Question 1

What is the difference between a final good and an intermediate good? Give one example of each. How are they treated in GDP calculations?

Accepted Answer

A final good is a product that is purcha

Question 2

Which of the following items is a stock variable?

Accepted Answer

A)  Expenditure on consumer goods 
B)  Private investment 
C)  Labor wage 
D)  Government debt 
A)  Expenditure on consumer goods 
B)  Private investment 
C)  Labor wage 
D)  Government debt

Question 3

Table 6-4 shows output and income data for the economy of Argonia. Use the table to answer questions .
Table 6-4
  
-Refer to Table 6-4. What is the value of Argonia's gross national product?

Accepted Answer

A)  $900 billion 
B)  $1,000 billion 
C)  $1,100 billion 
D)  $1,200 billion 
A)  $900 billion 
B)  $1,000 billion 
C)  $1,100 billion 
D)  $1,200 billion

Question 4

Figure 6-1 shows the circular flow model where only consumption goods are being produced. Use the figure to answer questions .
Figure 6-1  
-Refer to Figure 6-1. The arrow marked "A" represents the flow of:

Accepted Answer

A)  personal consumption expenditures. 
B)  consumer goods and services. 
C)  factors of production. 
D)  factor incomes. 
A)  personal consumption expenditures. 
B)  consumer goods and services. 
C)  factors of production. 
D)  factor incomes.

Question 5

An increase in real GDP

Accepted Answer

A)  reduces the amount of pollution. 
B)  corresponds to an increase in leisure. 
C)  may or may not correspond to an increase in human happiness. 
D)  means that all people in the country are better off. 
A)  reduces the amount of pollution. 
B)  corresponds to an increase in leisure. 
C)  may or may not correspond to an increase in human happiness. 
D)  means that all people in the country are better off.

Question 6

Which of the following is the best measure of a nation's standard of living?

Accepted Answer

A)  nominal GDP 
B)  market GDP 
C)  real GDP per capita 
D)  nominal GDP per capita 
A)  nominal GDP 
B)  market GDP 
C)  real GDP per capita 
D)  nominal GDP per capita

Question 7

Table 6.2 shows data on the components of GDP in an economy. Use the table to answer questions .
Table 6-2
  
-Refer to Table 6-2. Net exports are negative. This would mean that:

Accepted Answer

A)  imports are larger than exports and there is a trade surplus. 
B)  exports are larger than imports and there is a trade surplus. 
C)  imports are larger than exports and there is a trade deficit. 
D)  exports are larger than imports and there is a trade deficit. 
A)  imports are larger than exports and there is a trade surplus. 
B)  exports are larger than imports and there is a trade surplus. 
C)  imports are larger than exports and there is a trade deficit. 
D)  exports are larger than imports and there is a trade deficit.

Question 8

Vikram, an Indian national working for Microsoft in New York, sends $300 every month to his elderly parents who live in Bangalore, India. This activity will:

Accepted Answer

A)  increase India's GNP and decrease U.S. GNP. 
B)  decrease U.S. GNP but does not affect U.S. GDP. 
C)  increase U.S. GNP and India's GNP. 
D)  not affect the GDP or GNP of either country. 
A)  increase India's GNP and decrease U.S. GNP. 
B)  decrease U.S. GNP but does not affect U.S. GDP. 
C)  increase U.S. GNP and India's GNP. 
D)  not affect the GDP or GNP of either country.

Question 9

The value of an economy's total output of goods and services is called _____.

Accepted Answer

A)  consumption 
B)  investment 
C)  gross domestic product 
D)  exports 
A)  consumption 
B)  investment 
C)  gross domestic product 
D)  exports

Question 10

Which of the following is an example of a transfer payment?

Accepted Answer

A)  The President's salary 
B)  A payment for a gambling debt 
C)  A barber's income 
D)  A pension payment to retired military personnel 
A)  The President's salary 
B)  A payment for a gambling debt 
C)  A barber's income 
D)  A pension payment to retired military personnel

Question 11

Figure 6-2 shows a spending flow model where both consumption and investment goods are being produced. Use the figure to answer questions .
Figure 6-2  
-Refer to Figure 6-2. The purchase of a new tractor by Farmer Brown is:

Accepted Answer

A)  classified as gross private investment and the flow is represented by 5. 
B)  classified as gross private investment and the flow is represented by 2. 
C)  classified as consumption and the flow is represented by 5. 
D)  classified as consumption and the flow is represented by 1. 
A)  classified as gross private investment and the flow is represented by 5. 
B)  classified as gross private investment and the flow is represented by 2. 
C)  classified as consumption and the flow is represented by 5. 
D)  classified as consumption and the flow is represented by 1.

Question 12

Private investment plays a crucial role in the macroeconomy because it is:

Accepted Answer

A)  the largest expenditure component of GDP. 
B)  the smallest expenditure component of GDP. 
C)  an expenditure that adds to the economy's productive capacity. 
D)  undertaken by the government and must be funded by tax revenue. 
A)  the largest expenditure component of GDP. 
B)  the smallest expenditure component of GDP. 
C)  an expenditure that adds to the economy's productive capacity. 
D)  undertaken by the government and must be funded by tax revenue.

Question 13

The equality between GDP and GDI in an economy implies that the income generated by final goods and services is equal to:

Accepted Answer

A)  expenditures on intermediate goods and services. 
B)  gross private domestic investment. 
C)  the total value of final goods and services produced. 
D)  total wages and other employee compensation. 
A)  expenditures on intermediate goods and services. 
B)  gross private domestic investment. 
C)  the total value of final goods and services produced. 
D)  total wages and other employee compensation.

Question 14

Table 6-6 shows the different stages in the production of an office building. A mining firm extracts iron from the earth. A steel mill converts the iron to steel beams for use in construction. A construction company uses the steel beams to make a building. Assume that the total product of these firms represents the only components of the building and that they will have no other uses.
Table 6-6
  
-Refer to Table 6-6. What is the value added by Fuller Mill?

Accepted Answer

A)  $325,000 
B)  $225,000 
C)  $125,000 
D)  $100,000 
A)  $325,000 
B)  $225,000 
C)  $125,000 
D)  $100,000

Question 15

The gross national product (GNP) of the U.S. measures:

Accepted Answer

A)  the market value of final goods and services sold in the U.S. during a particular period. 
B)  the market value of final goods and services produced using factors of production owned by U.S. residents during a particular period. 
C)  the market value of goods and services produced anywhere in the world, by U.S. citizens and foreigners residing in the U.S. during a particular period. 
D)  the market value of goods and services produced in the U.S. by foreigners residing in the U.S. during a particular period. 
A)  the market value of final goods and services sold in the U.S. during a particular period. 
B)  the market value of final goods and services produced using factors of production owned by U.S. residents during a particular period. 
C)  the market value of goods and services produced anywhere in the world, by U.S. citizens and foreigners residing in the U.S. during a particular period. 
D)  the market value of goods and services produced in the U.S. by foreigners residing in the U.S. during a particular period.

Question 16

The amount by which the value of a firm's output exceeds the value of the goods and services that the firm purchases from other firms is called _____.

Accepted Answer

A)  profit 
B)  value added 
C)  the markup rate 
D)  the marginal product 
A)  profit 
B)  value added 
C)  the markup rate 
D)  the marginal product

Question 17

Gross private domestic investment includes purchases of:

Accepted Answer

A)  government T-bills. 
B)  existing residential housing. 
C)  company stocks. 
D)  new factory equipment. 
A)  government T-bills. 
B)  existing residential housing. 
C)  company stocks. 
D)  new factory equipment.

Question 18

Figure 6-1 shows the circular flow model where only consumption goods are being produced. Use the figure to answer questions .
Figure 6-1  
-Refer to Figure 6-1. Suppose you have been hired by an electronics store as a salesperson. Which of the following flows represents this transaction?

Accepted Answer

A)  A and B 
B)  B and C 
C)  A and D 
D)  C and D 
A)  A and B 
B)  B and C 
C)  A and D 
D)  C and D

Question 19

All of the following are included in gross domestic income EXCEPT:

Accepted Answer

A)  wages. 
B)  welfare payments. 
C)  net interest. 
D)  rental income. 
A)  wages. 
B)  welfare payments. 
C)  net interest. 
D)  rental income.

Question 20

Disposable personal income is that part of income that households:

Accepted Answer

A)  have available to spend on goods and services. 
B)  earn by selling factors of production. 
C)  have after paying taxes and purchasing consumption goods. 
D)  save after consumption and investment. 
A)  have available to spend on goods and services. 
B)  earn by selling factors of production. 
C)  have after paying taxes and purchasing consumption goods. 
D)  save after consumption and investment.

What is the difference between a final good and an intermediate good? Give one example of each. How are they treated in GDP calculations?

Which of the following items is a stock variable?

Table 6-4 shows output and income data for the economy of Argonia. Use the table to answer questions . Table 6-4 -Refer to Table 6-4. What is the value of Argonia's gross national product?

Figure 6-1 shows the circular flow model where only consumption goods are being produced. Use the figure to answer questions . Figure 6-1 -Refer to Figure 6-1. The arrow marked "A" represents the flow of:

An increase in real GDP

Which of the following is the best measure of a nation's standard of living?

Table 6.2 shows data on the components of GDP in an economy. Use the table to answer questions . Table 6-2 -Refer to Table 6-2. Net exports are negative. This would mean that:

Vikram, an Indian national working for Microsoft in New York, sends $300 every month to his elderly parents who live in Bangalore, India. This activity will:

The value of an economy's total output of goods and services is called _____.

Which of the following is an example of a transfer payment?

Figure 6-2 shows a spending flow model where both consumption and investment goods are being produced. Use the figure to answer questions . Figure 6-2 -Refer to Figure 6-2. The purchase of a new tractor by Farmer Brown is:

Private investment plays a crucial role in the macroeconomy because it is:

The equality between GDP and GDI in an economy implies that the income generated by final goods and services is equal to:

The gross national product (GNP) of the U.S. measures:

The amount by which the value of a firm's output exceeds the value of the goods and services that the firm purchases from other firms is called _____.

Gross private domestic investment includes purchases of:

Figure 6-1 shows the circular flow model where only consumption goods are being produced. Use the figure to answer questions . Figure 6-1 -Refer to Figure 6-1. Suppose you have been hired by an electronics store as a salesperson. Which of the following flows represents this transaction?

All of the following are included in gross domestic income EXCEPT:

Disposable personal income is that part of income that households:

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters

Exam 6: Measuring Total Output and Income

What is the difference between a final good and an intermediate good? Give one example of each. How are they treated in GDP calculations?

Which of the following items is a stock variable?

Table 6-4 shows output and income data for the economy of Argonia. Use the table to answer questions . Table 6-4 -Refer to Table 6-4. What is the value of Argonia's gross national product?

Figure 6-1 shows the circular flow model where only consumption goods are being produced. Use the figure to answer questions . Figure 6-1 -Refer to Figure 6-1. The arrow marked "A" represents the flow of:

An increase in real GDP

Which of the following is the best measure of a nation's standard of living?

Table 6.2 shows data on the components of GDP in an economy. Use the table to answer questions . Table 6-2 -Refer to Table 6-2. Net exports are negative. This would mean that:

Vikram, an Indian national working for Microsoft in New York, sends $300 every month to his elderly parents who live in Bangalore, India. This activity will:

The value of an economy's total output of goods and services is called _____.

Which of the following is an example of a transfer payment?

Figure 6-2 shows a spending flow model where both consumption and investment goods are being produced. Use the figure to answer questions . Figure 6-2 -Refer to Figure 6-2. The purchase of a new tractor by Farmer Brown is:

Private investment plays a crucial role in the macroeconomy because it is:

The equality between GDP and GDI in an economy implies that the income generated by final goods and services is equal to:

The gross national product (GNP) of the U.S. measures:

The amount by which the value of a firm's output exceeds the value of the goods and services that the firm purchases from other firms is called _____.

Gross private domestic investment includes purchases of:

Figure 6-1 shows the circular flow model where only consumption goods are being produced. Use the figure to answer questions . Figure 6-1 -Refer to Figure 6-1. Suppose you have been hired by an electronics store as a salesperson. Which of the following flows represents this transaction?

All of the following are included in gross domestic income EXCEPT:

Disposable personal income is that part of income that households:

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters