Question 1

Net investment refers to

Accepted Answer

A)  the change in the capital stock after subtracting out depreciation. 
B)  the change in inventories over a 1-year period. 
C)  the change in investment spending and the change in government expenditures on infrastructure. 
D)  exports minus imports. 
A)  the change in the capital stock after subtracting out depreciation. 
B)  the change in inventories over a 1-year period. 
C)  the change in investment spending and the change in government expenditures on infrastructure. 
D)  exports minus imports.

Question 2

Consumption expenditures do NOT include purchases of

Accepted Answer

A)  durable goods. 
B)  nondurable goods. 
C)  intermediate goods. 
D)  services. 
A)  durable goods. 
B)  nondurable goods. 
C)  intermediate goods. 
D)  services.

Question 3

-Using above table, the market price of the textbook is

Accepted Answer

A)  $118.90. 
B)  $32.00. 
C)  $78.90. 
D)  $40.00. 
A)  $118.90. 
B)  $32.00. 
C)  $78.90. 
D)  $40.00.

Question 4

If imports are $100 million more than exports, government spending is $500 million, consumer expenditures are $900 million, and investment spending is $500 million, then GDP is

Accepted Answer

A)  $2.0 billion. 
B)  $1.9 billion. 
C)  $1.8 billion. 
D)  $2.1 billion. 
A)  $2.0 billion. 
B)  $1.9 billion. 
C)  $1.8 billion. 
D)  $2.1 billion.

Question 5

If C = consumption, G = government expenditures, and I = gross private investment expenditures, the mathematical representation of Gross Domestic Product (GDP) using the expenditure approach is

Accepted Answer

A)  Gross Domestic Product (GDP) = C + I + G + Transfers. 
B)  Gross Domestic Product (GDP) = C + I + G + Imports. 
C)  Gross Domestic Product (GDP) = C + Imports. 
D)  Gross Domestic Product (GDP) = C + I + G + Net exports. 
A)  Gross Domestic Product (GDP) = C + I + G + Transfers. 
B)  Gross Domestic Product (GDP) = C + I + G + Imports. 
C)  Gross Domestic Product (GDP) = C + Imports. 
D)  Gross Domestic Product (GDP) = C + I + G + Net exports.

Question 6

The two sectors of the economy in the simple circular flow model are

Accepted Answer

A)  the employed and the unemployed. 
B)  foreign markets and domestic markets. 
C)  households and businesses. 
D)  the private sector and the public sector. 
A)  the employed and the unemployed. 
B)  foreign markets and domestic markets. 
C)  households and businesses. 
D)  the private sector and the public sector.

Question 7

-Refer to the above table. The production of this good goes through 4 different stages of production. What is the value added at Stage 2?

Accepted Answer

A)  $0.02 
B)  $0.08 
C)  $0.10 
D)  $0.75 
A)  $0.02 
B)  $0.08 
C)  $0.10 
D)  $0.75

Question 8

-Using the above table, the net domestic product is (in billions of dollars)

Accepted Answer

A)  8,000. 
B)  9,700. 
C)  8,300. 
D)  6,500. 
A)  8,000. 
B)  9,700. 
C)  8,300. 
D)  6,500.

Question 9

-Using the above table, the Personal Income (PI) for the country is

Accepted Answer

A)  84. 
B)  228. 
C)  155. 
D)  301. 
A)  84. 
B)  228. 
C)  155. 
D)  301.

Question 10

-Using the above table, the Gross Domestic Product (GDP) for the country is

Accepted Answer

A)  662. 
B)  84. 
C)  746. 
D)  338. 
A)  662. 
B)  84. 
C)  746. 
D)  338.

Question 11

Real GDP is

Accepted Answer

A)  nominal GDP adjusted for depreciation. 
B)  nominal GDP adjusted for price changes. 
C)  nominal GDP adjusted for transfer payments. 
D)  nominal GDP adjusted for indirect business taxes. 
A)  nominal GDP adjusted for depreciation. 
B)  nominal GDP adjusted for price changes. 
C)  nominal GDP adjusted for transfer payments. 
D)  nominal GDP adjusted for indirect business taxes.

Question 12

Food and gasoline can be classified as

Accepted Answer

A)  nondurable goods. 
B)  durable goods. 
C)  capital goods. 
D)  long-term goods. 
A)  nondurable goods. 
B)  durable goods. 
C)  capital goods. 
D)  long-term goods.

Question 13

Which one of the following is NOT included in GDP?

Accepted Answer

A)  You look after your neighbor's plants during her vacation in exchange for her agreement to feed your fish while you are gone. 
B)  A homeowner hires a cleaning service to take care of household chores she chooses not to do because of the demands of her job. 
C)  A bicycle manufacturer pays an advertising agency to develop a new promotional campaign. 
D)  You purchase new tires for your old car. 
A)  You look after your neighbor's plants during her vacation in exchange for her agreement to feed your fish while you are gone. 
B)  A homeowner hires a cleaning service to take care of household chores she chooses not to do because of the demands of her job. 
C)  A bicycle manufacturer pays an advertising agency to develop a new promotional campaign. 
D)  You purchase new tires for your old car.

Question 14

A capital good is

Accepted Answer

A)  a good that lasts more than three years. 
B)  a good that is used to make other goods and services. 
C)  an intermediate product and therefore not part of GDP. 
D)  a good that should increase in value over time. 
A)  a good that lasts more than three years. 
B)  a good that is used to make other goods and services. 
C)  an intermediate product and therefore not part of GDP. 
D)  a good that should increase in value over time.

Question 15

Which of the following statements is FALSE?

Accepted Answer

A)  The value of total income is equal in value to total output because profit is a cost of production. 
B)  In the circular flow model, households sell factor services to businesses in return for factor payments. 
C)  Businesses sell goods and services to households who use their income to pay for them. 
D)  Total income is always greater than total output. 
A)  The value of total income is equal in value to total output because profit is a cost of production. 
B)  In the circular flow model, households sell factor services to businesses in return for factor payments. 
C)  Businesses sell goods and services to households who use their income to pay for them. 
D)  Total income is always greater than total output.

Question 16

Which of the following would be included when calculating Gross Domestic Product?

Accepted Answer

A)  the purchase of a previously owned house for $270,000 
B)  the purchase of a used $10,000 automobile from a friend 
C)  a Social Security check for $800 
D)  none of the above 
A)  the purchase of a previously owned house for $270,000 
B)  the purchase of a used $10,000 automobile from a friend 
C)  a Social Security check for $800 
D)  none of the above

Question 17

Personal income taxes are the difference between

Accepted Answer

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

Question 18

The approach used in the U.S. to measure the economy's aggregate performance is

Accepted Answer

A)  national income accounting. 
B)  to add up the value of intermediate goods. 
C)  the total value of securities. 
D)  to add up the total value of financial transactions, transfer payments, and secondhand goods. 
E)  all of the above. 
A)  national income accounting. 
B)  to add up the value of intermediate goods. 
C)  the total value of securities. 
D)  to add up the total value of financial transactions, transfer payments, and secondhand goods. 
E)  all of the above.

Question 19

-Using the above table, the GDP is (in billions of dollars)

Accepted Answer

A)  10,200. 
B)  8,200. 
C)  8,900. 
D)  9,500. 
A)  10,200. 
B)  8,200. 
C)  8,900. 
D)  9,500.

Question 20

-Using the above table, the national income is (in billions of dollars)

Accepted Answer

A)  8,950. 
B)  7,250. 
C)  6,850. 
D)  8,050. 
A)  8,950. 
B)  7,250. 
C)  6,850. 
D)  8,050.

Exam 8: Measuring the Economys Performance

Net investment refers to

Consumption expenditures do NOT include purchases of

-Using above table, the market price of the textbook is

If imports are $100 million more than exports, government spending is $500 million, consumer expenditures are $900 million, and investment spending is $500 million, then GDP is

If C = consumption, G = government expenditures, and I = gross private investment expenditures, the mathematical representation of Gross Domestic Product (GDP) using the expenditure approach is

The two sectors of the economy in the simple circular flow model are

-Refer to the above table. The production of this good goes through 4 different stages of production. What is the value added at Stage 2?

-Using the above table, the net domestic product is (in billions of dollars)

-Using the above table, the Personal Income (PI) for the country is

-Using the above table, the Gross Domestic Product (GDP) for the country is

Real GDP is

Food and gasoline can be classified as

Which one of the following is NOT included in GDP?

A capital good is

Which of the following statements is FALSE?

Which of the following would be included when calculating Gross Domestic Product?

Personal income taxes are the difference between

The approach used in the U.S. to measure the economy's aggregate performance is

-Using the above table, the GDP is (in billions of dollars)

-Using the above table, the national income is (in billions of dollars)

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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