Question 1

A nondurable good

Accepted Answer

A)  has a life span of more than 3 years. 
B)  is used up within 3 years. 
C)  applies only to services. 
D)  is an intangible commodity. 
A)  has a life span of more than 3 years. 
B)  is used up within 3 years. 
C)  applies only to services. 
D)  is an intangible commodity.

Question 2

Which sector of our economy accounts for the largest percentage to total spending?

Accepted Answer

A)  households 
B)  businesses 
C)  government 
D)  exports 
A)  households 
B)  businesses 
C)  government 
D)  exports

Question 3

Where does profit enter in the circular flow? Why?

Accepted Answer

Profit is a payment made to entrepreneur

Question 4

The foreign exchange rate

Accepted Answer

A)  is the price of one good or service as compared to a similar good or service. 
B)  is the same as the price of a product in U.S. dollars. 
C)  is not relevant when comparing the GDPs of various countries. 
D)  is the price of one currency in terms of another. 
A)  is the price of one good or service as compared to a similar good or service. 
B)  is the same as the price of a product in U.S. dollars. 
C)  is not relevant when comparing the GDPs of various countries. 
D)  is the price of one currency in terms of another.

Question 5

Nominal GDP is calculated using

Accepted Answer

A)  the market prices during the year under consideration. 
B)  the prices from some base year to adjust for price changes. 
C)  the average of prices from the three preceding years. 
D)  the prices from the preceding year. 
A)  the market prices during the year under consideration. 
B)  the prices from some base year to adjust for price changes. 
C)  the average of prices from the three preceding years. 
D)  the prices from the preceding year.

Question 6

-Using above table, how much is contributed to the GDP from the production of the textbook?

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 7

Constant dollars are dollars

Accepted Answer

A)  corrected for general price level changes. 
B)  measured in terms of current-year prices. 
C)  issued by the U.S. Treasury with values that fail to change even in the face of inflation or deflation. 
D)  issued by the Federal Reserve with values that fail to change even in the face of inflation or deflation. 
A)  corrected for general price level changes. 
B)  measured in terms of current-year prices. 
C)  issued by the U.S. Treasury with values that fail to change even in the face of inflation or deflation. 
D)  issued by the Federal Reserve with values that fail to change even in the face of inflation or deflation.

Question 8

-Refer to the above table. All real GDP numbers are expressed in terms of the purchasing power of dollars in

Accepted Answer

A)  2015. 
B)  2016. 
C)  2017. 
D)  2018. 
A)  2015. 
B)  2016. 
C)  2017. 
D)  2018.

Question 9

Which of the following is a component of net domestic product (NDP), but NOT of national income?

Accepted Answer

A)  capital consumption allowance 
B)  indirect business taxes 
C)  corporate taxes 
D)  personal taxes 
A)  capital consumption allowance 
B)  indirect business taxes 
C)  corporate taxes 
D)  personal taxes

Question 10

Disposable personal income is equal to

Accepted Answer

A)  national income minus personal income taxes. 
B)  personal income plus transfer payments. 
C)  Gross Domestic Product (GDP) minus depreciation. 
D)  personal income minus personal income tax payments. 
A)  national income minus personal income taxes. 
B)  personal income plus transfer payments. 
C)  Gross Domestic Product (GDP) minus depreciation. 
D)  personal income minus personal income tax payments.

Question 11

Which of the following statements is NOT true about the relationship between the dollar value of total output and total income?

Accepted Answer

A)  The dollar value of total output equals total income because the spending of one group is the income of another. 
B)  The dollar value of total output equals total income because profit is considered a cost of production. 
C)  The dollar value of total output equals total income because profit is not considered a cost of production. 
D)  The dollar value of total output equals total income because of the economic definition of profit. 
A)  The dollar value of total output equals total income because the spending of one group is the income of another. 
B)  The dollar value of total output equals total income because profit is considered a cost of production. 
C)  The dollar value of total output equals total income because profit is not considered a cost of production. 
D)  The dollar value of total output equals total income because of the economic definition of profit.

Question 12

-Refer to the above table (figures in billions). The value of the GDP deflator in 2014 is

Accepted Answer

A)  100. 
B)  102. 
C)  104. 
D)  uncertain without more information. 
A)  100. 
B)  102. 
C)  104. 
D)  uncertain without more information.

Question 13

-According to the above table, net domestic product is

Accepted Answer

A)  $14,390. 
B)  $13,190. 
C)  $12,540. 
D)  $12,365. 
A)  $14,390. 
B)  $13,190. 
C)  $12,540. 
D)  $12,365.

Question 14

If nominal Gross Domestic Product (GDP) in 2008 was $500 billion with a price index of 100, what would be the real Gross Domestic Product (GDP) in 2018 if the 2018 nominal Gross Domestic Product (GDP) was $900 billion and the 2018 price index was 140?

Accepted Answer

A)  $900 billion 
B)  $540 billion 
C)  $800 billion 
D)  $643 billion 
A)  $900 billion 
B)  $540 billion 
C)  $800 billion 
D)  $643 billion

Question 15

Which one of the following accounting identities is TRUE?

Accepted Answer

A)  Disposable personal income plus indirect business taxes equals personal income. 
B)  Disposable personal income plus non-income expense items equals personal income. 
C)  Disposable personal income plus personal income taxes equals personal income. 
D)  National income plus profit equals personal income. 
A)  Disposable personal income plus indirect business taxes equals personal income. 
B)  Disposable personal income plus non-income expense items equals personal income. 
C)  Disposable personal income plus personal income taxes equals personal income. 
D)  National income plus profit equals personal income.

Question 16

When we use the term fixed investment, we include in investment

Accepted Answer

A)  the purchase of stocks and bonds. 
B)  the purchase of consumer goods. 
C)  the purchase of private bonds, but not government bonds. 
D)  the purchase of equipment and other capital goods. 
A)  the purchase of stocks and bonds. 
B)  the purchase of consumer goods. 
C)  the purchase of private bonds, but not government bonds. 
D)  the purchase of equipment and other capital goods.

Question 17

If all other factors are held constant, an increase in imports

Accepted Answer

A)  causes an increase in exports of the same size. 
B)  causes Gross Domestic Product (GDP) to increase. 
C)  causes Gross Domestic Product (GDP) to decrease. 
D)  can cause Gross Domestic Product (GDP) to increase or decrease, depending on whether the imports are purchased by consumers or by business firms. 
A)  causes an increase in exports of the same size. 
B)  causes Gross Domestic Product (GDP) to increase. 
C)  causes Gross Domestic Product (GDP) to decrease. 
D)  can cause Gross Domestic Product (GDP) to increase or decrease, depending on whether the imports are purchased by consumers or by business firms.

Question 18

The largest category of gross domestic income is

Accepted Answer

A)  interest. 
B)  rent. 
C)  wages. 
D)  profits. 
A)  interest. 
B)  rent. 
C)  wages. 
D)  profits.

Question 19

Gross Domestic Product measures

Accepted Answer

A)  the total value of labor used in the economy. 
B)  the total market value of final goods and services produced within a nation's borders. 
C)  the total income received by residents of a nation. 
D)  the total worth of all goods consumed within the borders of a nation. 
A)  the total value of labor used in the economy. 
B)  the total market value of final goods and services produced within a nation's borders. 
C)  the total income received by residents of a nation. 
D)  the total worth of all goods consumed within the borders of a nation.

Question 20

Which of the following is NOT included in the calculation of Gross Domestic Product (GDP)?

Accepted Answer

A)  the purchase of a raincoat by Mr. Z 
B)  Mrs. T's use of a lawyer 
C)  Mr. J's purchase of a share of General Motors stock 
D)  All of these would be included. 
A)  the purchase of a raincoat by Mr. Z 
B)  Mrs. T's use of a lawyer 
C)  Mr. J's purchase of a share of General Motors stock 
D)  All of these would be included.

Exam 8: Measuring the Economys Performance

A nondurable good

Which sector of our economy accounts for the largest percentage to total spending?

Where does profit enter in the circular flow? Why?

The foreign exchange rate

Nominal GDP is calculated using

-Using above table, how much is contributed to the GDP from the production of the textbook?

Constant dollars are dollars

-Refer to the above table. All real GDP numbers are expressed in terms of the purchasing power of dollars in

Which of the following is a component of net domestic product (NDP), but NOT of national income?

Disposable personal income is equal to

Which of the following statements is NOT true about the relationship between the dollar value of total output and total income?

-Refer to the above table (figures in billions). The value of the GDP deflator in 2014 is

-According to the above table, net domestic product is

If nominal Gross Domestic Product (GDP) in 2008 was $500 billion with a price index of 100, what would be the real Gross Domestic Product (GDP) in 2018 if the 2018 nominal Gross Domestic Product (GDP) was $900 billion and the 2018 price index was 140?

Which one of the following accounting identities is TRUE?

When we use the term fixed investment, we include in investment

If all other factors are held constant, an increase in imports

The largest category of gross domestic income is

Gross Domestic Product measures

Which of the following is NOT included in the calculation of Gross Domestic Product (GDP)?

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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