Question 1

A(n) _____ in the business cycle usually means the economy is operating at its capacity.

Accepted Answer

A)  upward trend 
B)  peak 
C)  recession 
D)  recovery 
A)  upward trend 
B)  peak 
C)  recession 
D)  recovery

Question 2

Gross private domestic investment, which consists of _____ and changes in private inventories, is an important determinant of _____.

Accepted Answer

A)  investment in stocks and bonds; inflation 
B)  fixed investments; swings in the business cycle 
C)  fixed investments; trade deficits 
D)  investment in stocks and bonds; trade deficits 
A)  investment in stocks and bonds; inflation 
B)  fixed investments; swings in the business cycle 
C)  fixed investments; trade deficits 
D)  investment in stocks and bonds; trade deficits

Question 3

Martin purchases 500 shares of stock in ABC Company at a price of $10 per share. He pays his stockbroker a commission of $50 for helping with the transaction. How much does GDP change as a result of Martin's commission payment?

Accepted Answer

A)  There is no change in GDP. 
B)  GDP rises by $5,000. 
C)  GDP rises by $5,050. 
D)  GDP rises by $50. 
A)  There is no change in GDP. 
B)  GDP rises by $5,000. 
C)  GDP rises by $5,050. 
D)  GDP rises by $50.

Question 4

Business cycles

Accepted Answer

A)  are always the same duration. 
B)  are always the same magnitude. 
C)  are always the same duration and magnitude. 
D)  vary in duration and magnitude. 
A)  are always the same duration. 
B)  are always the same magnitude. 
C)  are always the same duration and magnitude. 
D)  vary in duration and magnitude.

Question 5

During a typical economic recovery

Accepted Answer

A)  inflation declines. 
B)  people become pessimistic. 
C)  unemployment decreases. 
D)  incomes fall. 
A)  inflation declines. 
B)  people become pessimistic. 
C)  unemployment decreases. 
D)  incomes fall.

Question 6

The national income and product accounts have been used to track the United States' economic performance since the Civil War.

Accepted Answer

A) True 
 B)False

Question 7

Which of these will NOT be included in the GDP?

Accepted Answer

A)  the value of a meal eaten at Wendy's in New York City but consumed by a tourist from Norway 
B)  the value of Kansas corn 
C)  college tuition 
D)  a cruise on a ship registered in Norway 
A)  the value of a meal eaten at Wendy's in New York City but consumed by a tourist from Norway 
B)  the value of Kansas corn 
C)  college tuition 
D)  a cruise on a ship registered in Norway

Question 8

In the national income and product accounts, "disposable personal income" and "personal income" are synonymous.

Accepted Answer

A) True 
 B)False

Question 9

When Mr. Wilson worked full time, he paid a service to have his house cleaned twice a month. Now that he is retired, Mr. Wilson does his own cleaning. What is the effect on GDP?

Accepted Answer

A)  GDP is unaffected by this change. 
B)  GDP falls as a result of this change. 
C)  GDP at first rises but then falls. 
D)  GDP rises as a result of this change. 
A)  GDP is unaffected by this change. 
B)  GDP falls as a result of this change. 
C)  GDP at first rises but then falls. 
D)  GDP rises as a result of this change.

Question 10

A recession is always followed by a depression.

Accepted Answer

A) True 
 B)False

Question 11

The National Activity Index is

Accepted Answer

A)  a weighted average of 85 indicators of national economic activity. 
B)  a weighted average of estimates of economic activity by the National Bureau of Economic Research (NBER) and the Bureau of Economic Activity (BE
A) . 
C)  produced by the NBER. 
D)  a measure of unemployment and participation in the labor force. 
A)  a weighted average of 85 indicators of national economic activity. 
B)  a weighted average of estimates of economic activity by the National Bureau of Economic Research (NBER) and the Bureau of Economic Activity (BE
A) . 
C)  produced by the NBER. 
D)  a measure of unemployment and participation in the labor force.

Question 12

What are the national income and product accounts? Give examples of some of the measures in use today.

Accepted Answer

The national income and product accounts

Question 13

(Table Macroeconomic Data for Econoland) Look at the table. What stage of the business cycle would the NBER declare Econoland to be in during the fourth quarter of 2014?

Accepted Answer

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

Question 14

Depreciation is included in the GDP.

Accepted Answer

A) True 
 B)False

Question 15

(Table) Look at the table of data for two countries. Which statement correctly identifies the country in which consumers are better off on average and why?

Accepted Answer

A)  Econoland because its GDP per capita is higher 
B)  Macroland because its GDP per capita is higher 
C)  Econoland because its consumption purchases per capita is higher 
D)  Macroland because its consumption purchases per capita is higher 
A)  Econoland because its GDP per capita is higher 
B)  Macroland because its GDP per capita is higher 
C)  Econoland because its consumption purchases per capita is higher 
D)  Macroland because its consumption purchases per capita is higher

Question 16

The Leading Economic Index fell in July and August, rose in September, and fell again in October. Based on this, we should expect a recession in the near future.

Accepted Answer

A) True 
 B)False

Question 17

National income and product accounts came about in the United States during the 1930s as a result of

Accepted Answer

A)  the theories of John Maynard Keynes. 
B)  a lack of reliable economic data. 
C)  the work of the Council of Economic Advisers. 
D)  the work of the Federal Reserve. 
A)  the theories of John Maynard Keynes. 
B)  a lack of reliable economic data. 
C)  the work of the Council of Economic Advisers. 
D)  the work of the Federal Reserve.

Question 18

The expenditure category that accounts for the largest share of GDP is

Accepted Answer

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

Question 19

Shortcomings of the national income and product accounts include ignoring nonmarket transactions, such as the value of your labor within your own home (e.g., the value of cooking your own dinner).

Accepted Answer

A) True 
 B)False

Question 20

Economists believe that changes in investment spending are important for forecasting the business cycle because

Accepted Answer

A)  increases in investment spending raise tax revenues, which allows the government to spend more. 
B)  investment closely reflects consumer sentiment. 
C)  changes in investment shows where the economy has been. 
D)  investment is a key determinant of economic growth. 
A)  increases in investment spending raise tax revenues, which allows the government to spend more. 
B)  investment closely reflects consumer sentiment. 
C)  changes in investment shows where the economy has been. 
D)  investment is a key determinant of economic growth.

A(n) _____ in the business cycle usually means the economy is operating at its capacity.

Gross private domestic investment, which consists of _ and changes in private inventories, is an important determinant of _.

Martin purchases 500 shares of stock in ABC Company at a price of $10 per share. He pays his stockbroker a commission of $50 for helping with the transaction. How much does GDP change as a result of Martin's commission payment?

Business cycles

During a typical economic recovery

The national income and product accounts have been used to track the United States' economic performance since the Civil War.

Which of these will NOT be included in the GDP?

In the national income and product accounts, "disposable personal income" and "personal income" are synonymous.

When Mr. Wilson worked full time, he paid a service to have his house cleaned twice a month. Now that he is retired, Mr. Wilson does his own cleaning. What is the effect on GDP?

A recession is always followed by a depression.

The National Activity Index is

What are the national income and product accounts? Give examples of some of the measures in use today.

(Table Macroeconomic Data for Econoland) Look at the table. What stage of the business cycle would the NBER declare Econoland to be in during the fourth quarter of 2014?

Depreciation is included in the GDP.

(Table) Look at the table of data for two countries. Which statement correctly identifies the country in which consumers are better off on average and why?

The Leading Economic Index fell in July and August, rose in September, and fell again in October. Based on this, we should expect a recession in the near future.

National income and product accounts came about in the United States during the 1930s as a result of

The expenditure category that accounts for the largest share of GDP is

Shortcomings of the national income and product accounts include ignoring nonmarket transactions, such as the value of your labor within your own home (e.g., the value of cooking your own dinner).

Economists believe that changes in investment spending are important for forecasting the business cycle because

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

A(n) _____ in the business cycle usually means the economy is operating at its capacity.

Gross private domestic investment, which consists of _____ and changes in private inventories, is an important determinant of _____.

Martin purchases 500 shares of stock in ABC Company at a price of $10 per share. He pays his stockbroker a commission of $50 for helping with the transaction. How much does GDP change as a result of Martin's commission payment?

Business cycles

During a typical economic recovery

The national income and product accounts have been used to track the United States' economic performance since the Civil War.

Which of these will NOT be included in the GDP?

In the national income and product accounts, "disposable personal income" and "personal income" are synonymous.

When Mr. Wilson worked full time, he paid a service to have his house cleaned twice a month. Now that he is retired, Mr. Wilson does his own cleaning. What is the effect on GDP?

A recession is always followed by a depression.

The National Activity Index is

What are the national income and product accounts? Give examples of some of the measures in use today.

(Table Macroeconomic Data for Econoland) Look at the table. What stage of the business cycle would the NBER declare Econoland to be in during the fourth quarter of 2014?

Depreciation is included in the GDP.

(Table) Look at the table of data for two countries. Which statement correctly identifies the country in which consumers are better off on average and why?

The Leading Economic Index fell in July and August, rose in September, and fell again in October. Based on this, we should expect a recession in the near future.

National income and product accounts came about in the United States during the 1930s as a result of

The expenditure category that accounts for the largest share of GDP is

Shortcomings of the national income and product accounts include ignoring nonmarket transactions, such as the value of your labor within your own home (e.g., the value of cooking your own dinner).

Economists believe that changes in investment spending are important for forecasting the business cycle because

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

Gross private domestic investment, which consists of _ and changes in private inventories, is an important determinant of _.