Question 1

Which of the following statements is true?

Accepted Answer

A) National income accountants consider the portion of corporate profits that is used to pay corporate profits taxes to be income earned by households but not received. 
B) Net domestic product (NDP) is a smaller dollar amount than GDP. 
C) Personal income includes transfer payments. 
D) b and c 
E) a, b, and c 
A) National income accountants consider the portion of corporate profits that is used to pay corporate profits taxes to be income earned by households but not received. 
B) Net domestic product (NDP) is a smaller dollar amount than GDP. 
C) Personal income includes transfer payments. 
D) b and c 
E) a, b, and c

Question 2

Look at the following data: GDP = 1,150 billion; investment = $200 billion; exports = $55 billion; government purchases = $145 billion; consumption = $850 billion. What does import spending equal?

Accepted Answer

A) $100 billion 
B) $370 billion 
C) $200 billion 
D) $430 billion 
E) There is not enough information provided to answer this question. 
A) $100 billion 
B) $370 billion 
C) $200 billion 
D) $430 billion 
E) There is not enough information provided to answer this question.

Question 3

Suppose the total market value of all final goods and services produced in economy X this year is $4 million. Of the $4 million worth of goods and services, $3 million is sold and $1 million is held in inventory. For this year, the GDP for economy X is

Accepted Answer

A) $4 million. 
B) $3 million. 
C) $1 million. 
D) $7 million. 
E) none of the above 
A) $4 million. 
B) $3 million. 
C) $1 million. 
D) $7 million. 
E) none of the above

Question 4

What is the proper sequence of the phases of a business cycle?

Accepted Answer

A) peak, contraction, trough, expansion, recovery 
B) peak, contraction, recovery, trough, expansion 
C) peak, contraction, trough, recovery, expansion 
D) contraction, peak, trough, recovery, expansion 
E) recovery, trough, peak, expansion, contraction 
A) peak, contraction, trough, expansion, recovery 
B) peak, contraction, recovery, trough, expansion 
C) peak, contraction, trough, recovery, expansion 
D) contraction, peak, trough, recovery, expansion 
E) recovery, trough, peak, expansion, contraction

Question 5

Country A has a higher GDP than country B. What does this mean?

Accepted Answer

A) It means that on a per-capita basis the residents of country A are relatively better off (in terms of the goods and services they have available to them) than the residents of country B. 
B) It means that on a per-capita basis the residents of country A are richer than the residents of country B. 
C) It means that more goods and services were produced in country A than country B. 
D) It means that the total market value of the final goods and services produced in country A is greater than the total market value of the final goods and services produced in country B. 
E) a and d 
A) It means that on a per-capita basis the residents of country A are relatively better off (in terms of the goods and services they have available to them) than the residents of country B. 
B) It means that on a per-capita basis the residents of country A are richer than the residents of country B. 
C) It means that more goods and services were produced in country A than country B. 
D) It means that the total market value of the final goods and services produced in country A is greater than the total market value of the final goods and services produced in country B. 
E) a and d

Question 6

Suppose that nondurable goods spending is $200 billion, durable goods spending is $400 billion, new residential housing spending is $500 billion, and spending on services is $700 billion. What does consumption equal?

Accepted Answer

A) $600 billion 
B) $1,100 billion 
C) $1,800 billion 
D) $1,300 billion 
E) There is not enough information to answer this question. 
A) $600 billion 
B) $1,100 billion 
C) $1,800 billion 
D) $1,300 billion 
E) There is not enough information to answer this question.

Question 7

Corporate profits is the largest category of national income.

Accepted Answer

A) True 
 B)False

Question 8

Purchases of new residential housing are considered investment, for purposes of computing GDP.

Accepted Answer

A) True 
 B)False

Question 9

The interest income received by U.S. households and government minus the interest they paid out is termed net interest.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is false?

Accepted Answer

A) Domestic income is the total income earned by the people and businesses within a country's borders. 
B) National income is the total income earned by U.S.citizens and businesses, no matter where they reside or are located. 
C) Corporate profits is the largest component of national income. 
D) National income = compensation of employees + proprietors' income + corporate profits + rental income + net interest. 
A) Domestic income is the total income earned by the people and businesses within a country's borders. 
B) National income is the total income earned by U.S.citizens and businesses, no matter where they reside or are located. 
C) Corporate profits is the largest component of national income. 
D) National income = compensation of employees + proprietors' income + corporate profits + rental income + net interest.

Question 11

A business cycle refers to the

Accepted Answer

A) continued expansion in Real GDP. 
B) recurrent swings (up and down) in Real GDP. 
C) continued decline in Real GDP. 
D) period when Real GDP grows at unusually high rates. 
E) none of the above 
A) continued expansion in Real GDP. 
B) recurrent swings (up and down) in Real GDP. 
C) continued decline in Real GDP. 
D) period when Real GDP grows at unusually high rates. 
E) none of the above

Question 12

Exhibit 7-1
  
-Refer to Exhibit 7-1. What is the value of personal income?

Accepted Answer

A) $4,252 
B) $4,388 
C) $5,072 
D) $3,996 
E) $4,207 
A) $4,252 
B) $4,388 
C) $5,072 
D) $3,996 
E) $4,207

Question 13

To derive net domestic product (NDP) from gross domestic product (GDP), we must subtract ________________ from GDP.

Accepted Answer

A) the capital consumption allowance 
B) gross private domestic investment 
C) imports 
D) inventory investment 
E) the statistical discrepancy 
A) the capital consumption allowance 
B) gross private domestic investment 
C) imports 
D) inventory investment 
E) the statistical discrepancy

Question 14

In the calculation of national income, dividends paid to stockholders are part of

Accepted Answer

A) compensation of employees. 
B) proprietors' income. 
C) rental income. 
D) net interest. 
E) corporate profits. 
A) compensation of employees. 
B) proprietors' income. 
C) rental income. 
D) net interest. 
E) corporate profits.

Question 15

Which of the following is omitted from GDP calculations?

Accepted Answer

A) sales of used goods 
B) certain nonmarket goods and services 
C) legal and illegal underground activities 
D) transfer payments 
E) all of the above 
A) sales of used goods 
B) certain nonmarket goods and services 
C) legal and illegal underground activities 
D) transfer payments 
E) all of the above

Question 16

What does annual economic growth refer to?

Accepted Answer

A) annual increases in GDP 
B) annual increases in consumption spending 
C) annual increases in investment spending 
D) annual increases in Real GDP 
E) none of the above 
A) annual increases in GDP 
B) annual increases in consumption spending 
C) annual increases in investment spending 
D) annual increases in Real GDP 
E) none of the above

Question 17

"Economic growth" has occurred if

Accepted Answer

A) inflation rate between this year and last year is zero or less. 
B) GDP this year exceeds the Real GDP this year. 
C) unemployment rate this year is above the natural rate of unemployment. 
D) Real GDP this year is greater than Real GDP last year. 
A) inflation rate between this year and last year is zero or less. 
B) GDP this year exceeds the Real GDP this year. 
C) unemployment rate this year is above the natural rate of unemployment. 
D) Real GDP this year is greater than Real GDP last year.

Question 18

In the definition of GDP, the words "total market value" refer to total

Accepted Answer

A) dollar value at base prices. 
B) dollar value at current prices. 
C) subjective value. 
D) objective value. 
E) a and d 
A) dollar value at base prices. 
B) dollar value at current prices. 
C) subjective value. 
D) objective value. 
E) a and d

Question 19

Consumption expenditures in the U.S. usually account for approximately __________ percent of GDP.

Accepted Answer

A) 40 
B) 50 
C) 60 
D) 70 
E) 80 
A) 40 
B) 50 
C) 60 
D) 70 
E) 80

Question 20

Which of the following would not be included in the measurement of GDP?

Accepted Answer

A) a bill from a car mechanic 
B) wages of a card dealer working in a Las Vegas casino 
C) commissions of a stockbroker 
D) the increased value of shares of stock 
E) c and d 
A) a bill from a car mechanic 
B) wages of a card dealer working in a Las Vegas casino 
C) commissions of a stockbroker 
D) the increased value of shares of stock 
E) c and d

Exam 7: Macroeconomic Measurements Part II Gdp and Real Gdp

Which of the following statements is true?

Look at the following data: GDP = 1,150 billion; investment = $200 billion; exports = $55 billion; government purchases = $145 billion; consumption = $850 billion. What does import spending equal?

Suppose the total market value of all final goods and services produced in economy X this year is $4 million. Of the $4 million worth of goods and services, $3 million is sold and $1 million is held in inventory. For this year, the GDP for economy X is

What is the proper sequence of the phases of a business cycle?

Country A has a higher GDP than country B. What does this mean?

Suppose that nondurable goods spending is $200 billion, durable goods spending is $400 billion, new residential housing spending is $500 billion, and spending on services is $700 billion. What does consumption equal?

Corporate profits is the largest category of national income.

Purchases of new residential housing are considered investment, for purposes of computing GDP.

The interest income received by U.S. households and government minus the interest they paid out is termed net interest.

Which of the following statements is false?

A business cycle refers to the

Exhibit 7-1 -Refer to Exhibit 7-1. What is the value of personal income?

To derive net domestic product (NDP) from gross domestic product (GDP), we must subtract ________________ from GDP.

In the calculation of national income, dividends paid to stockholders are part of

Which of the following is omitted from GDP calculations?

What does annual economic growth refer to?

"Economic growth" has occurred if

In the definition of GDP, the words "total market value" refer to total

Consumption expenditures in the U.S. usually account for approximately __________ percent of GDP.

Which of the following would not be included in the measurement of GDP?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government Five Topics Considered

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