Question 1

Household income after taxes is called:

Accepted Answer

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

Question 2

If real GDP increased by 2% and nominal GDP increased by 4%, then output:

Accepted Answer

A) ​increased and the price level increased. 
B) ​increased and the price level decreased. 
C) ​decreased and the price level increased. 
D) ​decreased and the price level decreased. 
A) ​increased and the price level increased. 
B) ​increased and the price level decreased. 
C) ​decreased and the price level increased. 
D) ​decreased and the price level decreased.

Question 3

Which of the following is not included in GDP?

Accepted Answer

A) ​the fees for legal services rendered by your attorney 
B) ​the replacement of brake pads on your six-year-old vehicle 
C) ​cash income paid to a day laborer that is not reported to the tax authorities 
D) ​the payments for a chiropractor's services 
A) ​the fees for legal services rendered by your attorney 
B) ​the replacement of brake pads on your six-year-old vehicle 
C) ​cash income paid to a day laborer that is not reported to the tax authorities 
D) ​the payments for a chiropractor's services

Question 4

Which of the following is true?

Accepted Answer

A) ​Purchases of stock are included as part of investment in the national income accounts. 
B) ​Fixed investments include all spending on capital goods, as well as residential construction. 
C) ​Investment spending is the least volatile category of GDP. 
D) ​All of the above are true. 
A) ​Purchases of stock are included as part of investment in the national income accounts. 
B) ​Fixed investments include all spending on capital goods, as well as residential construction. 
C) ​Investment spending is the least volatile category of GDP. 
D) ​All of the above are true.

Question 5

If Jim pays $1000 to John:

Accepted Answer

A) ​GDP will increase by $1000. 
B) ​GDP will increase, but we cannot determine by what amount. 
C) ​nominal GDP will increase, but we cannot be sure if real GDP will increase or decrease. 
D) ​we need more information in order to determine whether or how much GDP will change. 
A) ​GDP will increase by $1000. 
B) ​GDP will increase, but we cannot determine by what amount. 
C) ​nominal GDP will increase, but we cannot be sure if real GDP will increase or decrease. 
D) ​we need more information in order to determine whether or how much GDP will change.

Question 6

Personal income includes:

Accepted Answer

A) ​income received in the form of transfer payments. 
B) ​wages and salaries. 
C) ​interest earnings on bonds. 
D) ​all of the above. 
A) ​income received in the form of transfer payments. 
B) ​wages and salaries. 
C) ​interest earnings on bonds. 
D) ​all of the above.

Question 7

Which of the following is true?

Accepted Answer

A) ​Real GDP equals nominal GDP divided by the current price level index, times one hundred. 
B) ​In periods of inflation, real GDP growth will tend to be greater than nominal GDP growth. 
C) ​In a country with a growing population, real GDP could be falling at the same time that real GDP per capita was rising. 
D) ​Marrying one's housekeeper would leave reported GDP unchanged. 
A) ​Real GDP equals nominal GDP divided by the current price level index, times one hundred. 
B) ​In periods of inflation, real GDP growth will tend to be greater than nominal GDP growth. 
C) ​In a country with a growing population, real GDP could be falling at the same time that real GDP per capita was rising. 
D) ​Marrying one's housekeeper would leave reported GDP unchanged.

Question 8

The era of Prohibition began in 1920 when the Volstead Act was passed to implement the Eighteenth Amendment to the Constitution, which prohibited the production and sale of liquor and beer. In 1920 much of this activity went underground, and Al Capone became a leading illegal entrepreneur. Assuming the amount of liquor and beer produced stayed the same, what was the effect of the Volstead Act on the GDP in 1920?

Accepted Answer

A) ​GDP would have declined, since activities in the underground economy are not included. 
B) ​GDP would have remained the same, since only the organization producing the goods changed. 
C) ​GDP would have increased, because production in the underground economy increased. 
D) ​Real GDP would have increased, while nominal GDP would have decreased. 
A) ​GDP would have declined, since activities in the underground economy are not included. 
B) ​GDP would have remained the same, since only the organization producing the goods changed. 
C) ​GDP would have increased, because production in the underground economy increased. 
D) ​Real GDP would have increased, while nominal GDP would have decreased.

Question 9

GDP equals $8 trillion. If consumption equals $5.5 trillion, investment equals $500 billion, and government spending equals $1.5 trillion, then:

Accepted Answer

A) ​exports exceed imports by $500 billion. 
B) ​imports exceed exports by $500 billion. 
C) ​net exports equal zero. 
D) ​exports exceed imports by $1 trillion. 
A) ​exports exceed imports by $500 billion. 
B) ​imports exceed exports by $500 billion. 
C) ​net exports equal zero. 
D) ​exports exceed imports by $1 trillion.

Question 10

Nominal GDP is $10,000 billion in 2011, but real GDP is only $9,000. It follows that:

Accepted Answer

A) ​the GDP deflator is equal to 111. 
B) ​the GDP deflator is equal to 100. 
C) ​the GDP deflator is equal to 90. 
D) ​prices must have decreased relative to the base year. 
A) ​the GDP deflator is equal to 111. 
B) ​the GDP deflator is equal to 100. 
C) ​the GDP deflator is equal to 90. 
D) ​prices must have decreased relative to the base year.

Question 11

Which of the following products are not included in current U.S. GDP?

Accepted Answer

A) ​a Washington apple 
B) ​a Ford Mustang produced last year and sold this year 
C) ​a physical examination at a California health clinic 
D) ​All of the above are included in current U.S.GDP. 
A) ​a Washington apple 
B) ​a Ford Mustang produced last year and sold this year 
C) ​a physical examination at a California health clinic 
D) ​All of the above are included in current U.S.GDP.

Question 12

In the simple circular flow model of the economy, total expenditures on goods and services equal total household income.

Accepted Answer

A) True 
 B)False

Question 13

If real GDP increased by 2% and nominal GDP increased by 2%, then output:

Accepted Answer

A) ​increased and the price level increased. 
B) ​increased and the price level decreased. 
C) ​increased and the price level remained unchanged. 
D) ​remained unchanged and the price level increased. 
A) ​increased and the price level increased. 
B) ​increased and the price level decreased. 
C) ​increased and the price level remained unchanged. 
D) ​remained unchanged and the price level increased.

Question 14

Gross domestic product is the value of all final goods and services produced within a country during a given period of time.

Accepted Answer

A) True 
 B)False

Question 15

GDP minus the net income of foreigners is:

Accepted Answer

A) ​personal income. 
B) ​national income. 
C) ​GNP. 
D) ​net national income. 
A) ​personal income. 
B) ​national income. 
C) ​GNP. 
D) ​net national income.

Question 16

The formula from the expenditure method indicates that GDP is equal to:

Accepted Answer

A) ​C + I   G   X   M 
B) ​C + I   G + X   M 
C) ​C + I + G + X   M 
D) ​C + I + G + M   X 
A) ​C + I   G   X   M 
B) ​C + I   G + X   M 
C) ​C + I + G + X   M 
D) ​C + I + G + M   X

Question 17

The expenditure method dictates that GDP is equal to C + I + G + (X   M).

Accepted Answer

A) True 
 B)False

Question 18

Changes in inventories are included in which category under the expenditure approach to GDP accounting?

Accepted Answer

A) ​consumption 
B) ​government purchases 
C) ​investment 
D) ​net exports 
A) ​consumption 
B) ​government purchases 
C) ​investment 
D) ​net exports

Question 19

​Exhibit 11-1
 
-Refer to Exhibit 11-1. Net exports of goods and services (X-M) was approximately:

Accepted Answer

A) ​-900 billion. 
B) ​-450 billion. 
C) ​1200 billion. 
D) ​900 billion. 
A) ​-900 billion. 
B) ​-450 billion. 
C) ​1200 billion. 
D) ​900 billion.

Question 20

Which of the following is subtracted from gross national product to arrive at the net national product?

Accepted Answer

A) ​net income of foreigners 
B) ​depreciation 
C) ​indirect business taxes 
D) ​transfer payments 
A) ​net income of foreigners 
B) ​depreciation 
C) ​indirect business taxes 
D) ​transfer payments

Household income after taxes is called:

If real GDP increased by 2% and nominal GDP increased by 4%, then output:

Which of the following is not included in GDP?

Which of the following is true?

If Jim pays $1000 to John:

Personal income includes:

Which of the following is true?

GDP equals $8 trillion. If consumption equals $5.5 trillion, investment equals $500 billion, and government spending equals $1.5 trillion, then:

Nominal GDP is $10,000 billion in 2011, but real GDP is only $9,000. It follows that:

Which of the following products are not included in current U.S. GDP?

In the simple circular flow model of the economy, total expenditures on goods and services equal total household income.

If real GDP increased by 2% and nominal GDP increased by 2%, then output:

Gross domestic product is the value of all final goods and services produced within a country during a given period of time.

GDP minus the net income of foreigners is:

The formula from the expenditure method indicates that GDP is equal to:

The expenditure method dictates that GDP is equal to C + I + G + (X M).

Changes in inventories are included in which category under the expenditure approach to GDP accounting?

Exhibit 11-1 -Refer to Exhibit 11-1. Net exports of goods and services (X-M) was approximately:

Which of the following is subtracted from gross national product to arrive at the net national product?

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exam 11: The Firm: Production and Costs

Household income after taxes is called:

If real GDP increased by 2% and nominal GDP increased by 4%, then output:

Which of the following is not included in GDP?

Which of the following is true?

If Jim pays $1000 to John:

Personal income includes:

Which of the following is true?

GDP equals $8 trillion. If consumption equals $5.5 trillion, investment equals $500 billion, and government spending equals $1.5 trillion, then:

Nominal GDP is $10,000 billion in 2011, but real GDP is only $9,000. It follows that:

Which of the following products are not included in current U.S. GDP?

In the simple circular flow model of the economy, total expenditures on goods and services equal total household income.

If real GDP increased by 2% and nominal GDP increased by 2%, then output:

Gross domestic product is the value of all final goods and services produced within a country during a given period of time.

GDP minus the net income of foreigners is:

The formula from the expenditure method indicates that GDP is equal to:

The expenditure method dictates that GDP is equal to C + I + G + (X M).

Changes in inventories are included in which category under the expenditure approach to GDP accounting?

​Exhibit 11-1 -Refer to Exhibit 11-1. Net exports of goods and services (X-M) was approximately:

Which of the following is subtracted from gross national product to arrive at the net national product?

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exhibit 11-1 -Refer to Exhibit 11-1. Net exports of goods and services (X-M) was approximately: