Question 1

The United States produces and sells millions of types of products. To add them up to a single aggregate, each good is weighted by its:

Accepted Answer

A) cost of production. 
B) market price. 
C) utility to consumers. 
D) contribution to corporate profits. 
A) cost of production. 
B) market price. 
C) utility to consumers. 
D) contribution to corporate profits.

Question 2

Aggregate income includes all of the following except:

Accepted Answer

A) employee compensation. 
B) interest. 
C) rent. 
D) transfer payments. 
A) employee compensation. 
B) interest. 
C) rent. 
D) transfer payments.

Question 3

Which of the following is a stock concept?

Accepted Answer

A) Income 
B) Wealth 
C) Rent 
D) Expenditures 
A) Income 
B) Wealth 
C) Rent 
D) Expenditures

Question 4

If an economy is comprised of two goods and the price of one good rises by 5 percent and the price of the second good rises 3 percent, a possible rate of inflation for the economy is 5 percent.

Accepted Answer

A) True 
 B)False

Question 5

If substantially more foreign money is invested in Ireland than Irish citizens have invested abroad, then one will likely expect Irish:

Accepted Answer

A) net foreign factor income to be positive. 
B) net foreign factor income to be zero. 
C) GDP to exceed Irish GNP. 
D) GNP to exceed Irish GDP. 
A) net foreign factor income to be positive. 
B) net foreign factor income to be zero. 
C) GDP to exceed Irish GNP. 
D) GNP to exceed Irish GDP.

Question 6

Comparisons of per capita gross domestic product across countries provide a very good measure of how similar living standards are across countries.

Accepted Answer

A) True 
 B)False

Question 7

If U.S. net exports are positive, then U.S.:

Accepted Answer

A) GDP is less than the sum of consumption, investment, and government purchases. 
B) GDP exceeds the sum of consumption, investment, and government purchases. 
C) imports must exceed U.S. exports. 
D) GDP equals the sum of consumption, investment, and government purchases. 
A) GDP is less than the sum of consumption, investment, and government purchases. 
B) GDP exceeds the sum of consumption, investment, and government purchases. 
C) imports must exceed U.S. exports. 
D) GDP equals the sum of consumption, investment, and government purchases.

Question 8

GNP is the:

Accepted Answer

A) aggregate output of the citizens and businesses of an economy in a one-year period. 
B) aggregate final output of the citizens and businesses of an economy in a one-year period. 
C) total market value of all goods and services produced in an economy in a one-year period. 
D) total market value of all final goods and services produced in an economy in a one-year period. 
A) aggregate output of the citizens and businesses of an economy in a one-year period. 
B) aggregate final output of the citizens and businesses of an economy in a one-year period. 
C) total market value of all goods and services produced in an economy in a one-year period. 
D) total market value of all final goods and services produced in an economy in a one-year period.

Question 9

Your visit to the dentist, college tuition, and any commissions earned by a used car salesman are all included in GDP.

Accepted Answer

A) True 
 B)False

Question 10

One reason economists have begun focusing on the Personal Consumption Expenditure measure for inflation is that the PCE deflator:

Accepted Answer

A) takes the exchange rate value of the dollar into account. 
B) weights food more because food is a rising percent of expenditures. 
C) allows for a changing basket of goods. 
D) includes the price of assets such as stock portfolios. 
A) takes the exchange rate value of the dollar into account. 
B) weights food more because food is a rising percent of expenditures. 
C) allows for a changing basket of goods. 
D) includes the price of assets such as stock portfolios.

Question 11

Aggregate income is divided into four categories.They are (1)Compensation of Employees, (2)Rents, (3)Interest and (4)Profits.Briefly describe what is and is not included in each category.

Accepted Answer

Compensation of Employees is the largest

Question 12

To compute GDP, you must add up the value of all the goods and services produced in a country in a year.

Accepted Answer

A) True 
 B)False

Question 13

Aggregate accounting enables us to measure and analyze how much a nation is producing and consuming.

Accepted Answer

A) True 
 B)False

Question 14

Your economics professor asked you to use data from the U.S.economy to show that GNP can be calculated using the income approach and the expenditures approach.What type of data should you gather to complete this assignment?

Accepted Answer

Using the expenditures approach,GDP = C

Question 15

If there are only two goods in the economy, one whose price rises by 1 percent and one by 6 percent, it is possible that inflation is:

Accepted Answer

A) 1 percent. 
B) 2 percent. 
C) 6 percent. 
D) 7 percent. 
A) 1 percent. 
B) 2 percent. 
C) 6 percent. 
D) 7 percent.

Question 16

Which of the following transactions is considered a purchase of final output? Which one is considered the purchase of an intermediate good?
(a)Albert purchased a camera from the U.S.to use on his vacation in the Bahamas.
(b)Albert purchased a roll of film to use in his camera.
(c)An owner of a bakery purchased wheat to make bread.
(d)A chocolate factory purchased milk to make chocolate.
(e)The Ford Company purchased 10 tons of steel to make cars.
(f)Sue purchased cleaning detergent to use in her newly purchased washing machine.
(g)Karen bought tomato seeds and planted them in her backyard for her own use.

Accepted Answer

(a)Final output.
(b)Final outp

Question 17

A one-time rise in the price level is:

Accepted Answer

A) inflation if that rise is above 5 percent. 
B) inflation if that rise is above 10 percent. 
C) inflation if that rise is above 15 percent. 
D) not inflation. 
A) inflation if that rise is above 5 percent. 
B) inflation if that rise is above 10 percent. 
C) inflation if that rise is above 15 percent. 
D) not inflation.

Question 18

If measurement errors did not exist, real per capita GDP would be an undeniably accurate measure of human welfare.

Accepted Answer

A) True 
 B)False

Question 19

Real GDP can be used to accurately measure:

Accepted Answer

A) economic welfare over time. 
B) the size of an economy's underground economy. 
C) the change in market production over time. 
D) the change in market prices over time. 
A) economic welfare over time. 
B) the size of an economy's underground economy. 
C) the change in market production over time. 
D) the change in market prices over time.

Question 20

If nominal GDP increased from $4 billion to $5 billion while real GDP increased from $3 billion to $4 billion, it follows that:

Accepted Answer

A) the price level and real output increased at the same rate. 
B) real output rose and price level fell. 
C) the price level increased at a faster rate than real output. 
D) the price level rose by 25 percent. 
A) the price level and real output increased at the same rate. 
B) real output rose and price level fell. 
C) the price level increased at a faster rate than real output. 
D) the price level rose by 25 percent.

Exam 25: Measuring and Describing the Aggregate Economy

The United States produces and sells millions of types of products. To add them up to a single aggregate, each good is weighted by its:

Aggregate income includes all of the following except:

Which of the following is a stock concept?

If an economy is comprised of two goods and the price of one good rises by 5 percent and the price of the second good rises 3 percent, a possible rate of inflation for the economy is 5 percent.

If substantially more foreign money is invested in Ireland than Irish citizens have invested abroad, then one will likely expect Irish:

Comparisons of per capita gross domestic product across countries provide a very good measure of how similar living standards are across countries.

If U.S. net exports are positive, then U.S.:

GNP is the:

Your visit to the dentist, college tuition, and any commissions earned by a used car salesman are all included in GDP.

One reason economists have begun focusing on the Personal Consumption Expenditure measure for inflation is that the PCE deflator:

Aggregate income is divided into four categories.They are (1)Compensation of Employees, (2)Rents, (3)Interest and (4)Profits.Briefly describe what is and is not included in each category.

To compute GDP, you must add up the value of all the goods and services produced in a country in a year.

Aggregate accounting enables us to measure and analyze how much a nation is producing and consuming.

Your economics professor asked you to use data from the U.S.economy to show that GNP can be calculated using the income approach and the expenditures approach.What type of data should you gather to complete this assignment?

If there are only two goods in the economy, one whose price rises by 1 percent and one by 6 percent, it is possible that inflation is:

A one-time rise in the price level is:

If measurement errors did not exist, real per capita GDP would be an undeniably accurate measure of human welfare.

Real GDP can be used to accurately measure:

If nominal GDP increased from $4 billion to $5 billion while real GDP increased from $3 billion to $4 billion, it follows that:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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