Question 1

The gross domestic product of a nation:

Accepted Answer

A)  is a flow variable. 
B)  is a stock variable. 
C)  could either be a flow variable or a stock variable depending on the time period considered. 
D)  could either be a flow variable or a stock variable depending on the share of personal consumption. 
A)  is a flow variable. 
B)  is a stock variable. 
C)  could either be a flow variable or a stock variable depending on the time period considered. 
D)  could either be a flow variable or a stock variable depending on the share of personal consumption.

Question 2

Which of the following is the best example of a final good or service?

Accepted Answer

A)  Crude oil in an oil well 
B)  Gasoline purchased by Exxon for its gas stations 
C)  A song you downloaded for a fee from Amazon.com 
D)  Retail floor space at a suburban shopping mall 
A)  Crude oil in an oil well 
B)  Gasoline purchased by Exxon for its gas stations 
C)  A song you downloaded for a fee from Amazon.com 
D)  Retail floor space at a suburban shopping mall

Question 3

Use the following to answer questions .
Exhibit: Output and Income Data for the Economy of Argonia
  
-(Exhibit: Output and Income Data for the Economy of Argonia) 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

Use the following to answer questions .
Exhibit: Stages of Production of Toy Model Airplanes
  
-(Exhibit: Stages of Production of Toy Model Airplanes) The value added by the sale of a model airplane to the customer is _____.

Accepted Answer

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

Question 5

Personal income equals:

Accepted Answer

A)  net national product plus income earned but not received plus income received but not earned. 
B)  wages and salaries plus net interest income plus transfer payments. 
C)  national income minus income earned but not received plus income received but not earned. 
D)  factor incomes received for supplying factors of production plus income received but not earned. 
A)  net national product plus income earned but not received plus income received but not earned. 
B)  wages and salaries plus net interest income plus transfer payments. 
C)  national income minus income earned but not received plus income received but not earned. 
D)  factor incomes received for supplying factors of production plus income received but not earned.

Question 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

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 9

GDP is the sum of:

Accepted Answer

A)  personal consumption, private investment, government purchases, and imports. 
B)  personal consumption, private investment, government purchases, and net exports. 
C)  personal consumption, private investment, government purchases, and net imports. 
D)  personal consumption, private investment, government purchases, and foreign remittances. 
A)  personal consumption, private investment, government purchases, and imports. 
B)  personal consumption, private investment, government purchases, and net exports. 
C)  personal consumption, private investment, government purchases, and net imports. 
D)  personal consumption, private investment, government purchases, and foreign remittances.

Question 10

Use the following to answer questions .
Exhibit: Stages in the Production of an Office Building
  
-(Exhibit: 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.
Suppose the value-added tax is 10%. What is the amount paid by Crane Construction to Fuller Mill?

Accepted Answer

A)  $825,000 
B)  $725,000 
C)  $247,500 
D)  $225,000 
A)  $825,000 
B)  $725,000 
C)  $247,500 
D)  $225,000

Question 11

Use the following to answer questions .
Exhibit: Components of GDP for an Economy 2
  
-(Exhibit: Components of GDP for an Economy 2) What is the value of GDP?

Accepted Answer

A)  $1,010 billion 
B)  $1,060 billion 
C)  $950 billion 
D)  $210 billion 
A)  $1,010 billion 
B)  $1,060 billion 
C)  $950 billion 
D)  $210 billion

Question 12

Of the following, which statistic do economists use to measure the business cycle?

Accepted Answer

A)  Changes in the inflation rate 
B)  Changes in real gross domestic product 
C)  Changes in the value of imports 
D)  Changes in the implicit price deflator 
A)  Changes in the inflation rate 
B)  Changes in real gross domestic product 
C)  Changes in the value of imports 
D)  Changes in the implicit price deflator

Question 13

Use the following to answer questions .
Exhibit: Stages in the Production of an Office Building
  
-(Exhibit: 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. Suppose the value added tax is 10%. What is the amount paid by Fuller Mill to Acme Mining?

Accepted Answer

A)  $100,000 
B)  $110,000 
C)  $215,000 
D)  $225,000 
A)  $100,000 
B)  $110,000 
C)  $215,000 
D)  $225,000

Question 14

Pfeister Inc., a firm located in New York, is a German manufacturer of heavy-duty glass doors. It uses glass-cutting machinery imported from Germany in production. The firm's output of glass doors will be counted in:

Accepted Answer

A)  U.S. GDP. 
B)  U.S. domestic private investment. 
C)  Germany's GDP. 
D)  Germany's net exports. 
A)  U.S. GDP. 
B)  U.S. domestic private investment. 
C)  Germany's GDP. 
D)  Germany's net exports.

Question 15

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 16

If we sum up the value added at every stage of production of a good, we will get:

Accepted Answer

A)  the total cost of the labor used to produce the good. 
B)  the prices of the factors of production used to produce the good. 
C)  the final value of the good. 
D)  the capital-labor ratio. 
A)  the total cost of the labor used to produce the good. 
B)  the prices of the factors of production used to produce the good. 
C)  the final value of the good. 
D)  the capital-labor ratio.

Question 17

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 18

Thames Patio Solutions is a manufacturer of patio umbrellas. In 2007, its inventory increases by 170 umbrellas. In 2008, it sells all the 170 umbrellas. Which of the following can be inferred in this case?

Accepted Answer

A)  The value of the increased inventory will be counted as part of GDP in 2007, and the value of the 170 umbrellas sold in 2008 will not cause GDP in 2008 to increase. 
B)  The value of the increased inventory will not affect GDP in 2007, but the sale of the umbrellas will cause GDP in 2008 to increase. 
C)  The value of the increased inventory will be counted as part of GDP in 2007 and the value of the 170 umbrellas sold in 2008 will cause GDP in 2008 to increase. 
D)  Since the umbrellas were not sold in 2007, they will not be included as part of GDP in 2007, and since they were not produced in 2008, they will not be included as part of GDP in 2008. This is a shortcoming of GDP computations. 
A)  The value of the increased inventory will be counted as part of GDP in 2007, and the value of the 170 umbrellas sold in 2008 will not cause GDP in 2008 to increase. 
B)  The value of the increased inventory will not affect GDP in 2007, but the sale of the umbrellas will cause GDP in 2008 to increase. 
C)  The value of the increased inventory will be counted as part of GDP in 2007 and the value of the 170 umbrellas sold in 2008 will cause GDP in 2008 to increase. 
D)  Since the umbrellas were not sold in 2007, they will not be included as part of GDP in 2007, and since they were not produced in 2008, they will not be included as part of GDP in 2008. This is a shortcoming of GDP computations.

Question 19

Use the following to answer questions .
Exhibit: Stages in the Production of an Office Building
  
-(Exhibit: 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. 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 20

Use the following to answer questions .
Exhibit: Components of GDP for an Economy 1
  
-(Exhibit: Components of GDP for an Economy 1) What is the value of exports?

Accepted Answer

A)  -$120 billion 
B)  $120 billion 
C)  -$480 billion 
D)  $480 billion 
A)  -$120 billion 
B)  $120 billion 
C)  -$480 billion 
D)  $480 billion

The gross domestic product of a nation:

Which of the following is the best example of a final good or service?

Use the following to answer questions . Exhibit: Output and Income Data for the Economy of Argonia -(Exhibit: Output and Income Data for the Economy of Argonia) What is the value of Argonia's gross national product?

Use the following to answer questions . Exhibit: Stages of Production of Toy Model Airplanes -(Exhibit: Stages of Production of Toy Model Airplanes) The value added by the sale of a model airplane to the customer is _____.

Personal income equals:

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

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

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

GDP is the sum of:

Use the following to answer questions . Exhibit: Components of GDP for an Economy 2 -(Exhibit: Components of GDP for an Economy 2) What is the value of GDP?

Of the following, which statistic do economists use to measure the business cycle?

Pfeister Inc., a firm located in New York, is a German manufacturer of heavy-duty glass doors. It uses glass-cutting machinery imported from Germany in production. The firm's output of glass doors will be counted in:

Gross domestic income (GDI) is defined as:

If we sum up the value added at every stage of production of a good, we will get:

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

Thames Patio Solutions is a manufacturer of patio umbrellas. In 2007, its inventory increases by 170 umbrellas. In 2008, it sells all the 170 umbrellas. Which of the following can be inferred in this case?

Use the following to answer questions . Exhibit: Components of GDP for an Economy 1 -(Exhibit: Components of GDP for an Economy 1) What is the value of exports?

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

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

Filters

Exam 6: Measuring Total Output and Income

The gross domestic product of a nation:

Which of the following is the best example of a final good or service?

Use the following to answer questions . Exhibit: Output and Income Data for the Economy of Argonia -(Exhibit: Output and Income Data for the Economy of Argonia) What is the value of Argonia's gross national product?

Use the following to answer questions . Exhibit: Stages of Production of Toy Model Airplanes -(Exhibit: Stages of Production of Toy Model Airplanes) The value added by the sale of a model airplane to the customer is _____.

Personal income equals:

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

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

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

GDP is the sum of:

Use the following to answer questions . Exhibit: Components of GDP for an Economy 2 -(Exhibit: Components of GDP for an Economy 2) What is the value of GDP?

Of the following, which statistic do economists use to measure the business cycle?

Pfeister Inc., a firm located in New York, is a German manufacturer of heavy-duty glass doors. It uses glass-cutting machinery imported from Germany in production. The firm's output of glass doors will be counted in:

Gross domestic income (GDI) is defined as:

If we sum up the value added at every stage of production of a good, we will get:

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

Thames Patio Solutions is a manufacturer of patio umbrellas. In 2007, its inventory increases by 170 umbrellas. In 2008, it sells all the 170 umbrellas. Which of the following can be inferred in this case?

Use the following to answer questions . Exhibit: Components of GDP for an Economy 1 -(Exhibit: Components of GDP for an Economy 1) What is the value of exports?

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

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

Filters