Question 1

Private investment plays a crucial role in the macroeconomy because it is:

Accepted Answer

A) the largest expenditure component of GDP. 
B) the smallest expenditure component of GDP. 
C) an expenditure that adds to the economy's productive capacity. 
D) undertaken by the government and must be funded by tax revenue. 
A) the largest expenditure component of GDP. 
B) the smallest expenditure component of GDP. 
C) an expenditure that adds to the economy's productive capacity. 
D) undertaken by the government and must be funded by tax revenue.

Question 2

Use the following to answer questions 
Exhibit: Stages of Production of Toy Model Airplanes
  
-(Exhibit: Stages of Production of Toy Model Airplanes)
The final value of a model airplane is _____.

Accepted Answer

A) $5 
B) $21 
C) $56 
D) $77 
A) $5 
B) $21 
C) $56 
D) $77

Question 3

A trade deficit occurs when:

Accepted Answer

A) foreign remittances paid are less than foreign remittances received. 
B) exports are less than imports. 
C) exports equal imports. 
D) exports are greater than imports. 
A) foreign remittances paid are less than foreign remittances received. 
B) exports are less than imports. 
C) exports equal imports. 
D) exports are greater than imports.

Question 4

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 "D" 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 5

The gross domestic product of an economy is defined as the:

Accepted Answer

A) total value of all industrial goods produced and sold during a given period. 
B) total value of all final goods and services produced during a given period. 
C) value of all noneconomic transactions made among consumers during a particular period. 
D) value of all non-monetary transactions between consumers and firms during a given period. 
A) total value of all industrial goods produced and sold during a given period. 
B) total value of all final goods and services produced during a given period. 
C) value of all noneconomic transactions made among consumers during a particular period. 
D) value of all non-monetary transactions between consumers and firms during a given period.

Question 6

The largest component of factor income in the U.S.is:

Accepted Answer

A) rental income. 
B) profits. 
C) employee compensation. 
D) consumption. 
A) rental income. 
B) profits. 
C) employee compensation. 
D) consumption.

Question 7

As households eat out more, purchase more prepared foods at the grocery store, hire out child care services that they once performed themselves, what is likely to happen to the value of GDP?

Accepted Answer

A) The value of GDP is likely to decrease. 
B) The value of GDP is likely to increase. 
C) GDP will not be affected because there is no net increase in the output of goods and services. 
D) GDP will not be affected because there is no net increase in the output of goods and services but GDI will increase. 
A) The value of GDP is likely to decrease. 
B) The value of GDP is likely to increase. 
C) GDP will not be affected because there is no net increase in the output of goods and services. 
D) GDP will not be affected because there is no net increase in the output of goods and services but GDI will increase.

Question 8

Use the following to answer questions 
Exhibit: Stages in the Production of an Office Building
  
-(Exhibit: Stages in the Production of an Office Building)
A mining firm extracts iron from the earth.A steel mill converts the iron to steel beams for use in construction.A construction company uses the steel beams to make a building.Assume that the total product of these firms represents the only components of the building and that they will have no other uses.Suppose the value added tax is 10%.What is the amount paid by Fuller Mill to Acme Mining?

Accepted Answer

A) $100,000 
B) $110,000 
C) $215,000 
D) $225,000 
A) $100,000 
B) $110,000 
C) $215,000 
D) $225,000

Question 9

Use the following to answer questions 
Exhibit: The Circular Flow for the United States  
-(Exhibit: The Circular Flow for the United States)
A New York restaurant purchases 1,000 cases of wine from a winery in France.This transaction is recorded as part of:

Accepted Answer

A) gross private investment and the flow is represented by 2. 
B) net exports and the flow is represented by 4. 
C) consumption expenditure and the flow is represented by 1. 
D) consumption expenditure and the flow is represented by 4. 
A) gross private investment and the flow is represented by 2. 
B) net exports and the flow is represented by 4. 
C) consumption expenditure and the flow is represented by 1. 
D) consumption expenditure and the flow is represented by 4.

Question 10

GNP equals GDP less depreciation.

Accepted Answer

A) True 
 B)False

Question 11

In the calculation of GDP, the value of a new house constructed by a firm is included in:

Accepted Answer

A) personal consumption expenditures. 
B) personal saving. 
C) the depreciation of capital. 
D) private investment. 
A) personal consumption expenditures. 
B) personal saving. 
C) the depreciation of capital. 
D) private investment.

Question 12

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.Suppose you have been hired by an electronics store as a salesperson.Which of the following flows represents this transaction?

Accepted Answer

A) A and B 
B) B and C 
C) A and D 
D) C and D 
A) A and B 
B) B and C 
C) A and D 
D) C and D

Question 13

Per capita real GDP indicates the way in which GDP is distributed among people.

Accepted Answer

A) True 
 B)False

Question 14

The value of an economy's total output of goods and services is called _____.

Accepted Answer

A) consumption 
B) investment 
C) gross domestic product 
D) exports 
A) consumption 
B) investment 
C) gross domestic product 
D) exports

Question 15

Suppose the personal income in a nation equals $5 billion, and personal income taxes equal
$1 billion.The disposable personal income equals:

Accepted Answer

A) $4 billion. 
B) $5 billion. 
C) $6 billion. 
D) $1 billion. 
A) $4 billion. 
B) $5 billion. 
C) $6 billion. 
D) $1 billion.

Question 16

The purchases of U.S.products by the citizens of Mexico are:

Accepted Answer

A) counted as U.S.exports. 
B) counted as U.S.imports. 
C) considered Mexico's exports. 
D) considered as an income transfer from the U.S.to Mexico. 
A) counted as U.S.exports. 
B) counted as U.S.imports. 
C) considered Mexico's exports. 
D) considered as an income transfer from the U.S.to Mexico.

Question 17

Use the following to answer questions 
Exhibit: Stages of Production of Toy Model Airplanes
  
-(Exhibit: Stages of Production of Toy Model Airplanes)
The value added by the extraction of the crude oil is _____.

Accepted Answer

A) $2 
B) $3 
C) $4 
D) $5 
A) $2 
B) $3 
C) $4 
D) $5

Question 18

In the circular flow model for an economy that produces only consumption goods:

Accepted Answer

A) factor incomes flow from households to firms. 
B) factors of production flow from households to firms. 
C) factor incomes flow from households to firms and to the government. 
D) factors of production flow from firms to households. 
A) factor incomes flow from households to firms. 
B) factors of production flow from households to firms. 
C) factor incomes flow from households to firms and to the government. 
D) factors of production flow from firms to households.

Question 19

Thames Patio Solutions is a manufacturer of patio umbrellas.In 2007, its inventory increases by 170 umbrellas.In 2008, it sells all the 170 umbrellas.Which of the following can be inferred in this case?

Accepted Answer

A) The value of the increased inventory will be counted as part of GDP in 2007, and the value of the 170 umbrellas sold in 2008 will not cause GDP in 2008 to increase. 
B) The value of the increased inventory will not affect GDP in 2007, but the sale of the umbrellas will cause GDP in 2008 to increase. 
C) The value of the increased inventory will be counted as part of GDP in 2007 and the value of the 170 umbrellas sold in 2008 will cause GDP in 2008 to increase. 
D) Since the umbrellas were not sold in 2007, they will not be included as part of GDP in 2007, and since they were not produced in 2008, they will not be included as part of GDP in 2008.This is a shortcoming of GDP computations. 
A) The value of the increased inventory will be counted as part of GDP in 2007, and the value of the 170 umbrellas sold in 2008 will not cause GDP in 2008 to increase. 
B) The value of the increased inventory will not affect GDP in 2007, but the sale of the umbrellas will cause GDP in 2008 to increase. 
C) The value of the increased inventory will be counted as part of GDP in 2007 and the value of the 170 umbrellas sold in 2008 will cause GDP in 2008 to increase. 
D) Since the umbrellas were not sold in 2007, they will not be included as part of GDP in 2007, and since they were not produced in 2008, they will not be included as part of GDP in 2008.This is a shortcoming of GDP computations.

Question 20

A Canadian resident runs a corner store in New York, U.S.His monthly income from the store is included in the Canadian GNP.

Accepted Answer

A) True 
 B)False

Private investment plays a crucial role in the macroeconomy because it is:

Use the following to answer questions Exhibit: Stages of Production of Toy Model Airplanes -(Exhibit: Stages of Production of Toy Model Airplanes) The final value of a model airplane is _____.

A trade deficit occurs when:

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 "D" represents the flow of:

The gross domestic product of an economy is defined as the:

The largest component of factor income in the U.S.is:

As households eat out more, purchase more prepared foods at the grocery store, hire out child care services that they once performed themselves, what is likely to happen to the value of GDP?

Use the following to answer questions Exhibit: The Circular Flow for the United States -(Exhibit: The Circular Flow for the United States) A New York restaurant purchases 1,000 cases of wine from a winery in France.This transaction is recorded as part of:

GNP equals GDP less depreciation.

In the calculation of GDP, the value of a new house constructed by a firm is included in:

Per capita real GDP indicates the way in which GDP is distributed among people.

The value of an economy's total output of goods and services is called _____.

Suppose the personal income in a nation equals $5 billion, and personal income taxes equal $1 billion.The disposable personal income equals:

The purchases of U.S.products by the citizens of Mexico are:

Use the following to answer questions Exhibit: Stages of Production of Toy Model Airplanes -(Exhibit: Stages of Production of Toy Model Airplanes) The value added by the extraction of the crude oil is _____.

In the circular flow model for an economy that produces only consumption goods:

Thames Patio Solutions is a manufacturer of patio umbrellas.In 2007, its inventory increases by 170 umbrellas.In 2008, it sells all the 170 umbrellas.Which of the following can be inferred in this case?

A Canadian resident runs a corner store in New York, U.S.His monthly income from the store is included in the Canadian GNP.

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

Exam 6: Measuring Total Output and Income

Private investment plays a crucial role in the macroeconomy because it is:

Use the following to answer questions Exhibit: Stages of Production of Toy Model Airplanes -(Exhibit: Stages of Production of Toy Model Airplanes) The final value of a model airplane is _____.

A trade deficit occurs when:

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 "D" represents the flow of:

The gross domestic product of an economy is defined as the:

The largest component of factor income in the U.S.is:

As households eat out more, purchase more prepared foods at the grocery store, hire out child care services that they once performed themselves, what is likely to happen to the value of GDP?

Use the following to answer questions Exhibit: The Circular Flow for the United States -(Exhibit: The Circular Flow for the United States) A New York restaurant purchases 1,000 cases of wine from a winery in France.This transaction is recorded as part of:

GNP equals GDP less depreciation.

In the calculation of GDP, the value of a new house constructed by a firm is included in:

Per capita real GDP indicates the way in which GDP is distributed among people.

The value of an economy's total output of goods and services is called _____.

Suppose the personal income in a nation equals $5 billion, and personal income taxes equal $1 billion.The disposable personal income equals:

The purchases of U.S.products by the citizens of Mexico are:

Use the following to answer questions Exhibit: Stages of Production of Toy Model Airplanes -(Exhibit: Stages of Production of Toy Model Airplanes) The value added by the extraction of the crude oil is _____.

In the circular flow model for an economy that produces only consumption goods:

Thames Patio Solutions is a manufacturer of patio umbrellas.In 2007, its inventory increases by 170 umbrellas.In 2008, it sells all the 170 umbrellas.Which of the following can be inferred in this case?

A Canadian resident runs a corner store in New York, U.S.His monthly income from the store is included in the Canadian GNP.

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