Question 1

Personal income and property taxes paid by individuals are not included in the income approach of gross domestic product calculation.

Accepted Answer

A) True 
 B)False

Question 2

Identify the impact of an increase in the inventory stock during a year.

Accepted Answer

A) Consumption spending will decrease thereby reducing the GDP. 
B) The GDP of the country should decrease by the amount of the increase in inventory. 
C) The capital investment in the country will increase. 
D) Neither the capital investment nor the GDP will change. 
E) The GDP of the country should increase by the amount of the increase in inventory. 
A) Consumption spending will decrease thereby reducing the GDP. 
B) The GDP of the country should decrease by the amount of the increase in inventory. 
C) The capital investment in the country will increase. 
D) Neither the capital investment nor the GDP will change. 
E) The GDP of the country should increase by the amount of the increase in inventory.

Question 3

The table given below lists the price per unit and output of computers and calculators (the only two goods produced by a nation)for the years 1995 and 2003. Table 5.6
  Refer to Table 5.6.Calculate the nominal GDP for 1995.

Accepted Answer

A) $223, 000 
B) $254, 000 
C) $448, 000 
D) $520, 000 
E) $110, 000 
A) $223, 000 
B) $254, 000 
C) $448, 000 
D) $520, 000 
E) $110, 000

Question 4

The table given below reports the sales value at each stage ofproduction of the soft drink Pepsi. Table 5.3
  Refer to Table 5.3.If this Pepsi were the only good produced in the economy, what would GDP by the expenditures approach be equal to?

Accepted Answer

A) $0.05 
B) $0.20 
C) $0.40 
D) $1.15 
E) $0.60 
A) $0.05 
B) $0.20 
C) $0.40 
D) $1.15 
E) $0.60

Question 5

The table given below reports the value of different economic variables of a country during a year. Table 5.4
  Refer to Table 5.4.Compute the GNP of the country.

Accepted Answer

A) $2, 680 
B) $2, 480 
C) $3, 280 
D) $3, 880 
E) $4, 480 
A) $2, 680 
B) $2, 480 
C) $3, 280 
D) $3, 880 
E) $4, 480

Question 6

The consumer price index [CPI] measures price changes at an earlier stage of production than the producer price index [PPI], hence, increases in the CPI are usually followed by increases in the PPI.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following represents the amount of income that is actually available to people for consumption and saving?

Accepted Answer

A) Net national product 
B) National income 
C) Disposable personal income 
D) Gross national product 
E) Personal income 
A) Net national product 
B) National income 
C) Disposable personal income 
D) Gross national product 
E) Personal income

Question 8

The term capital consumption allowance is defined as:

Accepted Answer

A) the amount of net interest in the economy each year. 
B) the estimated value of depreciation and obsolescence in investment goods. 
C) the difference between exports and imports. 
D) the disposition of disposable personal income. 
E) the difference between earnings not received and receipts not earned. 
A) the amount of net interest in the economy each year. 
B) the estimated value of depreciation and obsolescence in investment goods. 
C) the difference between exports and imports. 
D) the disposition of disposable personal income. 
E) the difference between earnings not received and receipts not earned.

Question 9

Bill Gates' recent purchase of a new Rolls-Royce automobile produced in Great Britain will:

Accepted Answer

A) increase the gross domestic product of the United States. 
B) have no effect on either country's GDP. 
C) decrease Great Britain's GDP. 
D) increase the net exports component of U.S.gross domestic product. 
E) have to be subtracted from the U.S.GDP. 
A) increase the gross domestic product of the United States. 
B) have no effect on either country's GDP. 
C) decrease Great Britain's GDP. 
D) increase the net exports component of U.S.gross domestic product. 
E) have to be subtracted from the U.S.GDP.

Question 10

National income accounting can best be characterized as:

Accepted Answer

A) a set of rules used to summarize economic activity over a given period of time. 
B) a method for comparing different political systems. 
C) a microeconomic model of the economy used by the Federal Reserve bank. 
D) a statistical measure of the income received by consumers as opposed to businesses. 
E) a standardized economic report authored by politicians. 
A) a set of rules used to summarize economic activity over a given period of time. 
B) a method for comparing different political systems. 
C) a microeconomic model of the economy used by the Federal Reserve bank. 
D) a statistical measure of the income received by consumers as opposed to businesses. 
E) a standardized economic report authored by politicians.

Question 11

The table given below reports the value of sales at each stage of production of an economics book. Table 5.1
  Refer to Table 5.1.What is the contribution to GDP from the production of an economics book?

Accepted Answer

A) $13.50 
B) $7.75 
C) $24.50 
D) $38 
E) $71.50 
A) $13.50 
B) $7.75 
C) $24.50 
D) $38 
E) $71.50

Question 12

The table given below reports the value of sales at each stage of production of an economics book. Table 5.1
  Refer to Table 5.1.Compute the market price of an economics book.

Accepted Answer

A) $13.50 
B) $7.75 
C) $24.50 
D) $38 
E) $71.50 
A) $13.50 
B) $7.75 
C) $24.50 
D) $38 
E) $71.50

Question 13

The market basket of goods and services used to calculate the consumer price index [CPI] by the Department of Labor in the U.S.changes only every two years.

Accepted Answer

A) True 
 B)False

Question 14

Suppose the current price of DVDs is $16, while its base-year price is $11.50.The value of the price index for the current year is approximately:

Accepted Answer

A) 139 
B) 39 
C) 25 
D) 160 
E) 172 
A) 139 
B) 39 
C) 25 
D) 160 
E) 172

Question 15

Scenario 5.1 Suppose that personal income is $250 billion.Furthermore, assume that retained corporate earnings are $2 billion, Social security taxes are $15 billion, Social security benefit checks equal $16 billion, the capital consumption allowance is $32 billion, and corporate taxes amount to $40 billion.
Refer to Scenario 5.1.What will be the value of net national product in this country?

Accepted Answer

A) $209 billion 
B) $219 billion 
C) $283 billion 
D) $291 billion 
E) $323 billion 
A) $209 billion 
B) $219 billion 
C) $283 billion 
D) $291 billion 
E) $323 billion

Question 16

National income accounting fills in the dollar values in the circular flow.

Accepted Answer

A) True 
 B)False

Question 17

Gross national product in terms of the income method is equal to national income plus indirect business taxes minus the capital consumption allowance.

Accepted Answer

A) True 
 B)False

Question 18

The difference between gross and net investment is referred to as:

Accepted Answer

A) a personal tax. 
B) the income earned but not received. 
C) a capital consumption allowance. 
D) an indirect business tax. 
E) a statistical discrepancy. 
A) a personal tax. 
B) the income earned but not received. 
C) a capital consumption allowance. 
D) an indirect business tax. 
E) a statistical discrepancy.

Question 19

The price index for the current year is 180.This means that, on average, prices in the current year are:

Accepted Answer

A) 80 percent of prices in the base year. 
B) $1.80 higher than prices in the base year. 
C) 180 percent higher than prices in the base year. 
D) $0.80 higher than prices in the base year. 
E) 80 percent higher than prices in the base year. 
A) 80 percent of prices in the base year. 
B) $1.80 higher than prices in the base year. 
C) 180 percent higher than prices in the base year. 
D) $0.80 higher than prices in the base year. 
E) 80 percent higher than prices in the base year.

Question 20

A price index is a measure of the average level of prices in an economy.

Accepted Answer

A) True 
 B)False

Exam 6: National Income Accounting

Personal income and property taxes paid by individuals are not included in the income approach of gross domestic product calculation.

Identify the impact of an increase in the inventory stock during a year.

The table given below lists the price per unit and output of computers and calculators (the only two goods produced by a nation)for the years 1995 and 2003. Table 5.6 Refer to Table 5.6.Calculate the nominal GDP for 1995.

The table given below reports the sales value at each stage ofproduction of the soft drink Pepsi. Table 5.3 Refer to Table 5.3.If this Pepsi were the only good produced in the economy, what would GDP by the expenditures approach be equal to?

The table given below reports the value of different economic variables of a country during a year. Table 5.4 Refer to Table 5.4.Compute the GNP of the country.

The consumer price index [CPI] measures price changes at an earlier stage of production than the producer price index [PPI], hence, increases in the CPI are usually followed by increases in the PPI.

Which of the following represents the amount of income that is actually available to people for consumption and saving?

The term capital consumption allowance is defined as:

Bill Gates' recent purchase of a new Rolls-Royce automobile produced in Great Britain will:

National income accounting can best be characterized as:

The table given below reports the value of sales at each stage of production of an economics book. Table 5.1 Refer to Table 5.1.What is the contribution to GDP from the production of an economics book?

The table given below reports the value of sales at each stage of production of an economics book. Table 5.1 Refer to Table 5.1.Compute the market price of an economics book.

The market basket of goods and services used to calculate the consumer price index [CPI] by the Department of Labor in the U.S.changes only every two years.

Suppose the current price of DVDs is $16, while its base-year price is $11.50.The value of the price index for the current year is approximately:

National income accounting fills in the dollar values in the circular flow.

Gross national product in terms of the income method is equal to national income plus indirect business taxes minus the capital consumption allowance.

The difference between gross and net investment is referred to as:

The price index for the current year is 180.This means that, on average, prices in the current year are:

A price index is a measure of the average level of prices in an economy.

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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