Question 1

The sum of durable goods, nondurable goods, and services equals

Accepted Answer

A) investment. 
B) fixed investment. 
C) government purchases. 
D) consumption. 
E) net exports. 
A) investment. 
B) fixed investment. 
C) government purchases. 
D) consumption. 
E) net exports.

Question 2

GDP includes some nonmarket goods.

Accepted Answer

A) True 
 B)False

Question 3

Suppose that fixed investment is $480 billion and (total) investment is $630 billion. What does inventory investment equal?

Accepted Answer

A) $150 billion 
B) $550 billion 
C) $630 billion 
D) $1,110 billion 
E) There is not enough information to answer this question. 
A) $150 billion 
B) $550 billion 
C) $630 billion 
D) $1,110 billion 
E) There is not enough information to answer this question.

Question 4

Compensation of employees is the largest component of GDP when using the expenditure approach to calculate GDP.

Accepted Answer

A) True 
 B)False

Question 5

Underground activities are not counted in GDP because

Accepted Answer

A) some underground activities are illegal and the government doesn't want to place, for instance, drug dealers on an equal footing with small businesses. 
B) there are no written records of underground activities. 
C) of a decision made in the 1930s and no one has gotten around to changing it yet. 
D) although it is possible to accurately measure underground activities, it is harder than measuring above-ground activities because with the latter, one doesn't have to dig as deep. 
A) some underground activities are illegal and the government doesn't want to place, for instance, drug dealers on an equal footing with small businesses. 
B) there are no written records of underground activities. 
C) of a decision made in the 1930s and no one has gotten around to changing it yet. 
D) although it is possible to accurately measure underground activities, it is harder than measuring above-ground activities because with the latter, one doesn't have to dig as deep.

Question 6

Increases in import spending _____________________, ceteris paribus.

Accepted Answer

A) raise GDP 
B) lower GDP 
C) are always equal to decreases in exports 
D) may raise or lower GDP 
A) raise GDP 
B) lower GDP 
C) are always equal to decreases in exports 
D) may raise or lower GDP

Question 7

Which of the following goods is an intermediate good?

Accepted Answer

A) lettuce that a restaurant buys to put on sandwiches 
B) tires that a car company buys to put on the cars it produces 
C) a television set that Mai buys to put in her college dorm room 
D) a and b 
E) b and c 
A) lettuce that a restaurant buys to put on sandwiches 
B) tires that a car company buys to put on the cars it produces 
C) a television set that Mai buys to put in her college dorm room 
D) a and b 
E) b and c

Question 8

Exhibit 7-1
  
-Refer to Exhibit 7-1. What is the value of net domestic product?

Accepted Answer

A) $5,840 
B) $5,731 
C) $5,650 
D) $5,767 
E) $6,637 
A) $5,840 
B) $5,731 
C) $5,650 
D) $5,767 
E) $6,637

Question 9

Disposable income is

Accepted Answer

A) equal to GDP minus the capital consumption allowance. 
B) that portion of personal income that can be used for consumption and saving. 
C) the sum of all payments to suppliers of the factors of production. 
D) equal to national income. 
E) another term for personal income. 
A) equal to GDP minus the capital consumption allowance. 
B) that portion of personal income that can be used for consumption and saving. 
C) the sum of all payments to suppliers of the factors of production. 
D) equal to national income. 
E) another term for personal income.

Question 10

Exhibit 7-4
Economic Data for Country A
  
-Refer to Exhibit 7-4. Did Country A experience a recession (based on the standard definition) in 2019?

Accepted Answer

A) Yes, because its Real GDP declined during two consecutive quarters in 2019. 
B) No, because its Real GDP did not decline during three consecutive quarters in 2019. 
C) Yes, because its Real GDP was lower at the end of the year than it was at the beginning of the year. 
D) This information cannot be determined because the determination of a recession is based upon GDP not Real GDP. 
A) Yes, because its Real GDP declined during two consecutive quarters in 2019. 
B) No, because its Real GDP did not decline during three consecutive quarters in 2019. 
C) Yes, because its Real GDP was lower at the end of the year than it was at the beginning of the year. 
D) This information cannot be determined because the determination of a recession is based upon GDP not Real GDP.

Question 11

Look at the following data: personal income = $4,900 billion; personal taxes = $900 billion; transfer payments = $980 billion. What is disposable income?

Accepted Answer

A) $3,200 billion 
B) $4,000 billion 
C) $4,980 billion 
D) $1,880 billion 
E) There is not enough information to answer the question. 
A) $3,200 billion 
B) $4,000 billion 
C) $4,980 billion 
D) $1,880 billion 
E) There is not enough information to answer the question.

Question 12

Suppose there are five goods in the economy, A-E. The current-year quantity of each is 10A, 20B, 30C, 40D, and 50E. Current-year prices are $1 for each unit of A, $2 for each unit of B, $3 for each unit of C, $4 for each unit of D, and $5 for each unit of E. Base-year prices are $1 for each good. Real GDP in the current year equals _________ and GDP equals _________.

Accepted Answer

A) $550; $150 
B) $130; $530 
C) $150; $550 
D) $530; $130 
E) none of the above 
A) $550; $150 
B) $130; $530 
C) $150; $550 
D) $530; $130 
E) none of the above

Question 13

The typical U.S. business cycle, measured peak to peak, lasts approximately

Accepted Answer

A) 4 to 5 years. 
B) 8 to 10 years. 
C) 1 to 3 years. 
D) 6 months to 2 years. 
A) 4 to 5 years. 
B) 8 to 10 years. 
C) 1 to 3 years. 
D) 6 months to 2 years.

Question 14

Net interest is the interest paid out by US households and government minus the interest income they received.

Accepted Answer

A) True 
 B)False

Question 15

In the United States, which is the largest dollar figure?

Accepted Answer

A) disposable personal income 
B) gross domestic product 
C) per-capita GDP 
D) personal income 
A) disposable personal income 
B) gross domestic product 
C) per-capita GDP 
D) personal income

Question 16

Macroeconomists define consumption as

Accepted Answer

A) purchases by the business sector. 
B) wearing away and breakdown of capital goods. 
C) the difference between imports and exports. 
D) purchases by the household sector. 
A) purchases by the business sector. 
B) wearing away and breakdown of capital goods. 
C) the difference between imports and exports. 
D) purchases by the household sector.

Question 17

Which of the following statements is true?

Accepted Answer

A) The main items that comprise indirect business taxes include excise taxes, income taxes, and property taxes. 
B) Capital consumption allowance is also known as depreciation. 
C) A sales tax is an example of an indirect business tax. 
D) b and c 
E) a, b, and c 
A) The main items that comprise indirect business taxes include excise taxes, income taxes, and property taxes. 
B) Capital consumption allowance is also known as depreciation. 
C) A sales tax is an example of an indirect business tax. 
D) b and c 
E) a, b, and c

Question 18

Suppose investment is equal to $950 billion, purchases of newly produced capital goods is $670 billion, and changes in business inventories is -$120 billion. What does purchases of new residential housing equal?

Accepted Answer

A) $1,500 billion 
B) $100 billion 
C) $160 billion 
D) $400 billion 
A) $1,500 billion 
B) $100 billion 
C) $160 billion 
D) $400 billion

Question 19

Net exports must always be a positive amount.

Accepted Answer

A) True 
 B)False

Question 20

Look at the following data: durable goods = $300 billion; nondurable goods = $450 billion; services = $900 billion; fixed investment + inventory investment = $200 billion; government purchases = $400 billion; exports = $40 billion; imports = $85 billion. GDP is equal to

Accepted Answer

A) $2,205 billion. 
B) $2,375 billion. 
C) $1,855 billion. 
D) $1,010 billion. 
E) There is not enough information to answer the question. 
A) $2,205 billion. 
B) $2,375 billion. 
C) $1,855 billion. 
D) $1,010 billion. 
E) There is not enough information to answer the question.

Exam 7: Macroeconomic Measurements Part II Gdp and Real Gdp

The sum of durable goods, nondurable goods, and services equals

GDP includes some nonmarket goods.

Suppose that fixed investment is $480 billion and (total) investment is $630 billion. What does inventory investment equal?

Compensation of employees is the largest component of GDP when using the expenditure approach to calculate GDP.

Underground activities are not counted in GDP because

Increases in import spending _____________________, ceteris paribus.

Which of the following goods is an intermediate good?

Exhibit 7-1 -Refer to Exhibit 7-1. What is the value of net domestic product?

Disposable income is

Exhibit 7-4 Economic Data for Country A -Refer to Exhibit 7-4. Did Country A experience a recession (based on the standard definition) in 2019?

Look at the following data: personal income = $4,900 billion; personal taxes = $900 billion; transfer payments = $980 billion. What is disposable income?

The typical U.S. business cycle, measured peak to peak, lasts approximately

Net interest is the interest paid out by US households and government minus the interest income they received.

In the United States, which is the largest dollar figure?

Macroeconomists define consumption as

Which of the following statements is true?

Suppose investment is equal to $950 billion, purchases of newly produced capital goods is $670 billion, and changes in business inventories is -$120 billion. What does purchases of new residential housing equal?

Net exports must always be a positive amount.

Look at the following data: durable goods = $300 billion; nondurable goods = $450 billion; services = $900 billion; fixed investment + inventory investment = $200 billion; government purchases = $400 billion; exports = $40 billion; imports = $85 billion. GDP is equal to

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