Question 1

Consumption includes expenditure on:

Accepted Answer

A)  durable goods and services. 
B)  non-durable goods and services. 
C)  both durable and non-durable expenditure. 
D)  tangible items only. 
A)  durable goods and services. 
B)  non-durable goods and services. 
C)  both durable and non-durable expenditure. 
D)  tangible items only.

Question 2

In a closed economy, which of the following must be true?

Accepted Answer

A)  C = I. 
B)  S = I. 
C)  G = T. 
D)  C = S. 
A)  C = I. 
B)  S = I. 
C)  G = T. 
D)  C = S.

Question 3

In the circular flow model, the demand arrow represents:

Accepted Answer

A)  the flow of investment expenditures from households to firms. 
B)  the flow of consumption expenditures from households to firms. 
C)  the flow of consumption expenditures from firms to households. 
D)  the flow of investment expenditures from businesses to firms. 
A)  the flow of investment expenditures from households to firms. 
B)  the flow of consumption expenditures from households to firms. 
C)  the flow of consumption expenditures from firms to households. 
D)  the flow of investment expenditures from businesses to firms.

Question 4

GDP underestimates our economic wellbeing because:

Accepted Answer

A)  it includes the value of work done by nannies. 
B)  it ignores the distribution of products. 
C)  it includes the value of work done by householders. 
D)  it includes the value of work done by illegal immigrants. 
A)  it includes the value of work done by nannies. 
B)  it ignores the distribution of products. 
C)  it includes the value of work done by householders. 
D)  it includes the value of work done by illegal immigrants.

Question 5

Suppose a miller sells flour to a baker for $100. The baker then produces bread from the flour and sells it to Coles for $600. Coles in turn then sells it to the public for $850. The increase in GDP as a result of these transactions will be:

Accepted Answer

A)  $1550. 
B)  $850. 
C)  $600. 
D)  $100. 
A)  $1550. 
B)  $850. 
C)  $600. 
D)  $100.

Question 6

Household consumption expenditures include:

Accepted Answer

A)  investment expenditure. 
B)  used goods and services. 
C)  durable goods, non-durable goods, and services. 
D)  voluntary services. 
A)  investment expenditure. 
B)  used goods and services. 
C)  durable goods, non-durable goods, and services. 
D)  voluntary services.

Question 7

Real GDP means GDP:

Accepted Answer

A)  valued at prices in a base year. 
B)  that does not change from year to year. 
C)  corrected for changes in quality. 
D)  valued at prices at which goods are actually sold. 
A)  valued at prices in a base year. 
B)  that does not change from year to year. 
C)  corrected for changes in quality. 
D)  valued at prices at which goods are actually sold.

Question 8

Narrbegin Exhibit 11.1 Expenditure approach
 $\begin{array}{|l|c|}
\hline \text {National income account}&
\text {(Billions of dollars)}\
\hline \text { Personal consumption expenditures }(C) & \$ 500 \
\hline \text { Net exports }(X-M) & 50 \
\hline \begin{array}{l}
\text { Federal government consumption and gross investment } \
\text { expenditures }(G)
\end{array} & 100 \
\hline \begin{array}{l}
\text { State and local government consumption and } \
\text { gross investment expenditures }(G)
\end{array} & 200 \
\hline \text { Imports } & 15 \
\hline \text { Gross private domestic investment }(I) & 65\
\hline
\end{array}$
 
-As shown in Exhibit 11.1, total spending by government is:

Accepted Answer

A)  $100 billion. 
B)  $200 billion. 
C)  $300 billion. 
D)  $600 billion. 
A)  $100 billion. 
B)  $200 billion. 
C)  $300 billion. 
D)  $600 billion.

Question 9

National saving can be defined as:

Accepted Answer

A)  (T - G) + (Y - C - T). 
B)  T + S. 
C)  Y - C - T +G. 
D)  S - I. 
A)  (T - G) + (Y - C - T). 
B)  T + S. 
C)  Y - C - T +G. 
D)  S - I.

Question 10

Narrbegin Exhibit 11.1 Expenditure approach
 $\begin{array}{|l|c|}
\hline \text {National income account}&
\text {(Billions of dollars)}\
\hline \text { Personal consumption expenditures }(C) & \$ 500 \
\hline \text { Net exports }(X-M) & 50 \
\hline \begin{array}{l}
\text { Federal government consumption and gross investment } \
\text { expenditures }(G)
\end{array} & 100 \
\hline \begin{array}{l}
\text { State and local government consumption and } \
\text { gross investment expenditures }(G)
\end{array} & 200 \
\hline \text { Imports } & 15 \
\hline \text { Gross private domestic investment }(I) & 65\
\hline
\end{array}$
 
-As shown in Exhibit 11.1, total expenditures by businesses for fixed investment and inventories are:

Accepted Answer

A)  $15 billion. 
B)  $50 billion. 
C)  $65 billion. 
D)  $200 billion. 
A)  $15 billion. 
B)  $50 billion. 
C)  $65 billion. 
D)  $200 billion.

Question 11

In an economy with persistent inflation:

Accepted Answer

A)  real GDP will grow faster than nominal GDP. 
B)  nominal GDP will grow faster than real GDP. 
C)  nominal and real GDP will grow at the same rate. 
D)  nominal and real GDP will both fall. 
A)  real GDP will grow faster than nominal GDP. 
B)  nominal GDP will grow faster than real GDP. 
C)  nominal and real GDP will grow at the same rate. 
D)  nominal and real GDP will both fall.

Question 12

Capital goods, like factories and machinery, are classified as intermediate goods.

Accepted Answer

A) True 
 B)False

Question 13

If the underground economy is sizeable, then GDP will:

Accepted Answer

A)  understate the economy's performance. 
B)  overstate the economy's performance. 
C)  fluctuate unpredictably. 
D)  accurately reflect this subterranean activity. 
A)  understate the economy's performance. 
B)  overstate the economy's performance. 
C)  fluctuate unpredictably. 
D)  accurately reflect this subterranean activity.

Question 14

Assume that household consumption is $500 billion, gross private domestic investment is $200 billion, government expenditure is $200 billion, and net exports are -$10 billion. The GDP is:

Accepted Answer

A)  $910 billion. 
B)  $900 billion. 
C)  $890 billion. 
D)  $700 billion. 
A)  $910 billion. 
B)  $900 billion. 
C)  $890 billion. 
D)  $700 billion.

Question 15

Gross national expenditure (GNE) is equal to:

Accepted Answer

A)  C + I + G + NX. 
B)  C + I + G - NX. 
C)  C + I +G. 
D)  C + I + G + M. 
A)  C + I + G + NX. 
B)  C + I + G - NX. 
C)  C + I +G. 
D)  C + I + G + M.

Question 16

One way that an economy can grow in the long run is by:

Accepted Answer

A)  people saving some of their income and having it invested in capital goods by firms. 
B)  people spending more of their income on consumption and less on saving. 
C)  governments running continual budget deficits. 
D)  people consuming more than they earn. 
A)  people saving some of their income and having it invested in capital goods by firms. 
B)  people spending more of their income on consumption and less on saving. 
C)  governments running continual budget deficits. 
D)  people consuming more than they earn.

Question 17

GDP data provides _____ information as to whether a small fraction of the population consumes most of a country's GDP or whether consumption is evenly divided.

Accepted Answer

A)  no 
B)  a little 
C)  a lot of 
D)  interesting 
A)  no 
B)  a little 
C)  a lot of 
D)  interesting

Question 18

Flows are measured per period of time, while stocks are measured at a particular point in time.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following countries has the highest level of GDP?

Accepted Answer

A)  Bangladesh. 
B)  The USA. 
C)  Switzerland. 
D)  Kenya. 
A)  Bangladesh. 
B)  The USA. 
C)  Switzerland. 
D)  Kenya.

Question 20

Which of the following is a shortcoming of GDP?

Accepted Answer

A)  It measures used goods and services. 
B)  It includes changes in inventories. 
C)  It includes the value of net exports. 
D)  It does not make an allowance for leisure time. 
A)  It measures used goods and services. 
B)  It includes changes in inventories. 
C)  It includes the value of net exports. 
D)  It does not make an allowance for leisure time.

Consumption includes expenditure on:

In a closed economy, which of the following must be true?

In the circular flow model, the demand arrow represents:

GDP underestimates our economic wellbeing because:

Suppose a miller sells flour to a baker for $100. The baker then produces bread from the flour and sells it to Coles for $600. Coles in turn then sells it to the public for $850. The increase in GDP as a result of these transactions will be:

Household consumption expenditures include:

Real GDP means GDP:

National saving can be defined as:

In an economy with persistent inflation:

Capital goods, like factories and machinery, are classified as intermediate goods.

If the underground economy is sizeable, then GDP will:

Assume that household consumption is $500 billion, gross private domestic investment is $200 billion, government expenditure is $200 billion, and net exports are -$10 billion. The GDP is:

Gross national expenditure (GNE) is equal to:

One way that an economy can grow in the long run is by:

GDP data provides _____ information as to whether a small fraction of the population consumes most of a country's GDP or whether consumption is evenly divided.

Flows are measured per period of time, while stocks are measured at a particular point in time.

Which of the following countries has the highest level of GDP?

Which of the following is a shortcoming of GDP?

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

Consumption includes expenditure on:

In a closed economy, which of the following must be true?

In the circular flow model, the demand arrow represents:

GDP underestimates our economic wellbeing because:

Suppose a miller sells flour to a baker for $100. The baker then produces bread from the flour and sells it to Coles for $600. Coles in turn then sells it to the public for $850. The increase in GDP as a result of these transactions will be:

Household consumption expenditures include:

Real GDP means GDP:

National saving can be defined as:

In an economy with persistent inflation:

Capital goods, like factories and machinery, are classified as intermediate goods.

If the underground economy is sizeable, then GDP will:

Assume that household consumption is $500 billion, gross private domestic investment is $200 billion, government expenditure is $200 billion, and net exports are -$10 billion. The GDP is:

Gross national expenditure (GNE) is equal to:

One way that an economy can grow in the long run is by:

GDP data provides _____ information as to whether a small fraction of the population consumes most of a country's GDP or whether consumption is evenly divided.

Flows are measured per period of time, while stocks are measured at a particular point in time.

Which of the following countries has the highest level of GDP?

Which of the following is a shortcoming of GDP?

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