Question 1

In economics, the term 'investment' refers to:

Accepted Answer

A)  purchasing shares and fixed term securities. 
B)  spending on physical products that are intended to be used as inputs in production
Processes. 
C)  purchasing a piece of existing real estate. 
D)  purchasing goods or services. 
A)  purchasing shares and fixed term securities. 
B)  spending on physical products that are intended to be used as inputs in production
Processes. 
C)  purchasing a piece of existing real estate. 
D)  purchasing goods or services.

Question 2

Because GDP does not account for improvements in the quality of goods, the GDP calculation:

Accepted Answer

A)  tends to overstate the true value of output in Australia. 
B)  tends to understate the true value of output in Australia. 
C)  provides an accurate value of output in Australia. 
D)  provides the best measure of output in Australia. 
A)  tends to overstate the true value of output in Australia. 
B)  tends to understate the true value of output in Australia. 
C)  provides an accurate value of output in Australia. 
D)  provides the best measure of output in Australia.

Question 3

All final goods and services that make up GDP can be expressed in the form:

Accepted Answer

A)  GDP = C + G + (X - M). 
B)  GDP = C + I + G + (X + M). 
C)  GDP = C + I + G + (X - M). 
D)  GDP = G + I + (X - M). 
A)  GDP = C + G + (X - M). 
B)  GDP = C + I + G + (X + M). 
C)  GDP = C + I + G + (X - M). 
D)  GDP = G + I + (X - M).

Question 4

Which one of the following statements is true?

Accepted Answer

A)  Resources flow from the government to households. 
B)  Resources flow from firms to households. 
C)  Taxes flow from firms to the government. 
D)  Resource payments flow from firms to households. 
A)  Resources flow from the government to households. 
B)  Resources flow from firms to households. 
C)  Taxes flow from firms to the government. 
D)  Resource payments flow from firms to households.

Question 5

Based on the circular flow model, money flows from households to businesses in:

Accepted Answer

A)  factor markets. 
B)  product markets. 
C)  neither factor nor product markets. 
D)  both factor and product markets. 
A)  factor markets. 
B)  product markets. 
C)  neither factor nor product markets. 
D)  both factor and product markets.

Question 6

If a firm buys a dozen new cars for its sales team, this would be included in:

Accepted Answer

A)  consumption expenditure. 
B)  investment inventories. 
C)  gross private fixed investment. 
D)  gross private fixed consumption. 
A)  consumption expenditure. 
B)  investment inventories. 
C)  gross private fixed investment. 
D)  gross private fixed consumption.

Question 7

GDP is not a perfect measure of economic welfare because it:

Accepted Answer

A)  double-counts overall spending. 
B)  treats a dollar spent on exports the same as a dollar spent on imports. 
C)  double-counts the value of leisure time. 
D)  treats a non-market transaction as if it did not exist. 
A)  double-counts overall spending. 
B)  treats a dollar spent on exports the same as a dollar spent on imports. 
C)  double-counts the value of leisure time. 
D)  treats a non-market transaction as if it did not exist.

Question 8

The difference between gross investment and net investment is the stock of inventory.

Accepted Answer

A) True 
 B)False

Question 9

Gross national product is also known as:

Accepted Answer

A)  gross international income. 
B)  net domestic goods and services. 
C)  gross national expenditure. 
D)  gross national income of a country. 
A)  gross international income. 
B)  net domestic goods and services. 
C)  gross national expenditure. 
D)  gross national income of a country.

Question 10

Which one of the following statements is true? Money flows from:

Accepted Answer

A)  the government to households for taxes. 
B)  foreign economies to households for exports. 
C)  the government to firms for goods and services. 
D)  firms to foreign economies for exports. 
A)  the government to households for taxes. 
B)  foreign economies to households for exports. 
C)  the government to firms for goods and services. 
D)  firms to foreign economies for exports.

Question 11

The expenditure approach to GDP accounting includes:

Accepted Answer

A)  wages and salaries. 
B)  net exports. 
C)  net interest. 
D)  corporate profit. 
A)  wages and salaries. 
B)  net exports. 
C)  net interest. 
D)  corporate profit.

Question 12

If the underground economy were included in GDP, GDP would:

Accepted Answer

A)  grow. 
B)  decline. 
C)  stay the same. 
D)  Not possible to determine. 
A)  grow. 
B)  decline. 
C)  stay the same. 
D)  Not possible to determine.

Question 13

Gross private domestic investment does not include:

Accepted Answer

A)  spending for new houses. 
B)  spending to build up inventories. 
C)  unintentional inventory investment. 
D)  spending on employee salaries. 
A)  spending for new houses. 
B)  spending to build up inventories. 
C)  unintentional inventory investment. 
D)  spending on employee salaries.

Question 14

GDP understates national wellbeing because:

Accepted Answer

A)  there is not enough data on working hours. 
B)  no allowance is made for leisure time. 
C)  people can afford leisure time now. 
D)  people are working more now than they did a century ago. 
A)  there is not enough data on working hours. 
B)  no allowance is made for leisure time. 
C)  people can afford leisure time now. 
D)  people are working more now than they did a century ago.

Question 15

GDP ignores:

Accepted Answer

A)  the value of mowing your lawn if you hired someone to do it. 
B)  the value of cleaning your clothes if you took them to the laundry. 
C)  the value of driving your kids to school if you hired a taxi to do it. 
D)  the value of the air quality in your neighbourhood. 
A)  the value of mowing your lawn if you hired someone to do it. 
B)  the value of cleaning your clothes if you took them to the laundry. 
C)  the value of driving your kids to school if you hired a taxi to do it. 
D)  the value of the air quality in your neighbourhood.

Question 16

The payment of welfare benefits by the government:

Accepted Answer

A)  increases the value of GDP. 
B)  reduces the value of GDP. 
C)  is not included in the calculation of GDP. 
D)  is only included in the calculation of GDP if it is for unemployment benefits. 
A)  increases the value of GDP. 
B)  reduces the value of GDP. 
C)  is not included in the calculation of GDP. 
D)  is only included in the calculation of GDP if it is for unemployment benefits.

Question 17

Income is an example of a _____, and the money in my bank account is a _____.

Accepted Answer

A)  stock; flow 
B)  stock; stock 
C)  flow; stock 
D)  flow; flow 
A)  stock; flow 
B)  stock; stock 
C)  flow; stock 
D)  flow; flow

Question 18

Gross domestic product (GDP) is officially measured by adding together:

Accepted Answer

A)  the quantity of each good and service produced by Australian residents. 
B)  gross national product and depreciation of resources. 
C)  incomes received by all of a nation's households. 
D)  the market value of all final goods and services produced within the borders of a nation. 
A)  the quantity of each good and service produced by Australian residents. 
B)  gross national product and depreciation of resources. 
C)  incomes received by all of a nation's households. 
D)  the market value of all final goods and services produced within the borders of a nation.

Question 19

Net domestic product is calculated as GDP:

Accepted Answer

A)  plus depreciation. 
B)  plus indirect business taxes. 
C)  minus indirect business taxes. 
D)  minus depreciation. 
A)  plus depreciation. 
B)  plus indirect business taxes. 
C)  minus indirect business taxes. 
D)  minus depreciation.

Question 20

GDP is not a perfect measure of economic welfare because it ignores:

Accepted Answer

A)  production of goods and services by the government. 
B)  goods produced in Australia but shipped overseas. 
C)  environmental degradation. 
D)  consumer spending on new goods and services. 
A)  production of goods and services by the government. 
B)  goods produced in Australia but shipped overseas. 
C)  environmental degradation. 
D)  consumer spending on new goods and services.

In economics, the term 'investment' refers to:

Because GDP does not account for improvements in the quality of goods, the GDP calculation:

All final goods and services that make up GDP can be expressed in the form:

Which one of the following statements is true?

Based on the circular flow model, money flows from households to businesses in:

If a firm buys a dozen new cars for its sales team, this would be included in:

GDP is not a perfect measure of economic welfare because it:

The difference between gross investment and net investment is the stock of inventory.

Gross national product is also known as:

Which one of the following statements is true? Money flows from:

The expenditure approach to GDP accounting includes:

If the underground economy were included in GDP, GDP would:

Gross private domestic investment does not include:

GDP understates national wellbeing because:

GDP ignores:

The payment of welfare benefits by the government:

Income is an example of a _, and the money in my bank account is a _.

Gross domestic product (GDP) is officially measured by adding together:

Net domestic product is calculated as GDP:

GDP is not a perfect measure of economic welfare because it ignores:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters

Exam 12: Measuring the Size of the Economy

In economics, the term 'investment' refers to:

Because GDP does not account for improvements in the quality of goods, the GDP calculation:

All final goods and services that make up GDP can be expressed in the form:

Which one of the following statements is true?

Based on the circular flow model, money flows from households to businesses in:

If a firm buys a dozen new cars for its sales team, this would be included in:

GDP is not a perfect measure of economic welfare because it:

The difference between gross investment and net investment is the stock of inventory.

Gross national product is also known as:

Which one of the following statements is true? Money flows from:

The expenditure approach to GDP accounting includes:

If the underground economy were included in GDP, GDP would:

Gross private domestic investment does not include:

GDP understates national wellbeing because:

GDP ignores:

The payment of welfare benefits by the government:

Income is an example of a _____, and the money in my bank account is a _____.

Gross domestic product (GDP) is officially measured by adding together:

Net domestic product is calculated as GDP:

GDP is not a perfect measure of economic welfare because it ignores:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters

Income is an example of a _, and the money in my bank account is a _.