Question 1

If personal income exceeds national income in a particular year, we can conclude that

Accepted Answer

A)  transfer payments exceeded the sum of Social Security contributions, corporate income taxes, and taxes on production and imports. 
B)  the sum of Social Security contributions, corporate income taxes, and undistributed corporate proﬁts exceeded transfer payments. 
C)  consumption of ﬁxed capital and taxes on production and imports exceeded personal taxes. 
D)  transfer payments exceeded the sum of Social Security contributions, corporate income taxes, and undistributed corporate proﬁts. 
A)  transfer payments exceeded the sum of Social Security contributions, corporate income taxes, and taxes on production and imports. 
B)  the sum of Social Security contributions, corporate income taxes, and undistributed corporate proﬁts exceeded transfer payments. 
C)  consumption of ﬁxed capital and taxes on production and imports exceeded personal taxes. 
D)  transfer payments exceeded the sum of Social Security contributions, corporate income taxes, and undistributed corporate proﬁts.

Question 2

In the treatment of U.S. exports and imports, national income accountants

Accepted Answer

A)  subtract exports, but add imports, in calculating GDP. 
B)  subtract both exports and imports in calculating GDP. 
C)  add both exports and imports in calculating GDP. 
D)  add exports, but subtract imports, in calculating GDP. 
A)  subtract exports, but add imports, in calculating GDP. 
B)  subtract both exports and imports in calculating GDP. 
C)  add both exports and imports in calculating GDP. 
D)  add exports, but subtract imports, in calculating GDP.

Question 3

Which of the following activities is excluded from GDP, causing GDP to understate a nation's well- being?

Accepted Answer

A)  the services of used-car dealers 
B)  the child-care services provided by stay-at-home parents 
C)  the construction of new houses 
D)  government expenditures on military equipment 
A)  the services of used-car dealers 
B)  the child-care services provided by stay-at-home parents 
C)  the construction of new houses 
D)  government expenditures on military equipment

Question 4

Gross output (GO) for an economy in a given year

Accepted Answer

A)  will always be less than GDP for that economy in the same year. 
B)  will always equal GDP for that economy in the same year. 
C)  may be greater than or less than GDP for that economy in the same year. 
D)  will always exceed GDP for that economy in the same year. 
A)  will always be less than GDP for that economy in the same year. 
B)  will always equal GDP for that economy in the same year. 
C)  may be greater than or less than GDP for that economy in the same year. 
D)  will always exceed GDP for that economy in the same year.

Question 5

National income accountants deﬁne investment to include

Accepted Answer

A)  any increase in business inventories. 
B)  the addition of cash to a savings account. 
C)  the purchase of common or preferred stock. 
D)  the purchase of any durable good, for example, an automobile or a refrigerator. 
A)  any increase in business inventories. 
B)  the addition of cash to a savings account. 
C)  the purchase of common or preferred stock. 
D)  the purchase of any durable good, for example, an automobile or a refrigerator.

Question 6

$$\begin{array} { | l | r | } 
\hline \text { Personal Consumption Expenditures } & \$ 400 \
\hline \text { Government Purchases } & 128 \
\hline \text { Gross Private Domestic Investment } & 88 \
\hline \text { Net Exports } & 7 \
\hline \text { Net Foreign Factor Income } & 0 \
\hline \text { Consumption of Fixed Capital } & 43 \
\hline \text { Taxes on Production and Imports } & 50 \
\hline \text { Compensation of Employees } & 369 \
\hline \text { Rents } & 12 \
\hline \text { Interest } & 15 \
\hline \text { Proprietors' Income } & 52 \
\hline \text { Corporate Income Taxes } & 36 \
\hline \text { Dividends } & 24 \
\hline \text { Undistributed Corporate Profits } & 22 \
\hline \text { Statistical Discrepancy } & 0 \
\hline
\end{array}$$ Refer to the accompanying national income data for the economy. All ?gures are in billions of dollars. Disposable income

Accepted Answer

A)  cannot be determined from the data given. 
B)  is $484. 
C)  is $416. 
D)  is $502. 
A)  cannot be determined from the data given. 
B)  is $484. 
C)  is $416. 
D)  is $502.

Question 7

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

Accepted Answer

A)  $370. 
B)  $402. 
C)  $392. 
D)  $467. 
A)  $370. 
B)  $402. 
C)  $392. 
D)  $467.

Question 8

When local police and ﬁre departments buy new cars for their operations, these are counted as part of

Accepted Answer

A)  C. 
B)  Ig. 
C)  G. 
D)  Xn. 
A)  C. 
B)  Ig. 
C)  G. 
D)  Xn.

Question 9

Which would be considered an investment according to economists?

Accepted Answer

A)  A ﬁshing-company owner buys Google shares. 
B)  A ﬁshing company buys a few used boats from another ﬁshing company that was closing out. 
C)  A ﬁshing company buys new ﬁshing gear. 
D)  A ﬁshing-company owner buys fuel to run the boats. 
A)  A ﬁshing-company owner buys Google shares. 
B)  A ﬁshing company buys a few used boats from another ﬁshing company that was closing out. 
C)  A ﬁshing company buys new ﬁshing gear. 
D)  A ﬁshing-company owner buys fuel to run the boats.

Question 10

$\begin{array}{|c|l|r|}
\hline 1 & \text { Consumption of Fixed Capital } & \$ 438 \
\hline 2 & \text { Taxes on Production and Imports } & 326 \
\hline 3 & \text { Compensation of Employees } & 2,347 \
\hline 4 & \text { Rents } & 14 \
\hline 5 & \text { Interest } & 287 \
\hline 6 & \text { Proprietors' Income } & 242 \
\hline 7 & \text { Corporate Profits } & 297 \
\hline 8 & \text { Personal Consumption Expenditures } & 2,582 \
\hline 9 & \text { Gross Private Domestic Investment } & 669 \
\hline 10 & \text { Government Purchases } & 815 \
\hline 11 & \text { Net Exports } & -78 \
\hline 12 & \text { Net Foreign Factor Income } & 46 \
\hline 13 & \text { Statistical Discrepancy } & 50 \
\hline
\end{array}$ Refer to the accompanying national income data (in billions of dollars). The expenditures approach to GDP calculation can be done by adding

Accepted Answer

A)  1 through 7. 
B)  2 through 7. 
C)  8 through 11. 
D)  8 through 13. 
A)  1 through 7. 
B)  2 through 7. 
C)  8 through 11. 
D)  8 through 13.

Question 11

Gross output (GO) and GDP both measure

Accepted Answer

A)  resource extraction. 
B)  production. 
C)  distribution. 
D)  output of an economy. 
A)  resource extraction. 
B)  production. 
C)  distribution. 
D)  output of an economy.

Question 12

A large underground economy results in an

Accepted Answer

A)  understated GDP. 
B)  overstated GDP. 
C)  understated GDP price index. 
D)  overstated GDP price index. 
A)  understated GDP. 
B)  overstated GDP. 
C)  understated GDP price index. 
D)  overstated GDP price index.

Question 13

The total volume of business sales in our economy is several times larger than GDP because

Accepted Answer

A)  GDP does not take taxes into account. 
B)  GDP excludes intermediate transactions. 
C)  GDP grossly understates the value of our annual output. 
D)  total sales are in money terms and GDP is always stated in real terms. 
A)  GDP does not take taxes into account. 
B)  GDP excludes intermediate transactions. 
C)  GDP grossly understates the value of our annual output. 
D)  total sales are in money terms and GDP is always stated in real terms.

Question 14

$$\begin{array} { | l | c | } 
\hline \text { Proprietors' Income } & \$ 20 \
\hline \text { Compensation of Employees } & 300 \
\hline \text { Consumption of Fixed Capital } & 15 \
\hline \text { Gross Investment } & 80 \
\hline \text { Rents } & 10 \
\hline \text { Interest } & 20 \
\hline \text { Exports } & 30 \
\hline \text { Imports } & 50 \
\hline \text { Corporate Profits } & 25 \
\hline \text { Taxes on Production and Imports } & 5 \
\hline \text { Net Foreign Factor Income } & 0 \
\hline \text { Statistical Discrepancy } & 0 \
\hline
\end{array}$$ Refer to the accompanying data. All ?gures are in billions of dollars. Net domestic product is

Accepted Answer

A)  $395. 
B)  $380. 
C)  $375. 
D)  $360. 
A)  $395. 
B)  $380. 
C)  $375. 
D)  $360.

Question 15

U.S. GDP in 2018 was about

Accepted Answer

A)  $8 trillion. 
B)  $21 trillion. 
C)  $890 billion. 
D)  $30 trillion. 
A)  $8 trillion. 
B)  $21 trillion. 
C)  $890 billion. 
D)  $30 trillion.

Question 16

An example of intermediate goods would be

Accepted Answer

A)  bricks bought by a homeowner for constructing a patio. 
B)  sacks of groceries bought by a dentist for his family. 
C)  a new car bought by a recent college graduate. 
D)  paper and ink bought by a publishing company. 
A)  bricks bought by a homeowner for constructing a patio. 
B)  sacks of groceries bought by a dentist for his family. 
C)  a new car bought by a recent college graduate. 
D)  paper and ink bought by a publishing company.

Question 17

Refer to the diagram. Which of the following statements is correct?

Accepted Answer

A)  The price index is greater than 100 for every year shown on the graph. 
B)  Nominal GDP must be deﬂated in each year prior to 2000 to determine real GDP. 
C)  Real GDP has grown in this economy, but nominal GDP has not. 
D)  Nominal GDP must be deﬂated in each year after 2000 to determine real GDP. 
A)  The price index is greater than 100 for every year shown on the graph. 
B)  Nominal GDP must be deﬂated in each year prior to 2000 to determine real GDP. 
C)  Real GDP has grown in this economy, but nominal GDP has not. 
D)  Nominal GDP must be deﬂated in each year after 2000 to determine real GDP.

Question 18

Depreciation is all the following, except

Accepted Answer

A)  the difference between GDP and NDP. 
B)  the difference between gross investment and net investment. 
C)  the accumulation of capital stock. 
D)  the consumption of ﬁxed capital. 
A)  the difference between GDP and NDP. 
B)  the difference between gross investment and net investment. 
C)  the accumulation of capital stock. 
D)  the consumption of ﬁxed capital.

Question 19

If depreciation (consumption of ﬁxed capital) exceeds gross domestic investment, we can conclude that

Accepted Answer

A)  nominal GDP is rising but real GDP is declining. 
B)  net investment is negative. 
C)  the economy is importing more than it exports. 
D)  the economy's production capacity is expanding. 
A)  nominal GDP is rising but real GDP is declining. 
B)  net investment is negative. 
C)  the economy is importing more than it exports. 
D)  the economy's production capacity is expanding.

Question 20

Transfer payments are included in

Accepted Answer

A)  NI. 
B)  PI. 
C)  GDP. 
D)  NDP. 
A)  NI. 
B)  PI. 
C)  GDP. 
D)  NDP.

If personal income exceeds national income in a particular year, we can conclude that

In the treatment of U.S. exports and imports, national income accountants

Which of the following activities is excluded from GDP, causing GDP to understate a nation's well- being?

Gross output (GO) for an economy in a given year

National income accountants deﬁne investment to include

When local police and ﬁre departments buy new cars for their operations, these are counted as part of

Which would be considered an investment according to economists?

Gross output (GO) and GDP both measure

A large underground economy results in an

The total volume of business sales in our economy is several times larger than GDP because

U.S. GDP in 2018 was about

An example of intermediate goods would be

Refer to the diagram. Which of the following statements is correct?

Depreciation is all the following, except

If depreciation (consumption of ﬁxed capital) exceeds gross domestic investment, we can conclude that

Transfer payments are included in

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

If personal income exceeds national income in a particular year, we can conclude that

In the treatment of U.S. exports and imports, national income accountants

Which of the following activities is excluded from GDP, causing GDP to understate a nation's well- being?

Gross output (GO) for an economy in a given year

National income accountants deﬁne investment to include

When local police and ﬁre departments buy new cars for their operations, these are counted as part of

Which would be considered an investment according to economists?

Gross output (GO) and GDP both measure

A large underground economy results in an

The total volume of business sales in our economy is several times larger than GDP because

U.S. GDP in 2018 was about

An example of intermediate goods would be

Refer to the diagram. Which of the following statements is correct?

Depreciation is all the following, except

If depreciation (consumption of ﬁxed capital) exceeds gross domestic investment, we can conclude that

Transfer payments are included in

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