Question 1

Use the following to answer questions:  
-(Table: Measuring GDP) Use Table: Measuring GDP. Government purchases of goods and services are:

Accepted Answer

A)  $50 billion. 
B)  $100 billion. 
C)  $200 billion. 
D)  $300 billion. 
A)  $50 billion. 
B)  $100 billion. 
C)  $200 billion. 
D)  $300 billion. D

Question 2

Use the following to answer questions:  
-(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. If 2013 is the base year, real GDP in 2013 was:

Accepted Answer

A)  $400. 
B)  $420. 
C)  $425. 
D)  $445. 
A)  $400. 
B)  $420. 
C)  $425. 
D)  $445. A

Question 3

GDP may be calculated as the sum of:

Accepted Answer

A)  consumer spending, investment spending, government purchases of goods and services, and exports minus imports. 
B)  consumer spending, investment spending, government transfer payments, and exports minus imports. 
C)  consumer spending, investment spending, government purchases of goods and services, and exports. 
D)  exports and imports only. 
A)  consumer spending, investment spending, government purchases of goods and services, and exports minus imports. 
B)  consumer spending, investment spending, government transfer payments, and exports minus imports. 
C)  consumer spending, investment spending, government purchases of goods and services, and exports. 
D)  exports and imports only. A

Question 4

Which transaction is included in the nation's gross domestic product?

Accepted Answer

A)  A college student buys a used textbook from his roommate. 
B)  A construction company purchases lumber to build a new house. 
C)  A college student buys a pizza and has it delivered to her dorm room. 
D)  A group of college students volunteer to rake leaves at an assisted living facility for senior citizens. 
A)  A college student buys a used textbook from his roommate. 
B)  A construction company purchases lumber to build a new house. 
C)  A college student buys a pizza and has it delivered to her dorm room. 
D)  A group of college students volunteer to rake leaves at an assisted living facility for senior citizens.

Question 5

The calculation of GDP does NOT include the value of:

Accepted Answer

A)  Firestone tires sold at your local garage. 
B)  Bridgestone tires purchased by Ford Motor Co. 
C)  Goodyear tires purchased by the United States Secret Service. 
D)  Michelin tires purchased by Canadian car collectors. 
A)  Firestone tires sold at your local garage. 
B)  Bridgestone tires purchased by Ford Motor Co. 
C)  Goodyear tires purchased by the United States Secret Service. 
D)  Michelin tires purchased by Canadian car collectors.

Question 6

In the U.S. economy, the circular-flow diagram does NOT illustrate:

Accepted Answer

A)  growing income inequality. 
B)  flows of money. 
C)  flows of goods and services. 
D)  the purchase and sale of factors of production. 
A)  growing income inequality. 
B)  flows of money. 
C)  flows of goods and services. 
D)  the purchase and sale of factors of production.

Question 7

Assume that, in the base year (2011), a country's nominal GDP is $10,000 billion. The country has had 5% inflation each year since 2006. Real GDP of 2011 is equal to:

Accepted Answer

A)  $10,500 billion. 
B)  $11,025 billion. 
C)  $10,000 billion. 
D)  $9,500 billion. 
A)  $10,500 billion. 
B)  $11,025 billion. 
C)  $10,000 billion. 
D)  $9,500 billion.

Question 8

If nominal GDP increases from one year to the next, _____ must have risen.

Accepted Answer

A)  prices 
B)  real GDP 
C)  prices and real GDP 
D)  real GDP or prices or both 
A)  prices 
B)  real GDP 
C)  prices and real GDP 
D)  real GDP or prices or both

Question 9

In the circular-flow diagram, the places where goods and services are bought and sold are the:

Accepted Answer

A)  product markets. 
B)  factor markets. 
C)  households. 
D)  firms. 
A)  product markets. 
B)  factor markets. 
C)  households. 
D)  firms.

Question 10

Aggregate output is:

Accepted Answer

A)  equal to consumer spending on goods and services. 
B)  the value of new construction, changes in inventories, and the purchase of physical capital by businesses. 
C)  the total quantity of intermediate goods produced by an economy. 
D)  the total quantity of final goods and services produced by an economy. 
A)  equal to consumer spending on goods and services. 
B)  the value of new construction, changes in inventories, and the purchase of physical capital by businesses. 
C)  the total quantity of intermediate goods produced by an economy. 
D)  the total quantity of final goods and services produced by an economy.

Question 11

Use the following to answer questions:  
-(Table: Per Capita GDP) Use Table: Per Capita GDP. Per capita real GDP in 2011 was:

Accepted Answer

A)  $600. 
B)  $400. 
C)  $300. 
D)  $30. 
A)  $600. 
B)  $400. 
C)  $300. 
D)  $30.

Question 12

Which item is included in the calculation of GDP?

Accepted Answer

A)  expenditure on new construction 
B)  a retiree's monthly Social Security check 
C)  buying a house built 10 years ago 
D)  buying shares of Home Depot stock 
A)  expenditure on new construction 
B)  a retiree's monthly Social Security check 
C)  buying a house built 10 years ago 
D)  buying shares of Home Depot stock

Question 13

Use the following to answer questions:  
-(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. The growth of nominal GDP from 2013 to 2014 was due to approximately a _____% increase in prices and approximately a _____% increase in aggregate output.

Accepted Answer

A)  11.25; 0 
B)  0; 45 
C)  5; 11.25 
D)  6.25; 5 
A)  11.25; 0 
B)  0; 45 
C)  5; 11.25 
D)  6.25; 5

Question 14

Use the following to answer questions:  
-(Figure 7-1: Circular-Flow Model) Use Figure 7-1: Circular-Flow Model. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it) and there is an increase in consumer spending, holding everything else constant, which outcome is likely to occur?

Accepted Answer

A)  an increase in GDP 
B)  a decrease in GDP 
C)  an increase in the unemployment rate 
D)  a decrease in the inflation rate 
A)  an increase in GDP 
B)  a decrease in GDP 
C)  an increase in the unemployment rate 
D)  a decrease in the inflation rate

Question 15

Most households derive the bulk of their income from:

Accepted Answer

A)  wages. 
B)  interest. 
C)  profit. 
D)  rent. 
A)  wages. 
B)  interest. 
C)  profit. 
D)  rent.

Question 16

Intermediate goods are NOT counted in GDP because:

Accepted Answer

A)  doing so would result in double counting. 
B)  these goods are not produced for the market. 
C)  these goods are produced in the underground economy. 
D)  these goods involve financial transactions. 
A)  doing so would result in double counting. 
B)  these goods are not produced for the market. 
C)  these goods are produced in the underground economy. 
D)  these goods involve financial transactions.

Question 17

Which factor is NOT included in investment spending in the national income accounts?

Accepted Answer

A)  new residential construction 
B)  the purchase of machinery and other productive physical capital 
C)  the purchase of stocks and bonds by a business 
D)  spending on inventories 
A)  new residential construction 
B)  the purchase of machinery and other productive physical capital 
C)  the purchase of stocks and bonds by a business 
D)  spending on inventories

Question 18

Use the following to answer questions:  
-(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. If 2013 is the base year, real GDP in 2014 was:

Accepted Answer

A)  $400. 
B)  $420. 
C)  $425. 
D)  $445. 
A)  $400. 
B)  $420. 
C)  $425. 
D)  $445.

Question 19

Use the following to answer question 91:  
-According to the information in Table: Calculating GDP, what is GDP?

Accepted Answer

A)  $47,475 
B)  $12,200 
C)  $21,485 
D)  $34,085 
A)  $47,475 
B)  $12,200 
C)  $21,485 
D)  $34,085

Question 20

A country's GNP:

Accepted Answer

A)  must be larger than its GDP. 
B)  is the total factor income earned by residents of a country. 
C)  includes factor income earned by foreigners. 
D)  excludes factor income earned abroad by Americans. 
A)  must be larger than its GDP. 
B)  is the total factor income earned by residents of a country. 
C)  includes factor income earned by foreigners. 
D)  excludes factor income earned abroad by Americans.

Use the following to answer questions: -(Table: Measuring GDP) Use Table: Measuring GDP. Government purchases of goods and services are:

Use the following to answer questions: -(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. If 2013 is the base year, real GDP in 2013 was:

GDP may be calculated as the sum of:

Which transaction is included in the nation's gross domestic product?

The calculation of GDP does NOT include the value of:

In the U.S. economy, the circular-flow diagram does NOT illustrate:

Assume that, in the base year (2011), a country's nominal GDP is $10,000 billion. The country has had 5% inflation each year since 2006. Real GDP of 2011 is equal to:

If nominal GDP increases from one year to the next, _____ must have risen.

In the circular-flow diagram, the places where goods and services are bought and sold are the:

Aggregate output is:

Use the following to answer questions: -(Table: Per Capita GDP) Use Table: Per Capita GDP. Per capita real GDP in 2011 was:

Which item is included in the calculation of GDP?

Most households derive the bulk of their income from:

Intermediate goods are NOT counted in GDP because:

Which factor is NOT included in investment spending in the national income accounts?

Use the following to answer questions: -(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. If 2013 is the base year, real GDP in 2014 was:

Use the following to answer question 91: -According to the information in Table: Calculating GDP, what is GDP?

A country's GNP:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Exam 7: GDP and the CPI: Tracking the Macroeconomy

Use the following to answer questions: -(Table: Measuring GDP) Use Table: Measuring GDP. Government purchases of goods and services are:

Use the following to answer questions: -(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. If 2013 is the base year, real GDP in 2013 was:

GDP may be calculated as the sum of:

Which transaction is included in the nation's gross domestic product?

The calculation of GDP does NOT include the value of:

In the U.S. economy, the circular-flow diagram does NOT illustrate:

Assume that, in the base year (2011), a country's nominal GDP is $10,000 billion. The country has had 5% inflation each year since 2006. Real GDP of 2011 is equal to:

If nominal GDP increases from one year to the next, _____ must have risen.

In the circular-flow diagram, the places where goods and services are bought and sold are the:

Aggregate output is:

Use the following to answer questions: -(Table: Per Capita GDP) Use Table: Per Capita GDP. Per capita real GDP in 2011 was:

Which item is included in the calculation of GDP?

Most households derive the bulk of their income from:

Intermediate goods are NOT counted in GDP because:

Which factor is NOT included in investment spending in the national income accounts?

Use the following to answer questions: -(Table: Lemonade and Cookies) Use Table: Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. If 2013 is the base year, real GDP in 2014 was:

Use the following to answer question 91: -According to the information in Table: Calculating GDP, what is GDP?

A country's GNP:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters