Question 1

Investment includes:

Accepted Answer

A) an increase in corporate stock volumes during the year. 
B) the purchase of medical supplies by the National Guard. 
C) an increase in government purchases. 
D) an increase in business inventories. 
A) an increase in corporate stock volumes during the year. 
B) the purchase of medical supplies by the National Guard. 
C) an increase in government purchases. 
D) an increase in business inventories.

Question 2

Government expenditures for Social Security and unemployment insurance are, for GDP accounting purposes, considered:

Accepted Answer

A) transfers, and are included in government spending as part of GDP. 
B) transfers, and are not included in government spending as part of GDP. 
C) purchases, and are included in government spending as part of GDP. 
D) purchases, and are not included in government spending as part of GDP. 
A) transfers, and are included in government spending as part of GDP. 
B) transfers, and are not included in government spending as part of GDP. 
C) purchases, and are included in government spending as part of GDP. 
D) purchases, and are not included in government spending as part of GDP.

Question 3

The relationship between real and nominal interest rates can be expressed by:

Accepted Answer

A) real interest rate = nominal interest rate + inflation. 
B) real interest rate = inflation - nominal interest rate . 
C) real interest rate = nominal interest rate - inflation. 
D) The real interest rate cannot be calculated. 
A) real interest rate = nominal interest rate + inflation. 
B) real interest rate = inflation - nominal interest rate . 
C) real interest rate = nominal interest rate - inflation. 
D) The real interest rate cannot be calculated.

Question 4

Suppose the value of your home increases from $100,000 to $125 ,000.If you continue to live in your home, the increase in its value:

Accepted Answer

A) adds nothing to GDP. 
B) increases GDP by $25,000. 
C) increases GDP by $100,000. 
D) increases GDP by $125,000. 
A) adds nothing to GDP. 
B) increases GDP by $25,000. 
C) increases GDP by $100,000. 
D) increases GDP by $125,000.

Question 5

If the PCE deflator increased from 88 to 99 in one year, the rate of consumer inflation is:

Accepted Answer

A) 10.0%. 
B) 11.0%. 
C) 12.5%. 
D) 13.4%. 
A) 10.0%. 
B) 11.0%. 
C) 12.5%. 
D) 13.4%.

Question 6

How does stock differ from flow?

Accepted Answer

A) A flow concept has meaning over a specified period of time, while a stock concept is a value at a point in time. 
B) A flow concept is a value at a point in time, while a stock concept has meaning over a specified period of time. 
C) They do not differ; both flow and stock concepts have meaning only over a specified period of time. 
D) The do not differ; both flow and stock concepts are values at a point in time. 
A) A flow concept has meaning over a specified period of time, while a stock concept is a value at a point in time. 
B) A flow concept is a value at a point in time, while a stock concept has meaning over a specified period of time. 
C) They do not differ; both flow and stock concepts have meaning only over a specified period of time. 
D) The do not differ; both flow and stock concepts are values at a point in time.

Question 7

Double counting in the national income accounts will be avoided if GDP is computed by totaling all:

Accepted Answer

A) sales of final output. 
B) sales of final output and intermediate goods. 
C) sales. 
D) production costs. 
A) sales of final output. 
B) sales of final output and intermediate goods. 
C) sales. 
D) production costs.

Question 8

Because official price indexes do not account for some improvements in product quality, official estimates of real GDP overestimate the true increase in real output.

Accepted Answer

A) True 
 B)False

Question 9

If the nominal interest rate is 2% and the real interest rate is 1%, inflation is:

Accepted Answer

A) -1%. 
B) 0% 
C) 1%. 
D) 2%. 
A) -1%. 
B) 0% 
C) 1%. 
D) 2%.

Question 10

If there are only two goods in the economy, one whose price rises by 1% and one by 6%, it is possible that inflation is:

Accepted Answer

A) 1% 
B) 2% 
C) 6%. 
D) 7% 
A) 1% 
B) 2% 
C) 6%. 
D) 7%

Question 11

An increase in nominal GDP implies an increase in:

Accepted Answer

A) the price level. 
B) output. 
C) both the price level and output. 
D) either the price level or output or both. 
A) the price level. 
B) output. 
C) both the price level and output. 
D) either the price level or output or both.

Question 12

Suppose both nominal GDP and real GDP increase.It can be concluded that:

Accepted Answer

A) output rose. 
B) the price level rose. 
C) both output and the price level rose. 
D) both output and the price level rose, but output rose at a faster rate. 
A) output rose. 
B) the price level rose. 
C) both output and the price level rose. 
D) both output and the price level rose, but output rose at a faster rate.

Question 13

GDP is a:

Accepted Answer

A) stock concept and refers to the market value of all output sold. 
B) stock concept and refers to the market value of final output. 
C) flow concept and refers to the market value of all output sold. 
D) flow concept and refers to the market value of final output. 
A) stock concept and refers to the market value of all output sold. 
B) stock concept and refers to the market value of final output. 
C) flow concept and refers to the market value of all output sold. 
D) flow concept and refers to the market value of final output.

Question 14

Which of the following is not a part of U.S.GDP?

Accepted Answer

A) The payments for an insurance policy on an old BMW sold by a U.S.company 
B) The value of a BMW imported from Germany 
C) The value of a BMW produced in the United States 
D) The commissions earned by a BMW dealership in the United States 
A) The payments for an insurance policy on an old BMW sold by a U.S.company 
B) The value of a BMW imported from Germany 
C) The value of a BMW produced in the United States 
D) The commissions earned by a BMW dealership in the United States

Question 15

If there are only two goods in the economy, one whose price rises by 3% and one by 5%, it is possible that inflation is:

Accepted Answer

A) 3% 
B) 4% 
C) 5%. 
D) 7% 
A) 3% 
B) 4% 
C) 5%. 
D) 7%

Question 16

Refer to the table shown.   What are the economy's net exports?

Accepted Answer

A) -$0.4 trillion 
B) $0.2 trillion 
C) $1.0 trillion 
D) -$0.2 trillion 
A) -$0.4 trillion 
B) $0.2 trillion 
C) $1.0 trillion 
D) -$0.2 trillion

Question 17

Aggregate income is the sum of:

Accepted Answer

A) employee compensation and profits. 
B) employee compensation, rent, and profits. 
C) employee compensation, rent, profits, and interest. 
D) employee compensation, rent, profits, interest, and transfer payments. 
A) employee compensation and profits. 
B) employee compensation, rent, and profits. 
C) employee compensation, rent, profits, and interest. 
D) employee compensation, rent, profits, interest, and transfer payments.

Question 18

What is GDP using the table shown?

Accepted Answer

A) 5,570 
B) 5,600 
C) 6,050 
D) 6,320 
A) 5,570 
B) 5,600 
C) 6,050 
D) 6,320

Question 19

Net exports is the key to the equality of aggregate expenditures and aggregate income.

Accepted Answer

A) True 
 B)False

Question 20

In what category is the purchase of a computer by a person for household use in national income accounting?

Accepted Answer

A) It is counted as consumption 
B) It is counted as consumption if the computer was manufactured in the United States; otherwise it is ignored 
C) It is included as part of investment 
D) The purchase is not included at all, but the value of services the computer gives is included in consumption each year 
A) It is counted as consumption 
B) It is counted as consumption if the computer was manufactured in the United States; otherwise it is ignored 
C) It is included as part of investment 
D) The purchase is not included at all, but the value of services the computer gives is included in consumption each year

Exam 25: Measuring and Describing the Aggregate Economy

Investment includes:

Government expenditures for Social Security and unemployment insurance are, for GDP accounting purposes, considered:

The relationship between real and nominal interest rates can be expressed by:

Suppose the value of your home increases from $100,000 to $125 ,000.If you continue to live in your home, the increase in its value:

If the PCE deflator increased from 88 to 99 in one year, the rate of consumer inflation is:

How does stock differ from flow?

Double counting in the national income accounts will be avoided if GDP is computed by totaling all:

Because official price indexes do not account for some improvements in product quality, official estimates of real GDP overestimate the true increase in real output.

If the nominal interest rate is 2% and the real interest rate is 1%, inflation is:

If there are only two goods in the economy, one whose price rises by 1% and one by 6%, it is possible that inflation is:

An increase in nominal GDP implies an increase in:

Suppose both nominal GDP and real GDP increase.It can be concluded that:

GDP is a:

Which of the following is not a part of U.S.GDP?

If there are only two goods in the economy, one whose price rises by 3% and one by 5%, it is possible that inflation is:

Refer to the table shown. What are the economy's net exports?

Aggregate income is the sum of:

What is GDP using the table shown?

Net exports is the key to the equality of aggregate expenditures and aggregate income.

In what category is the purchase of a computer by a person for household use in national income accounting?

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Economic Growth, Business Cycles, and Unemployment

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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