Question 1

Explain how disposable personal income is derived from Gross Domestic Product.

Accepted Answer

Gross domestic product is the same thing

Question 2

The difference between personal income and disposable personal income is

Accepted Answer

A)  disposable personal income is what is left after personal income taxes have been paid while personal income includes personal income taxes. 
B)  personal income is what is left after personal income taxes have been paid while disposable income includes personal income taxes. 
C)  personal income includes transfer payments while disposable personal income does not. 
D)  personal income includes indirect business taxes while disposable income does not. 
A)  disposable personal income is what is left after personal income taxes have been paid while personal income includes personal income taxes. 
B)  personal income is what is left after personal income taxes have been paid while disposable income includes personal income taxes. 
C)  personal income includes transfer payments while disposable personal income does not. 
D)  personal income includes indirect business taxes while disposable income does not.

Question 3

Which of the following items is excluded from GDP?

Accepted Answer

A)  services a barber performs in cutting hair 
B)  production and sale of hair-cutting equipment 
C)  services a barber performs in repairing his own hair-cutting equipment 
D)  the construction of a new barbershop 
A)  services a barber performs in cutting hair 
B)  production and sale of hair-cutting equipment 
C)  services a barber performs in repairing his own hair-cutting equipment 
D)  the construction of a new barbershop

Question 4

A firm produces a good and generates $5 million in receipts. Wages are $1 million, rent is $500,000, and interest payments are $1 million. Then

Accepted Answer

A)  profits are $500,000, the cost of production is $4.5 million, and households receive income equal to $4.5 million. 
B)  profits are $1.5 million, the cost of production is $5 million, and households receive income equal to $4.5 million. 
C)  profits are $1.5 million, the cost of production is $5 million, and households receive income equal to $5 million. 
D)  profits are $500,000, the cost of production is $5 million, and households receive income equal to $4.5 million. 
A)  profits are $500,000, the cost of production is $4.5 million, and households receive income equal to $4.5 million. 
B)  profits are $1.5 million, the cost of production is $5 million, and households receive income equal to $4.5 million. 
C)  profits are $1.5 million, the cost of production is $5 million, and households receive income equal to $5 million. 
D)  profits are $500,000, the cost of production is $5 million, and households receive income equal to $4.5 million.

Question 5

Gross domestic product is a measure of

Accepted Answer

A)  the total value of all transactions in U. S. markets. 
B)  the added value of production. 
C)  the dollar value of final goods and services produced in the United States. 
D)  the dollar value of the aggregate measure of business as measured by the Dow Jones Industrial Average. 
A)  the total value of all transactions in U. S. markets. 
B)  the added value of production. 
C)  the dollar value of final goods and services produced in the United States. 
D)  the dollar value of the aggregate measure of business as measured by the Dow Jones Industrial Average.

Question 6

Non-income expense items included in the Gross Domestic Product (GDP) calculation include

Accepted Answer

A)  depreciation and indirect business taxes. 
B)  depreciation and corporate profits. 
C)  corporate profits tax and indirect business taxes. 
D)  indirect business taxes and corporate profits. 
A)  depreciation and indirect business taxes. 
B)  depreciation and corporate profits. 
C)  corporate profits tax and indirect business taxes. 
D)  indirect business taxes and corporate profits.

Question 7

When economists refer to investment expenditures they mean the

Accepted Answer

A)  purchase of a consumer nondurable goods. 
B)  purchase of stocks or bonds. 
C)  use of today's resources to expand tomorrow's production or consumption. 
D)  production of intermediate goods. 
A)  purchase of a consumer nondurable goods. 
B)  purchase of stocks or bonds. 
C)  use of today's resources to expand tomorrow's production or consumption. 
D)  production of intermediate goods.

Question 8

The computation of GDP by adding up the dollar value at current market prices of all final goods and services is

Accepted Answer

A)  the expenditure approach. 
B)  the income approach. 
C)  transfer payments. 
D)  the value of all securities. 
A)  the expenditure approach. 
B)  the income approach. 
C)  transfer payments. 
D)  the value of all securities.

Question 9

Gross Domestic Product (GDP) figures may understate the value of goods and services due to

Accepted Answer

A)  the exclusion of the underground economy. 
B)  the inclusion of household production. 
C)  the inclusion of legal non-reported, non-taxed income. 
D)  the exclusion of the value of stocks. 
A)  the exclusion of the underground economy. 
B)  the inclusion of household production. 
C)  the inclusion of legal non-reported, non-taxed income. 
D)  the exclusion of the value of stocks.

Question 10

All of the following are incomes earned in the factor market EXCEPT

Accepted Answer

A)  wages. 
B)  prices of goods and services. 
C)  profits. 
D)  rents. 
A)  wages. 
B)  prices of goods and services. 
C)  profits. 
D)  rents.

Question 11

The purchase of a share of stock is excluded in the calculation of Gross Domestic Product (GDP) because it

Accepted Answer

A)  is an intermediate good. 
B)  produces value added. 
C)  only represents the transfer of ownership rights. 
D)  is a final service and not a good. 
A)  is an intermediate good. 
B)  produces value added. 
C)  only represents the transfer of ownership rights. 
D)  is a final service and not a good.

Question 12

Why aren't financial transactions, sales of secondhand goods, and household production included in measuring GDP?

Accepted Answer

Financial transactions do not involve th

Question 13

All of the following statements are correct EXCEPT

Accepted Answer

A)  NDP = Gross Domestic Product (GDP) - depreciation (capital consumption allowance). 
B)  NI = NDP + indirect business taxes. 
C)  net exports = total exports - total imports. 
D)  Gross Domestic Product (GDP) = NDP + capital consumption allowance (depreciation). 
A)  NDP = Gross Domestic Product (GDP) - depreciation (capital consumption allowance). 
B)  NI = NDP + indirect business taxes. 
C)  net exports = total exports - total imports. 
D)  Gross Domestic Product (GDP) = NDP + capital consumption allowance (depreciation).

Question 14

GDP is a measure of

Accepted Answer

A)  production. 
B)  innovation. 
C)  inflation. 
D)  the amount of money available. 
A)  production. 
B)  innovation. 
C)  inflation. 
D)  the amount of money available.

Question 15

Inventory investment occurs when

Accepted Answer

A)  grocers sell stocks of canned goods off their shelves. 
B)  individuals buys more company stock shares online. 
C)  shopkeepers check their inventories. 
D)  automobile dealers add to their stocks of unsold cars. 
A)  grocers sell stocks of canned goods off their shelves. 
B)  individuals buys more company stock shares online. 
C)  shopkeepers check their inventories. 
D)  automobile dealers add to their stocks of unsold cars.

Question 16

A car sold from a used car lot

Accepted Answer

A)  would be counted in Gross Domestic Product (GDP). 
B)  would fall under net exports, and would then be counted in Gross Domestic Product (GDP). 
C)  would not be counted in Gross Domestic Product (GDP). 
D)  would only be counted in Gross Domestic Product (GDP) if it was a foreign made car. 
A)  would be counted in Gross Domestic Product (GDP). 
B)  would fall under net exports, and would then be counted in Gross Domestic Product (GDP). 
C)  would not be counted in Gross Domestic Product (GDP). 
D)  would only be counted in Gross Domestic Product (GDP) if it was a foreign made car.

Question 17

Which of the following will be the smallest in value?

Accepted Answer

A)  national income 
B)  net domestic product 
C)  personal income 
D)  disposable personal income 
A)  national income 
B)  net domestic product 
C)  personal income 
D)  disposable personal income

Question 18

Which of the following statements is TRUE?

Accepted Answer

A)  During periods of inflation, nominal GDP increases more rapidly than does real GDP. 
B)  Nominal values are expressed in constant dollars. 
C)  Real values are expressed in current dollars. 
D)  Increases in real GDP are evidence that the distribution of wealth is becoming more equal. 
A)  During periods of inflation, nominal GDP increases more rapidly than does real GDP. 
B)  Nominal values are expressed in constant dollars. 
C)  Real values are expressed in current dollars. 
D)  Increases in real GDP are evidence that the distribution of wealth is becoming more equal.

Question 19

The term "value added" refers to the dollar value of

Accepted Answer

A)  an industry's sales plus profits. 
B)  the intermediate goods and services purchased by an industry. 
C)  an industry's sales less the dollar value of the intermediate goods purchased by the industry. 
D)  the intermediate goods purchased by an industry plus the profits of the industry. 
A)  an industry's sales plus profits. 
B)  the intermediate goods and services purchased by an industry. 
C)  an industry's sales less the dollar value of the intermediate goods purchased by the industry. 
D)  the intermediate goods purchased by an industry plus the profits of the industry.

Question 20

GDP can be calculated using

Accepted Answer

A)  the expenditure approach and the production approach. 
B)  the expenditure approach and the income approach. 
C)  the expenditure approach and the factor of production approach. 
D)  the expenditure approach and the resource approach. 
A)  the expenditure approach and the production approach. 
B)  the expenditure approach and the income approach. 
C)  the expenditure approach and the factor of production approach. 
D)  the expenditure approach and the resource approach.

Exam 8: Measuring the Economys Performance

Explain how disposable personal income is derived from Gross Domestic Product.

The difference between personal income and disposable personal income is

Which of the following items is excluded from GDP?

A firm produces a good and generates $5 million in receipts. Wages are $1 million, rent is $500,000, and interest payments are $1 million. Then

Gross domestic product is a measure of

Non-income expense items included in the Gross Domestic Product (GDP) calculation include

When economists refer to investment expenditures they mean the

The computation of GDP by adding up the dollar value at current market prices of all final goods and services is

Gross Domestic Product (GDP) figures may understate the value of goods and services due to

All of the following are incomes earned in the factor market EXCEPT

The purchase of a share of stock is excluded in the calculation of Gross Domestic Product (GDP) because it

Why aren't financial transactions, sales of secondhand goods, and household production included in measuring GDP?

All of the following statements are correct EXCEPT

GDP is a measure of

Inventory investment occurs when

A car sold from a used car lot

Which of the following will be the smallest in value?

Which of the following statements is TRUE?

The term "value added" refers to the dollar value of

GDP can be calculated using

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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