Question 1

A decrease in gross domestic product (GDP)necessarily means that consumer welfare has decreased.

Accepted Answer

A) True 
 B)False

Question 2

Marianne and Laura are both homemakers with children.When Laura starts to work as an unpaid volunteer at a hospital,she hires Marianne to care for her young child.In this context,the gross domestic product (GDP)will _____.

Accepted Answer

A) increase 
B) decrease 
C) remain unaffected 
D) increase if Marianne cares for the child better than Laura 
E) increase if Laura treats patients with more sincerity than the other volunteers 
A) increase 
B) decrease 
C) remain unaffected 
D) increase if Marianne cares for the child better than Laura 
E) increase if Laura treats patients with more sincerity than the other volunteers

Question 3

In the double-entry bookkeeping system used to track the economy,_____.

Accepted Answer

A) the value of aggregate output equals the aggregate income paid for the resources used to produce that output 
B) government spending on transfer payment is recorded 
C) the earnings of all shareholders in the economy from the sale of shares are recorded 
D) inventories are counted twice,once as investment and once as output 
E) intermediate goods are counted twice,once as a type of output themselves and once as part of the final output 
A) the value of aggregate output equals the aggregate income paid for the resources used to produce that output 
B) government spending on transfer payment is recorded 
C) the earnings of all shareholders in the economy from the sale of shares are recorded 
D) inventories are counted twice,once as investment and once as output 
E) intermediate goods are counted twice,once as a type of output themselves and once as part of the final output

Question 4

Katrina pays $40 for a meal at a fancy restaurant.The ingredients used cost $10.The value added by the restaurant is _____.

Accepted Answer

A) $30 
B) $40 
C) $70 
D) $40 plus the wages paid to the chef and waiters 
E) $40 plus the profit earned by the restaurant owner 
A) $30 
B) $40 
C) $70 
D) $40 plus the wages paid to the chef and waiters 
E) $40 plus the profit earned by the restaurant owner

Question 5

If consumption = $2,000,investment = $600,government purchases = $500,net exports = −$40,transfer payments = $340,then _____.

Accepted Answer

A) GDP = $2,720 
B) GDP = $3,060 
C) GDP = $3,140 
D) GDP = $3,400 
E) GDP = $3,340 
A) GDP = $2,720 
B) GDP = $3,060 
C) GDP = $3,140 
D) GDP = $3,400 
E) GDP = $3,340

Question 6

The price index in the base year always equals_____.

Accepted Answer

A) 0 
B) 10 
C) 100 
D) 1 
E) 0.01 
A) 0 
B) 10 
C) 100 
D) 1 
E) 0.01

Question 7

Inventories help manufacturers cope with unexpected changes in the supply of their resources or in the demand for their products.

Accepted Answer

A) True 
 B)False

Question 8

If the real gross domestic product (GDP)for the base year is $3 trillion,then the nominal gross domestic product (GDP)for that year is _____.

Accepted Answer

A) −$.03 trillion 
B) $0.3 trillion 
C) $3 trillion 
D) $30 trillion 
E) $300 trillion 
A) −$.03 trillion 
B) $0.3 trillion 
C) $3 trillion 
D) $30 trillion 
E) $300 trillion

Question 9

The gross domestic product (GDP)of an economy for a particular year is likely to increase if _____.

Accepted Answer

A) workers go on longer vacations during that year 
B) the length of an average work week decreases 
C) homeowners hire lawn care services rather than maintaining the lawns themselves 
D) people cook food at home instead of buying restaurant meals 
E) the sale of illegal drugs increases 
A) workers go on longer vacations during that year 
B) the length of an average work week decreases 
C) homeowners hire lawn care services rather than maintaining the lawns themselves 
D) people cook food at home instead of buying restaurant meals 
E) the sale of illegal drugs increases

Question 10

The circular flow model shows that:

Accepted Answer

A) households are on the demand side of the resource market. 
B) firms are on the demand side of both the product and resource markets. 
C) households are on the supply side of the resource market and the demand side of the product market. 
D) firms and governments are on the supply side of the loanable funds market. 
E) governments are on the demand side of the product market and the supply side of the resource market. 
A) households are on the demand side of the resource market. 
B) firms are on the demand side of both the product and resource markets. 
C) households are on the supply side of the resource market and the demand side of the product market. 
D) firms and governments are on the supply side of the loanable funds market. 
E) governments are on the demand side of the product market and the supply side of the resource market.

Question 11

Depreciation refers to:

Accepted Answer

A) the value of leisure goods. 
B) changes in exchange rates. 
C) income that we earn but do not receive. 
D) investment undertaken merely to replace worn-out capital. 
E) the effects of government subsidy programs. 
A) the value of leisure goods. 
B) changes in exchange rates. 
C) income that we earn but do not receive. 
D) investment undertaken merely to replace worn-out capital. 
E) the effects of government subsidy programs.

Question 12

A shortcoming of national income accounting is that it ignores:

Accepted Answer

A) the depreciation of manufactured capital. 
B) spending by poor households who are receiving government transfer payments. 
C) spending on intermediate goods. 
D) the depletion of natural resources. 
E) U.S.products that are sold overseas. 
A) the depreciation of manufactured capital. 
B) spending by poor households who are receiving government transfer payments. 
C) spending on intermediate goods. 
D) the depletion of natural resources. 
E) U.S.products that are sold overseas.

Question 13

Which of the following is an example of an injection into the circular flow of income and expenditure?

Accepted Answer

A) Consumption 
B) Exports 
C) Taxes 
D) Saving 
E) Government borrowing 
A) Consumption 
B) Exports 
C) Taxes 
D) Saving 
E) Government borrowing

Question 14

Aggregate income equals:

Accepted Answer

A) the sum of income earned by all laborers in the world economy. 
B) the sum of income earned by all workers in the private sector. 
C) the sum of the income earned by all the resource suppliers in an economy. 
D) the total income of all employees after payment of income tax. 
E) the total income of all employees after purchases of necessities. 
A) the sum of income earned by all laborers in the world economy. 
B) the sum of income earned by all workers in the private sector. 
C) the sum of the income earned by all the resource suppliers in an economy. 
D) the total income of all employees after payment of income tax. 
E) the total income of all employees after purchases of necessities.

Question 15

Which of the following is true about the consumer price index (CPI)and the GDP price index?

Accepted Answer

A) Both measures weigh prices by quantities consumed in some base year. 
B) Both yield identical numbers for price level changes for any two years. 
C) Both CPI and GDP price index underestimate changes in the price level in an economy. 
D) The CPI measures changes in relative prices of goods,while the GDP price index measures changes in the absolute price level of a fixed basket of goods and services. 
E) CPI includes products that are widely used,while GDP price index includes all goods and services. 
A) Both measures weigh prices by quantities consumed in some base year. 
B) Both yield identical numbers for price level changes for any two years. 
C) Both CPI and GDP price index underestimate changes in the price level in an economy. 
D) The CPI measures changes in relative prices of goods,while the GDP price index measures changes in the absolute price level of a fixed basket of goods and services. 
E) CPI includes products that are widely used,while GDP price index includes all goods and services.

Question 16

Suppose a loaf of bread sold for $3.00 in 2008.The price of bread then increases to $3.60 in 2009.The price index for bread considering 2008 as the base year is _____.

Accepted Answer

A) 1.20 
B) 83.33 
C) 120 
D) 100 
E) 20 
A) 1.20 
B) 83.33 
C) 120 
D) 100 
E) 20

Question 17

Which of the following is an example of an injection into the circular flow of income and expenditure?

Accepted Answer

A) Net taxes 
B) Saving 
C) Transfer payments 
D) Government borrowing 
E) Disposable income 
A) Net taxes 
B) Saving 
C) Transfer payments 
D) Government borrowing 
E) Disposable income

Question 18

The largest component of aggregate expenditure is _____.

Accepted Answer

A) government purchases 
B) transfer payments 
C) imports 
D) consumption 
E) investment 
A) government purchases 
B) transfer payments 
C) imports 
D) consumption 
E) investment

Question 19

The final market value of a good is _____.

Accepted Answer

A) the sum of the value added at all stages of production 
B) the value added at one stage of production 
C) greater than the sum of all the values added at all stages of production 
D) less than the sum of all the values added at all stages of production 
E) the value added at the final stage of production 
A) the sum of the value added at all stages of production 
B) the value added at one stage of production 
C) greater than the sum of all the values added at all stages of production 
D) less than the sum of all the values added at all stages of production 
E) the value added at the final stage of production

Question 20

If the price of a good increases compared to the base year,then the price level also increases.

Accepted Answer

A) True 
 B)False

A decrease in gross domestic product (GDP)necessarily means that consumer welfare has decreased.

Marianne and Laura are both homemakers with children.When Laura starts to work as an unpaid volunteer at a hospital,she hires Marianne to care for her young child.In this context,the gross domestic product (GDP)will _____.

In the double-entry bookkeeping system used to track the economy,_____.

Katrina pays $40 for a meal at a fancy restaurant.The ingredients used cost $10.The value added by the restaurant is _____.

If consumption = $2,000,investment = $600,government purchases = $500,net exports = −$40,transfer payments = $340,then _____.

The price index in the base year always equals_____.

Inventories help manufacturers cope with unexpected changes in the supply of their resources or in the demand for their products.

If the real gross domestic product (GDP)for the base year is $3 trillion,then the nominal gross domestic product (GDP)for that year is _____.

The gross domestic product (GDP)of an economy for a particular year is likely to increase if _____.

The circular flow model shows that:

Depreciation refers to:

A shortcoming of national income accounting is that it ignores:

Which of the following is an example of an injection into the circular flow of income and expenditure?

Aggregate income equals:

Which of the following is true about the consumer price index (CPI)and the GDP price index?

Suppose a loaf of bread sold for $3.00 in 2008.The price of bread then increases to $3.60 in 2009.The price index for bread considering 2008 as the base year is _____.

Which of the following is an example of an injection into the circular flow of income and expenditure?

The largest component of aggregate expenditure is _____.

The final market value of a good is _____.

If the price of a good increases compared to the base year,then the price level also increases.

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 6: Tracking the U S Economy

A decrease in gross domestic product (GDP)necessarily means that consumer welfare has decreased.

Marianne and Laura are both homemakers with children.When Laura starts to work as an unpaid volunteer at a hospital,she hires Marianne to care for her young child.In this context,the gross domestic product (GDP)will _____.

In the double-entry bookkeeping system used to track the economy,_____.

Katrina pays $40 for a meal at a fancy restaurant.The ingredients used cost $10.The value added by the restaurant is _____.

If consumption = $2,000,investment = $600,government purchases = $500,net exports = −$40,transfer payments = $340,then _____.

The price index in the base year always equals_____.

Inventories help manufacturers cope with unexpected changes in the supply of their resources or in the demand for their products.

If the real gross domestic product (GDP)for the base year is $3 trillion,then the nominal gross domestic product (GDP)for that year is _____.

The gross domestic product (GDP)of an economy for a particular year is likely to increase if _____.

The circular flow model shows that:

Depreciation refers to:

A shortcoming of national income accounting is that it ignores:

Which of the following is an example of an injection into the circular flow of income and expenditure?

Aggregate income equals:

Which of the following is true about the consumer price index (CPI)and the GDP price index?

Suppose a loaf of bread sold for $3.00 in 2008.The price of bread then increases to $3.60 in 2009.The price index for bread considering 2008 as the base year is _____.

Which of the following is an example of an injection into the circular flow of income and expenditure?

The largest component of aggregate expenditure is _____.

The final market value of a good is _____.

If the price of a good increases compared to the base year,then the price level also increases.

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters