Question 1

In the circular flow model, the flow of dollars from firms to households is paid and the flow of dollars from households to firms is paid .

Accepted Answer

A) as wages and profits; for goods and services 
B) for value added; as imputed values 
C) in current dollars; in constant dollars 
D) as interest and dividends; for depreciation and taxes 
A) as wages and profits; for goods and services 
B) for value added; as imputed values 
C) in current dollars; in constant dollars 
D) as interest and dividends; for depreciation and taxes

Question 2

The underground economy:

Accepted Answer

A) is included in the latest GDP accounts. 
B) includes only illegal activities. 
C) includes domestic workers for whom Social Security tax is not collected. 
D) excludes the illegal drug trade. 
A) is included in the latest GDP accounts. 
B) includes only illegal activities. 
C) includes domestic workers for whom Social Security tax is not collected. 
D) excludes the illegal drug trade.

Question 3

In 2010 in the United States, total government purchases per person (in current dollars) amounted to approximately:

Accepted Answer

A) $1,900. 
B) $9,700. 
C) $13,500. 
D) $25,600. 
A) $1,900. 
B) $9,700. 
C) $13,500. 
D) $25,600.

Question 4

Assume that a bakery hires more workers and pays them wages and that the workers produce more bread. GDP increases in all of the following cases except when the bread:

Accepted Answer

A.is sold to households.
B.is

Question 5

If an increasing proportion of the adult population is retired, then the labor force participation rate:

Accepted Answer

A) will increase. 
B) will decrease. 
C) will remain constant. 
D) may increase, decrease, or remain constant. 
A) will increase. 
B) will decrease. 
C) will remain constant. 
D) may increase, decrease, or remain constant.

Question 6

An increase in the price of imported goods will show up in:

Accepted Answer

A) the CPI but not in the GDP deflator. 
B) the GDP deflator but not in the CPI. 
C) both the CPI and the GDP deflator. 
D) neither the CPI nor the GDP deflator. 
A) the CPI but not in the GDP deflator. 
B) the GDP deflator but not in the CPI. 
C) both the CPI and the GDP deflator. 
D) neither the CPI nor the GDP deflator.

Question 7

The total income of everyone in the economy is exactly equal to the total:

Accepted Answer

A) expenditure on the economy's output of goods and services. 
B) consumption expenditures of everyone in the economy. 
C) expenditures of all businesses in the economy. 
D) government expenditures. 
A) expenditure on the economy's output of goods and services. 
B) consumption expenditures of everyone in the economy. 
C) expenditures of all businesses in the economy. 
D) government expenditures.

Question 8

Net national product equals GDP:

Accepted Answer

A) plus net investment. 
B) minus net investment. 
C) plus depreciation. 
D) minus depreciation. 
A) plus net investment. 
B) minus net investment. 
C) plus depreciation. 
D) minus depreciation.

Question 9

National income differs from net national product by an amount called:

Accepted Answer

A) depreciation. 
B) indirect business taxes. 
C) a statistical discrepancy. 
D) net foreign factor income payments. 
A) depreciation. 
B) indirect business taxes. 
C) a statistical discrepancy. 
D) net foreign factor income payments.

Question 10

The CPI is determined by computing:

Accepted Answer

A) an average of prices of all goods and services. 
B) the price of a basket of goods and services that changes every year, relative to the same basket in a base year. 
C) the price of a fixed basket of goods and services, relative to the price of the same basket in a base year. 
D) nominal GDP relative to real GDP. 
A) an average of prices of all goods and services. 
B) the price of a basket of goods and services that changes every year, relative to the same basket in a base year. 
C) the price of a fixed basket of goods and services, relative to the price of the same basket in a base year. 
D) nominal GDP relative to real GDP.

Question 11

When a firm sells a product out of inventory, GDP:

Accepted Answer

A) increases. 
B) decreases. 
C) is not changed. 
D) increases or decreases, depending on the year the product was produced. 
A) increases. 
B) decreases. 
C) is not changed. 
D) increases or decreases, depending on the year the product was produced.

Question 12

Assume that the market basket of goods and services purchased in 2004 by the average family in the United States costs $14,000 in 2004 prices, whereas the same basket costs $21,000 in 2009 prices. However, the basket of goods and services actually purchased by the average family in 2009 costs $20,000 in 2009 prices, whereas this same basket would have cost $15,000 in 2004 prices. Given these data, a Paasche index for 2009 using 2004 prices would be:

Accepted Answer

A)  1.05. 
B) approximately 1.07. 
C) approximately 1.33. 
D) 1.50. 
A)  1.05. 
B) approximately 1.07. 
C) approximately 1.33. 
D) 1.50.

Question 13

Real GDP means the value of goods and services is measured in prices.

Accepted Answer

A) current 
B) actual 
C) constant 
D) average 
A) current 
B) actual 
C) constant 
D) average

Question 14

Nominal GDP measures the value of goods and services in prices, while real GDP measures the value of goods and services in prices.

Accepted Answer

A) foreign; domestic 
B) domestic; foreign 
C) current; constant 
D) constant; current 
A) foreign; domestic 
B) domestic; foreign 
C) current; constant 
D) constant; current

Question 15

Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure, called core inflation,

Accepted Answer

A) provides a real, rather than a nominal, rate of inflation. 
B) gives a better measure of ongoing, sustained price changes. 
C) is more consistent with measures of inflation used in other countries. 
D) fluctuates more than measures of inflation that include food and energy prices. 
A) provides a real, rather than a nominal, rate of inflation. 
B) gives a better measure of ongoing, sustained price changes. 
C) is more consistent with measures of inflation used in other countries. 
D) fluctuates more than measures of inflation that include food and energy prices.

Question 16

If 7 million workers are unemployed, 143 million workers are employed, and the adult population equals 200 million, then the unemployment rate equals approximately percent.

Accepted Answer

A) 3.5 
B) 4.7 
C) 4.9 
D) 7 
A) 3.5 
B) 4.7 
C) 4.9 
D) 7

Question 17

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $0.50 in 2009. If 10 apples and 5 oranges were purchased in 2002, and 5 apples and 10 oranges were purchased in 2009, the CPI for 2009, using 2002 as the base year, is:

Accepted Answer

A) 0.75. 
B) 0.80. 
C) 1. 
D) 1.25. 
A) 0.75. 
B) 0.80. 
C) 1. 
D) 1.25.

Question 18

In 2010 in the United States, the approximate percentage of GDP that was spent on consumption was:

Accepted Answer

A) 67 percent. 
B) 50 percent. 
C) 31 percent. 
D) 16 percent. 
A) 67 percent. 
B) 50 percent. 
C) 31 percent. 
D) 16 percent.

Question 19

If real GDP grew by 6 percent and population grew by 2 percent, then real GDP per person grew by approximately percent.

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 8 
A) 2 
B) 3 
C) 4 
D) 8

Question 20

GDP is all of the following except the total:

Accepted Answer

A) expenditure of everyone in the economy. 
B) income of everyone in the economy. 
C) expenditure on the economy's output of goods and services. 
D) output of the economy. 
A) expenditure of everyone in the economy. 
B) income of everyone in the economy. 
C) expenditure on the economy's output of goods and services. 
D) output of the economy.

In the circular flow model, the flow of dollars from firms to households is paid and the flow of dollars from households to firms is paid .

The underground economy:

In 2010 in the United States, total government purchases per person (in current dollars) amounted to approximately:

Assume that a bakery hires more workers and pays them wages and that the workers produce more bread. GDP increases in all of the following cases except when the bread:

If an increasing proportion of the adult population is retired, then the labor force participation rate:

An increase in the price of imported goods will show up in:

The total income of everyone in the economy is exactly equal to the total:

Net national product equals GDP:

National income differs from net national product by an amount called:

The CPI is determined by computing:

When a firm sells a product out of inventory, GDP:

Real GDP means the value of goods and services is measured in prices.

Nominal GDP measures the value of goods and services in prices, while real GDP measures the value of goods and services in prices.

Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure, called core inflation,

If 7 million workers are unemployed, 143 million workers are employed, and the adult population equals 200 million, then the unemployment rate equals approximately percent.

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $0.50 in 2009. If 10 apples and 5 oranges were purchased in 2002, and 5 apples and 10 oranges were purchased in 2009, the CPI for 2009, using 2002 as the base year, is:

In 2010 in the United States, the approximate percentage of GDP that was spent on consumption was:

If real GDP grew by 6 percent and population grew by 2 percent, then real GDP per person grew by approximately percent.

GDP is all of the following except the total:

The Science of Macroeconomics

National Income Where It Comes From and Where It Goes

Money and Inflation

The Open Economy

Unemployment

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Is-Lm Model

Aggregate Demand II: Applying the Is-Lm Model

The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime

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Exam 2: The Data of Macroeconomics

In the circular flow model, the flow of dollars from firms to households is paid and the flow of dollars from households to firms is paid .

The underground economy:

In 2010 in the United States, total government purchases per person (in current dollars) amounted to approximately:

Assume that a bakery hires more workers and pays them wages and that the workers produce more bread. GDP increases in all of the following cases except when the bread:

If an increasing proportion of the adult population is retired, then the labor force participation rate:

An increase in the price of imported goods will show up in:

The total income of everyone in the economy is exactly equal to the total:

Net national product equals GDP:

National income differs from net national product by an amount called:

The CPI is determined by computing:

When a firm sells a product out of inventory, GDP:

Real GDP means the value of goods and services is measured in prices.

Nominal GDP measures the value of goods and services in prices, while real GDP measures the value of goods and services in prices.

Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure, called core inflation,

If 7 million workers are unemployed, 143 million workers are employed, and the adult population equals 200 million, then the unemployment rate equals approximately percent.

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $0.50 in 2009. If 10 apples and 5 oranges were purchased in 2002, and 5 apples and 10 oranges were purchased in 2009, the CPI for 2009, using 2002 as the base year, is:

In 2010 in the United States, the approximate percentage of GDP that was spent on consumption was:

If real GDP grew by 6 percent and population grew by 2 percent, then real GDP per person grew by approximately percent.

GDP is all of the following except the total:

The Science of Macroeconomics

National Income Where It Comes From and Where It Goes

Money and Inflation

The Open Economy

Unemployment

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Is-Lm Model

Aggregate Demand II: Applying the Is-Lm Model

The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime

Filters