Question 1

GDP can be calculated by totaling either the:

Accepted Answer

A)  market values of all final goods and services or the total volume of all intermediate goods at all stages of production. 
B)  market values of all final goods and services or the value added at all stages of production. 
C)  total sales values of all intermediate goods at all stages of production or the value added at all stages of production. 
D)  market values of all final goods and services or the values added by labor at all stages of production. 
A)  market values of all final goods and services or the total volume of all intermediate goods at all stages of production. 
B)  market values of all final goods and services or the value added at all stages of production. 
C)  total sales values of all intermediate goods at all stages of production or the value added at all stages of production. 
D)  market values of all final goods and services or the values added by labor at all stages of production.

Question 2

Changes in nominal GDP

Accepted Answer

A)  are due to changes in price only while changes in real GDP are attributed to movements in output and price. 
B)  are due to changes in output and price while changes in real GDP are attributed to movements in output only. 
C)  are due to changes in exchange rate while changes in real GDP are attributed to movements in price only. 
D)  and changes in real GDP are due to changes in output and price. 
A)  are due to changes in price only while changes in real GDP are attributed to movements in output and price. 
B)  are due to changes in output and price while changes in real GDP are attributed to movements in output only. 
C)  are due to changes in exchange rate while changes in real GDP are attributed to movements in price only. 
D)  and changes in real GDP are due to changes in output and price.

Question 3

Goods and services produced abroad and sold in the domestic economy 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 4

Per capita real GDP indicates the way in which GDP is distributed among people.

Accepted Answer

A) True 
 B)False

Question 5

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. Suppose the value-added tax is 10%. What is the total VAT collected from all stages of production including final sale?

Accepted Answer

A)  $1,050,000 
B)  $127,500 
C)  $95,000 
D)  $72,500 
A)  $1,050,000 
B)  $127,500 
C)  $95,000 
D)  $72,500

Question 6

The gross domestic product of a nation can be measured:

Accepted Answer

A)  as the total value of consumer expenditures on goods and services. 
B)  as the total value of income generated in producing total output. 
C)  as the total cost of producing of that output excluding profit 
D)  as the total value of inputs used to produce a nation's output. 
A)  as the total value of consumer expenditures on goods and services. 
B)  as the total value of income generated in producing total output. 
C)  as the total cost of producing of that output excluding profit 
D)  as the total value of inputs used to produce a nation's output.

Question 7

The costs of wages are included in the value added approach to calculating income, but profits are not included.

Accepted Answer

A) True 
 B)False

Question 8

Gross domestic income (GDI) is defined as:

Accepted Answer

A)  the income of all the workers in an economy who have provided human capital in the production process during a particular period. 
B)  the income of all workers in the private sector of an economy during a particular period. 
C)  the total income generated in an economy by the production of final goods and services during a particular period. 
D)  the total non-wage benefits of all the workers in private sector. 
A)  the income of all the workers in an economy who have provided human capital in the production process during a particular period. 
B)  the income of all workers in the private sector of an economy during a particular period. 
C)  the total income generated in an economy by the production of final goods and services during a particular period. 
D)  the total non-wage benefits of all the workers in private sector.

Question 9

What is the difference between a flow variable and a stock variable?

Accepted Answer

A)  A stock variable is a variable that is measured over a specific period of time while a flow variable is a variable that is independent of time. 
B)  A flow variable is a variable that is measured in units of current prices while a stock variable is measured using prices from a base period. 
C)  A flow variable is a variable that is measured over a specific period of time while a stock variable is a variable that is independent of time. 
D)  A stock variable is a variable that is measured in units of current prices while a flow variable is measured using prices from a base period. 
A)  A stock variable is a variable that is measured over a specific period of time while a flow variable is a variable that is independent of time. 
B)  A flow variable is a variable that is measured in units of current prices while a stock variable is measured using prices from a base period. 
C)  A flow variable is a variable that is measured over a specific period of time while a stock variable is a variable that is independent of time. 
D)  A stock variable is a variable that is measured in units of current prices while a flow variable is measured using prices from a base period.

Question 10

As households eat out more, purchase more prepared foods at the grocery store, hire out child care services that they once performed themselves, what is likely to happen to the value of GDP?

Accepted Answer

A)  The value of GDP is likely to decrease. 
B)  The value of GDP is likely to increase. 
C)  GDP will not be affected because there is no net increase in the output of goods and services. 
D)  GDP will not be affected because there is no net increase in the output of goods and services but GDI will increase. 
A)  The value of GDP is likely to decrease. 
B)  The value of GDP is likely to increase. 
C)  GDP will not be affected because there is no net increase in the output of goods and services. 
D)  GDP will not be affected because there is no net increase in the output of goods and services but GDI will increase.

Question 11

Transfer payments are:

Accepted Answer

A)  payments made to certain individuals and are part of GDP. 
B)  not included in GDP because they do not represent income derived from current production. 
C)  included in GDP only if they pertain to unemployment benefits. 
D)  payments for services produced in the current time period. 
A)  payments made to certain individuals and are part of GDP. 
B)  not included in GDP because they do not represent income derived from current production. 
C)  included in GDP only if they pertain to unemployment benefits. 
D)  payments for services produced in the current time period.

Question 12

A resident of San Diego, California, owns and operates a garage across the U.S.-Mexican border in Tijuana, Mexico. The value of the garage services produced at the shop would be counted in _____.

Accepted Answer

A)  U.S. GNP 
B)  Mexico's GNP 
C)  U.S. GDP 
D)  U.S.'s net exports 
A)  U.S. GNP 
B)  Mexico's GNP 
C)  U.S. GDP 
D)  U.S.'s net exports

Question 13

Which of the following statements is true?

Accepted Answer

A)  Capital and gross private investment are flow variables. 
B)  Capital and gross private investment are stock variables. 
C)  Capital is a stock variable while gross private investment is a flow variable. 
D)  Capital is a flow variable while gross private investment is a stock variable. 
A)  Capital and gross private investment are flow variables. 
B)  Capital and gross private investment are stock variables. 
C)  Capital is a stock variable while gross private investment is a flow variable. 
D)  Capital is a flow variable while gross private investment is a stock variable.

Question 14

It is difficult to measure the contribution of the service sector to GDP because

Accepted Answer

A)  its contribution to GDP is very little. 
B)  of large fluctuations in prices in the service sector. 
C)  there are close ties between the service sector and illegal activities. 
D)  it is difficult to determine what counts as a unit of output. 
A)  its contribution to GDP is very little. 
B)  of large fluctuations in prices in the service sector. 
C)  there are close ties between the service sector and illegal activities. 
D)  it is difficult to determine what counts as a unit of output.

Question 15

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 "D" 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 16

In the calculation of GDP, the value of a new house constructed by a firm is included in:

Accepted Answer

A)  personal consumption expenditures. 
B)  personal saving. 
C)  the depreciation of capital. 
D)  private investment. 
A)  personal consumption expenditures. 
B)  personal saving. 
C)  the depreciation of capital. 
D)  private investment.

Question 17

If your ticket wins the lottery, the earnings you receive:

Accepted Answer

A)  raises GDI but does not affect GDP. 
B)  increases both GDI and GDP. 
C)  raises both GDI and GNP. 
D)  does not affect GDI or GNP. 
A)  raises GDI but does not affect GDP. 
B)  increases both GDI and GDP. 
C)  raises both GDI and GNP. 
D)  does not affect GDI or GNP.

Question 18

For a given level of GDP, an increase in net factor earnings from abroad will:

Accepted Answer

A)  increase gross national product. 
B)  reduce gross national product. 
C)  not affect disposable personal income. 
D)  increase a nation's trade surplus. 
A)  increase gross national product. 
B)  reduce gross national product. 
C)  not affect disposable personal income. 
D)  increase a nation's trade surplus.

Question 19

Government expenditure is the largest single category of GDP.

Accepted Answer

A) True 
 B)False

Question 20

Taxes imposed on firms on the production or sale of goods and services are called:

Accepted Answer

A)  output tax. 
B)  profit tax. 
C)  direct business taxes. 
D)  indirect business taxes. 
A)  output tax. 
B)  profit tax. 
C)  direct business taxes. 
D)  indirect business taxes.

GDP can be calculated by totaling either the:

Changes in nominal GDP

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

Per capita real GDP indicates the way in which GDP is distributed among people.

The gross domestic product of a nation can be measured:

The costs of wages are included in the value added approach to calculating income, but profits are not included.

Gross domestic income (GDI) is defined as:

What is the difference between a flow variable and a stock variable?

As households eat out more, purchase more prepared foods at the grocery store, hire out child care services that they once performed themselves, what is likely to happen to the value of GDP?

Transfer payments are:

A resident of San Diego, California, owns and operates a garage across the U.S.-Mexican border in Tijuana, Mexico. The value of the garage services produced at the shop would be counted in _____.

Which of the following statements is true?

It is difficult to measure the contribution of the service sector to GDP because

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 "D" represents the flow of:

In the calculation of GDP, the value of a new house constructed by a firm is included in:

If your ticket wins the lottery, the earnings you receive:

For a given level of GDP, an increase in net factor earnings from abroad will:

Government expenditure is the largest single category of GDP.

Taxes imposed on firms on the production or sale of goods and services are called:

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

GDP can be calculated by totaling either the:

Changes in nominal GDP

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

Per capita real GDP indicates the way in which GDP is distributed among people.

The gross domestic product of a nation can be measured:

The costs of wages are included in the value added approach to calculating income, but profits are not included.

Gross domestic income (GDI) is defined as:

What is the difference between a flow variable and a stock variable?

As households eat out more, purchase more prepared foods at the grocery store, hire out child care services that they once performed themselves, what is likely to happen to the value of GDP?

Transfer payments are:

A resident of San Diego, California, owns and operates a garage across the U.S.-Mexican border in Tijuana, Mexico. The value of the garage services produced at the shop would be counted in _____.

Which of the following statements is true?

It is difficult to measure the contribution of the service sector to GDP because

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 "D" represents the flow of:

In the calculation of GDP, the value of a new house constructed by a firm is included in:

If your ticket wins the lottery, the earnings you receive:

For a given level of GDP, an increase in net factor earnings from abroad will:

Government expenditure is the largest single category of GDP.

Taxes imposed on firms on the production or sale of goods and services are called:

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