Question 1

Which of the following does GDP omit?

Accepted Answer

A)  Jack purchases $2,300 worth of stock in company X. 
B)  Bob mows his lawn and washes and irons his shirts. 
C)  Helen receives $4,000 a year in Social Security payments. 
D)  a and b 
E)  a,b,and c 
A)  Jack purchases $2,300 worth of stock in company X. 
B)  Bob mows his lawn and washes and irons his shirts. 
C)  Helen receives $4,000 a year in Social Security payments. 
D)  a and b 
E)  a,b,and c

Question 2

An economy produces 10X,20Y,and 30Z in a year.Base-year prices for these goods are $1,$2,and $3,respectively.Current-year prices for these goods are $2,$3,and $4,respectively.What is Real GDP?

Accepted Answer

A)  $180 
B)  $200 
C)  $140 
D)  $240 
E)  none of the above 
A)  $180 
B)  $200 
C)  $140 
D)  $240 
E)  none of the above

Question 3

Which of the following is a point made by economist Richard Easterlin (for whom the Easterlin Paradox is named)based on his research?

Accepted Answer

A)  Rich people tend to be happier than poor people in the same country. 
B)  People in richer countries tend to be no happier than people in poorer countries. 
C)  People in richer countries tend to be much happier than people in poorer countries. 
D)  People in poorer countries tend to be much happier than people in richer countries. 
E)  a and b 
A)  Rich people tend to be happier than poor people in the same country. 
B)  People in richer countries tend to be no happier than people in poorer countries. 
C)  People in richer countries tend to be much happier than people in poorer countries. 
D)  People in poorer countries tend to be much happier than people in richer countries. 
E)  a and b

Question 4

In 1950,the country with the highest per-capita GDP was

Accepted Answer

A)  Switzerland. 
B)  New Zealand. 
C)  the United States. 
D)  Venezuela. 
E)  the Netherlands. 
A)  Switzerland. 
B)  New Zealand. 
C)  the United States. 
D)  Venezuela. 
E)  the Netherlands.

Question 5

-Refer to Exhibit 7-2.GDP in 2019 is

Accepted Answer

A)  $49. 
B)  $51. 
C)  $86. 
D)  $92. 
E)  not possible to calculate without the CPI. 
A)  $49. 
B)  $51. 
C)  $86. 
D)  $92. 
E)  not possible to calculate without the CPI.

Question 6

Suppose you have data on durable goods,nondurable goods,fixed investment,government purchases,exports,and imports.Can you compute GDP?

Accepted Answer

A)  No,since data on services and profits are missing. 
B)  No,since data on inventory investment and profits are missing. 
C)  No,since data on inventory investment and services are missing. 
D)  No,since data on services and dividends are missing. 
E)  Yes,all of the necessary components of GDP are given. 
A)  No,since data on services and profits are missing. 
B)  No,since data on inventory investment and profits are missing. 
C)  No,since data on inventory investment and services are missing. 
D)  No,since data on services and dividends are missing. 
E)  Yes,all of the necessary components of GDP are given.

Question 7

An economy produces 5X,10Y,and 20Z in a year.Base-year prices for these goods are $1,$3,and $5,respectively.Current-year prices for these goods are $2,$3,and $4,respectively.What is Real GDP?

Accepted Answer

A)  $135 
B)  $165 
C)  $120 
D)  $170 
E)  none of the above 
A)  $135 
B)  $165 
C)  $120 
D)  $170 
E)  none of the above

Question 8

Which of the following statements is true?

Accepted Answer

A)  The main items that comprise indirect business taxes include excise taxes,income taxes,and property taxes. 
B)  Capital consumption allowance is also known as depreciation. 
C)  A sales tax is an example of an indirect business tax. 
D)  b and c 
E)  a,b,and c 
A)  The main items that comprise indirect business taxes include excise taxes,income taxes,and property taxes. 
B)  Capital consumption allowance is also known as depreciation. 
C)  A sales tax is an example of an indirect business tax. 
D)  b and c 
E)  a,b,and c

Question 9

-Refer to Exhibit 7-2.Assuming that 1990 is the base year,Real GDP in 2019 is

Accepted Answer

A)  $49. 
B)  $51. 
C)  $86. 
D)  $92. 
E)  not possible to calculate without the CPI. 
A)  $49. 
B)  $51. 
C)  $86. 
D)  $92. 
E)  not possible to calculate without the CPI.

Question 10

What does annual economic growth refer to?

Accepted Answer

A)  annual increases in GDP 
B)  annual increases in consumption spending 
C)  annual increases in investment spending 
D)  annual increases in Real GDP 
E)  none of the above 
A)  annual increases in GDP 
B)  annual increases in consumption spending 
C)  annual increases in investment spending 
D)  annual increases in Real GDP 
E)  none of the above

Question 11

Of the two types of investment (fixed and inventory),fixed investment is the larger of the two.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is false?

Accepted Answer

A)  Domestic income is the total income earned by the people and businesses within a country's borders. 
B)  National income is the total income earned by U.S.citizens and businesses,no matter where they reside or are located. 
C)  Corporate profits is the largest component of national income. 
D)  National income = compensation of employees + proprietors' income + corporate profits + rental income + net interest. 
A)  Domestic income is the total income earned by the people and businesses within a country's borders. 
B)  National income is the total income earned by U.S.citizens and businesses,no matter where they reside or are located. 
C)  Corporate profits is the largest component of national income. 
D)  National income = compensation of employees + proprietors' income + corporate profits + rental income + net interest.

Question 13

Which of the following is omitted from GDP calculations?

Accepted Answer

A)  sales of used goods 
B)  certain nonmarket goods and services 
C)  legal and illegal underground activities 
D)  transfer payments 
E)  all of the above 
A)  sales of used goods 
B)  certain nonmarket goods and services 
C)  legal and illegal underground activities 
D)  transfer payments 
E)  all of the above

Question 14

In the business cycle,what is the difference between the recovery phase and the expansion phase?

Accepted Answer

A)  The expansion phase occurs in the rising portion of the business cycle,while the recovery phase occurs in the falling portion of the business cycle. 
B)  The expansion phase occurs in the falling portion of the business cycle,while the recovery phase occurs in the rising portion of the business cycle. 
C)  The expansion phase is the period when Real GDP increases beyond the recovery phase. 
D)  The expansion phase must always come before the recovery phase. 
A)  The expansion phase occurs in the rising portion of the business cycle,while the recovery phase occurs in the falling portion of the business cycle. 
B)  The expansion phase occurs in the falling portion of the business cycle,while the recovery phase occurs in the rising portion of the business cycle. 
C)  The expansion phase is the period when Real GDP increases beyond the recovery phase. 
D)  The expansion phase must always come before the recovery phase.

Question 15

With respect to the business cycle,describe the difference between the expansion phase and the recovery phase.

Accepted Answer

The recovery phase is the period when Re

Question 16

Which of the following is counted in GDP?

Accepted Answer

A)  the trading of 100 shares of Microsoft stock 
B)  the services of a real estate broker 
C)  government transfer payments 
D)  the sale of a used car 
E)  none of the above 
A)  the trading of 100 shares of Microsoft stock 
B)  the services of a real estate broker 
C)  government transfer payments 
D)  the sale of a used car 
E)  none of the above

Question 17

Personal income is

Accepted Answer

A)  equal to GDP. 
B)  that portion of national income that can be used for consumption and saving. 
C)  the sum of all payments to suppliers of the factors of production. 
D)  the amount of income that individuals actually receive. 
E)  another term for disposable income. 
A)  equal to GDP. 
B)  that portion of national income that can be used for consumption and saving. 
C)  the sum of all payments to suppliers of the factors of production. 
D)  the amount of income that individuals actually receive. 
E)  another term for disposable income.

Question 18

If a business firm in Country A produces a good but does not sell it in that same year,that good will not be counted in Country A's GDP.

Accepted Answer

A) True 
 B)False

Question 19

The research of economists Stevenson and Wolfers tends to support the Easterlin paradox.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is true?

Accepted Answer

A)  Government purchases is the largest component of GDP. 
B)  Net exports are equal to exports plus imports. 
C)  U.S.imports refer to the physical quantity of foreign-produced goods that are purchased by residents of the United States. 
D)  Government purchases includes the spending on goods and services by all levels of government (federal,state,and local). 
E)  c and d 
A)  Government purchases is the largest component of GDP. 
B)  Net exports are equal to exports plus imports. 
C)  U.S.imports refer to the physical quantity of foreign-produced goods that are purchased by residents of the United States. 
D)  Government purchases includes the spending on goods and services by all levels of government (federal,state,and local). 
E)  c and d

Exam 7: Consumer Choice: Maximizing Utility and Behavioral Economics

Which of the following does GDP omit?

An economy produces 10X,20Y,and 30Z in a year.Base-year prices for these goods are $1,$2,and $3,respectively.Current-year prices for these goods are $2,$3,and $4,respectively.What is Real GDP?

Which of the following is a point made by economist Richard Easterlin (for whom the Easterlin Paradox is named)based on his research?

In 1950,the country with the highest per-capita GDP was

-Refer to Exhibit 7-2.GDP in 2019 is

Suppose you have data on durable goods,nondurable goods,fixed investment,government purchases,exports,and imports.Can you compute GDP?

An economy produces 5X,10Y,and 20Z in a year.Base-year prices for these goods are $1,$3,and $5,respectively.Current-year prices for these goods are $2,$3,and $4,respectively.What is Real GDP?

Which of the following statements is true?

-Refer to Exhibit 7-2.Assuming that 1990 is the base year,Real GDP in 2019 is

What does annual economic growth refer to?

Of the two types of investment (fixed and inventory),fixed investment is the larger of the two.

Which of the following statements is false?

Which of the following is omitted from GDP calculations?

In the business cycle,what is the difference between the recovery phase and the expansion phase?

With respect to the business cycle,describe the difference between the expansion phase and the recovery phase.

Which of the following is counted in GDP?

Personal income is

If a business firm in Country A produces a good but does not sell it in that same year,that good will not be counted in Country A's GDP.

The research of economists Stevenson and Wolfers tends to support the Easterlin paradox.

Which of the following statements is true?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

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Stocks,bonds,futures,and Options

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