Question 1

Which of the following statements is TRUE?

Accepted Answer

A)  GDP = NDP 
B)  GDP = NI 
C)  GDP = GDI 
D)  GDP = PI 
A)  GDP = NDP 
B)  GDP = NI 
C)  GDP = GDI 
D)  GDP = PI

Question 2

Which of the following items are included in GDP?

Accepted Answer

A)  used cars 
B)  all transactions involving bonds 
C)  newly built homes 
D)  unemployment benefits 
A)  used cars 
B)  all transactions involving bonds 
C)  newly built homes 
D)  unemployment benefits

Question 3

If Net Domestic Product (NDP) is $50 less than Gross Domestic Product (GDP), we know that

Accepted Answer

A)  inventories increased over the year. 
B)  inventories decreased over the year. 
C)  net investment equals $50. 
D)  depreciation equals $50. 
A)  inventories increased over the year. 
B)  inventories decreased over the year. 
C)  net investment equals $50. 
D)  depreciation equals $50.

Question 4

Which of the following is a final good?

Accepted Answer

A)  seed used for corn 
B)  wheat used for bread 
C)  electricity used for producing automobiles 
D)  a lawn mower purchased by a household 
A)  seed used for corn 
B)  wheat used for bread 
C)  electricity used for producing automobiles 
D)  a lawn mower purchased by a household

Question 5

Which of the following transactions is included in GDP?

Accepted Answer

A)  sales of used goods 
B)  buying and selling of stocks and bonds 
C)  the sales of houses produced in that given year 
D)  government transfer payments 
A)  sales of used goods 
B)  buying and selling of stocks and bonds 
C)  the sales of houses produced in that given year 
D)  government transfer payments

Question 6

The dollar value of an industry's sales minus the value of intermediate goods is

Accepted Answer

A)  GDP. 
B)  NDP. 
C)  transfer payments. 
D)  value added. 
A)  GDP. 
B)  NDP. 
C)  transfer payments. 
D)  value added.

Question 7

Which of the following spending components makes up the largest percentage of Gross Domestic Product (GDP)?

Accepted Answer

A)  consumption expenditures 
B)  government expenditures 
C)  gross private domestic investment expenditures 
D)  expenditures on net exports of goods and services 
A)  consumption expenditures 
B)  government expenditures 
C)  gross private domestic investment expenditures 
D)  expenditures on net exports of goods and services

Question 8

Suppose a firm purchases new equipment to replace worn-out equipment at its factory. This purchase of new equipment is considered

Accepted Answer

A)  durable consumption goods. 
B)  inventory investment. 
C)  gross private domestic investment. 
D)  none of the above. 
A)  durable consumption goods. 
B)  inventory investment. 
C)  gross private domestic investment. 
D)  none of the above.

Question 9

National income accounting is

Accepted Answer

A)  how the amount of unemployment in the system is measured. 
B)  used only to determine the government deficit. 
C)  an approach to measuring an economy's aggregate performance. 
D)  the system that measures the value of the Dow Jones average. 
A)  how the amount of unemployment in the system is measured. 
B)  used only to determine the government deficit. 
C)  an approach to measuring an economy's aggregate performance. 
D)  the system that measures the value of the Dow Jones average.

Question 10

Which one of the following is NOT included in GDP?

Accepted Answer

A)  You pay a roofer $2,000 to repair your roof after it is damaged in a hailstorm. 
B)  You pay a roofer $2,000 to repair your roof after you discover leaks have appeared due to normal wear and tear. 
C)  You give up a weekend of leisure to repair your roof yourself. 
D)  You purchase $20 worth of first aid supplies at the local drugstore to treat the cuts and scrapes you suffered while crawling around on the roof. 
A)  You pay a roofer $2,000 to repair your roof after it is damaged in a hailstorm. 
B)  You pay a roofer $2,000 to repair your roof after you discover leaks have appeared due to normal wear and tear. 
C)  You give up a weekend of leisure to repair your roof yourself. 
D)  You purchase $20 worth of first aid supplies at the local drugstore to treat the cuts and scrapes you suffered while crawling around on the roof.

Question 11

Nominal values are

Accepted Answer

A)  measured in terms of actual market prices at which the goods are sold. 
B)  based on inflation-adjustments. 
C)  based on Gross Domestic Product (GDP) per capita. 
D)  measured in terms of total purchasing power. 
A)  measured in terms of actual market prices at which the goods are sold. 
B)  based on inflation-adjustments. 
C)  based on Gross Domestic Product (GDP) per capita. 
D)  measured in terms of total purchasing power.

Question 12

Your parents surprise you with a $500 check. As a result, the U.S. GDP

Accepted Answer

A)  increases because this is unexpected income to you. 
B)  decreases because you will spend it on useless goods. 
C)  remains unchanged because it was counted when your parents earned it. 
D)  decreases because you have to pay taxes on this income. 
A)  increases because this is unexpected income to you. 
B)  decreases because you will spend it on useless goods. 
C)  remains unchanged because it was counted when your parents earned it. 
D)  decreases because you have to pay taxes on this income.

Question 13

The annual cost of producing the entire output of goods and services in the economy

Accepted Answer

A)  includes financial transactions. 
B)  can be calculated entirely on the basis of financial transactions. 
C)  includes durable goods but excludes nondurable goods. 
D)  is total income. 
A)  includes financial transactions. 
B)  can be calculated entirely on the basis of financial transactions. 
C)  includes durable goods but excludes nondurable goods. 
D)  is total income.

Question 14

Which of the following statements is FALSE?

Accepted Answer

A)  Gross Domestic Product (GDP) measures the market value of final goods and services produced during a particular time period. 
B)  Transfers of used goods are not included in Gross Domestic Product (GDP). 
C)  Private transfer payments, such as an inheritance, are included in the Gross Domestic Product (GDP). 
D)  If statisticians counted intermediate goods, the estimate of Gross Domestic Product (GDP) would be too high. 
A)  Gross Domestic Product (GDP) measures the market value of final goods and services produced during a particular time period. 
B)  Transfers of used goods are not included in Gross Domestic Product (GDP). 
C)  Private transfer payments, such as an inheritance, are included in the Gross Domestic Product (GDP). 
D)  If statisticians counted intermediate goods, the estimate of Gross Domestic Product (GDP) would be too high.

Question 15

Suppose Social Security contributions rise by $10 billion while Social Security benefits also rise by $10 billion. Further, personal income taxes fall by $700 million. As a result

Accepted Answer

A)  both personal and disposable personal income should increase. 
B)  national income, personal income, and disposable income should increase. 
C)  disposable income should increase while personal income and national income are unchanged. 
D)  personal income, disposable personal income, and national income remain unchanged. 
A)  both personal and disposable personal income should increase. 
B)  national income, personal income, and disposable income should increase. 
C)  disposable income should increase while personal income and national income are unchanged. 
D)  personal income, disposable personal income, and national income remain unchanged.

Question 16

Nominal income per person in the United States in 1960 was about $2,800 per year, while in 1990 nominal income per person was about $21,000. This indicates that

Accepted Answer

A)  nominal income was about 7.5 times greater in 1990, but we can't tell if this increase is due to inflation, economic growth, or a combination of the two. 
B)  people enjoyed a standard of living about 7.5 times higher in 1990 than in 1960. 
C)  a dollar in 1960 was worth less than a dollar in 1990. 
D)  the average person would consider him/herself about 7.5 times happier in 1990 than in 1960. 
A)  nominal income was about 7.5 times greater in 1990, but we can't tell if this increase is due to inflation, economic growth, or a combination of the two. 
B)  people enjoyed a standard of living about 7.5 times higher in 1990 than in 1960. 
C)  a dollar in 1960 was worth less than a dollar in 1990. 
D)  the average person would consider him/herself about 7.5 times happier in 1990 than in 1960.

Question 17

Which of the following is an example of investment in computing Gross Domestic Product (GDP)?

Accepted Answer

A)  an increase of inventory stock in a retail store 
B)  a deposit of $2,000 in a bank 
C)  a laptop purchased by a student 
D)  the purchase of government bonds by a retiree 
A)  an increase of inventory stock in a retail store 
B)  a deposit of $2,000 in a bank 
C)  a laptop purchased by a student 
D)  the purchase of government bonds by a retiree

Question 18

Total income

Accepted Answer

A)  is the yearly amount earned by owners of the nation's resources. 
B)  includes only wages received by workers. 
C)  includes only wages and interest payments. 
D)  excludes profits. 
A)  is the yearly amount earned by owners of the nation's resources. 
B)  includes only wages received by workers. 
C)  includes only wages and interest payments. 
D)  excludes profits.

Question 19

Which of the following statements is NOT true of GDP?

Accepted Answer

A)  GDP excludes nonmarket production. 
B)  There are no significant weaknesses in using GDP as a measure of the nation's economic performance. 
C)  GDP is the value of final goods and services produced in the economy. 
D)  GDP is not a measure of a nation's overall welfare. 
A)  GDP excludes nonmarket production. 
B)  There are no significant weaknesses in using GDP as a measure of the nation's economic performance. 
C)  GDP is the value of final goods and services produced in the economy. 
D)  GDP is not a measure of a nation's overall welfare.

Question 20

The total factor payments to all resource owners is called

Accepted Answer

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

Exam 8: Measuring the Economys Performance

Which of the following statements is TRUE?

Which of the following items are included in GDP?

If Net Domestic Product (NDP) is $50 less than Gross Domestic Product (GDP), we know that

Which of the following is a final good?

Which of the following transactions is included in GDP?

The dollar value of an industry's sales minus the value of intermediate goods is

Which of the following spending components makes up the largest percentage of Gross Domestic Product (GDP)?

Suppose a firm purchases new equipment to replace worn-out equipment at its factory. This purchase of new equipment is considered

National income accounting is

Which one of the following is NOT included in GDP?

Nominal values are

Your parents surprise you with a $500 check. As a result, the U.S. GDP

The annual cost of producing the entire output of goods and services in the economy

Which of the following statements is FALSE?

Suppose Social Security contributions rise by $10 billion while Social Security benefits also rise by $10 billion. Further, personal income taxes fall by $700 million. As a result

Nominal income per person in the United States in 1960 was about $2,800 per year, while in 1990 nominal income per person was about $21,000. This indicates that

Which of the following is an example of investment in computing Gross Domestic Product (GDP)?

Total income

Which of the following statements is NOT true of GDP?

The total factor payments to all resource owners is called

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