Question 1

Which statement is TRUE within the circular flow of economic activity?

Accepted Answer

A)  Households are buyers of products and sellers of production factors. 
B)  Business firms are buyers and sellers of production factors. 
C)  Households are sellers of products and buyers of production factors. 
D)  Business firms are buyers of products and sellers of production factors. 
A)  Households are buyers of products and sellers of production factors. 
B)  Business firms are buyers and sellers of production factors. 
C)  Households are sellers of products and buyers of production factors. 
D)  Business firms are buyers of products and sellers of production factors.

Question 2

The Council of Economic Advisers is responsible for defining the turning points in the economy.

Accepted Answer

A) True 
 B)False

Question 3

Gross private domestic investment is an important determinant of how severe recessions will be mitigated.

Accepted Answer

A) True 
 B)False

Question 4

Poorland is a country of subsistence farmers; most people in Poorland eat what they grow. In Richland, most people purchase their food in stores. How would these lifestyle choices affect the comparison of the GDPs of the two countries?

Accepted Answer

GDP, as currently computed, uses market

Question 5

The sum of all income, including wages, salaries and benefits, profits, rental income, and interest, is called _____ income.

Accepted Answer

A)  labor 
B)  gross domestic 
C)  national 
D)  pretax 
A)  labor 
B)  gross domestic 
C)  national 
D)  pretax

Question 6

(Table) Suppose a loaf of bread goes through the following stages of production, with the values noted at the end of each stage.   The sale of one loaf of bread adds _____ to GDP.

Accepted Answer

A)  $4.45 
B)  $5.65 
C)  $2.65 
D)  $6.30 
A)  $4.45 
B)  $5.65 
C)  $2.65 
D)  $6.30

Question 7

GDP per capita is found by dividing GDP by population.

Accepted Answer

A) True 
 B)False

Question 8

Cancer treatments to ease lung cancer caused by smoking cigarettes are included in the GDP accounts.

Accepted Answer

A) True 
 B)False

Question 9

The "business cycle" refers to

Accepted Answer

A)  short-run fluctuations in macroeconomic activity. 
B)  a long-run increase in GDP. 
C)  changes in the economy over the course of the four seasons. 
D)  changes in the economy between winter and summer. 
A)  short-run fluctuations in macroeconomic activity. 
B)  a long-run increase in GDP. 
C)  changes in the economy over the course of the four seasons. 
D)  changes in the economy between winter and summer.

Question 10

Econoland and Macroland are neighboring countries. Which of these would be included in the GNP of Econoland but NOT in Econoland's GDP?

Accepted Answer

A)  the value of the output of a factory in Econoland that is owned by a company whose headquarters are located in Macroland 
B)  the value of the output of a factory in Macroland that is owned by a company whose headquarters are located in Econoland 
C)  the value of output sold in Macroland that was produced by a farmer who owns land in Econoland 
D)  the value of output produced in Econoland that remained unsold the year it was produced 
A)  the value of the output of a factory in Econoland that is owned by a company whose headquarters are located in Macroland 
B)  the value of the output of a factory in Macroland that is owned by a company whose headquarters are located in Econoland 
C)  the value of output sold in Macroland that was produced by a farmer who owns land in Econoland 
D)  the value of output produced in Econoland that remained unsold the year it was produced

Question 11

Gross private domestic investment is an important factor in shaping the turning points of the business cycle, especially at the troughs.

Accepted Answer

A) True 
 B)False

Question 12

Joyce is an accountant. Sarah, her hair stylist, cuts and perms her hair in exchange for having her taxes done. This is an example of an economic transaction that is NOT included in the national income and product accounts.

Accepted Answer

A) True 
 B)False

Question 13

The _____ let(s) economists judge our nation's economic performance, compare U.S. income and output to that of other nations, and track the economy's condition over the course of the business cycle.

Accepted Answer

A)  National Bureau of Economic Research 
B)  National Activity Index 
C)  Census Bureau 
D)  national income and product accounts 
A)  National Bureau of Economic Research 
B)  National Activity Index 
C)  Census Bureau 
D)  national income and product accounts

Question 14

It is possible for the unemployment rate at the beginning of a recession to be lower than the unemployment rate at the beginning of a recovery.

Accepted Answer

A) True 
 B)False

Question 15

Which of these is NOT a criticism of the dating of business cycles by the National Bureau of Economic Research (NBER)?

Accepted Answer

A)  Economists use different methodologies to measure business cycles. 
B)  NBER dates peaks and troughs only after they occur. 
C)  The NBER deliberations are not public. 
D)  The NBER is sometimes manipulated by the federal government. 
A)  Economists use different methodologies to measure business cycles. 
B)  NBER dates peaks and troughs only after they occur. 
C)  The NBER deliberations are not public. 
D)  The NBER is sometimes manipulated by the federal government.

Question 16

(Table) According to the table, what is this country's GDP?

Accepted Answer

A)  $1,225 
B)  $1,305 
C)  $1,365 
D)  $1,440 
A)  $1,225 
B)  $1,305 
C)  $1,365 
D)  $1,440

Question 17

The National Bureau of Economic Research determines that a recession is over

Accepted Answer

A)  after one year of economic growth. 
B)  when the economy is in a trough. 
C)  when the unemployment rate falls below 5%. 
D)  when the stock market reaches its prerecession level. 
A)  after one year of economic growth. 
B)  when the economy is in a trough. 
C)  when the unemployment rate falls below 5%. 
D)  when the stock market reaches its prerecession level.

Question 18

The Integrated Environmental and Economic Satellite Accounts are intended to take into account the environmental benefits or harmful effects of economic activity.

Accepted Answer

A) True 
 B)False

Question 19

(Table) According to the table, using the income approach, national income is equal to

Accepted Answer

A)  $1,320 billion. 
B)  $1,330 billion. 
C)  $1,570 billion. 
D)  $1,070 billion. 
A)  $1,320 billion. 
B)  $1,330 billion. 
C)  $1,570 billion. 
D)  $1,070 billion.

Question 20

(Table) When you look at the table, what evidence do you see that suggests which country has the highest savings rate?

Accepted Answer

A)  The smaller amount of consumer spending in Econia suggests that it has a higher savings rate. 
B)  Consumer spending is a smaller share of total spending in Macland, suggesting that consumers are saving a larger share of their income. 
C)  Investment is lower in Econia, suggesting the households are saving rather than investing. 
D)  The higher GDP in Macland means that they must have a higher savings rate. 
A)  The smaller amount of consumer spending in Econia suggests that it has a higher savings rate. 
B)  Consumer spending is a smaller share of total spending in Macland, suggesting that consumers are saving a larger share of their income. 
C)  Investment is lower in Econia, suggesting the households are saving rather than investing. 
D)  The higher GDP in Macland means that they must have a higher savings rate.

Which statement is TRUE within the circular flow of economic activity?

The Council of Economic Advisers is responsible for defining the turning points in the economy.

Gross private domestic investment is an important determinant of how severe recessions will be mitigated.

Poorland is a country of subsistence farmers; most people in Poorland eat what they grow. In Richland, most people purchase their food in stores. How would these lifestyle choices affect the comparison of the GDPs of the two countries?

The sum of all income, including wages, salaries and benefits, profits, rental income, and interest, is called _____ income.

(Table) Suppose a loaf of bread goes through the following stages of production, with the values noted at the end of each stage. The sale of one loaf of bread adds _____ to GDP.

GDP per capita is found by dividing GDP by population.

Cancer treatments to ease lung cancer caused by smoking cigarettes are included in the GDP accounts.

The "business cycle" refers to

Econoland and Macroland are neighboring countries. Which of these would be included in the GNP of Econoland but NOT in Econoland's GDP?

Gross private domestic investment is an important factor in shaping the turning points of the business cycle, especially at the troughs.

Joyce is an accountant. Sarah, her hair stylist, cuts and perms her hair in exchange for having her taxes done. This is an example of an economic transaction that is NOT included in the national income and product accounts.

The _____ let(s) economists judge our nation's economic performance, compare U.S. income and output to that of other nations, and track the economy's condition over the course of the business cycle.

It is possible for the unemployment rate at the beginning of a recession to be lower than the unemployment rate at the beginning of a recovery.

Which of these is NOT a criticism of the dating of business cycles by the National Bureau of Economic Research (NBER)?

(Table) According to the table, what is this country's GDP?

The National Bureau of Economic Research determines that a recession is over

The Integrated Environmental and Economic Satellite Accounts are intended to take into account the environmental benefits or harmful effects of economic activity.

(Table) According to the table, using the income approach, national income is equal to

(Table) When you look at the table, what evidence do you see that suggests which country has the highest savings rate?

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

Which statement is TRUE within the circular flow of economic activity?

The Council of Economic Advisers is responsible for defining the turning points in the economy.

Gross private domestic investment is an important determinant of how severe recessions will be mitigated.

Poorland is a country of subsistence farmers; most people in Poorland eat what they grow. In Richland, most people purchase their food in stores. How would these lifestyle choices affect the comparison of the GDPs of the two countries?

The sum of all income, including wages, salaries and benefits, profits, rental income, and interest, is called _____ income.

(Table) Suppose a loaf of bread goes through the following stages of production, with the values noted at the end of each stage. The sale of one loaf of bread adds _____ to GDP.

GDP per capita is found by dividing GDP by population.

Cancer treatments to ease lung cancer caused by smoking cigarettes are included in the GDP accounts.

The "business cycle" refers to

Econoland and Macroland are neighboring countries. Which of these would be included in the GNP of Econoland but NOT in Econoland's GDP?

Gross private domestic investment is an important factor in shaping the turning points of the business cycle, especially at the troughs.

Joyce is an accountant. Sarah, her hair stylist, cuts and perms her hair in exchange for having her taxes done. This is an example of an economic transaction that is NOT included in the national income and product accounts.

The _____ let(s) economists judge our nation's economic performance, compare U.S. income and output to that of other nations, and track the economy's condition over the course of the business cycle.

It is possible for the unemployment rate at the beginning of a recession to be lower than the unemployment rate at the beginning of a recovery.

Which of these is NOT a criticism of the dating of business cycles by the National Bureau of Economic Research (NBER)?

(Table) According to the table, what is this country's GDP?

The National Bureau of Economic Research determines that a recession is over

The Integrated Environmental and Economic Satellite Accounts are intended to take into account the environmental benefits or harmful effects of economic activity.

(Table) According to the table, using the income approach, national income is equal to

(Table) When you look at the table, what evidence do you see that suggests which country has the highest savings rate?

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