Question 1

The construction of a new state highway would be included in the _____ category of GDP.

Accepted Answer

A)  personal consumption 
B)  government purchases 
C)  government output 
D)  government investment 
A)  personal consumption 
B)  government purchases 
C)  government output 
D)  government investment

Question 2

Goods and services produced and but not sold in the current period are not included in current period GDP.

Accepted Answer

A) True 
 B)False

Question 3

Transfer payments are:

Accepted Answer

A)  payments made to firms for investment. 
B)  payments that do not require a good or service in exchange. 
C)  considered a part of government purchases. 
D)  an important component of GDP because they increase consumption spending. 
A)  payments made to firms for investment. 
B)  payments that do not require a good or service in exchange. 
C)  considered a part of government purchases. 
D)  an important component of GDP because they increase consumption spending.

Question 4

Which of the following is an example of income earned but not received?

Accepted Answer

A)  Social security payroll taxes 
B)  Farm subsidies 
C)  Net factor earnings from abroad 
D)  Disposable income 
A)  Social security payroll taxes 
B)  Farm subsidies 
C)  Net factor earnings from abroad 
D)  Disposable income

Question 5

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 "B" represents the flow of:

Accepted Answer

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

Question 6

Suppose the personal income in a nation equals $5 billion, and personal income taxes equal J$1 billion. The disposable personal income equals:

Accepted Answer

A)  $4 billion. 
B)  $5 billion. 
C)  $6 billion. 
D)  $1 billion. 
A)  $4 billion. 
B)  $5 billion. 
C)  $6 billion. 
D)  $1 billion.

Question 7

Expenditure on new equipment replacing older machines in a factory is an example of capital stock.

Accepted Answer

A) True 
 B)False

Question 8

Value added is defined as:

Accepted Answer

A)  the value of productivity gains that arise when a firm increases its capital-labor ratio. 
B)  the difference between the total cost of production of a product and the total revenues earned from the sale of the product. 
C)  the amount by which the value of a firm's final output exceeds the total value of the intermediate goods and services used to produce the good. 
D)  the cost savings that a firm enjoys when it reduces the cost of its resources by employing a more efficient production method. 
A)  the value of productivity gains that arise when a firm increases its capital-labor ratio. 
B)  the difference between the total cost of production of a product and the total revenues earned from the sale of the product. 
C)  the amount by which the value of a firm's final output exceeds the total value of the intermediate goods and services used to produce the good. 
D)  the cost savings that a firm enjoys when it reduces the cost of its resources by employing a more efficient production method.

Question 9

Which of the following items is included in gross private domestic investment?

Accepted Answer

A)  An increase in the level of government spending on new schools 
B)  The purchase of medical equipment by the Marines for use in its field hospitals 
C)  An increase in business inventories 
D)  An increase in the value of corporate stocks sold during the year 
A)  An increase in the level of government spending on new schools 
B)  The purchase of medical equipment by the Marines for use in its field hospitals 
C)  An increase in business inventories 
D)  An increase in the value of corporate stocks sold during the year

Question 10

What is a value-added tax (VAT)?

Accepted Answer

A)  It is essentially a tax on profits earned by firms from the sale of goods and services. 
B)  It is a tax placed on a product whenever value is added at a stage of production and at final sale. 
C)  It is a tax imposed on those who supply factors of production, such as the payroll tax. 
D)  It is a tax imposed on luxury goods to generate additional revenue for the government. 
A)  It is essentially a tax on profits earned by firms from the sale of goods and services. 
B)  It is a tax placed on a product whenever value is added at a stage of production and at final sale. 
C)  It is a tax imposed on those who supply factors of production, such as the payroll tax. 
D)  It is a tax imposed on luxury goods to generate additional revenue for the government.

Question 11

All of the following items are a flow variable EXCEPT _____.

Accepted Answer

A)  a savings account balance 
B)  consumption expenditure 
C)  government purchases 
D)  gross private investment 
A)  a savings account balance 
B)  consumption expenditure 
C)  government purchases 
D)  gross private investment

Question 12

Gross national product minus net factor earnings from abroad is equal to gross domestic product.

Accepted Answer

A) True 
 B)False

Question 13

Employee compensation is the largest among the components of factor income.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would not be included in the measurement of GDP?

Accepted Answer

A)  federal government payments for Jeeps 
B)  a purchase of California wine by a Canadian firm 
C)  employers' payments for employees' medical insurance 
D)  transactions in the underground economy 
A)  federal government payments for Jeeps 
B)  a purchase of California wine by a Canadian firm 
C)  employers' payments for employees' medical insurance 
D)  transactions in the underground economy

Question 15

Which of the following is an example of an indirect business tax?

Accepted Answer

A)  Consumption tax 
B)  Corporate profit tax 
C)  Personal income tax 
D)  Excise tax 
A)  Consumption tax 
B)  Corporate profit tax 
C)  Personal income tax 
D)  Excise tax

Question 16

In the U.S., since the 1950s, the share of employee benefits as a percentage of total employee compensation:

Accepted Answer

A)  has been increasing. 
B)  has been decreasing. 
C)  has been relatively stable. 
D)  has remained the same but has fallen in dollar terms. 
A)  has been increasing. 
B)  has been decreasing. 
C)  has been relatively stable. 
D)  has remained the same but has fallen in dollar terms.

Question 17

Table 6-3 shows data relating to the stages of production of toy model airplanes.
Table 6-3
  
-Refer to Table 6-3. The value added by the extraction of the crude oil is _____.

Accepted Answer

A)  $2 
B)  $3 
C)  $4 
D)  $5 
A)  $2 
B)  $3 
C)  $4 
D)  $5

Question 18

Goods and services produced in the domestic economy and sold abroad are called _____.

Accepted Answer

A)  net exports 
B)  exports 
C)  imports 
D)  transfer payments 
A)  net exports 
B)  exports 
C)  imports 
D)  transfer payments

Question 19

The largest component of factor income in the U.S. is:

Accepted Answer

A)  rental income. 
B)  profits. 
C)  employee compensation. 
D)  consumption. 
A)  rental income. 
B)  profits. 
C)  employee compensation. 
D)  consumption.

Question 20

All else constant, an outbreak of avian flu

Accepted Answer

A)  is likely to increase GDP because it drives up health-care spending. 
B)  is likely to decrease GDP because output is likely to fall. 
C)  is unlikely to affect GDP. 
D)  is likely to increase government transfer payments. 
A)  is likely to increase GDP because it drives up health-care spending. 
B)  is likely to decrease GDP because output is likely to fall. 
C)  is unlikely to affect GDP. 
D)  is likely to increase government transfer payments.

The construction of a new state highway would be included in the _____ category of GDP.

Goods and services produced and but not sold in the current period are not included in current period GDP.

Transfer payments are:

Which of the following is an example of income earned but not received?

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 "B" represents the flow of:

Suppose the personal income in a nation equals $5 billion, and personal income taxes equal J$1 billion. The disposable personal income equals:

Expenditure on new equipment replacing older machines in a factory is an example of capital stock.

Value added is defined as:

Which of the following items is included in gross private domestic investment?

What is a value-added tax (VAT)?

All of the following items are a flow variable EXCEPT _____.

Gross national product minus net factor earnings from abroad is equal to gross domestic product.

Employee compensation is the largest among the components of factor income.

Which of the following would not be included in the measurement of GDP?

Which of the following is an example of an indirect business tax?

In the U.S., since the 1950s, the share of employee benefits as a percentage of total employee compensation:

Table 6-3 shows data relating to the stages of production of toy model airplanes. Table 6-3 -Refer to Table 6-3. The value added by the extraction of the crude oil is _____.

Goods and services produced in the domestic economy and sold abroad are called _____.

The largest component of factor income in the U.S. is:

All else constant, an outbreak of avian flu

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

The construction of a new state highway would be included in the _____ category of GDP.

Goods and services produced and but not sold in the current period are not included in current period GDP.

Transfer payments are:

Which of the following is an example of income earned but not received?

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 "B" represents the flow of:

Suppose the personal income in a nation equals $5 billion, and personal income taxes equal J$1 billion. The disposable personal income equals:

Expenditure on new equipment replacing older machines in a factory is an example of capital stock.

Value added is defined as:

Which of the following items is included in gross private domestic investment?

What is a value-added tax (VAT)?

All of the following items are a flow variable EXCEPT _____.

Gross national product minus net factor earnings from abroad is equal to gross domestic product.

Employee compensation is the largest among the components of factor income.

Which of the following would not be included in the measurement of GDP?

Which of the following is an example of an indirect business tax?

In the U.S., since the 1950s, the share of employee benefits as a percentage of total employee compensation:

Table 6-3 shows data relating to the stages of production of toy model airplanes. Table 6-3 -Refer to Table 6-3. The value added by the extraction of the crude oil is _____.

Goods and services produced in the domestic economy and sold abroad are called _____.

The largest component of factor income in the U.S. is:

All else constant, an outbreak of avian flu

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