Question 1

Gross domestic income can be defined as

Accepted Answer

A)  the sum of all incomes earned by all factors of production in a year. 
B)  the sum of all incomes earned by individuals. 
C)  the sum of all profits earned by businesses in a year. 
D)  the sum of all profits earned minus depreciation. 
A)  the sum of all incomes earned by all factors of production in a year. 
B)  the sum of all incomes earned by individuals. 
C)  the sum of all profits earned by businesses in a year. 
D)  the sum of all profits earned minus depreciation.

Question 2

Gross Domestic Product (GDP) = $13.0 trillion, consumption = $9.5 trillion, depreciation = $1.8 trillion, other business income adjustments less indirect business taxes = $0.2 trillion, and net U.S. income earned abroad = $0.1 trillion. Use this information to calculate national income (NI).

Accepted Answer

A)  NI = $11.0 billion 
B)  NI = $11.3 billion 
C)  NI = $11.4 billion 
D)  NI = $11.5 billion 
A)  NI = $11.0 billion 
B)  NI = $11.3 billion 
C)  NI = $11.4 billion 
D)  NI = $11.5 billion

Question 3

-Which of the following is included when measuring Gross Domestic Product (GDP)?

Accepted Answer

A)  the value of services of durable goods purchased in previous years 
B)  the value of leisure time 
C)  the value of services provided by homemakers 
D)  the rental income received by a landlord 
A)  the value of services of durable goods purchased in previous years 
B)  the value of leisure time 
C)  the value of services provided by homemakers 
D)  the rental income received by a landlord

Question 4

Which of the following is NOT included when calculating GDP?

Accepted Answer

A)  the dollar value of a new book 
B)  the dollar value of a new iPod 
C)  the dollar value of a newly issued corporate bond 
D)  the dollar value of tuition expenditures at a community college 
A)  the dollar value of a new book 
B)  the dollar value of a new iPod 
C)  the dollar value of a newly issued corporate bond 
D)  the dollar value of tuition expenditures at a community college

Question 5

Social Security payments are

Accepted Answer

A)  included in Gross Domestic Product (GDP). 
B)  not included in Gross Domestic Product (GDP), but are included in Gross Domestic Income accounts. 
C)  not included in Gross Domestic Product (GDP). 
D)  not included in Gross Domestic Product (GDP), but are included in Net Domestic Product. 
A)  included in Gross Domestic Product (GDP). 
B)  not included in Gross Domestic Product (GDP), but are included in Gross Domestic Income accounts. 
C)  not included in Gross Domestic Product (GDP). 
D)  not included in Gross Domestic Product (GDP), but are included in Net Domestic Product.

Question 6

In the product markets, households

Accepted Answer

A)  are the buyers of goods and services. 
B)  are the sellers of resources. 
C)  are neither buyers nor sellers in the market. 
D)  none of the above is correct. 
A)  are the buyers of goods and services. 
B)  are the sellers of resources. 
C)  are neither buyers nor sellers in the market. 
D)  none of the above is correct.

Question 7

The components of GDP using the income method (excluding indirect business taxes and depreciation) are

Accepted Answer

A)  consumption expenditures, investment expenditures, and government expenditures. 
B)  consumption expenditures, investment expenditures, government expenditures, and net exports. 
C)  wages and interest. 
D)  wages, interest, rents, and profits. 
A)  consumption expenditures, investment expenditures, and government expenditures. 
B)  consumption expenditures, investment expenditures, government expenditures, and net exports. 
C)  wages and interest. 
D)  wages, interest, rents, and profits.

Question 8

An example of an increase in gross private domestic investment spending that also increases Gross Domestic Product (GDP) is when

Accepted Answer

A)  a family sells its home because of a transfer. 
B)  a farmer buys a used tractor. 
C)  inventories of new cars accumulate on the lots of car dealers. 
D)  government increases spending on infrastructure. 
A)  a family sells its home because of a transfer. 
B)  a farmer buys a used tractor. 
C)  inventories of new cars accumulate on the lots of car dealers. 
D)  government increases spending on infrastructure.

Question 9

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

Accepted Answer

A)  the buying and selling of securities 
B)  government transfer payments 
C)  private transfer payments 
D)  the sale of used goods 
E)  none of the above 
A)  the buying and selling of securities 
B)  government transfer payments 
C)  private transfer payments 
D)  the sale of used goods 
E)  none of the above

Question 10

Which of the following items is included in GDP?

Accepted Answer

A)  the value of a medical service 
B)  the value of home cooking 
C)  proceeds for a garage sale of used goods 
D)  purchase of a government bond 
A)  the value of a medical service 
B)  the value of home cooking 
C)  proceeds for a garage sale of used goods 
D)  purchase of a government bond

Question 11

Assume that the nominal GDP for a given year is equal to $12,400 billion and the GDP deflator equals 112. Real GDP for that year is approximately

Accepted Answer

A)  $13,888.0 billion. 
B)  $12,512.0 billion. 
C)  $11,071.4 billion. 
D)  $12,228.1 billion. 
A)  $13,888.0 billion. 
B)  $12,512.0 billion. 
C)  $11,071.4 billion. 
D)  $12,228.1 billion.

Question 12

Real GDP is

Accepted Answer

A)  the nominal value of all real goods produced in the nation in a year. 
B)  Nominal GDP corrected for changes in the average of overall prices. 
C)  a misnomer since all GDP figures have to be in dollar values. 
D)  the value of output in current dollars. 
A)  the nominal value of all real goods produced in the nation in a year. 
B)  Nominal GDP corrected for changes in the average of overall prices. 
C)  a misnomer since all GDP figures have to be in dollar values. 
D)  the value of output in current dollars.

Question 13

The production of a portable power bank involves 5 stages. The value added after the first stage of production occurs is $1.20. The sale price of the portable power bank is $2.50. Based on the above information, what amount is used to measure GDP?

Accepted Answer

A)  $3.70 
B)  $1.20 
C)  $1.30 
D)  $2.50 
A)  $3.70 
B)  $1.20 
C)  $1.30 
D)  $2.50

Question 14

GDP does NOT include intermediate goods because

Accepted Answer

A)  intermediate goods are not valuable. 
B)  intermediate goods are not useful to consumers. 
C)  that would count the value of intermediate goods twice. 
D)  that would understate the true size of GDP. 
A)  intermediate goods are not valuable. 
B)  intermediate goods are not useful to consumers. 
C)  that would count the value of intermediate goods twice. 
D)  that would understate the true size of GDP.

Question 15

The appropriate formula for computing Gross Domestic Product using the income approach (excluding depreciation and indirect income taxes) is

Accepted Answer

A)  consumption + investment + government spending + net exports. 
B)  wages + rent + interest + profits. 
C)  wages + rent + interest + profits + indirect business taxes. 
D)  wages + rent + interest + profits + indirect business taxes + depreciation. 
A)  consumption + investment + government spending + net exports. 
B)  wages + rent + interest + profits. 
C)  wages + rent + interest + profits + indirect business taxes. 
D)  wages + rent + interest + profits + indirect business taxes + depreciation.

Question 16

In the factor market, households

Accepted Answer

A)  sell resources. 
B)  buy resources. 
C)  are neither buyers nor sellers of resources. 
D)  are both buyers and sellers of resources. 
A)  sell resources. 
B)  buy resources. 
C)  are neither buyers nor sellers of resources. 
D)  are both buyers and sellers of resources.

Question 17

The real value of an economic variable is

Accepted Answer

A)  the consumer price index. 
B)  the producer price. 
C)  expressed in terms of actual market prices at which goods are sold. 
D)  computed by taking the nominal value and dividing by the appropriate price index. 
A)  the consumer price index. 
B)  the producer price. 
C)  expressed in terms of actual market prices at which goods are sold. 
D)  computed by taking the nominal value and dividing by the appropriate price index.

Question 18

Transfer payments are included in

Accepted Answer

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

Question 19

Adjusting nominal Gross Domestic Product (GDP) for price changes from a base year yields

Accepted Answer

A)  current Gross Domestic Product (GDP). 
B)  real Gross Domestic Product (GDP). 
C)  constant disposable income. 
D)  Gross Domestic Product (GDP) net of relative price changes. 
A)  current Gross Domestic Product (GDP). 
B)  real Gross Domestic Product (GDP). 
C)  constant disposable income. 
D)  Gross Domestic Product (GDP) net of relative price changes.

Question 20

Net exports equal the

Accepted Answer

A)  total value of all exports. 
B)  total value of all government produced exports. 
C)  value of exports minus the value of imports. 
D)  value of imports minus the value of exports. 
A)  total value of all exports. 
B)  total value of all government produced exports. 
C)  value of exports minus the value of imports. 
D)  value of imports minus the value of exports.

Exam 8: Measuring the Economys Performance

Gross domestic income can be defined as

Gross Domestic Product (GDP) = $13.0 trillion, consumption = $9.5 trillion, depreciation = $1.8 trillion, other business income adjustments less indirect business taxes = $0.2 trillion, and net U.S. income earned abroad = $0.1 trillion. Use this information to calculate national income (NI).

-Which of the following is included when measuring Gross Domestic Product (GDP)?

Which of the following is NOT included when calculating GDP?

Social Security payments are

In the product markets, households

The components of GDP using the income method (excluding indirect business taxes and depreciation) are

An example of an increase in gross private domestic investment spending that also increases Gross Domestic Product (GDP) is when

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

Which of the following items is included in GDP?

Assume that the nominal GDP for a given year is equal to $12,400 billion and the GDP deflator equals 112. Real GDP for that year is approximately

Real GDP is

The production of a portable power bank involves 5 stages. The value added after the first stage of production occurs is $1.20. The sale price of the portable power bank is $2.50. Based on the above information, what amount is used to measure GDP?

GDP does NOT include intermediate goods because

The appropriate formula for computing Gross Domestic Product using the income approach (excluding depreciation and indirect income taxes) is

In the factor market, households

The real value of an economic variable is

Transfer payments are included in

Adjusting nominal Gross Domestic Product (GDP) for price changes from a base year yields

Net exports equal the

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

Filters