Question 1

Which of the following is an example of an intermediate product?

Accepted Answer

A) A pair of skis sold by a sporting goods retailer to a skier 
B) A share of IBM stock 
C) The lumber produced by Boise Cascade and sold to a builder of old houses 
D) An antique car sold to the highest bidder 
A) A pair of skis sold by a sporting goods retailer to a skier 
B) A share of IBM stock 
C) The lumber produced by Boise Cascade and sold to a builder of old houses 
D) An antique car sold to the highest bidder

Question 2

Value added is calculated by:

Accepted Answer

A) subtracting the cost of materials used in production from the value of sales. 
B) adding the cost of materials used in production to the value of sales. 
C) subtracting the value of sales from the cost of materials used in production. 
D) adding the value of output to the value of inputs. 
A) subtracting the cost of materials used in production from the value of sales. 
B) adding the cost of materials used in production to the value of sales. 
C) subtracting the value of sales from the cost of materials used in production. 
D) adding the value of output to the value of inputs.

Question 3

If U.S. GNP exceeds GDP by approximately $133 billion,

Accepted Answer

A) U.S. factor income earned abroad exceeded foreign factor income by $133 billion. 
B) U.S. factor income earned abroad was $133 billion less than foreign factor income. 
C) U.S. depreciation was $133 billion. 
D) U.S. depreciation was −$133 billion. 
A) U.S. factor income earned abroad exceeded foreign factor income by $133 billion. 
B) U.S. factor income earned abroad was $133 billion less than foreign factor income. 
C) U.S. depreciation was $133 billion. 
D) U.S. depreciation was −$133 billion.

Question 4

What is the difference between Gross Domestic Product (GDP)and Gross National Product (GNP)? What is the difference between Gross Domestic Product (GDP)and Net Domestic Product (NDP)?

Accepted Answer

Gross Domestic Product measures the aggr

Question 5

GDP is the:

Accepted Answer

A) market value of an economy's production of final goods and services in a one year period. 
B) sum of coins, bills, and demand deposits circulating in an economy one year period. 
C) total expenditures of the federal government over the period of one year. 
D) market value of an economy's production of all goods and services in a one year period. 
A) market value of an economy's production of final goods and services in a one year period. 
B) sum of coins, bills, and demand deposits circulating in an economy one year period. 
C) total expenditures of the federal government over the period of one year. 
D) market value of an economy's production of all goods and services in a one year period.

Question 6

Calculate the contribution to GDP that would be the result of each of the following transactions:
(a)The government purchases an airplane for $6 million.
(b)A citizen sells a used car for $6,000.
(c)A citizen sells a used car to a dealer for $6,000,who resells it to a consumer for $7,500.
(d)A citizen sells a bond for $1,000 that they bought last year for $600.
(e)The government issues a social security check for $1,250 (ignore the administrative costs of issuing the check).

Accepted Answer

(a)$6 million.Government purchases are v

Question 7

If the nominal interest rate is 2 percent and the real interest rate is 1 percent, inflation is:

Accepted Answer

A) −1 percent. 
B) 0 percent. 
C) 1 percent. 
D) 2 percent. 
A) −1 percent. 
B) 0 percent. 
C) 1 percent. 
D) 2 percent.

Question 8

Payments for loans by households to firms are known in aggregate accounting as:

Accepted Answer

A) interest. 
B) rents. 
C) employee compensation. 
D) profits. 
A) interest. 
B) rents. 
C) employee compensation. 
D) profits.

Question 9

To move from gross domestic product (GDP)to gross national product (GNP), one must:

Accepted Answer

A) add depreciation to GDP. 
B) subtract depreciation from GDP. 
C) subtract net foreign factor income from GDP. 
D) add net foreign factor income to GDP. 
A) add depreciation to GDP. 
B) subtract depreciation from GDP. 
C) subtract net foreign factor income from GDP. 
D) add net foreign factor income to GDP.

Question 10

Which of the following economic activities would be included in U.S. gross domestic product (GDP)?

Accepted Answer

A) Illegal drug sales 
B) Pure services, such as haircuts 
C) Illegal prostitution 
D) Work performed and paid for in cash to avoid income tax 
A) Illegal drug sales 
B) Pure services, such as haircuts 
C) Illegal prostitution 
D) Work performed and paid for in cash to avoid income tax

Question 11

Depreciation:

Accepted Answer

A) estimates the decrease in value of capital goods due to wear and tear over the year. 
B) is the reduction in business inventories per year. 
C) represents a firm's expenditure to add to its capital stock. 
D) is the decline in the value of a firm's stock. 
A) estimates the decrease in value of capital goods due to wear and tear over the year. 
B) is the reduction in business inventories per year. 
C) represents a firm's expenditure to add to its capital stock. 
D) is the decline in the value of a firm's stock.

Question 12

In 2008, the value of the stocks listed on the New York Stock Exchange decreased tremendously. As a direct result:

Accepted Answer

A) both U.S. GDP and U.S. GNP declined by the same amount. 
B) U.S. GDP declined by the amount of the stock market decline but U.S. GNP was unaffected. 
C) U.S. GNP declined by the amount of the stock market decline but U.S. GDP was unaffected. 
D) neither U.S. GDP nor U.S. GNP were affected. 
A) both U.S. GDP and U.S. GNP declined by the same amount. 
B) U.S. GDP declined by the amount of the stock market decline but U.S. GNP was unaffected. 
C) U.S. GNP declined by the amount of the stock market decline but U.S. GDP was unaffected. 
D) neither U.S. GDP nor U.S. GNP were affected.

Question 13

In recent years, many environmentalists have proposed changes to GDP accounting that would take into account the impact of economic activity on the environment. Which of the following economic activities that affect the environment is currently included in GDP?

Accepted Answer

A) The effect of the depletion of oil reserves on energy expenditures 
B) The effect of deforestation on global climate change and the income of future generations 
C) The impact of corporate pollution on health care spending 
D) Expenditures on pollution control technology 
A) The effect of the depletion of oil reserves on energy expenditures 
B) The effect of deforestation on global climate change and the income of future generations 
C) The impact of corporate pollution on health care spending 
D) Expenditures on pollution control technology

Question 14

Negative net exports means:

Accepted Answer

A) GDP is lower than it would have been if net exports had equaled zero. 
B) GDP is higher than it would have been if net exports had equaled zero. 
C) exports exceed imports. 
D) depreciation exceed investment. 
A) GDP is lower than it would have been if net exports had equaled zero. 
B) GDP is higher than it would have been if net exports had equaled zero. 
C) exports exceed imports. 
D) depreciation exceed investment.

Question 15

While net domestic product (NDP)is theoretically a better measure of economic activity than gross domestic product (GDP), GDP is used more frequently because:

Accepted Answer

A) consumption, which is included in NDP but not GDP, is difficult to measure. 
B) investment, which is included in NDP but not GDP, is difficult to measure. 
C) net exports, which are included in NDP but not GDP, are difficult to measure. 
D) depreciation, which is included in NDP but not GDP, is difficult to measure. 
A) consumption, which is included in NDP but not GDP, is difficult to measure. 
B) investment, which is included in NDP but not GDP, is difficult to measure. 
C) net exports, which are included in NDP but not GDP, are difficult to measure. 
D) depreciation, which is included in NDP but not GDP, is difficult to measure.

Question 16

The largest component of aggregate income is:

Accepted Answer

A) interest. 
B) rents. 
C) employee compensation. 
D) profits. 
A) interest. 
B) rents. 
C) employee compensation. 
D) profits.

Question 17

If Saudi Arabia has invested substantially more money in foreign countries than foreigners have invested in Saudi Arabia, then we might expect Saudi:

Accepted Answer

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

Question 18

Suppose profits are less than zero. From this it follows that:

Accepted Answer

A) aggregate income exceeds aggregate production. 
B) the sum of employee compensation, rents, and interest exceeds aggregate income. 
C) aggregate income is less than the value of final output. 
D) the sum of employee compensation, rents, and interest equals aggregate income. 
A) aggregate income exceeds aggregate production. 
B) the sum of employee compensation, rents, and interest exceeds aggregate income. 
C) aggregate income is less than the value of final output. 
D) the sum of employee compensation, rents, and interest equals aggregate income.

Question 19

Which of the following would not be included in personal consumption expenditure?

Accepted Answer

A) College tuition 
B) Medical expenses 
C) Federal police protection 
D) A movie ticket 
A) College tuition 
B) Medical expenses 
C) Federal police protection 
D) A movie ticket

Question 20

If the United States CPI was 37 in 1973 and in 2016 it was 215.3. By what percent did prices increase in the United States between 1973 and 2016? (Not the annual rate of change, but total. )

Accepted Answer

A) 5 
B) 48 
C) 482 
D) 545 
A) 5 
B) 48 
C) 482 
D) 545

Exam 25: Measuring and Describing the Aggregate Economy

Which of the following is an example of an intermediate product?

Value added is calculated by:

If U.S. GNP exceeds GDP by approximately $133 billion,

What is the difference between Gross Domestic Product (GDP)and Gross National Product (GNP)? What is the difference between Gross Domestic Product (GDP)and Net Domestic Product (NDP)?

GDP is the:

If the nominal interest rate is 2 percent and the real interest rate is 1 percent, inflation is:

Payments for loans by households to firms are known in aggregate accounting as:

To move from gross domestic product (GDP)to gross national product (GNP), one must:

Which of the following economic activities would be included in U.S. gross domestic product (GDP)?

Depreciation:

In 2008, the value of the stocks listed on the New York Stock Exchange decreased tremendously. As a direct result:

In recent years, many environmentalists have proposed changes to GDP accounting that would take into account the impact of economic activity on the environment. Which of the following economic activities that affect the environment is currently included in GDP?

Negative net exports means:

While net domestic product (NDP)is theoretically a better measure of economic activity than gross domestic product (GDP), GDP is used more frequently because:

The largest component of aggregate income is:

If Saudi Arabia has invested substantially more money in foreign countries than foreigners have invested in Saudi Arabia, then we might expect Saudi:

Suppose profits are less than zero. From this it follows that:

Which of the following would not be included in personal consumption expenditure?

If the United States CPI was 37 in 1973 and in 2016 it was 215.3. By what percent did prices increase in the United States between 1973 and 2016? (Not the annual rate of change, but total. )

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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