Question 1

National income measures

Accepted Answer

A)  nominal GDP after it has been inﬂated or deﬂated for changes in the value of the dollar. 
B)  the after-tax income of resource suppliers. 
C)  the total of all sources of private income plus government revenue from taxes on production and imports. 
D)  the amount of wage, rent, interest, and proﬁts income actually received by households. 
A)  nominal GDP after it has been inﬂated or deﬂated for changes in the value of the dollar. 
B)  the after-tax income of resource suppliers. 
C)  the total of all sources of private income plus government revenue from taxes on production and imports. 
D)  the amount of wage, rent, interest, and proﬁts income actually received by households.

Question 2

Which of the following is a ﬁnal good or service?

Accepted Answer

A)  a haircut purchased by a father for his 12-year-old son 
B)  fertilizer purchased by a farm supplier 
C)  diesel fuel bought for a delivery truck 
D)  Chevrolet windows purchased by a General Motors assembly plant 
A)  a haircut purchased by a father for his 12-year-old son 
B)  fertilizer purchased by a farm supplier 
C)  diesel fuel bought for a delivery truck 
D)  Chevrolet windows purchased by a General Motors assembly plant

Question 3

In an economy, the value of inventories was $75 billion in year 1 and $63 billion in year 2. In calculating total investment for year 2, national income accountants would

Accepted Answer

A)  decrease it by $75 billion. 
B)  increase it by $63 billion. 
C)  decrease it by $12 billion. 
D)  increase it by $138 billion. 
A)  decrease it by $75 billion. 
B)  increase it by $63 billion. 
C)  decrease it by $12 billion. 
D)  increase it by $138 billion.

Question 4

Value added by a ﬁrm is the market value of the ﬁrm's output minus the

Accepted Answer

A)  total wages paid to its employees. 
B)  value of inputs bought from other ﬁrms. 
C)  proﬁts that the ﬁrm's owners earn. 
D)  total costs of all inputs used. 
A)  total wages paid to its employees. 
B)  value of inputs bought from other ﬁrms. 
C)  proﬁts that the ﬁrm's owners earn. 
D)  total costs of all inputs used.

Question 5

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is

Accepted Answer

A)  100. 
B)  200. 
C)  240. 
D)  300. 
A)  100. 
B)  200. 
C)  240. 
D)  300.

Question 6

GDP is the

Accepted Answer

A)  national income minus all nonincome charges against output. 
B)  monetary value of all ﬁnal goods and services produced within the borders of a nation in a particular year. 
C)  monetary value of all economic resources used in producing a year's output. 
D)  monetary value of all goods and services, ﬁnal and intermediate, produced in a speciﬁc year. 
A)  national income minus all nonincome charges against output. 
B)  monetary value of all ﬁnal goods and services produced within the borders of a nation in a particular year. 
C)  monetary value of all economic resources used in producing a year's output. 
D)  monetary value of all goods and services, ﬁnal and intermediate, produced in a speciﬁc year.

Question 7

$$\begin{array} { | c | c | } 
\hline \text { Stage of Production } & \text { Sales Value of Materials or Products } \
\hline \text { Firm } A & \$ 800 \
\hline \text { Firm } B & 1,250 \
\hline \text { Firm } C & 1,850 \
\hline \text { Firm } D & 2,600 \
\hline \text { Firm } E & 3,800 \
\hline
\end{array}$$ Firm A produces something that Firm B uses as an input. The product of Firm B, in turn, is purchased and used as an input by Firm C, and so on down the line through Firm E, which produces the ?nal
Product. (See the accompanying table.) The total value added by Firms A-E from the production of
The ?nal product described here is

Accepted Answer

A)  $3,000. 
B)  $3,800. 
C)  $6,500. 
D)  $10,300. 
A)  $3,000. 
B)  $3,800. 
C)  $6,500. 
D)  $10,300.

Question 8

In national income accounting, the personal consumption expenditures category includes purchases of

Accepted Answer

A)  both new and used consumer goods. 
B)  automobiles for personal use but not houses. 
C)  consumer durable and nondurable goods but not services. 
D)  consumer nondurable goods and services but not consumer durable goods. 
A)  both new and used consumer goods. 
B)  automobiles for personal use but not houses. 
C)  consumer durable and nondurable goods but not services. 
D)  consumer nondurable goods and services but not consumer durable goods.

Question 9

$$\begin{array} { | c | c | c | c | } 
\hline \text { Year } & \text { Units of Output } & \text { Price of Bagel per Unit } & \text { Price Index (Year 1=100) } \
\hline 1 & 10 & \$ 10 & 100 \
\hline 2 & 12 & 20 & 200 \
\hline 3 & 15 & 30 & 300 \
\hline 4 & 20 & 40 & 400 \
\hline
\end{array}$$ The table contains data for a hypothetical single-product economy. Real GDP in year 3 is

Accepted Answer

A)  $100. 
B)  $450. 
C)  $225. 
D)  $150. 
A)  $100. 
B)  $450. 
C)  $225. 
D)  $150.

Question 10

In comparing GDP data over a period of years, a difference between nominal and real GDP may arise because

Accepted Answer

A)  of changes in trade deﬁcits and surpluses. 
B)  the length of the workweek has declined historically. 
C)  the price level may change over time. 
D)  depreciation may be greater or smaller than gross investment. 
A)  of changes in trade deﬁcits and surpluses. 
B)  the length of the workweek has declined historically. 
C)  the price level may change over time. 
D)  depreciation may be greater or smaller than gross investment.

Question 11

If the economy adds to its inventory of goods during some year,

Accepted Answer

A)  gross investment will exceed net investment by the amount of the inventory increase. 
B)  this amount should be ignored in calculating that year's GDP. 
C)  this amount should be subtracted in calculating that year's GDP. 
D)  this amount should be included in calculating that year's GDP. 
A)  gross investment will exceed net investment by the amount of the inventory increase. 
B)  this amount should be ignored in calculating that year's GDP. 
C)  this amount should be subtracted in calculating that year's GDP. 
D)  this amount should be included in calculating that year's GDP.

Question 12

A nation's gross domestic product (GDP)

Accepted Answer

A)  $\text { can be found by summing } C + I _ { g } + G + X _ { n }$ 
B)  is the dollar value of the total output produced by its citizens, regardless of where they are living. 
C)  $\text { can be found by summing } C + S + G + X _ { n } \text {. }$ 
D)  $\text { is always some amount less than its NDP. }$ 
A)  $\text { can be found by summing } C + I _ { g } + G + X _ { n }$ 
B)  is the dollar value of the total output produced by its citizens, regardless of where they are living. 
C)  $\text { can be found by summing } C + S + G + X _ { n } \text {. }$ 
D)  $\text { is always some amount less than its NDP. }$

Question 13

Gross private domestic investment exceeds depreciation in an economy that experiences
expanding production capacity.

Accepted Answer

A) True 
 B)False

Question 14

In determining GDP by the expenditures method, it is appropriate to use net investment rather than
gross investment as a measure of investment spending.

Accepted Answer

A) True 
 B)False

Question 15

Business inventories increase when ﬁrms produce

Accepted Answer

A)  more than they sell, and the inventory increase is added to GDP. 
B)  less than they sell, and the inventory increase is added to GDP. 
C)  more than they sell, and the inventory increase is subtracted from GDP. 
D)  less than they sell, and the inventory increase is subtracted from GDP. 
A)  more than they sell, and the inventory increase is added to GDP. 
B)  less than they sell, and the inventory increase is added to GDP. 
C)  more than they sell, and the inventory increase is subtracted from GDP. 
D)  less than they sell, and the inventory increase is subtracted from GDP.

Question 16

In calculating GDP, governmental transfer payments, such as Social Security or unemployment compensation, are

Accepted Answer

A)  not counted. 
B)  counted as investment spending. 
C)  counted as government spending. 
D)  counted as consumption spending. 
A)  not counted. 
B)  counted as investment spending. 
C)  counted as government spending. 
D)  counted as consumption spending.

Question 17

$$\begin{array} { | l | r | } 
\hline \text { Personal Taxes } & \$ 40 \
\hline \text { Social Security Contributions } & 15 \
\hline \text { Taxes on Production and Imports } & 20 \
\hline \text { Corporate Income Taxes } & 40 \
\hline \text { Transfer Payments } & 22 \
\hline \text { U.S. Exports } & 24 \
\hline \text { Undistributed Corporate Profits } & 35 \
\hline \text { Government Purchases } & 90 \
\hline \text { Gross Private Domestic Investment } & 75 \
\hline \text { U.S. Imports } & 22 \
\hline \text { Personal Consumption Expenditures } & 250 \
\hline \text { Consumption of Fixed Capital (depreciation) } & 25 \
\hline \text { Net Foreign Factor Income } & 10 \
\hline \text { Statistical Discrepancy } & 0 \
\hline
\end{array}$$ Refer to the accompanying data (all ?gures in billions of dollars). DI is

Accepted Answer

A)  $284. 
B)  $329. 
C)  $274. 
D)  $402. 
A)  $284. 
B)  $329. 
C)  $274. 
D)  $402.

Question 18

$$\begin{array} { | l | r | } 
\hline \text { Personal Taxes } & \$ 23 \
\hline \text { Net Private Domestic Investment } & 33 \
\hline \text { Net Exports } & 6 \
\hline \text { National Income } & 278 \
\hline \text { U.S. Exports } & 20 \
\hline \text { Gross Private Domestic Investment } & 56 \
\hline \text { Disposable Income } & 220 \
\hline \text { Taxes on Production and Imports } & 32 \
\hline \text { Undistributed Corporate Profits } & 15 \
\hline \text { Proprietors' Income } & 45 \
\hline \text { Net Foreign Factor Income } & 0 \
\hline \text { Statistical Discrepancy } & 0 \
\hline
\end{array}$$ Refer to the accompanying national income data. All ?gures are in billions of dollars. Personal consumption expenditures

Accepted Answer

A)  cannot be calculated. 
B)  are $231. 
C)  are $225. 
D)  are $205. 
A)  cannot be calculated. 
B)  are $231. 
C)  are $225. 
D)  are $205.

Question 19

If nominal GDP is 150 and the GDP price index is 200, real GDP is 75.

Accepted Answer

A) True 
 B)False

Question 20

In 1933, net private domestic investment was a minus $6.0 billion. This means that

Accepted Answer

A)  gross private domestic investment exceeded depreciation by $6.0 billion. 
B)  the economy was expanding that year. 
C)  the production of 1933's GDP used up more capital goods than were produced that year. 
D)  the economy produced no capital goods at all in 1933. 
A)  gross private domestic investment exceeded depreciation by $6.0 billion. 
B)  the economy was expanding that year. 
C)  the production of 1933's GDP used up more capital goods than were produced that year. 
D)  the economy produced no capital goods at all in 1933.

National income measures

Which of the following is a ﬁnal good or service?

In an economy, the value of inventories was $75 billion in year 1 and $63 billion in year 2. In calculating total investment for year 2, national income accountants would

Value added by a ﬁrm is the market value of the ﬁrm's output minus the

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is

GDP is the

In national income accounting, the personal consumption expenditures category includes purchases of

Year Units of Output Price of Bagel per Unit Price Index (Year 1=100) 1 10 \ 10 100 2 12 20 200 3 15 30 300 4 20 40 400 The table contains data for a hypothetical single-product economy. Real GDP in year 3 is

In comparing GDP data over a period of years, a difference between nominal and real GDP may arise because

If the economy adds to its inventory of goods during some year,

A nation's gross domestic product (GDP)

Gross private domestic investment exceeds depreciation in an economy that experiences expanding production capacity.

In determining GDP by the expenditures method, it is appropriate to use net investment rather than gross investment as a measure of investment spending.

Business inventories increase when ﬁrms produce

In calculating GDP, governmental transfer payments, such as Social Security or unemployment compensation, are

If nominal GDP is 150 and the GDP price index is 200, real GDP is 75.

In 1933, net private domestic investment was a minus $6.0 billion. This means that

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

Exam 7: Measuring Domestic Output and National Income

National income measures

Which of the following is a ﬁnal good or service?

In an economy, the value of inventories was $75 billion in year 1 and $63 billion in year 2. In calculating total investment for year 2, national income accountants would

Value added by a ﬁrm is the market value of the ﬁrm's output minus the

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is

GDP is the

In national income accounting, the personal consumption expenditures category includes purchases of

Year Units of Output Price of Bagel per Unit Price Index (Year 1=100) 1 10 \ 10 100 2 12 20 200 3 15 30 300 4 20 40 400 The table contains data for a hypothetical single-product economy. Real GDP in year 3 is

In comparing GDP data over a period of years, a difference between nominal and real GDP may arise because

If the economy adds to its inventory of goods during some year,

A nation's gross domestic product (GDP)

Gross private domestic investment exceeds depreciation in an economy that experiences expanding production capacity.

In determining GDP by the expenditures method, it is appropriate to use net investment rather than gross investment as a measure of investment spending.

Business inventories increase when ﬁrms produce

In calculating GDP, governmental transfer payments, such as Social Security or unemployment compensation, are

If nominal GDP is 150 and the GDP price index is 200, real GDP is 75.

In 1933, net private domestic investment was a minus $6.0 billion. This means that

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters