Question 1

Which of these correctly lists the sequence of stages in the business cycle?

Accepted Answer

A)  recession, peak, expansion, trough 
B)  recession, expansion, peak, trough 
C)  recession, trough, expansion, peak 
D)  recession, trough, peak, expansion 
A)  recession, peak, expansion, trough 
B)  recession, expansion, peak, trough 
C)  recession, trough, expansion, peak 
D)  recession, trough, peak, expansion

Question 2

GNP includes output produced _____, but it does NOT include output produced _____.

Accepted Answer

A)  outside the United States by U.S. citizens; inside the United States by foreign citizens 
B)  outside the United States by U.S. citizens; inside the United States by U.S. citizens 
C)  inside the United States by foreign citizens; outside the United States by U.S. citizens 
D)  The GNP only includes output (goods and services) produced by U.S. citizens within the United States. 
A)  outside the United States by U.S. citizens; inside the United States by foreign citizens 
B)  outside the United States by U.S. citizens; inside the United States by U.S. citizens 
C)  inside the United States by foreign citizens; outside the United States by U.S. citizens 
D)  The GNP only includes output (goods and services) produced by U.S. citizens within the United States.

Question 3

In the national income accounts, which of these is NOT classified as government spending?

Accepted Answer

A)  payments to Social Security recipients 
B)  services provided by police officers 
C)  purchases of military hardware 
D)  services provided by U.S. senators 
A)  payments to Social Security recipients 
B)  services provided by police officers 
C)  purchases of military hardware 
D)  services provided by U.S. senators

Question 4

At one time, Pittsburgh, Pennsylvania, was known for its poor air quality. Locals said that a man wearing a white shirt when he walked into the city would have a black shirt when he left. Since that time, the city has greatly reduced its air and water pollution. As a result of cleaner air and water

Accepted Answer

A)  the standard of living of the citizens of Pittsburgh has increased, even though the improvement in the environment was not reflected in its GDP. 
B)  the value of the GDP increased. 
C)  the value of the GDP increased in the year that the improvements were made but did not change in ensuing years. 
D)  the standard of living of the citizens of Pittsburgh did not change. 
A)  the standard of living of the citizens of Pittsburgh has increased, even though the improvement in the environment was not reflected in its GDP. 
B)  the value of the GDP increased. 
C)  the value of the GDP increased in the year that the improvements were made but did not change in ensuing years. 
D)  the standard of living of the citizens of Pittsburgh did not change.

Question 5

Because GDP excludes nonmarket transactions, the level of economic activity in a country is understated.

Accepted Answer

A) True 
 B)False

Question 6

Gross domestic product is a measure of

Accepted Answer

A)  an economy's total output. 
B)  household production. 
C)  the total weight of all goods produced. 
D)  production by owners of labor and capital only. 
A)  an economy's total output. 
B)  household production. 
C)  the total weight of all goods produced. 
D)  production by owners of labor and capital only.

Question 7

A jobless recovery occurs when an economic recovery produces too few jobs to significantly reduce the unemployment rate.

Accepted Answer

A) True 
 B)False

Question 8

Last year, Marian earned $25,000; paid $2,000 in taxes; and saved $5,000. Marian's personal income was _____, her disposable personal income was _____, and her consumption spending was _____.

Accepted Answer

A)  $20,000; $18,000; $13,000 
B)  $25,000; $23,000; $18,000 
C)  $25,000; $18,000; $13,000 
D)  $23,000; $21,000; $18,000 
A)  $20,000; $18,000; $13,000 
B)  $25,000; $23,000; $18,000 
C)  $25,000; $18,000; $13,000 
D)  $23,000; $21,000; $18,000

Question 9

The Leading Economic Index fell in July, August, and September, the same three months compared to the previous year. Therefore, a recession in the near future should be expected.

Accepted Answer

A) True 
 B)False

Question 10

Which item would be included in the GDP accounts?

Accepted Answer

A)  personal time spent learning how to use accounting software 
B)  personally rotating the tires on your neighbor's car 
C)  caring for your aged grandmother at home 
D)  paying a $50 consultation fee over the phone with a psychic adviser 
A)  personal time spent learning how to use accounting software 
B)  personally rotating the tires on your neighbor's car 
C)  caring for your aged grandmother at home 
D)  paying a $50 consultation fee over the phone with a psychic adviser

Question 11

The diagram that illustrates how households and businesses interact through product and resource markets is called the

Accepted Answer

A)  product-resource diagram. 
B)  economic agents' graph. 
C)  circular flow diagram. 
D)  economic interactivity diagram. 
A)  product-resource diagram. 
B)  economic agents' graph. 
C)  circular flow diagram. 
D)  economic interactivity diagram.

Question 12

Which component is the smallest part of U.S. GDP?

Accepted Answer

A)  personal consumption expenditures 
B)  gross private domestic investment 
C)  government purchases of goods and services 
D)  net exports 
A)  personal consumption expenditures 
B)  gross private domestic investment 
C)  government purchases of goods and services 
D)  net exports

Question 13

The informal economy in the United States is estimated to be around 10% of GDP.

Accepted Answer

A) True 
 B)False

Question 14

The major item that must be added to national income to obtain GDP is

Accepted Answer

A)  individual income taxes. 
B)  property taxes. 
C)  capital consumption allowance. 
D)  Social Security payments. 
A)  individual income taxes. 
B)  property taxes. 
C)  capital consumption allowance. 
D)  Social Security payments.

Question 15

The high point of a business cycle is called the

Accepted Answer

A)  trough. 
B)  expansion. 
C)  recession. 
D)  peak. 
A)  trough. 
B)  expansion. 
C)  recession. 
D)  peak.

Question 16

Which phase of the business cycle occurs immediately after a recovery?

Accepted Answer

A)  peak 
B)  trough 
C)  boom 
D)  recession 
A)  peak 
B)  trough 
C)  boom 
D)  recession

Question 17

The informal economy in the United States is approximately 40% of GDP.

Accepted Answer

A) True 
 B)False

Question 18

Which statement describes the informal economy?

Accepted Answer

A)  It is largely unmeasured. 
B)  It does not include transactions dealing with illegal goods and services. 
C)  It does not include income earned by undocumented residents. 
D)  It accounts for 20% of U.S. GDP. 
A)  It is largely unmeasured. 
B)  It does not include transactions dealing with illegal goods and services. 
C)  It does not include income earned by undocumented residents. 
D)  It accounts for 20% of U.S. GDP.

Question 19

If an index of well-being were included in the national income and product accounts, information on life expectancy, the stock of human capital, income distributions, poverty rates, and unemployment rates might be collected.

Accepted Answer

A) True 
 B)False

Question 20

Draw a simple circular flow diagram that shows how businesses and households interact through the product and resource markets, and describe the circular flow of income.

Accepted Answer

The major components of the national inc

Which of these correctly lists the sequence of stages in the business cycle?

GNP includes output produced _, but it does NOT include output produced _.

In the national income accounts, which of these is NOT classified as government spending?

At one time, Pittsburgh, Pennsylvania, was known for its poor air quality. Locals said that a man wearing a white shirt when he walked into the city would have a black shirt when he left. Since that time, the city has greatly reduced its air and water pollution. As a result of cleaner air and water

Because GDP excludes nonmarket transactions, the level of economic activity in a country is understated.

Gross domestic product is a measure of

A jobless recovery occurs when an economic recovery produces too few jobs to significantly reduce the unemployment rate.

Last year, Marian earned $25,000; paid $2,000 in taxes; and saved $5,000. Marian's personal income was ___, her disposable personal income was _, and her consumption spending was ___.

The Leading Economic Index fell in July, August, and September, the same three months compared to the previous year. Therefore, a recession in the near future should be expected.

Which item would be included in the GDP accounts?

The diagram that illustrates how households and businesses interact through product and resource markets is called the

Which component is the smallest part of U.S. GDP?

The informal economy in the United States is estimated to be around 10% of GDP.

The major item that must be added to national income to obtain GDP is

The high point of a business cycle is called the

Which phase of the business cycle occurs immediately after a recovery?

The informal economy in the United States is approximately 40% of GDP.

Which statement describes the informal economy?

If an index of well-being were included in the national income and product accounts, information on life expectancy, the stock of human capital, income distributions, poverty rates, and unemployment rates might be collected.

Draw a simple circular flow diagram that shows how businesses and households interact through the product and resource markets, and describe the circular flow of income.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Exam 5: Introduction to Macroeconomics

Which of these correctly lists the sequence of stages in the business cycle?

GNP includes output produced _____, but it does NOT include output produced _____.

In the national income accounts, which of these is NOT classified as government spending?

At one time, Pittsburgh, Pennsylvania, was known for its poor air quality. Locals said that a man wearing a white shirt when he walked into the city would have a black shirt when he left. Since that time, the city has greatly reduced its air and water pollution. As a result of cleaner air and water

Because GDP excludes nonmarket transactions, the level of economic activity in a country is understated.

Gross domestic product is a measure of

A jobless recovery occurs when an economic recovery produces too few jobs to significantly reduce the unemployment rate.

Last year, Marian earned $25,000; paid $2,000 in taxes; and saved $5,000. Marian's personal income was _____, her disposable personal income was _____, and her consumption spending was _____.

The Leading Economic Index fell in July, August, and September, the same three months compared to the previous year. Therefore, a recession in the near future should be expected.

Which item would be included in the GDP accounts?

The diagram that illustrates how households and businesses interact through product and resource markets is called the

Which component is the smallest part of U.S. GDP?

The informal economy in the United States is estimated to be around 10% of GDP.

The major item that must be added to national income to obtain GDP is

The high point of a business cycle is called the

Which phase of the business cycle occurs immediately after a recovery?

The informal economy in the United States is approximately 40% of GDP.

Which statement describes the informal economy?

If an index of well-being were included in the national income and product accounts, information on life expectancy, the stock of human capital, income distributions, poverty rates, and unemployment rates might be collected.

Draw a simple circular flow diagram that shows how businesses and households interact through the product and resource markets, and describe the circular flow of income.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

GNP includes output produced _, but it does NOT include output produced _.

Last year, Marian earned $25,000; paid $2,000 in taxes; and saved $5,000. Marian's personal income was ___, her disposable personal income was _, and her consumption spending was ___.