Question 1

The Consumer Price Index (CPI)is a measure of the:​

Accepted Answer

A) cost of a market basket of consumer goods and services relative to its cost in a base year. 
B) change in the average price of a market basket of necessary goods and services. 
C) cost of a market basket of consumer goods relative to the previous year. 
D) change in the average price of all intermediate goods and services. 
E) average price of all final goods and services relative to the average price in the previous year. 
A) cost of a market basket of consumer goods and services relative to its cost in a base year. 
B) change in the average price of a market basket of necessary goods and services. 
C) cost of a market basket of consumer goods relative to the previous year. 
D) change in the average price of all intermediate goods and services. 
E) average price of all final goods and services relative to the average price in the previous year.

Question 2

A fixed-weight price index provides less accurate changes than a chain-weighted system.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a problem associated with gross domestic product (GDP)as a measure of social welfare?

Accepted Answer

A) It includes many nonmarket activities. 
B) It takes into account the value of only those goods which are widely used. 
C) It takes into account the cost of environmental damage caused by pollution. 
D) It includes intermediate goods as a separate entry. 
E) It excludes the value of leisure time. 
A) It includes many nonmarket activities. 
B) It takes into account the value of only those goods which are widely used. 
C) It takes into account the cost of environmental damage caused by pollution. 
D) It includes intermediate goods as a separate entry. 
E) It excludes the value of leisure time.

Question 4

When a firm produces and sells a refrigerator worth $1,000,its contribution to the gross domestic product (GDP)on the income side is measured by:

Accepted Answer

A) the price paid by the consumer. 
B) the investment made by the firm to manufacture the refrigerator. 
C) the stock of inventories used by the firm to manufacture the refrigerator. 
D) the cost of raw materials used by the firm to manufacture the refrigerator. 
E) the sum of the wages,interest,and rent paid by the firm's owners and the profit of the firm. 
A) the price paid by the consumer. 
B) the investment made by the firm to manufacture the refrigerator. 
C) the stock of inventories used by the firm to manufacture the refrigerator. 
D) the cost of raw materials used by the firm to manufacture the refrigerator. 
E) the sum of the wages,interest,and rent paid by the firm's owners and the profit of the firm.

Question 5

The national income accounting system measures economic activity based on the concept of _____.

Accepted Answer

A) absolute advantage of different industries in an economy 
B) the circular flow of precious metal and money through the different sectors of an economy 
C) comparative advantage of different industries in an economy 
D) the circular flow of output and income through the different sectors of an economy 
E) the circular flow of labor and other resources through the different sectors of an economy 
A) absolute advantage of different industries in an economy 
B) the circular flow of precious metal and money through the different sectors of an economy 
C) comparative advantage of different industries in an economy 
D) the circular flow of output and income through the different sectors of an economy 
E) the circular flow of labor and other resources through the different sectors of an economy

Question 6

If a firm hires labor for $6,000,pays rent of $2,000,buys raw materials for $10,000 from another firm,earns profits of $800,and sells its output for $25,000,the value added by the firm is _____.

Accepted Answer

A) $6,200 
B) $9,000 
C) $15,000 
D) $18,000 
E) $18,800 
A) $6,200 
B) $9,000 
C) $15,000 
D) $18,000 
E) $18,800

Question 7

Which of the following is reflected in the gross domestic product (GDP)?

Accepted Answer

A) The value of leisure time 
B) The value of illegal goods and services 
C) The value of final goods produced by firms 
D) The cost of depletion of natural resources 
E) The value of house maintenance performed by homeowners 
A) The value of leisure time 
B) The value of illegal goods and services 
C) The value of final goods produced by firms 
D) The cost of depletion of natural resources 
E) The value of house maintenance performed by homeowners

Question 8

If consumption = $5,000;investment = $800,government purchases = $700,exports = $30,imports = $60,and transfer payments = $340,then _____.

Accepted Answer

A) GDP = $7,400 
B) GDP = $7,740 
C) GDP = $3,140 
D) GDP = $6,470 
E) GDP = $6,840 
A) GDP = $7,400 
B) GDP = $7,740 
C) GDP = $3,140 
D) GDP = $6,470 
E) GDP = $6,840

Question 9

When calculating gross domestic product (GDP),double counting can be avoided by:

Accepted Answer

A) taxing corporate income. 
B) adding all income taxes to GDP. 
C) calculating GDP using the income as well as the expenditure method. 
D) adding the value of exports to GDP and subtracting the value of imports. 
E) summing the value added at each stage of production. 
A) taxing corporate income. 
B) adding all income taxes to GDP. 
C) calculating GDP using the income as well as the expenditure method. 
D) adding the value of exports to GDP and subtracting the value of imports. 
E) summing the value added at each stage of production.

Question 10

Which of the following is a difference between net domestic product (NDP)and gross domestic product (GDP)?

Accepted Answer

A) GDP includes the cost of polluting the environment,while NDP does not. 
B) GDP excludes net taxes,while NDP includes it. 
C) GDP excludes that part of the capital stock used up in the production process,while NDP includes it. 
D) GDP includes all government spending,while NDP excludes government spending. 
E) GDP includes that part of the capital stock used up in the production process,while NDP does not. 
A) GDP includes the cost of polluting the environment,while NDP does not. 
B) GDP excludes net taxes,while NDP includes it. 
C) GDP excludes that part of the capital stock used up in the production process,while NDP includes it. 
D) GDP includes all government spending,while NDP excludes government spending. 
E) GDP includes that part of the capital stock used up in the production process,while NDP does not.

Question 11

The gross domestic product (GDP)of a country measures the _____.

Accepted Answer

A) market value of all intermediate goods and services produced by resources located within the country 
B) market value of all goods and services produced by resources located outside the country 
C) market value of all final goods and services produced by resources located within the country 
D) value added to the economy by intermediate goods and services minus original cost 
E) value of the total sales of financial assets 
A) market value of all intermediate goods and services produced by resources located within the country 
B) market value of all goods and services produced by resources located outside the country 
C) market value of all final goods and services produced by resources located within the country 
D) value added to the economy by intermediate goods and services minus original cost 
E) value of the total sales of financial assets

Question 12

Which of the following would be excluded from the gross domestic product (GDP)?

Accepted Answer

A) The mayor of a city hiring more workers to improve the sanitation of the city 
B) The sale of mobiles decreasing significantly 
C) The government reducing welfare benefits 
D) A homemaker spending $20 taking the family out to lunch instead of cooking food , 
E) A consumer having his pickup truck tuned up at the local garage 
A) The mayor of a city hiring more workers to improve the sanitation of the city 
B) The sale of mobiles decreasing significantly 
C) The government reducing welfare benefits 
D) A homemaker spending $20 taking the family out to lunch instead of cooking food , 
E) A consumer having his pickup truck tuned up at the local garage

Question 13

Gross domestic product (GDP)does not reflect many things that individuals do for themselves.

Accepted Answer

A) True 
 B)False

Question 14

The table below shows the current and base-year prices of different goods in a market basket.
The consumer price index (CPI)for the current year is _____.
?
Table 6.2
?
?
$$\begin{array} { c c c c } 
\text { Product } & \begin{array} { c } 
\text { Quantity in } \
\text { market basket }
\end{array} & \begin{array} { c } 
\text { Price in } \
\text { base year } ( \$ )
\end{array} & \begin{array} { c } 
\text { Price in } \
\text { current year } ( \$ )
\end{array} \
\hline \text { Bread } & 10 & 1.00 & 1.50 \
\text { Milk } & 5 & 1.00 & 2.00 \
\text { Gum } & 50 & 0.20 & 0.50
\end{array}$$
?

Accepted Answer

A) 2 
B) 50 
C) 55 
D) 182 
E) 200 
A) 2 
B) 50 
C) 55 
D) 182 
E) 200

Question 15

Which of the following is an example of a leakage from the circular flow of income and expenditure?

Accepted Answer

A) Investment 
B) Imports 
C) Government purchases 
D) Exports 
E) Transfer payments 
A) Investment 
B) Imports 
C) Government purchases 
D) Exports 
E) Transfer payments

Question 16

Which of the following actions would increase the consumption spending component of the gross domestic product (GDP)?

Accepted Answer

A) Ann cooking dinner for Tim instead of going out 
B) Ann and Tim buying a used microwave oven 
C) Ann and Tim buying vegetables to prepare soup at home 
D) Tim buying Ann a dress 
E) Tim and Ann painting the garage themselves 
A) Ann cooking dinner for Tim instead of going out 
B) Ann and Tim buying a used microwave oven 
C) Ann and Tim buying vegetables to prepare soup at home 
D) Tim buying Ann a dress 
E) Tim and Ann painting the garage themselves

Question 17

If a toy store overestimates the demand for a toy in 2004 and,as a result,has an unexpectedly large number of toys in stock at the end of the year,the value of the inventory of these toys will be considered as:

Accepted Answer

A) investment in 2004. 
B) investment in 2005. 
C) consumption in 2004. 
D) consumption in 2005. 
E) a part of GDP when the toys are sold. 
A) investment in 2004. 
B) investment in 2005. 
C) consumption in 2004. 
D) consumption in 2005. 
E) a part of GDP when the toys are sold.

Question 18

If the consumer price index (CPI)is 220 one year and 210 the next,the annual rate of inflation as measured by the CPI is approximately _____.

Accepted Answer

A) −2.3 percent 
B) −4.6 percent 
C) 10 percent 
D) 4.8 percent 
E) 220 percent 
A) −2.3 percent 
B) −4.6 percent 
C) 10 percent 
D) 4.8 percent 
E) 220 percent

Question 19

Which of the following is likely to be excluded from the gross domestic product (GDP)of a country?

Accepted Answer

A) The value of the drugs being sold in a vacant lot 
B) The value of the drugs being sold in a pharmacy 
C) A doctor treating a patient in a hospital 
D) The value of a new house bought by an individual 
E) The value of new furnitures bought by an individual 
A) The value of the drugs being sold in a vacant lot 
B) The value of the drugs being sold in a pharmacy 
C) A doctor treating a patient in a hospital 
D) The value of a new house bought by an individual 
E) The value of new furnitures bought by an individual

Question 20

Which of the following is an example of a leakage from the circular flow of income and expenditure?

Accepted Answer

A) Government purchases of goods and services 
B) Taxes 
C) Investment 
D) Exports 
E) Consumption expenditures 
A) Government purchases of goods and services 
B) Taxes 
C) Investment 
D) Exports 
E) Consumption expenditures

The Consumer Price Index (CPI)is a measure of the:

A fixed-weight price index provides less accurate changes than a chain-weighted system.

Which of the following is a problem associated with gross domestic product (GDP)as a measure of social welfare?

When a firm produces and sells a refrigerator worth $1,000,its contribution to the gross domestic product (GDP)on the income side is measured by:

The national income accounting system measures economic activity based on the concept of _____.

If a firm hires labor for $6,000,pays rent of $2,000,buys raw materials for $10,000 from another firm,earns profits of $800,and sells its output for $25,000,the value added by the firm is _____.

Which of the following is reflected in the gross domestic product (GDP)?

If consumption = $5,000;investment = $800,government purchases = $700,exports = $30,imports = $60,and transfer payments = $340,then _____.

When calculating gross domestic product (GDP),double counting can be avoided by:

Which of the following is a difference between net domestic product (NDP)and gross domestic product (GDP)?

The gross domestic product (GDP)of a country measures the _____.

Which of the following would be excluded from the gross domestic product (GDP)?

Gross domestic product (GDP)does not reflect many things that individuals do for themselves.

Which of the following is an example of a leakage from the circular flow of income and expenditure?

Which of the following actions would increase the consumption spending component of the gross domestic product (GDP)?

If a toy store overestimates the demand for a toy in 2004 and,as a result,has an unexpectedly large number of toys in stock at the end of the year,the value of the inventory of these toys will be considered as:

If the consumer price index (CPI)is 220 one year and 210 the next,the annual rate of inflation as measured by the CPI is approximately _____.

Which of the following is likely to be excluded from the gross domestic product (GDP)of a country?

Which of the following is an example of a leakage from the circular flow of income and expenditure?

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

The Consumer Price Index (CPI)is a measure of the:​

A fixed-weight price index provides less accurate changes than a chain-weighted system.

Which of the following is a problem associated with gross domestic product (GDP)as a measure of social welfare?

When a firm produces and sells a refrigerator worth $1,000,its contribution to the gross domestic product (GDP)on the income side is measured by:

The national income accounting system measures economic activity based on the concept of _____.

If a firm hires labor for $6,000,pays rent of $2,000,buys raw materials for $10,000 from another firm,earns profits of $800,and sells its output for $25,000,the value added by the firm is _____.

Which of the following is reflected in the gross domestic product (GDP)?

If consumption = $5,000;investment = $800,government purchases = $700,exports = $30,imports = $60,and transfer payments = $340,then _____.

When calculating gross domestic product (GDP),double counting can be avoided by:

Which of the following is a difference between net domestic product (NDP)and gross domestic product (GDP)?

The gross domestic product (GDP)of a country measures the _____.

Which of the following would be excluded from the gross domestic product (GDP)?

Gross domestic product (GDP)does not reflect many things that individuals do for themselves.

Which of the following is an example of a leakage from the circular flow of income and expenditure?

Which of the following actions would increase the consumption spending component of the gross domestic product (GDP)?

If a toy store overestimates the demand for a toy in 2004 and,as a result,has an unexpectedly large number of toys in stock at the end of the year,the value of the inventory of these toys will be considered as:

If the consumer price index (CPI)is 220 one year and 210 the next,the annual rate of inflation as measured by the CPI is approximately _____.

Which of the following is likely to be excluded from the gross domestic product (GDP)of a country?

Which of the following is an example of a leakage from the circular flow of income and expenditure?

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

The Consumer Price Index (CPI)is a measure of the: