Question 1

A trade deficit occurs when:

Accepted Answer

A)  foreign remittances paid are less than foreign remittances received. 
B)  exports are less than imports. 
C)  exports equal imports. 
D)  exports are greater than imports. 
A)  foreign remittances paid are less than foreign remittances received. 
B)  exports are less than imports. 
C)  exports equal imports. 
D)  exports are greater than imports.

Question 2

Government purchases include transfer payments.

Accepted Answer

A) True 
 B)False

Question 3

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 4

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 5

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 6

GDP increases if you purchase General Motors stock.

Accepted Answer

A) True 
 B)False

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

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 9

Use the following to answer questions .
Exhibit: Circular Flow Model  
-(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced. Which two flows represent your purchase of groceries from Safeway?

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 10

GNP equals GDP less depreciation.

Accepted Answer

A) True 
 B)False

Question 11

The value of income generated by the production of a given value of final goods and services is called:

Accepted Answer

A)  gross domestic income. 
B)  net factor output. 
C)  net foreign factor income. 
D)  gross personal product. 
A)  gross domestic income. 
B)  net factor output. 
C)  net foreign factor income. 
D)  gross personal product.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Double counting in GDP accounting:

Accepted Answer

A)  refers to the fact that accountants check their figures twice. 
B)  refers to the inclusion of both intermediate goods and final goods in GDP. 
C)  is the method of using both income and expenditures in measuring GDP. 
D)  is the method of calculating the GDP by including the net incomes received by residents of a nation living abroad. 
A)  refers to the fact that accountants check their figures twice. 
B)  refers to the inclusion of both intermediate goods and final goods in GDP. 
C)  is the method of using both income and expenditures in measuring GDP. 
D)  is the method of calculating the GDP by including the net incomes received by residents of a nation living abroad.

Question 14

Use the following to answer questions .
Exhibit: Circular Flow Model  
-(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced. 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 15

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 16

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 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 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

GDP does NOT include _____.

Accepted Answer

A)  government purchases 
B)  investment by firms 
C)  consumption spending 
D)  transfer payments 
A)  government purchases 
B)  investment by firms 
C)  consumption spending 
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

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.

A trade deficit occurs when:

Government purchases include transfer payments.

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

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 _____.

Transfer payments are:

GDP increases if you purchase General Motors stock.

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

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

Use the following to answer questions . Exhibit: Circular Flow Model -(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced. Which two flows represent your purchase of groceries from Safeway?

GNP equals GDP less depreciation.

The value of income generated by the production of a given value of final goods and services is called:

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

Double counting in GDP accounting:

Use the following to answer questions . Exhibit: Circular Flow Model -(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced. The arrow marked "A" represents the flow of:

Gross private domestic investment includes purchases of:

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 extraction of the crude oil is _____.

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

GDP does NOT include _____.

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

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

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

A trade deficit occurs when:

Government purchases include transfer payments.

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

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 _____.

Transfer payments are:

GDP increases if you purchase General Motors stock.

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

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

Use the following to answer questions . Exhibit: Circular Flow Model -(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced. Which two flows represent your purchase of groceries from Safeway?

GNP equals GDP less depreciation.

The value of income generated by the production of a given value of final goods and services is called:

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

Double counting in GDP accounting:

Use the following to answer questions . Exhibit: Circular Flow Model -(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced. The arrow marked "A" represents the flow of:

Gross private domestic investment includes purchases of:

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 extraction of the crude oil is _____.

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

GDP does NOT include _____.

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

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

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