Question 1

Refer to the diagram. The base year used in determining the price indices for this economy

Accepted Answer

A)  cannot be determined from the information given. 
B)  is some year before 2000. 
C)  is more recent than 2000. 
D)  is 2000. 
A)  cannot be determined from the information given. 
B)  is some year before 2000. 
C)  is more recent than 2000. 
D)  is 2000.

Question 2

GDP in an economy is $11,050 billion. Consumer expenditures are $7,735 billion, government purchases are $1,989 billion, and gross investment is $1,410 billion. Net exports must be

Accepted Answer

A)  +$53 billion. 
B)  -$47 billion. 
C)  -$84 billion. 
D)  -$161 billion. 
A)  +$53 billion. 
B)  -$47 billion. 
C)  -$84 billion. 
D)  -$161 billion.

Question 3

Final goods and services refers to

Accepted Answer

A)  goods and services that are unsold and therefore added to inventories. 
B)  goods and services whose value has been adjusted for changes in the price level. 
C)  goods and services purchased by ultimate users, rather than for resale or further processing. 
D)  the excess of U.S. exports over U.S. imports. 
A)  goods and services that are unsold and therefore added to inventories. 
B)  goods and services whose value has been adjusted for changes in the price level. 
C)  goods and services purchased by ultimate users, rather than for resale or further processing. 
D)  the excess of U.S. exports over U.S. imports.

Question 4

The smallest component of aggregate spending in the United States is

Accepted Answer

A)  net exports. 
B)  government purchases. 
C)  investment. 
D)  consumption. 
A)  net exports. 
B)  government purchases. 
C)  investment. 
D)  consumption.

Question 5

$$\begin{array} { | c | c | c | } 
\hline \text { Year } & \text { Units of Output } & \text { Price Per Unit } \
\hline 1 & 3 & \$ 3 \
\hline 2 & 4 & 4 \
\hline 3 & 6 & 5 \
\hline 4 & 7 & 7 \
\hline 5 & 8 & 8 \
\hline
\end{array}$$ Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a ?ve-year period are shown in the table. In determining real GDP, the nominal GDP for

Accepted Answer

A)  each year must be multiplied by the relevant price index. 
B)  years 1 and 2 must be in?ated. 
C)  years 4 and 5 must be in?ated. 
D)  years 1 and 2 must be de?ated. 
A)  each year must be multiplied by the relevant price index. 
B)  years 1 and 2 must be in?ated. 
C)  years 4 and 5 must be in?ated. 
D)  years 1 and 2 must be de?ated.

Question 6

If nominal GDP in some year is $280 and real GDP is $160, then the GDP price index for that year is

Accepted Answer

A)  175. 
B)  57. 
C)  160. 
D)  280. 
A)  175. 
B)  57. 
C)  160. 
D)  280.

Question 7

When an economy's production capacity is expanding,

Accepted Answer

A)  nominal GDP, but not necessarily real GDP, is rising. 
B)  net exports is always a positive amount. 
C)  DI exceeds PI. 
D)  gross domestic investment exceeds depreciation. 
A)  nominal GDP, but not necessarily real GDP, is rising. 
B)  net exports is always a positive amount. 
C)  DI exceeds PI. 
D)  gross domestic investment exceeds depreciation.

Question 8

Adding the market value of all ﬁnal and intermediate goods and services in an economy in a given year would result in

Accepted Answer

A)  the calculation of GDP for that year. 
B)  the calculation of NDP for that year. 
C)  an amount less than GDP for that year. 
D)  an amount greater than GDP for that year. 
A)  the calculation of GDP for that year. 
B)  the calculation of NDP for that year. 
C)  an amount less than GDP for that year. 
D)  an amount greater than GDP for that year.

Question 9

Corporate proﬁts are found by

Accepted Answer

A)  summing corporate income taxes, dividends, and undistributed corporate proﬁts. 
B)  adding corporate income taxes and dividends and subtracting undistributed corporate proﬁts. 
C)  subtracting corporate income taxes from the sum of dividends and undistributed corporate proﬁts. 
D)  summing dividends, undistributed corporate proﬁts, and proprietors' income. 
A)  summing corporate income taxes, dividends, and undistributed corporate proﬁts. 
B)  adding corporate income taxes and dividends and subtracting undistributed corporate proﬁts. 
C)  subtracting corporate income taxes from the sum of dividends and undistributed corporate proﬁts. 
D)  summing dividends, undistributed corporate proﬁts, and proprietors' income.

Question 10

Consumption of ﬁxed capital (depreciation) can be determined by

Accepted Answer

A)  adding taxes on production and imports to NDP. 
B)  subtracting NDP from GDP. 
C)  subtracting net investment from GDP. 
D)  adding net investment to gross investment. 
A)  adding taxes on production and imports to NDP. 
B)  subtracting NDP from GDP. 
C)  subtracting net investment from GDP. 
D)  adding net investment to gross investment.

Question 11

The largest expenditure component of GDP is

Accepted Answer

A)  government purchases. 
B)  personal consumption expenditures. 
C)  gross private domestic investment. 
D)  net exports. 
A)  government purchases. 
B)  personal consumption expenditures. 
C)  gross private domestic investment. 
D)  net exports.

Question 12

In an economy that is experiencing a shrinking production capacity,

Accepted Answer

A)  gross domestic investment is negative. 
B)  net private domestic investment is zero. 
C)  depreciation is negative. 
D)  depreciation exceeds gross investment. 
A)  gross domestic investment is negative. 
B)  net private domestic investment is zero. 
C)  depreciation is negative. 
D)  depreciation exceeds gross investment.

Question 13

Real GDP refers to

Accepted Answer

A)  the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. 
B)  GDP data that embody changes in the price level but not changes in physical output. 
C)  GDP data that do not reﬂect changes in both physical output and the price level. 
D)  GDP data that have been adjusted for changes in the price level. 
A)  the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. 
B)  GDP data that embody changes in the price level but not changes in physical output. 
C)  GDP data that do not reﬂect changes in both physical output and the price level. 
D)  GDP data that have been adjusted for changes in the price level.

Question 14

Arthur sells $100 worth of cotton to Bob. Bob turns the cotton into cloth, which he sells to Camille for $300. Camille uses the cloth to make prom dresses that she sells to Donita for $700. Donita sells
The dresses for $1,200 to kids attending the prom. The total contribution to GDP of this series of
Transactions is

Accepted Answer

A)  $1,200. 
B)  $500. 
C)  $2,300. 
D)  $1,100. 
A)  $1,200. 
B)  $500. 
C)  $2,300. 
D)  $1,100.

Question 15

If real GDP falls from one period to another, we can conclude that

Accepted Answer

A)  deﬂation occurred. 
B)  inﬂation occurred. 
C)  nominal GDP fell. 
D)  none of these necessarily occurred. 
A)  deﬂation occurred. 
B)  inﬂation occurred. 
C)  nominal GDP fell. 
D)  none of these necessarily occurred.

Question 16

If nominal GDP rises,

Accepted Answer

A)  real GDP may either rise or fall. 
B)  we can be certain that the price level has risen. 
C)  real GDP must fall. 
D)  real GDP must also rise. 
A)  real GDP may either rise or fall. 
B)  we can be certain that the price level has risen. 
C)  real GDP must fall. 
D)  real GDP must also rise.

Question 17

Computation of GDP by the expenditures method would include the purchase of

Accepted Answer

A)  fertilizer by a farmer. 
B)  cement by a construction company. 
C)  land by the U.S. Department of Interior. 
D)  government bonds by a commercial bank. 
A)  fertilizer by a farmer. 
B)  cement by a construction company. 
C)  land by the U.S. Department of Interior. 
D)  government bonds by a commercial bank.

Question 18

$$\begin{array} { | l | c | } 
\hline \text { Gross Private Domestic Investment } & \$ 46 \
\hline \text { Exports of the U.S. } & 9 \
\hline \text { Disposable Income } & 190 \
\hline \text { Personal Saving } & 10 \
\hline \text { Government Purchases } & 84 \
\hline \text { Net Foreign Factor Income } & 10 \
\hline \text { Consumption of Fixed Capital } & 52 \
\hline \text { Dividends } & 13 \
\hline \text { Imports of the U.S. } & 12 \
\hline \text { Taxes on Production and Imports } & 22 \
\hline \text { Personal Taxes } & 38 \
\hline \text { Social Security Contributions } & 23 \
\hline \text { Statistical Discrepancy } & 0 \
\hline
\end{array}$$ Refer to the accompanying data. All ?gures are in billions of dollars. The net domestic product is

Accepted Answer

A)  $233. 
B)  $255. 
C)  $230. 
D)  $348. 
A)  $233. 
B)  $255. 
C)  $230. 
D)  $348.

Question 19

Gross domestic product (GDP) measures and reports output

Accepted Answer

A)  as an index number. 
B)  in percentage terms. 
C)  in dollar amounts. 
D)  in quantities of physical units (for example, pounds, gallons, and bushels). 
A)  as an index number. 
B)  in percentage terms. 
C)  in dollar amounts. 
D)  in quantities of physical units (for example, pounds, gallons, and bushels).

Question 20

$$\begin{array} { | l | c | } 
\hline \text { Disposable Income } & \$ 200 \
\hline \text { Net Private Domestic Investment } & 40 \
\hline \text { US Imports } & 15 \
\hline \text { National Income } & 300 \
\hline \text { Personal Taxes } & 31 \
\hline \text { Net Exports } & 9 \
\hline \text { Gross Private Domestic Investment } & 55 \
\hline \text { Net Foreign Factor Income } & 10 \
\hline \text { Statistical Discrepancy } & 0 \
\hline
\end{array}$$ Refer to the accompanying national income data (in billions of dollars). In these data, U.S. exports are

Accepted Answer

A)  $9 billion. 
B)  $16 billion. 
C)  $24 billion. 
D)  $28 billion. 
A)  $9 billion. 
B)  $16 billion. 
C)  $24 billion. 
D)  $28 billion.

Refer to the diagram. The base year used in determining the price indices for this economy

GDP in an economy is $11,050 billion. Consumer expenditures are $7,735 billion, government purchases are $1,989 billion, and gross investment is $1,410 billion. Net exports must be

Final goods and services refers to

The smallest component of aggregate spending in the United States is

Year Units of Output Price Per Unit 1 3 \ 3 2 4 4 3 6 5 4 7 7 5 8 8 Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a ?ve-year period are shown in the table. In determining real GDP, the nominal GDP for

If nominal GDP in some year is $280 and real GDP is $160, then the GDP price index for that year is

When an economy's production capacity is expanding,

Adding the market value of all ﬁnal and intermediate goods and services in an economy in a given year would result in

Corporate proﬁts are found by

Consumption of ﬁxed capital (depreciation) can be determined by

The largest expenditure component of GDP is

In an economy that is experiencing a shrinking production capacity,

Real GDP refers to

If real GDP falls from one period to another, we can conclude that

If nominal GDP rises,

Computation of GDP by the expenditures method would include the purchase of

Gross domestic product (GDP) measures and reports output

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

Refer to the diagram. The base year used in determining the price indices for this economy

GDP in an economy is $11,050 billion. Consumer expenditures are $7,735 billion, government purchases are $1,989 billion, and gross investment is $1,410 billion. Net exports must be

Final goods and services refers to

The smallest component of aggregate spending in the United States is

Year Units of Output Price Per Unit 1 3 \ 3 2 4 4 3 6 5 4 7 7 5 8 8 Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a ?ve-year period are shown in the table. In determining real GDP, the nominal GDP for

If nominal GDP in some year is $280 and real GDP is $160, then the GDP price index for that year is

When an economy's production capacity is expanding,

Adding the market value of all ﬁnal and intermediate goods and services in an economy in a given year would result in

Corporate proﬁts are found by

Consumption of ﬁxed capital (depreciation) can be determined by

The largest expenditure component of GDP is

In an economy that is experiencing a shrinking production capacity,

Real GDP refers to

If real GDP falls from one period to another, we can conclude that

If nominal GDP rises,

Computation of GDP by the expenditures method would include the purchase of

Gross domestic product (GDP) measures and reports output

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