Question 1

One of the limitations of aggregate accounting is that:

Accepted Answer

A) it includes market transactions that should be excluded. 
B) it doesn't take depreciation into account. 
C) it measures market activity, not social welfare. 
D) there isn't enough data available in most developed countries to have national income accounts. 
A) it includes market transactions that should be excluded. 
B) it doesn't take depreciation into account. 
C) it measures market activity, not social welfare. 
D) there isn't enough data available in most developed countries to have national income accounts.

Question 2

If nominal wealth increases faster than real wealth:

Accepted Answer

A) real wealth must eventually decline. 
B) real wealth will eventually rise faster in order to catch up. 
C) asset inflation has occurred. 
D) society is better off than if nominal wealth growth had matched real wealth growth. 
A) real wealth must eventually decline. 
B) real wealth will eventually rise faster in order to catch up. 
C) asset inflation has occurred. 
D) society is better off than if nominal wealth growth had matched real wealth growth.

Question 3

Because official price indexes do not account for some improvements in product quality, official estimates of real GDP overestimate the true increase in real output.

Accepted Answer

A) True 
 B)False

Question 4

Suppose that both nominal GDP and prices double. We can conclude that real output:

Accepted Answer

A) more than doubled. 
B) doubled. 
C) remained constant. 
D) fell. 
A) more than doubled. 
B) doubled. 
C) remained constant. 
D) fell.

Question 5

Real output is $550 billion and nominal output is $600 billion.What is the value of the price index?

Accepted Answer

Use the formula real output =

Question 6

Payments for the use of land and buildings are included 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 7

Suppose real estate prices rise by 40 percent in a four-year period, while goods and services rise in price by 8 percent in the same time period. Population, the stock of houses, and other variables important to real estate prices have remained almost constant. Which of the following is most likely?

Accepted Answer

A) Real wealth has increased. 
B) Nominal wealth has declined. 
C) Asset inflation has occurred. 
D) GDP has increased by about 40 percent over the four-year period. 
A) Real wealth has increased. 
B) Nominal wealth has declined. 
C) Asset inflation has occurred. 
D) GDP has increased by about 40 percent over the four-year period.

Question 8

Payments to the owners of firms are included in aggregate accounting as:

Accepted Answer

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

Question 9

Refer to the table shown. $\begin{array} {| l | c| } 
\hline & \text { In trillims of dallars } \
\hline \text { Consumption } & 3.5 \
\hline \text { Irvestment } & 1.2 \
\hline \text { Government Purchases } &  1.8 \
\hline \text { Exports } &  0.6 \
\hline \text { Imports } & 0.4\
\hline
\end{array}$ What is the economy's GDP?

Accepted Answer

A) $6.5 trillion 
B) $7.1 trillion 
C) $6.7 trillion 
D) $6.1 trillion 
A) $6.5 trillion 
B) $7.1 trillion 
C) $6.7 trillion 
D) $6.1 trillion

Question 10

Great Basin National Park, the only national park wholly within the borders of Nevada, occupies 77,180 acres and contains 42 known caves. About 90,000 people visit the park each year. It has 25 permanent staff who, with the seasonal staff, collect $280,00 in fees a year, mostly for the 2,400 cave tours. The park also has about 80 volunteers who contribute 9,400 hours of work a year. Because the park surveys for springs in the 25 watersheds, the park service does not burn any acreage, which is part of standard maintenance in some parks. Some of the data are flow measurements and some are stock measurements. An example of a stock measurement is:

Accepted Answer

A) fees collected. 
B) number of visitors. 
C) number of watersheds. 
D) number of acres burned. 
A) fees collected. 
B) number of visitors. 
C) number of watersheds. 
D) number of acres burned.

Question 11

The difference between gross domestic product (GDP)and gross national product (GNP)is that GDP:

Accepted Answer

A) measures the economic activity that occurs within a country while GNP measures the economic activity of all the people and businesses of a country. 
B) measures the economic activity of all the people and businesses of a country, while GNP measures the economic activity that occurs within a country. 
C) excludes exports and imports while GNP does not. 
D) includes exports and imports while GNP does not. 
A) measures the economic activity that occurs within a country while GNP measures the economic activity of all the people and businesses of a country. 
B) measures the economic activity of all the people and businesses of a country, while GNP measures the economic activity that occurs within a country. 
C) excludes exports and imports while GNP does not. 
D) includes exports and imports while GNP does not.

Question 12

If you decide not to spend $1,000 you earned at your summer job but instead intend to buy shares in a mutual fund, in terms of aggregate economic accounting you would be:

Accepted Answer

A) consuming. 
B) saving. 
C) investing. 
D) transferring. 
A) consuming. 
B) saving. 
C) investing. 
D) transferring.

Question 13

Which of the following is most likely to be asset price inflation?

Accepted Answer

A) A rise in the current price of assets caused by expectation of higher asset prices in the future 
B) A rise in the current price of assets caused by an increase in the riskiness of financial assets 
C) A rise in the price of assets caused by an increase in the underlying productivity of those assets 
D) A rise in the current price of assets caused by a shift in people's time preference 
A) A rise in the current price of assets caused by expectation of higher asset prices in the future 
B) A rise in the current price of assets caused by an increase in the riskiness of financial assets 
C) A rise in the price of assets caused by an increase in the underlying productivity of those assets 
D) A rise in the current price of assets caused by a shift in people's time preference

Question 14

What is the GDP using the table shown? $$\begin{array} { | l | c | } 
\hline & \text { In billims of dallars } \
\hline \text { Consurngtion } & 3,600 \
\hline \text { Irvestment } & 800 \
\hline \text { Transfer payments } & 750 \
\hline \text { Government Purchases } & 1,000 \
\hline \text { Exports } & 650 \
\hline \text { Imports } & 450 \
\hline \text { Net foreign factor incorne } & - 30 \
\hline
\end{array}$$

Accepted Answer

A) 5,570 
B) 5,600 
C) 6,050 
D) 6,320 
A) 5,570 
B) 5,600 
C) 6,050 
D) 6,320

Question 15

What is nominal wealth?

Accepted Answer

Nominal wealth is th

Question 16

What is inflation and how do we measure it? Which prices does each of the major price indexes actually measure? How can a price index be used to convert nominal output into real output?

Accepted Answer

Inflation is a sustained rise in the pri

Question 17

The value of intermediate goods is:

Accepted Answer

A) included in both GDP and GNP. 
B) included in GDP but not GNP. 
C) included in GNP but not GDP. 
D) excluded from both GDP and GNP. 
A) included in both GDP and GNP. 
B) included in GDP but not GNP. 
C) included in GNP but not GDP. 
D) excluded from both GDP and GNP.

Question 18

If economic activity increases, it follows that economic welfare:

Accepted Answer

A) increases as more goods and services become available. 
B) decreases as more resources are depleted. 
C) does not change since it does not depend on the level of economic activity. 
D) may increase, decrease, or remain unchanged depending on the nature of the increase in economic activity. 
A) increases as more goods and services become available. 
B) decreases as more resources are depleted. 
C) does not change since it does not depend on the level of economic activity. 
D) may increase, decrease, or remain unchanged depending on the nature of the increase in economic activity.

Question 19

Assume an economy produces just cars and computers;use the information in the table below to answer the following questions about the GDP.
 $$\begin{array} { | l | l | l | l | l | } 
\hline &{ \text { Cars } } && { \text { Camputers } } \
\hline \text { Year } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline 2018 & 100 & \$ 10,000 & 1,000 & \$ 1,000 \
\hline 2019 & 110 & \$ 12,000 & 1,100 & \$ 900 \
\hline
\end{array}$$ (1)Calculate nominal GDP in 2018 and 2019.What is the growth rate in nominal GDP?
(2)Using 2018 as a base year,calculate real GDP in 2019.What is the growth rate in real GDP?
(3)Calculate the GDP deflator in 2019.

Accepted Answer

(1)Nominal GDP in 2018 = (100 × $10,000)

Question 20

What is national income? What are its four components?

Accepted Answer

National income is total incom

Exam 25: Measuring and Describing the Aggregate Economy

One of the limitations of aggregate accounting is that:

If nominal wealth increases faster than real wealth:

Because official price indexes do not account for some improvements in product quality, official estimates of real GDP overestimate the true increase in real output.

Suppose that both nominal GDP and prices double. We can conclude that real output:

Real output is $550 billion and nominal output is $600 billion.What is the value of the price index?

Payments for the use of land and buildings are included in aggregate accounting as:

Payments to the owners of firms are included in aggregate accounting as:

Refer to the table shown. In trillims of dallars Consumption 3.5 Irvestment 1.2 Government Purchases 1.8 Exports 0.6 Imports 0.4 What is the economy's GDP?

The difference between gross domestic product (GDP)and gross national product (GNP)is that GDP:

If you decide not to spend $1,000 you earned at your summer job but instead intend to buy shares in a mutual fund, in terms of aggregate economic accounting you would be:

Which of the following is most likely to be asset price inflation?

What is the GDP using the table shown? In billims of dallars Consurngtion 3,600 Irvestment 800 Transfer payments 750 Government Purchases 1,000 Exports 650 Imports 450 Net foreign factor incorne -30

What is nominal wealth?

What is inflation and how do we measure it? Which prices does each of the major price indexes actually measure? How can a price index be used to convert nominal output into real output?

The value of intermediate goods is:

If economic activity increases, it follows that economic welfare:

What is national income? What are its four components?

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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