Question 1

Which of the following is NOT an example of private investment expenditure?

Accepted Answer

A)  new plants and equipment added during the year 
B)  new houses built during the year 
C)  using credit cards to purchase durable and nondurable goods 
D)  increases in inventories on goods produced during the year 
A)  new plants and equipment added during the year 
B)  new houses built during the year 
C)  using credit cards to purchase durable and nondurable goods 
D)  increases in inventories on goods produced during the year

Question 2

Net investment is

Accepted Answer

A)  what is left over from total new private investment after depreciation. 
B)  the total amount of private investment purchases, whether new or previously existing. 
C)  the total amount of new private investment purchases. 
D)  gross investment plus depreciation. 
A)  what is left over from total new private investment after depreciation. 
B)  the total amount of private investment purchases, whether new or previously existing. 
C)  the total amount of new private investment purchases. 
D)  gross investment plus depreciation.

Question 3

Explain the difference between U.S. GDP and U.S. GNP.

Accepted Answer

U.S.GDP is the total market value of all

Question 4

Which of the following is NOT a component of gross domestic product?

Accepted Answer

A)  net exports 
B)  government purchases 
C)  purchases by consumers of used goods 
D)  purchases by consumers of finished goods 
A)  net exports 
B)  government purchases 
C)  purchases by consumers of used goods 
D)  purchases by consumers of finished goods

Question 5

As a component of GDP, consumption expenditures refers to purchases by consumers of currently produced goods and services.

Accepted Answer

A) True 
 B)False

Question 6

Suppose that a tire factory produces $825,000 of output and causes $70,000 worth of pollution as a result of production. The tire factory's official contribution to GDP would be ________ and its overall contribution to society would be ________.

Accepted Answer

A)  $825,000; $895,000 
B)  $895,000; $825,000 
C)  $825,000; $755,000 
D)  $755,000; $825,000 
A)  $825,000; $895,000 
B)  $895,000; $825,000 
C)  $825,000; $755,000 
D)  $755,000; $825,000

Question 7

Imagine that an economy produces two goods, flashlights and fishing lures. In 2011, the economy produced 100 flashlights and 50 fishing lures, and the prices of flashlights and fishing lures were $5 and $11, respectively. In 2012, the economy produced 120 flashlights and 60 fishing lures, and the prices of flashlights and fishing lures were $7 and $14, respectively. respectively. What happened to nominal GDP from 2011 to 2012? What happened to real GDP?

Accepted Answer

Nominal GDP in 2011 was (100 x 5) + (50

Question 8

GDP understates the value of output produced by an economy because it

Accepted Answer

A)  includes transactions that do not take place in organized markets, such as home-cooked meals. 
B)  excludes value added from the underground economy, such as tips taken "under the table." 
C)  includes environmental degradation caused by increased output production. 
D)  excludes the value of the wages and benefits of government employees. 
A)  includes transactions that do not take place in organized markets, such as home-cooked meals. 
B)  excludes value added from the underground economy, such as tips taken "under the table." 
C)  includes environmental degradation caused by increased output production. 
D)  excludes the value of the wages and benefits of government employees.

Question 9

If Cassie's Coffee House purchases 42 cents worth of ingredients and spends 28 cents on wages per cup of coffee to produce an 89 cent cup of coffee, then Cassie's Coffee House's value added per cup of coffee is

Accepted Answer

A)  19 cents. 
B)  28 cents. 
C)  47 cents. 
D)  61 cents. 
A)  19 cents. 
B)  28 cents. 
C)  47 cents. 
D)  61 cents.

Question 10

Recall the Application about the size of Wal-Mart to answer the following question(s). During 2008, Wal-Mart's sales were approximately $374 billion, or roughly 2.6 percent of U.S. GDP, and its cost of sales was $286 billion.
-According to this Application, why is the value of Wal-Mart's 2008 sales NOT an accurate measurement of its actual sales impact on the U.S. economy?

Accepted Answer

A)  The sales figure did not account for chain-weighted inflation measurements. 
B)  The sales figure includes the value of purchases from other firms. 
C)  The sales figure did not take into account the recession of 2008. 
D)  The sales figure was in nominal, not real, dollars.. 
A)  The sales figure did not account for chain-weighted inflation measurements. 
B)  The sales figure includes the value of purchases from other firms. 
C)  The sales figure did not take into account the recession of 2008. 
D)  The sales figure was in nominal, not real, dollars..

Question 11

To an economist, "investment" in the GDP accounts means purchases of new final goods and services by firms.

Accepted Answer

A) True 
 B)False

Question 12

Net exports are total imports minus total exports.

Accepted Answer

A) True 
 B)False

Question 13

The period of time in which the level of output moves from a trough to a peak is called a

Accepted Answer

A)  recovery. 
B)  depression. 
C)  contraction. 
D)  plateau. 
A)  recovery. 
B)  depression. 
C)  contraction. 
D)  plateau.

Question 14

Personal income and personal disposable income refer to payments ultimately flowing to

Accepted Answer

A)  firms. 
B)  households. 
C)  governments. 
D)  foreigners. 
A)  firms. 
B)  households. 
C)  governments. 
D)  foreigners.

Question 15

Net exports include goods produced

Accepted Answer

A)  domestically that are sold domestically, less goods produced domestically that are sold abroad. 
B)  domestically that are sold abroad, less goods produced domestically that are sold domestically. 
C)  domestically that are sold abroad, less goods that are produced abroad that are sold domestically. 
D)  abroad that are sold domestically, less goods that are produced domestically that are sold abroad. 
A)  domestically that are sold domestically, less goods produced domestically that are sold abroad. 
B)  domestically that are sold abroad, less goods produced domestically that are sold domestically. 
C)  domestically that are sold abroad, less goods that are produced abroad that are sold domestically. 
D)  abroad that are sold domestically, less goods that are produced domestically that are sold abroad.

Question 16

If an economy produced 60 pounds of sushi at $12 per pound and 15 gallons of sake at $30 per gallon, the total value of these goods and services would be

Accepted Answer

A)  $450. 
B)  $720. 
C)  $1,170. 
D)  $2,700. 
A)  $450. 
B)  $720. 
C)  $1,170. 
D)  $2,700.

Question 17

For the purposes of GDP accounting, government purchases include

Accepted Answer

A)  the purchases of new military equipment. 
B)  social security payments. 
C)  direct transfer payments by the government to other individuals. 
D)  welfare payments. 
A)  the purchases of new military equipment. 
B)  social security payments. 
C)  direct transfer payments by the government to other individuals. 
D)  welfare payments.

Question 18

We ADD to the GDP when goods produced abroad are sold in the United States.

Accepted Answer

A) True 
 B)False

Question 19

Intermediate goods are not counted as part of gross domestic product.

Accepted Answer

A) True 
 B)False

Question 20

A chain-weighted index

Accepted Answer

A)  is used to understate the rate of inflation. 
B)  uses neighboring years' data to calculate changes in nominal GDP. 
C)  calculates changes in prices by using an average of base years from neighboring years to obtain a more accurate measure of real GDP growth. 
D)  is a useful tool for determining which fence to purchase. 
A)  is used to understate the rate of inflation. 
B)  uses neighboring years' data to calculate changes in nominal GDP. 
C)  calculates changes in prices by using an average of base years from neighboring years to obtain a more accurate measure of real GDP growth. 
D)  is a useful tool for determining which fence to purchase.

Which of the following is NOT an example of private investment expenditure?

Net investment is

Explain the difference between U.S. GDP and U.S. GNP.

Which of the following is NOT a component of gross domestic product?

As a component of GDP, consumption expenditures refers to purchases by consumers of currently produced goods and services.

Suppose that a tire factory produces $825,000 of output and causes $70,000 worth of pollution as a result of production. The tire factory's official contribution to GDP would be and its overall contribution to society would be .

GDP understates the value of output produced by an economy because it

If Cassie's Coffee House purchases 42 cents worth of ingredients and spends 28 cents on wages per cup of coffee to produce an 89 cent cup of coffee, then Cassie's Coffee House's value added per cup of coffee is

To an economist, "investment" in the GDP accounts means purchases of new final goods and services by firms.

Net exports are total imports minus total exports.

The period of time in which the level of output moves from a trough to a peak is called a

Personal income and personal disposable income refer to payments ultimately flowing to

Net exports include goods produced

If an economy produced 60 pounds of sushi at $12 per pound and 15 gallons of sake at $30 per gallon, the total value of these goods and services would be

For the purposes of GDP accounting, government purchases include

We ADD to the GDP when goods produced abroad are sold in the United States.

Intermediate goods are not counted as part of gross domestic product.

A chain-weighted index

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow?

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 5: Measuring a Nation's Production and Income

Which of the following is NOT an example of private investment expenditure?

Net investment is

Explain the difference between U.S. GDP and U.S. GNP.

Which of the following is NOT a component of gross domestic product?

As a component of GDP, consumption expenditures refers to purchases by consumers of currently produced goods and services.

Suppose that a tire factory produces $825,000 of output and causes $70,000 worth of pollution as a result of production. The tire factory's official contribution to GDP would be ________ and its overall contribution to society would be ________.

GDP understates the value of output produced by an economy because it

If Cassie's Coffee House purchases 42 cents worth of ingredients and spends 28 cents on wages per cup of coffee to produce an 89 cent cup of coffee, then Cassie's Coffee House's value added per cup of coffee is

To an economist, "investment" in the GDP accounts means purchases of new final goods and services by firms.

Net exports are total imports minus total exports.

The period of time in which the level of output moves from a trough to a peak is called a

Personal income and personal disposable income refer to payments ultimately flowing to

Net exports include goods produced

If an economy produced 60 pounds of sushi at $12 per pound and 15 gallons of sake at $30 per gallon, the total value of these goods and services would be

For the purposes of GDP accounting, government purchases include

We ADD to the GDP when goods produced abroad are sold in the United States.

Intermediate goods are not counted as part of gross domestic product.

A chain-weighted index

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow?

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Suppose that a tire factory produces $825,000 of output and causes $70,000 worth of pollution as a result of production. The tire factory's official contribution to GDP would be and its overall contribution to society would be .