Question 1

Changes in inventories are NOT included in the calculation of gross private domestic investment.

Accepted Answer

A) True 
 B)False

Question 2

The income approach to calculating GDP includes compensation of employees plus

Accepted Answer

A)  corporate profits and rental income. 
B)  national income and government expenditures. 
C)  net interest and net exports. 
D)  rental income and net exports. 
A)  corporate profits and rental income. 
B)  national income and government expenditures. 
C)  net interest and net exports. 
D)  rental income and net exports.

Question 3

According to the simple circular flow diagram, total income equals total expenditures. Suppose $100 in funds flows through an economy. Suppose $75 of the business resource costs goes to labor and $25 goes to non-labor resources. Why is spending not $75?

Accepted Answer

All of the $100 income goes to household

Question 4

Over the past 150 years, the U.S. economy has endured a recession on average about every

Accepted Answer

A)  1 to 2 years. 
B)  4 to 5 years. 
C)  10 to 50 years. 
D)  50 years. 
A)  1 to 2 years. 
B)  4 to 5 years. 
C)  10 to 50 years. 
D)  50 years.

Question 5

A major appliance is an example of a nondurable good.

Accepted Answer

A) True 
 B)False

Question 6

The phases of the business cycle vary in duration and intensity.

Accepted Answer

A) True 
 B)False

Question 7

The three types of consumption are

Accepted Answer

A)  compulsive, impulsive, and deliberate. 
B)  durables, nondurables, and services. 
C)  investments, nondurables, and services. 
D)  investments, durables, and services. 
A)  compulsive, impulsive, and deliberate. 
B)  durables, nondurables, and services. 
C)  investments, nondurables, and services. 
D)  investments, durables, and services.

Question 8

Expenditures by individuals for durable goods, nondurable goods, and services are known as

Accepted Answer

A)  personal consumption expenditures. 
B)  total spending. 
C)  personal calculated expenditures. 
D)  personal computed expenditures. 
A)  personal consumption expenditures. 
B)  total spending. 
C)  personal calculated expenditures. 
D)  personal computed expenditures.

Question 9

What component of GDP includes college tuition?

Accepted Answer

A)  durable goods 
B)  nondurable goods 
C)  services 
D)  private domestic investment 
A)  durable goods 
B)  nondurable goods 
C)  services 
D)  private domestic investment

Question 10

(Table) According to the table, what is the value of this country's net exports?

Accepted Answer

A)  $35 
B)  -$35 
C)  $115 
D)  -$115 
A)  $35 
B)  -$35 
C)  $115 
D)  -$115

Question 11

Which component of GDP includes inventory changes?

Accepted Answer

A)  consumption 
B)  investment 
C)  government spending 
D)  Inventory changes are not included in GDP. 
A)  consumption 
B)  investment 
C)  government spending 
D)  Inventory changes are not included in GDP.

Question 12

Within the circular flow diagram, the arrows pointing counterclockwise represent flows of real items.

Accepted Answer

A) True 
 B)False

Question 13

If personal consumption is $100, investment is $25, government purchases total $25, imports equal $20, and exports equal $10, then GDP equals

Accepted Answer

A)  $160. 
B)  $180. 
C)  $150. 
D)  $140. 
A)  $160. 
B)  $180. 
C)  $150. 
D)  $140.

Question 14

(Table) When you look at the table, which government purchases do you see that represent a larger share of economic activity in which country?

Accepted Answer

A)  Econia because its consumption is smaller 
B)  Macland because its government spending is larger 
C)  Econia because its G/GDP is larger 
D)  It is equal because G/population is the same across both countries. 
A)  Econia because its consumption is smaller 
B)  Macland because its government spending is larger 
C)  Econia because its G/GDP is larger 
D)  It is equal because G/population is the same across both countries.

Question 15

One important reason economists track business investment is that

Accepted Answer

A)  it helps them decide which stocks to purchase. 
B)  it is a leading indicator of the business cycle. 
C)  business investment is an excellent proxy for government investment. 
D)  it shows where the economy has been. 
A)  it helps them decide which stocks to purchase. 
B)  it is a leading indicator of the business cycle. 
C)  business investment is an excellent proxy for government investment. 
D)  it shows where the economy has been.

Question 16

In 1933, Congress directed the _____ to develop estimates of "total national income for each of the calendar years 1929, 1930 and 1931. . ."

Accepted Answer

A)  Department of Commerce 
B)  Department of Justice 
C)  Census Bureau 
D)  National Bureau of Economic Research 
A)  Department of Commerce 
B)  Department of Justice 
C)  Census Bureau 
D)  National Bureau of Economic Research

Question 17

Which of these is NOT included in gross private domestic investment?

Accepted Answer

A)  construction of residential housing 
B)  new equipment purchased by businesses 
C)  purchases of common stock by investors 
D)  an increase in business inventories 
A)  construction of residential housing 
B)  new equipment purchased by businesses 
C)  purchases of common stock by investors 
D)  an increase in business inventories

Question 18

Karl's Keychain Company produces keychains that sell for $1 each. On January 1, 2015, the company had inventory of 8,000 keychains. During 2015, the company sold 900,000 keychains. At the end of the business year on December 31, 2015, the company's inventory of keychains was 9,000. What was the value of Karl's total production and inventory investment in 2015?

Accepted Answer

A)  production = $901,000; inventory investment = $1,000 
B)  production = $900,000; inventory investment = $9,000 
C)  production =$899,000; inventory investment = $1,000 
D)  production = $891,000; inventory investment = $17,000 
A)  production = $901,000; inventory investment = $1,000 
B)  production = $900,000; inventory investment = $9,000 
C)  production =$899,000; inventory investment = $1,000 
D)  production = $891,000; inventory investment = $17,000

Question 19

Which of these are two things people can do with money received as disposable personal income?

Accepted Answer

A)  pay taxes or save money 
B)  pay taxes or spend money 
C)  spend money or put it into savings 
D)  pay taxes or buy government bonds 
A)  pay taxes or save money 
B)  pay taxes or spend money 
C)  spend money or put it into savings 
D)  pay taxes or buy government bonds

Question 20

Which statement is TRUE about the National Activity Index?

Accepted Answer

A)  When the index has a zero value, the economy has reached a trough. 
B)  Negative values always mean the economy is in a recession. 
C)  Positive values indicate the economy may face a period of increasing inflation. 
D)  Negative values mean the economy is growing more slowly than its long-term trend. 
A)  When the index has a zero value, the economy has reached a trough. 
B)  Negative values always mean the economy is in a recession. 
C)  Positive values indicate the economy may face a period of increasing inflation. 
D)  Negative values mean the economy is growing more slowly than its long-term trend.

Changes in inventories are NOT included in the calculation of gross private domestic investment.

The income approach to calculating GDP includes compensation of employees plus

According to the simple circular flow diagram, total income equals total expenditures. Suppose $100 in funds flows through an economy. Suppose $75 of the business resource costs goes to labor and $25 goes to non-labor resources. Why is spending not $75?

Over the past 150 years, the U.S. economy has endured a recession on average about every

A major appliance is an example of a nondurable good.

The phases of the business cycle vary in duration and intensity.

The three types of consumption are

Expenditures by individuals for durable goods, nondurable goods, and services are known as

What component of GDP includes college tuition?

(Table) According to the table, what is the value of this country's net exports?

Which component of GDP includes inventory changes?

Within the circular flow diagram, the arrows pointing counterclockwise represent flows of real items.

If personal consumption is $100, investment is $25, government purchases total $25, imports equal $20, and exports equal $10, then GDP equals

(Table) When you look at the table, which government purchases do you see that represent a larger share of economic activity in which country?

One important reason economists track business investment is that

In 1933, Congress directed the _____ to develop estimates of "total national income for each of the calendar years 1929, 1930 and 1931. . ."

Which of these is NOT included in gross private domestic investment?

Which of these are two things people can do with money received as disposable personal income?

Which statement is TRUE about the National Activity Index?

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

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Exam 5: Introduction to Macroeconomics

Changes in inventories are NOT included in the calculation of gross private domestic investment.

The income approach to calculating GDP includes compensation of employees plus

According to the simple circular flow diagram, total income equals total expenditures. Suppose $100 in funds flows through an economy. Suppose $75 of the business resource costs goes to labor and $25 goes to non-labor resources. Why is spending not $75?

Over the past 150 years, the U.S. economy has endured a recession on average about every

A major appliance is an example of a nondurable good.

The phases of the business cycle vary in duration and intensity.

The three types of consumption are

Expenditures by individuals for durable goods, nondurable goods, and services are known as

What component of GDP includes college tuition?

(Table) According to the table, what is the value of this country's net exports?

Which component of GDP includes inventory changes?

Within the circular flow diagram, the arrows pointing counterclockwise represent flows of real items.

If personal consumption is $100, investment is $25, government purchases total $25, imports equal $20, and exports equal $10, then GDP equals

(Table) When you look at the table, which government purchases do you see that represent a larger share of economic activity in which country?

One important reason economists track business investment is that

In 1933, Congress directed the _____ to develop estimates of "total national income for each of the calendar years 1929, 1930 and 1931. . ."

Which of these is NOT included in gross private domestic investment?

Which of these are two things people can do with money received as disposable personal income?

Which statement is TRUE about the National Activity Index?

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