Question 1

Net domestic product (NDP) is

Accepted Answer

A)  Gross Domestic Product (GDP) minus depreciation. 
B)  Gross Domestic Product (GDP) minus private investment. 
C)  Gross Domestic Product (GDP) minus the foreign sector. 
D)  Gross Domestic Product (GDP) minus government transfers. 
A)  Gross Domestic Product (GDP) minus depreciation. 
B)  Gross Domestic Product (GDP) minus private investment. 
C)  Gross Domestic Product (GDP) minus the foreign sector. 
D)  Gross Domestic Product (GDP) minus government transfers.

Question 2

Excluding indirect business taxes and depreciation, Gross Domestic Income (GDI)

Accepted Answer

A)  is the sum of all income paid to the factors of production. 
B)  never equals GDP. 
C)  would equal GDP if there was no depreciation. 
D)  cannot be computed. 
A)  is the sum of all income paid to the factors of production. 
B)  never equals GDP. 
C)  would equal GDP if there was no depreciation. 
D)  cannot be computed.

Question 3

The circular flow of income shows

Accepted Answer

A)  the dollar value of output is less than the total income. 
B)  the dollar value of output is more than the total income because of the existence of profits. 
C)  the dollar value of output is exactly equal to the total income. 
D)  the dollar value of output is more or less than the total income, depending on whether profits are positive or negative. 
A)  the dollar value of output is less than the total income. 
B)  the dollar value of output is more than the total income because of the existence of profits. 
C)  the dollar value of output is exactly equal to the total income. 
D)  the dollar value of output is more or less than the total income, depending on whether profits are positive or negative.

Question 4

Which of the following is included in GDP?

Accepted Answer

A)  A newly laid-off worker receives his $400 unemployment compensation check from the state government. 
B)  A college senior receives a $1,000 graduation gift from a grandparent. 
C)  You buy a $12 snow shovel to have on hand for the next snow storm. 
D)  You purchase $300 worth of clothes from a thrift shop selling second-hand clothing. 
A)  A newly laid-off worker receives his $400 unemployment compensation check from the state government. 
B)  A college senior receives a $1,000 graduation gift from a grandparent. 
C)  You buy a $12 snow shovel to have on hand for the next snow storm. 
D)  You purchase $300 worth of clothes from a thrift shop selling second-hand clothing.

Question 5

If a firm produces more output than it sells, there will be I. An increase in the firm's inventories
II) An increase in the gross private investment of the nation

Accepted Answer

A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II

Question 6

To compute national income, which of the following items are added to net domestic product (NDP)? I. business income adjustments net of indirect business taxes and transfers
II) capital consumption allowance
III) U.S. net income earned abroad

Accepted Answer

A)  I only 
B)  II only 
C)  both I and III 
D)  both II and III 
A)  I only 
B)  II only 
C)  both I and III 
D)  both II and III

Question 7

Consider the following: Farmer Jones bought seed and fertilizer for $100.
He grew wheat that he sold to the Acme Bread Company for $200.
Acme Bread produced and sold bread to the ABC Grocery Store for $250.
Consumers bought the bread from the grocery for $350.
How much was added to the GDP?

Accepted Answer

A)  $700 
B)  $800 
C)  $350 
D)  $600 
A)  $700 
B)  $800 
C)  $350 
D)  $600

Question 8

Fixed investment includes

Accepted Answer

A)  business spending on plant and equipment. 
B)  business spending on printing paper. 
C)  business salaries. 
D)  labor union contracts. 
A)  business spending on plant and equipment. 
B)  business spending on printing paper. 
C)  business salaries. 
D)  labor union contracts.

Question 9

-Refer to the above table. Real GDP in 2017 is

Accepted Answer

A)  146.4. 
B)  682.9. 
C)  700. 
D)  717.5. 
A)  146.4. 
B)  682.9. 
C)  700. 
D)  717.5.

Question 10

Which of the following will be included in this year's GDP?

Accepted Answer

A)  a Pablo Picasso (1881-1973) painting purchased this year by the art museum 
B)  the purchase of a used textbook by your friend 
C)  the purchase of 100 shares of Google stock through your broker 
D)  the purchase of an insurance policy for your home 
A)  a Pablo Picasso (1881-1973) painting purchased this year by the art museum 
B)  the purchase of a used textbook by your friend 
C)  the purchase of 100 shares of Google stock through your broker 
D)  the purchase of an insurance policy for your home

Question 11

GDP minus depreciation equals

Accepted Answer

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

Question 12

Which of the following transactions is included in GDP?

Accepted Answer

A)  funds given to a college student by her parents 
B)  funds received by a college student for working in the college dining hall 
C)  funds given to a family on welfare 
D)  Social Security check received by an elderly couple 
A)  funds given to a college student by her parents 
B)  funds received by a college student for working in the college dining hall 
C)  funds given to a family on welfare 
D)  Social Security check received by an elderly couple

Question 13

Suppose 2010 is the base year. From 2010 to 2018, the price index increases from 100 to 102.5. If nominal Gross Domestic Product (GDP) is $2,800 in 2018, then the real Gross Domestic Product (GDP) in 2018 is

Accepted Answer

A)  $2,700. 
B)  $2,800. 
C)  $2,732. 
D)  $2,870. 
A)  $2,700. 
B)  $2,800. 
C)  $2,732. 
D)  $2,870.

Question 14

Many economists argue that real GDP is

Accepted Answer

A)  not a good measure of economic well-being because it overvalues increases in leisure time. 
B)  not a good measure of economic well-being because it excludes increases in leisure time. 
C)  a good measure of economic well-being because it includes increases in leisure time. 
D)  a good measure of economic well-being because it includes changes in personal safety. 
A)  not a good measure of economic well-being because it overvalues increases in leisure time. 
B)  not a good measure of economic well-being because it excludes increases in leisure time. 
C)  a good measure of economic well-being because it includes increases in leisure time. 
D)  a good measure of economic well-being because it includes changes in personal safety.

Question 15

Net exports for the United States

Accepted Answer

A)  are always positive numbers. 
B)  may be negative. 
C)  are a result of decreasing investment in the manufacturing industries. 
D)  are a result of decreasing domestic consumption. 
A)  are always positive numbers. 
B)  may be negative. 
C)  are a result of decreasing investment in the manufacturing industries. 
D)  are a result of decreasing domestic consumption.

Question 16

A capital good is

Accepted Answer

A)  one produced by the government. 
B)  part of investment spending when purchased by either private businesses or by the federal government. 
C)  one that is purchased in order to make other goods and services. 
D)  not part of Gross Domestic Product (GDP) because it is an intermediate product. 
A)  one produced by the government. 
B)  part of investment spending when purchased by either private businesses or by the federal government. 
C)  one that is purchased in order to make other goods and services. 
D)  not part of Gross Domestic Product (GDP) because it is an intermediate product.

Question 17

Why are exports added to (rather than subtracted from) the other expenditure components to arrive at GDP using the expenditure method?

Accepted Answer

A)  because exports account for those goods that were produced in the economy but that were not devoted to domestic consumption, used for domestic investment, or provided as government goods 
B)  because exports have a higher profit margin for manufacturers than do similar products sold in domestic markets 
C)  because exported goods are not valued properly, due to problems with the purchasing power parity index 
D)  because it is only through exporting that we can generate jobs in our own economy 
A)  because exports account for those goods that were produced in the economy but that were not devoted to domestic consumption, used for domestic investment, or provided as government goods 
B)  because exports have a higher profit margin for manufacturers than do similar products sold in domestic markets 
C)  because exported goods are not valued properly, due to problems with the purchasing power parity index 
D)  because it is only through exporting that we can generate jobs in our own economy

Question 18

The total market value of the nation's annual final products produced domestically best defines the

Accepted Answer

A)  GDP. 
B)  GNP. 
C)  CPI. 
D)  PPI. 
A)  GDP. 
B)  GNP. 
C)  CPI. 
D)  PPI.

Question 19

-According to the above table, net domestic product (NDP) is

Accepted Answer

A)  $1,995. 
B)  $2,265. 
C)  $2,550. 
D)  $2,850. 
A)  $1,995. 
B)  $2,265. 
C)  $2,550. 
D)  $2,850.

Question 20

U.S. Gross Domestic Product (GDP) does NOT include which of the following?

Accepted Answer

A)  business investment in the United States 
B)  the value of goods produced in Mexico by a U.S. owned firm 
C)  U.S. exports to other countries 
D)  the purchase of all final goods and services by U.S. households 
A)  business investment in the United States 
B)  the value of goods produced in Mexico by a U.S. owned firm 
C)  U.S. exports to other countries 
D)  the purchase of all final goods and services by U.S. households

Exam 8: Measuring the Economys Performance

Net domestic product (NDP) is

Excluding indirect business taxes and depreciation, Gross Domestic Income (GDI)

The circular flow of income shows

Which of the following is included in GDP?

If a firm produces more output than it sells, there will be I. An increase in the firm's inventories II) An increase in the gross private investment of the nation

To compute national income, which of the following items are added to net domestic product (NDP)? I. business income adjustments net of indirect business taxes and transfers II) capital consumption allowance III) U.S. net income earned abroad

Consider the following: Farmer Jones bought seed and fertilizer for $100. He grew wheat that he sold to the Acme Bread Company for $200. Acme Bread produced and sold bread to the ABC Grocery Store for $250. Consumers bought the bread from the grocery for $350. How much was added to the GDP?

Fixed investment includes

-Refer to the above table. Real GDP in 2017 is

Which of the following will be included in this year's GDP?

GDP minus depreciation equals

Which of the following transactions is included in GDP?

Suppose 2010 is the base year. From 2010 to 2018, the price index increases from 100 to 102.5. If nominal Gross Domestic Product (GDP) is $2,800 in 2018, then the real Gross Domestic Product (GDP) in 2018 is

Many economists argue that real GDP is

Net exports for the United States

A capital good is

Why are exports added to (rather than subtracted from) the other expenditure components to arrive at GDP using the expenditure method?

The total market value of the nation's annual final products produced domestically best defines the

-According to the above table, net domestic product (NDP) is

U.S. Gross Domestic Product (GDP) does NOT include which of the following?

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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