and net investment was $65 billion,then in that year the country's capital stock:

In calculating the GDP,national income accountants:

The GDP tends to:

Assume an economy that makes only one product and that year 3 is the base year.Output and price data for a five-year period are as follows.Answer the question on the basis of these data. 1 2 3 4 5 Units of 3 4 6 7 8 Price Per \ 3 4 5 7 8 Refer to the data.Real GDP for year 5 is:

Which of the following do national income accountants consider to be investment?

Nominal GDP is adjusted for price changes through the use of:

Disposable income measures the before-tax income received by resource suppliers.

Net exports are negative when:

The ZZZ Corporation issued $25 million in new common stock in 2013.It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans.As a result,investment:

Government purchases include government spending on:

Answer the question on the basis of the following information: 1 2 3 4 5 Nominal \ 550 560 576 586 604 Price 140 135 120 117 108 The economy above has experienced a:

In 1933,net private domestic investment was a minus $6.0 billion.This means that:

Income Inequality Poverty and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

Filters