Question 1

Gross national product minus net factor earnings from abroad is equal to gross domestic product.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following is an example of income earned but not received?

Accepted Answer

A) Social security payroll taxes 
B) Farm subsidies 
C) Net factor earnings from abroad 
D) Disposable income 
A) Social security payroll taxes 
B) Farm subsidies 
C) Net factor earnings from abroad 
D) Disposable income A

Question 3

Which of the following is NOT true of the circular model of the economy?

Accepted Answer

A) Personal consumption spending flows from households to firms. 
B) The production of goods and services generates income for households. 
C) Consumers finance their personal consumption spending by supplying factors of production to firms. 
D) Payments to factors of production flows from households to firms. 
A) Personal consumption spending flows from households to firms. 
B) The production of goods and services generates income for households. 
C) Consumers finance their personal consumption spending by supplying factors of production to firms. 
D) Payments to factors of production flows from households to firms. D

Question 4

Gross private domestic investment includes purchases of:

Accepted Answer

A) government T-bills. 
B) existing residential housing. 
C) company stocks. 
D) new factory equipment. 
A) government T-bills. 
B) existing residential housing. 
C) company stocks. 
D) new factory equipment.

Question 5

Nominal GDP uses current market prices and real GDP measures GDP using base-year prices.

Accepted Answer

A) True 
 B)False

Question 6

If a farmer grows crops and keeps that for domestic consumption, then the value of the produced is included in the GDP of the economy.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements about GNP is correct?

Accepted Answer

A) It measures the market value of all goods and services, both final and intermediate, produced by resources located within a nation regardless of who owns those resources. 
B) It measures the market value of all goods and services, both final and intermediate, produced by residents and firms regardless of the location of production. 
C) It measures the market value of all final goods and services produced by residents and firms of a nation regardless of the location of production. 
D) It measures the market value of all final goods and services produced by resources located within a nation regardless of who owns those resources. 
A) It measures the market value of all goods and services, both final and intermediate, produced by resources located within a nation regardless of who owns those resources. 
B) It measures the market value of all goods and services, both final and intermediate, produced by residents and firms regardless of the location of production. 
C) It measures the market value of all final goods and services produced by residents and firms of a nation regardless of the location of production. 
D) It measures the market value of all final goods and services produced by resources located within a nation regardless of who owns those resources.

Question 8

Vikram, an Indian national working for Microsoft in New York, sends $300 every month to his elderly parents who live in Bangalore, India.This activity will:

Accepted Answer

A) increase India's GNP and decrease U.S.GNP. 
B) decrease U.S.GNP but does not affect U.S.GDP. 
C) increase U.S.GNP and India's GNP. 
D) not affect the GDP or GNP of either country. 
A) increase India's GNP and decrease U.S.GNP. 
B) decrease U.S.GNP but does not affect U.S.GDP. 
C) increase U.S.GNP and India's GNP. 
D) not affect the GDP or GNP of either country.

Question 9

In the long run, a country's material standard of living is determined by:

Accepted Answer

A) the difference between its exports and imports. 
B) the average level of prices and the average income of its population. 
C) its output relative to its population. 
D) the amount of money supply relative to its population. 
A) the difference between its exports and imports. 
B) the average level of prices and the average income of its population. 
C) its output relative to its population. 
D) the amount of money supply relative to its population.

Question 10

An increase in real GDP

Accepted Answer

A) reduces the amount of pollution. 
B) corresponds to an increase in leisure. 
C) may or may not correspond to an increase in human happiness. 
D) means that all people in the country are better off. 
A) reduces the amount of pollution. 
B) corresponds to an increase in leisure. 
C) may or may not correspond to an increase in human happiness. 
D) means that all people in the country are better off.

Question 11

Which of the following items would NOT be a part of private investment in the computation of GDP?

Accepted Answer

A) A new factory building 
B) New factory equipment 
C) A rise in inventory levels at a firm 
D) An old shopping center acquired by a firm 
A) A new factory building 
B) New factory equipment 
C) A rise in inventory levels at a firm 
D) An old shopping center acquired by a firm

Question 12

Suppose that in the country of Welworth, most residents supply factors of production to foreign firms, while producers in Welworth never employ factors owned by residents of other countries.Which of the following statements is true of the economy of Welworth?

Accepted Answer

A) Welworth's GDP is greater than its GNP. 
B) Welworth's GDP is less than its GNP. 
C) Both GDP and GNP are about the same in Welworth. 
D) Welworth's GDP exceeds GNP by an amount equal to depreciation plus indirect business taxes. 
A) Welworth's GDP is greater than its GNP. 
B) Welworth's GDP is less than its GNP. 
C) Both GDP and GNP are about the same in Welworth. 
D) Welworth's GDP exceeds GNP by an amount equal to depreciation plus indirect business taxes.

Question 13

Use the following to answer questions 
Exhibit: Circular Flow Model  
-(Exhibit: Circular Flow Model)
The exhibit shows a simplified circular flow model where only consumption goods are being produced.The arrow marked "B" represents the flow of:

Accepted Answer

A) factors of production. 
B) factor incomes. 
C) personal consumption expenditures. 
D) consumer goods and services. 
A) factors of production. 
B) factor incomes. 
C) personal consumption expenditures. 
D) consumer goods and services.

Question 14

In GDP accounting, the value of the total final output in a given period equals the value of the:

Accepted Answer

A) total income generated by the production of final goods and services in that period. 
B) net revenue earned from the sales of intermediate goods and services during that period. 
C) total profit earned by firms involved in the production of the output during that period. 
D) total inputs used in the production of the final output in that period. 
A) total income generated by the production of final goods and services in that period. 
B) net revenue earned from the sales of intermediate goods and services during that period. 
C) total profit earned by firms involved in the production of the output during that period. 
D) total inputs used in the production of the final output in that period.

Question 15

Double counting in GDP accounting:

Accepted Answer

A) refers to the fact that accountants check their figures twice. 
B) refers to the inclusion of both intermediate goods and final goods in GDP. 
C) is the method of using both income and expenditures in measuring GDP. 
D) is the method of calculating the GDP by including the net incomes received by residents of a nation living abroad. 
A) refers to the fact that accountants check their figures twice. 
B) refers to the inclusion of both intermediate goods and final goods in GDP. 
C) is the method of using both income and expenditures in measuring GDP. 
D) is the method of calculating the GDP by including the net incomes received by residents of a nation living abroad.

Question 16

Gross domestic income (GDI)
Is defined as:

Accepted Answer

A) the income of all the workers in an economy who have provided human capital in the production process during a particular period. 
B) the income of all workers in the private sector of an economy during a particular period. 
C) the total income generated in an economy by the production of final goods and services during a particular period. 
D) the total non-wage benefits of all the workers in private sector. 
A) the income of all the workers in an economy who have provided human capital in the production process during a particular period. 
B) the income of all workers in the private sector of an economy during a particular period. 
C) the total income generated in an economy by the production of final goods and services during a particular period. 
D) the total non-wage benefits of all the workers in private sector.

Question 17

Double counting occurs when both intermediate and final goods are included in the GDP.

Accepted Answer

A) True 
 B)False

Question 18

The equality between GDP and GDI in an economy implies that the income generated by final goods and services is equal to:

Accepted Answer

A) expenditures on intermediate goods and services. 
B) gross private domestic investment. 
C) the total value of final goods and services produced. 
D) total wages and other employee compensation. 
A) expenditures on intermediate goods and services. 
B) gross private domestic investment. 
C) the total value of final goods and services produced. 
D) total wages and other employee compensation.

Question 19

Use the following to answer questions 
Exhibit: Components of GDP for an Economy 2
  
-(Exhibit: Components of GDP for an Economy 2)
Net exports are negative.This would mean that:

Accepted Answer

A) imports are larger than exports and there is a trade surplus. 
B) exports are larger than imports and there is a trade surplus. 
C) imports are larger than exports and there is a trade deficit. 
D) exports are larger than imports and there is a trade deficit. 
A) imports are larger than exports and there is a trade surplus. 
B) exports are larger than imports and there is a trade surplus. 
C) imports are larger than exports and there is a trade deficit. 
D) exports are larger than imports and there is a trade deficit.

Question 20

Which of the following is counted as consumption expenditure?

Accepted Answer

A) A person buying a government bond 
B) A person buying a toaster from your neighbor in a garage sale 
C) A firm renting a two-storied building 
D) A person buying a new car 
A) A person buying a government bond 
B) A person buying a toaster from your neighbor in a garage sale 
C) A firm renting a two-storied building 
D) A person buying a new car

Gross national product minus net factor earnings from abroad is equal to gross domestic product.

Which of the following is an example of income earned but not received?

Which of the following is NOT true of the circular model of the economy?

Gross private domestic investment includes purchases of:

Nominal GDP uses current market prices and real GDP measures GDP using base-year prices.

If a farmer grows crops and keeps that for domestic consumption, then the value of the produced is included in the GDP of the economy.

Which of the following statements about GNP is correct?

Vikram, an Indian national working for Microsoft in New York, sends $300 every month to his elderly parents who live in Bangalore, India.This activity will:

In the long run, a country's material standard of living is determined by:

An increase in real GDP

Which of the following items would NOT be a part of private investment in the computation of GDP?

Suppose that in the country of Welworth, most residents supply factors of production to foreign firms, while producers in Welworth never employ factors owned by residents of other countries.Which of the following statements is true of the economy of Welworth?

Use the following to answer questions Exhibit: Circular Flow Model -(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced.The arrow marked "B" represents the flow of:

In GDP accounting, the value of the total final output in a given period equals the value of the:

Double counting in GDP accounting:

Gross domestic income (GDI) Is defined as:

Double counting occurs when both intermediate and final goods are included in the GDP.

The equality between GDP and GDI in an economy implies that the income generated by final goods and services is equal to:

Use the following to answer questions Exhibit: Components of GDP for an Economy 2 -(Exhibit: Components of GDP for an Economy 2) Net exports are negative.This would mean that:

Which of the following is counted as consumption expenditure?

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Macroeconomics: the Big Picture

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

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Exam 6: Measuring Total Output and Income

Gross national product minus net factor earnings from abroad is equal to gross domestic product.

Which of the following is an example of income earned but not received?

Which of the following is NOT true of the circular model of the economy?

Gross private domestic investment includes purchases of:

Nominal GDP uses current market prices and real GDP measures GDP using base-year prices.

If a farmer grows crops and keeps that for domestic consumption, then the value of the produced is included in the GDP of the economy.

Which of the following statements about GNP is correct?

Vikram, an Indian national working for Microsoft in New York, sends $300 every month to his elderly parents who live in Bangalore, India.This activity will:

In the long run, a country's material standard of living is determined by:

An increase in real GDP

Which of the following items would NOT be a part of private investment in the computation of GDP?

Suppose that in the country of Welworth, most residents supply factors of production to foreign firms, while producers in Welworth never employ factors owned by residents of other countries.Which of the following statements is true of the economy of Welworth?

Use the following to answer questions Exhibit: Circular Flow Model -(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced.The arrow marked "B" represents the flow of:

In GDP accounting, the value of the total final output in a given period equals the value of the:

Double counting in GDP accounting:

Gross domestic income (GDI) Is defined as:

Double counting occurs when both intermediate and final goods are included in the GDP.

The equality between GDP and GDI in an economy implies that the income generated by final goods and services is equal to:

Use the following to answer questions Exhibit: Components of GDP for an Economy 2 -(Exhibit: Components of GDP for an Economy 2) Net exports are negative.This would mean that:

Which of the following is counted as consumption expenditure?

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Macroeconomics: the Big Picture

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Filters