Question 1

In the circular flow model

Accepted Answer

A)  households demand goods and services which are supplied by firms, and the firms demand resources that are supplied by intermediate firms. 
B)  households demand goods and services that are supplied by firms, while supplying resources that are demanded by firms. 
C)  households buy goods and services and firms supply goods. Resources are supplied by other firms. 
D)  households buy goods and services while firms sell goods and services. Firms obtain labor from households, capital from government, and raw materials from firms. 
A)  households demand goods and services which are supplied by firms, and the firms demand resources that are supplied by intermediate firms. 
B)  households demand goods and services that are supplied by firms, while supplying resources that are demanded by firms. 
C)  households buy goods and services and firms supply goods. Resources are supplied by other firms. 
D)  households buy goods and services while firms sell goods and services. Firms obtain labor from households, capital from government, and raw materials from firms.

Question 2

In the simple circular flow model

Accepted Answer

A)  households spend the income they receive from labor services but save the income they receive from selling the other factors of production. 
B)  businesses buy labor services from households, but supply other factors of production themselves. 
C)  households spend their entire income on consumer products. 
D)  profits are a type of income that is not received by households. 
A)  households spend the income they receive from labor services but save the income they receive from selling the other factors of production. 
B)  businesses buy labor services from households, but supply other factors of production themselves. 
C)  households spend their entire income on consumer products. 
D)  profits are a type of income that is not received by households.

Question 3

-Refer to the above table. The production of this good goes through 4 different stages of production. What is the total dollar value added when production is completed?

Accepted Answer

A)  $0.07 
B)  $0.32 
C)  $0.75 
D)  Cannot be computed without more information. 
A)  $0.07 
B)  $0.32 
C)  $0.75 
D)  Cannot be computed without more information.

Question 4

The sum of the value added at all stages of production for a product is

Accepted Answer

A)  the product's final price. 
B)  the product's price plus the value of intermediate goods. 
C)  the product's price minus the value of intermediate goods. 
D)  the sum of all the transactions in the production of the product. 
A)  the product's final price. 
B)  the product's price plus the value of intermediate goods. 
C)  the product's price minus the value of intermediate goods. 
D)  the sum of all the transactions in the production of the product.

Question 5

Value added is

Accepted Answer

A)  the price of an intermediate product. 
B)  the amount of dollar value contributed to a product at each stage of its production. 
C)  the sum of the prices of intermediate products. 
D)  the dollar value contributed to a product at the last stage of its production. 
A)  the price of an intermediate product. 
B)  the amount of dollar value contributed to a product at each stage of its production. 
C)  the sum of the prices of intermediate products. 
D)  the dollar value contributed to a product at the last stage of its production.

Question 6

In calculating GDP, the value of intermediate goods is eliminated by using the

Accepted Answer

A)  distributive method. 
B)  value association method. 
C)  value added method. 
D)  Federal Reserve method. 
A)  distributive method. 
B)  value association method. 
C)  value added method. 
D)  Federal Reserve method.

Question 7

The dollar value of final output

Accepted Answer

A)  is less than total income. 
B)  is equal to total income. 
C)  is greater than total income. 
D)  equals profits. 
A)  is less than total income. 
B)  is equal to total income. 
C)  is greater than total income. 
D)  equals profits.

Question 8

Indirect business taxes refer to

Accepted Answer

A)  depreciation expenses. 
B)  sales and local taxes paid by business. 
C)  payments for low-skilled labor. 
D)  dividend taxes paid by the corporation. 
A)  depreciation expenses. 
B)  sales and local taxes paid by business. 
C)  payments for low-skilled labor. 
D)  dividend taxes paid by the corporation.

Question 9

Wheat used for producing bread is

Accepted Answer

A)  a final good. 
B)  not going to generate any employment. 
C)  an intermediate good. 
D)  a durable good. 
A)  a final good. 
B)  not going to generate any employment. 
C)  an intermediate good. 
D)  a durable good.

Question 10

Suppose the total value of all assets in the Country X is $10 trillion. In 2018, the total value of all final services produced in Country X was $150 billion, the total value of all final goods produced in Country X was $350 billion, and the total value of all final goods and services produced by Country X's firms in other countries was $100 billion. In this situation, Country X's Gross Domestic Product for 2018 was

Accepted Answer

A)  $600 billion. 
B)  $510 billion. 
C)  $500 billion. 
D)  $10.5 trillion. 
A)  $600 billion. 
B)  $510 billion. 
C)  $500 billion. 
D)  $10.5 trillion.

Question 11

Suppose you buy a new Tesla Model S. The battery that comes with the car is a(n)

Accepted Answer

A)  final good. 
B)  intermediate good. 
C)  transfer good. 
D)  financial good. 
A)  final good. 
B)  intermediate good. 
C)  transfer good. 
D)  financial good.

Question 12

Which of the following would NOT be included in the calculation of the GDP?

Accepted Answer

A)  the value of the service of legally produced gambling services in Las Vegas 
B)  the value of the services of a homemaker 
C)  the value of legally produced liquor 
D)  the value of the production of nuclear weapons 
A)  the value of the service of legally produced gambling services in Las Vegas 
B)  the value of the services of a homemaker 
C)  the value of legally produced liquor 
D)  the value of the production of nuclear weapons

Question 13

A good goes through three stages of production. The value added at stage 1 is $3; the value added at stage 2 is $5; the value added at stage 3 is $2. What is the retail price of the good?

Accepted Answer

A)  $2 
B)  $10 
C)  $20 
D)  Cannot be determined based on the information given. 
A)  $2 
B)  $10 
C)  $20 
D)  Cannot be determined based on the information given.

Question 14

What constitutes investment when measuring gross private domestic investment?

Accepted Answer

Investment is the use of today's resourc

Question 15

The expenditure approach to deriving gross domestic product sums the following categories of spending

Accepted Answer

A)  consumption, investment, government spending, and net exports. 
B)  consumption, income, government spending, and net exports. 
C)  consumption, savings, investment, and government spending. 
D)  consumption, government spending, transfer payments, and net exports. 
A)  consumption, investment, government spending, and net exports. 
B)  consumption, income, government spending, and net exports. 
C)  consumption, savings, investment, and government spending. 
D)  consumption, government spending, transfer payments, and net exports.

Question 16

All of the following are included in the calculation of gross domestic income (GDI) EXCEPT

Accepted Answer

A)  consumer expenditures. 
B)  wages. 
C)  profits. 
D)  indirect business taxes. 
A)  consumer expenditures. 
B)  wages. 
C)  profits. 
D)  indirect business taxes.

Question 17

Income earned by the factors of production is called

Accepted Answer

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

Question 18

When GDP and other national income accounts are measured in nominal values, then they

Accepted Answer

A)  are measured in current market prices. 
B)  are measured in real values. 
C)  are not comparable because they are not in real terms. 
D)  should be converted into money values before comparing them over time. 
A)  are measured in current market prices. 
B)  are measured in real values. 
C)  are not comparable because they are not in real terms. 
D)  should be converted into money values before comparing them over time.

Question 19

The values of variables such as GDP expressed in current dollars are referred to as

Accepted Answer

A)  the price index. 
B)  a deflator. 
C)  nominal values. 
D)  real values. 
A)  the price index. 
B)  a deflator. 
C)  nominal values. 
D)  real values.

Question 20

How do economists view profits?

Accepted Answer

A)  Profits are an asset the business holds. 
B)  Profits are one of the costs paid to a factor of production. 
C)  Profits are guaranteed as long as a firm operates ethically. 
D)  The firm's profit equals the sum of all payments to the 5 factors of production. 
A)  Profits are an asset the business holds. 
B)  Profits are one of the costs paid to a factor of production. 
C)  Profits are guaranteed as long as a firm operates ethically. 
D)  The firm's profit equals the sum of all payments to the 5 factors of production.

Exam 8: Measuring the Economys Performance

In the circular flow model

In the simple circular flow model

-Refer to the above table. The production of this good goes through 4 different stages of production. What is the total dollar value added when production is completed?

The sum of the value added at all stages of production for a product is

Value added is

In calculating GDP, the value of intermediate goods is eliminated by using the

The dollar value of final output

Indirect business taxes refer to

Wheat used for producing bread is

Suppose you buy a new Tesla Model S. The battery that comes with the car is a(n)

Which of the following would NOT be included in the calculation of the GDP?

A good goes through three stages of production. The value added at stage 1 is $3; the value added at stage 2 is $5; the value added at stage 3 is $2. What is the retail price of the good?

What constitutes investment when measuring gross private domestic investment?

The expenditure approach to deriving gross domestic product sums the following categories of spending

All of the following are included in the calculation of gross domestic income (GDI) EXCEPT

Income earned by the factors of production is called

When GDP and other national income accounts are measured in nominal values, then they

The values of variables such as GDP expressed in current dollars are referred to as

How do economists view profits?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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