Question 1

-According to the above table, national income is

Accepted Answer

A)  $13,271 billion. 
B)  $11,917 billion. 
C)  $10,770 billion. 
D)  $10,646 billion. 
A)  $13,271 billion. 
B)  $11,917 billion. 
C)  $10,770 billion. 
D)  $10,646 billion.

Question 2

Total income is defined as

Accepted Answer

A)  the total receipts of firms before taxes. 
B)  the total amount earned by all resource owners. 
C)  the sum of the total receipts of firms and the amount earned by households. 
D)  the sum of the total receipts of firms less the amount of tax that must be paid. 
A)  the total receipts of firms before taxes. 
B)  the total amount earned by all resource owners. 
C)  the sum of the total receipts of firms and the amount earned by households. 
D)  the sum of the total receipts of firms less the amount of tax that must be paid.

Question 3

Which of the following would most likely be defined as a final good?

Accepted Answer

A)  iron ore 
B)  wheat 
C)  a computer tablet 
D)  lumber 
A)  iron ore 
B)  wheat 
C)  a computer tablet 
D)  lumber

Question 4

A consumer good that has a life span of more than three years is a(n)

Accepted Answer

A)  durable consumer good. 
B)  nondurable consumer good. 
C)  service. 
D)  investment. 
A)  durable consumer good. 
B)  nondurable consumer good. 
C)  service. 
D)  investment.

Question 5

The most meaningful way to compare per capita Gross Domestic Product (GDP) across countries is to

Accepted Answer

A)  use foreign exchange rates to convert each country's per capita Gross Domestic Product (GDP) into dollars. Then compare. 
B)  first adjust each country's per capita Gross Domestic Product (GDP) to exclude all the goods and services that are not exchanged with other countries. 
C)  assume that the cost of living in each country is the same as the United States' cost of living. 
D)  first use purchasing power parity to factor in each country's true cost of living. 
A)  use foreign exchange rates to convert each country's per capita Gross Domestic Product (GDP) into dollars. Then compare. 
B)  first adjust each country's per capita Gross Domestic Product (GDP) to exclude all the goods and services that are not exchanged with other countries. 
C)  assume that the cost of living in each country is the same as the United States' cost of living. 
D)  first use purchasing power parity to factor in each country's true cost of living.

Question 6

Which of the following is included in GDP?

Accepted Answer

A)  A computer manufacturer produces and sells a computer. 
B)  A woman mows her own yard and trims her own hedges. 
C)  An individual smuggles illegal drugs into the country and sells them. 
D)  An illegal gambling operation profits from secret betting activities. 
A)  A computer manufacturer produces and sells a computer. 
B)  A woman mows her own yard and trims her own hedges. 
C)  An individual smuggles illegal drugs into the country and sells them. 
D)  An illegal gambling operation profits from secret betting activities.

Question 7

Goods that are used up entirely in the production of final goods are known as

Accepted Answer

A)  durable goods. 
B)  value added goods. 
C)  intermediate goods. 
D)  capital goods. 
A)  durable goods. 
B)  value added goods. 
C)  intermediate goods. 
D)  capital goods.

Question 8

-According to the above table, Gross Domestic Product (GDP) is

Accepted Answer

A)  $2,190. 
B)  $2,840. 
C)  $2,465. 
D)  $2,750. 
A)  $2,190. 
B)  $2,840. 
C)  $2,465. 
D)  $2,750.

Question 9

Resources can be purchased

Accepted Answer

A)  in the product markets. 
B)  in the factor markets. 
C)  exclusively through the government. 
D)  only in the black market or illegal market. 
A)  in the product markets. 
B)  in the factor markets. 
C)  exclusively through the government. 
D)  only in the black market or illegal market.

Question 10

Comparing GDP across countries is unrealistic unless we make adjustment in exchange rates to take into account differences in the cost of living via

Accepted Answer

A)  real GDP. 
B)  purchasing power parity. 
C)  price index. 
D)  international GDP. 
A)  real GDP. 
B)  purchasing power parity. 
C)  price index. 
D)  international GDP.

Question 11

The amount earned by owners of the nation's factors of production is

Accepted Answer

A)  the wages and fringe benefits received by the nation's workers. 
B)  all profits received by businesses. 
C)  total income. 
D)  private and government transfer payments. 
A)  the wages and fringe benefits received by the nation's workers. 
B)  all profits received by businesses. 
C)  total income. 
D)  private and government transfer payments.

Question 12

Purchasing power parity exists when domestic currency

Accepted Answer

A)  maintains a fixed exchange rate with a foreign currency. 
B)  is not convertible to a foreign currency. 
C)  buys more goods at home than abroad. 
D)  buys as many goods abroad as at home. 
A)  maintains a fixed exchange rate with a foreign currency. 
B)  is not convertible to a foreign currency. 
C)  buys more goods at home than abroad. 
D)  buys as many goods abroad as at home.

Question 13

GDP

Accepted Answer

A)  is a stock measure since it represents the total market value. 
B)  is a flow measure since it represents the value of a flow of production over a year's period. 
C)  is neither a stock or flow measure since it is measured in dollars. 
D)  could be either a stock or flow measure depending upon whether it is measured in dollars or units of production. 
A)  is a stock measure since it represents the total market value. 
B)  is a flow measure since it represents the value of a flow of production over a year's period. 
C)  is neither a stock or flow measure since it is measured in dollars. 
D)  could be either a stock or flow measure depending upon whether it is measured in dollars or units of production.

Question 14

The farmer pays $0.2 for the seed that is sold to the miller for $0.45; the miller makes flour and sells it to the baker for $0.55. The baker makes bread and sells it to the grocery store for $0.8 and the store sells it to consumers for $1.20. Gross Domestic Product (GDP) is

Accepted Answer

A)  $2.20. 
B)  $2.00. 
C)  $1.20. 
D)  $0.20. 
A)  $2.20. 
B)  $2.00. 
C)  $1.20. 
D)  $0.20.

Question 15

Which of the following is included in government expenditures when measuring GDP?

Accepted Answer

A)  Medicare benefits for retirees 
B)  unemployment insurance payments 
C)  goods imported into the United States 
D)  the President's income 
A)  Medicare benefits for retirees 
B)  unemployment insurance payments 
C)  goods imported into the United States 
D)  the President's income

Question 16

One difference between net domestic product and national income is that

Accepted Answer

A)  net domestic product includes depreciation. 
B)  national income includes government and business transfer payments. 
C)  net domestic product includes indirect business taxes and transfers. 
D)  net domestic product doesn't include Social Security taxes or corporate retained earnings. 
A)  net domestic product includes depreciation. 
B)  national income includes government and business transfer payments. 
C)  net domestic product includes indirect business taxes and transfers. 
D)  net domestic product doesn't include Social Security taxes or corporate retained earnings.

Question 17

Which of the following is included in Gross Domestic Product (GDP)?

Accepted Answer

A)  purchases of stocks and bonds by individuals 
B)  purchases of stocks and bonds by firms 
C)  sales of financial assets to foreign firms 
D)  investment spending on capital goods 
A)  purchases of stocks and bonds by individuals 
B)  purchases of stocks and bonds by firms 
C)  sales of financial assets to foreign firms 
D)  investment spending on capital goods

Question 18

Why must total income be identical to the dollar value of total output?

Accepted Answer

Total income must be identical to the do

Question 19

Personal income is

Accepted Answer

A)  the sum of all incomes received by households on welfare. 
B)  the income households have after paying federal taxes. 
C)  the sum of all incomes received by households. 
D)  the sum of all incomes earned by sole proprietorships and partnerships. 
A)  the sum of all incomes received by households on welfare. 
B)  the income households have after paying federal taxes. 
C)  the sum of all incomes received by households. 
D)  the sum of all incomes earned by sole proprietorships and partnerships.

Question 20

An increase in corporate income taxes would reduce

Accepted Answer

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

Exam 8: Measuring the Economys Performance

-According to the above table, national income is

Total income is defined as

Which of the following would most likely be defined as a final good?

A consumer good that has a life span of more than three years is a(n)

The most meaningful way to compare per capita Gross Domestic Product (GDP) across countries is to

Which of the following is included in GDP?

Goods that are used up entirely in the production of final goods are known as

-According to the above table, Gross Domestic Product (GDP) is

Resources can be purchased

Comparing GDP across countries is unrealistic unless we make adjustment in exchange rates to take into account differences in the cost of living via

The amount earned by owners of the nation's factors of production is

Purchasing power parity exists when domestic currency

GDP

The farmer pays $0.2 for the seed that is sold to the miller for $0.45; the miller makes flour and sells it to the baker for $0.55. The baker makes bread and sells it to the grocery store for $0.8 and the store sells it to consumers for $1.20. Gross Domestic Product (GDP) is

Which of the following is included in government expenditures when measuring GDP?

One difference between net domestic product and national income is that

Which of the following is included in Gross Domestic Product (GDP)?

Why must total income be identical to the dollar value of total output?

Personal income is

An increase in corporate income taxes would reduce

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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