Question 1

If there are no statistical discrepancies, NDP (net domestic product) is

Accepted Answer

A)  NI minus net foreign factor income. 
B)  NI plus corporate income taxes. 
C)  GDP deﬂated for increases in the price level. 
D)  GDP minus taxes on production and imports. 
A)  NI minus net foreign factor income. 
B)  NI plus corporate income taxes. 
C)  GDP deﬂated for increases in the price level. 
D)  GDP minus taxes on production and imports.

Question 2

Which of the following is not included in personal consumption expenditures?

Accepted Answer

A)  new furniture and appliances bought by homeowners 
B)  payments for cable and Internet services to homes 
C)  purchases of mutual funds by consumers 
D)  food purchased at supermarkets 
A)  new furniture and appliances bought by homeowners 
B)  payments for cable and Internet services to homes 
C)  purchases of mutual funds by consumers 
D)  food purchased at supermarkets

Question 3

Which of the following is a primary use for national income accounts?

Accepted Answer

A)  to analyze the environmental cost of economic growth 
B)  to assess the economic eﬃciency of speciﬁc industries in the economy 
C)  to measure changes in the value of production and income in the economy 
D)  to determine whether there is a fair and equitable distribution of income in the economy 
A)  to analyze the environmental cost of economic growth 
B)  to assess the economic eﬃciency of speciﬁc industries in the economy 
C)  to measure changes in the value of production and income in the economy 
D)  to determine whether there is a fair and equitable distribution of income in the economy

Question 4

The National Income and Product Accounts (NIPA) for the U.S. are compiled by the

Accepted Answer

A)  National Bureau of Economic Research. 
B)  Bureau of Economic Analysis. 
C)  National Census Bureau. 
D)  Council of Economic Advisers. 
A)  National Bureau of Economic Research. 
B)  Bureau of Economic Analysis. 
C)  National Census Bureau. 
D)  Council of Economic Advisers.

Question 5

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

Accepted Answer

A)  both new and used consumer goods. 
B)  consumer durable goods and consumer nondurable goods but not services. 
C)  consumer durable goods, consumer nondurable goods, and services. 
D)  changes in business inventories. 
A)  both new and used consumer goods. 
B)  consumer durable goods and consumer nondurable goods but not services. 
C)  consumer durable goods, consumer nondurable goods, and services. 
D)  changes in business inventories.

Question 6

A distinguishing characteristic of public transfer payments is that

Accepted Answer

A)  they include wages to government workers. 
B)  they are counted as part of government purchases in the calculation of the gross domestic product. 
C)  they include the cost of maintaining public parks. 
D)  they involve no contribution to current production in return. 
A)  they include wages to government workers. 
B)  they are counted as part of government purchases in the calculation of the gross domestic product. 
C)  they include the cost of maintaining public parks. 
D)  they involve no contribution to current production in return.

Question 7

In an economy experiencing a persistently falling price level,

Accepted Answer

A)  potential GDP will necessarily exceed actual GDP. 
B)  changes in nominal GDP may either overstate or understate changes in real GDP. 
C)  changes in nominal GDP understate changes in real GDP. 
D)  changes in nominal GDP overstate changes in real GDP. 
A)  potential GDP will necessarily exceed actual GDP. 
B)  changes in nominal GDP may either overstate or understate changes in real GDP. 
C)  changes in nominal GDP understate changes in real GDP. 
D)  changes in nominal GDP overstate changes in real GDP.

Question 8

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

Accepted Answer

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

Question 9

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

Accepted Answer

A)  $23. 
B)  $14. 
C)  $32. 
D)  $26. 
A)  $23. 
B)  $14. 
C)  $32. 
D)  $26.

Question 10

What is the difference between national income and personal income?

Accepted Answer

A)  personal taxes 
B)  National income includes income earned both in the United States and abroad, while personal income only includes that income earned within the borders of the United States. 
C)  National income represents before-tax income, while personal income measures how much is available for spending after all taxes have been subtracted. 
D)  National income represents income earned by American-owned resources, while personal income measures received income, whether earned or unearned. 
A)  personal taxes 
B)  National income includes income earned both in the United States and abroad, while personal income only includes that income earned within the borders of the United States. 
C)  National income represents before-tax income, while personal income measures how much is available for spending after all taxes have been subtracted. 
D)  National income represents income earned by American-owned resources, while personal income measures received income, whether earned or unearned.

Question 11

Subtracting the purchase of intermediate products and supplies from the value of the sales of ﬁnal products determines the amount of

Accepted Answer

A)  net investment for a business. 
B)  proﬁt and cost. 
C)  value added from the economic activity. 
D)  surplus or deﬁcit from the economic activity. 
A)  net investment for a business. 
B)  proﬁt and cost. 
C)  value added from the economic activity. 
D)  surplus or deﬁcit from the economic activity.

Question 12

Gross output (GO)

Accepted Answer

A)  and GDP are equivalent measures of the ﬁnal output of an economy. 
B)  sums together the dollar value of economic activity at every stage of production. 
C)  measures all economic activity leading up to but excluding ﬁnal output. 
D)  always equals an amount smaller than GDP. 
A)  and GDP are equivalent measures of the ﬁnal output of an economy. 
B)  sums together the dollar value of economic activity at every stage of production. 
C)  measures all economic activity leading up to but excluding ﬁnal output. 
D)  always equals an amount smaller than GDP.

Question 13

A nation's gross domestic product (GDP)

Accepted Answer

A)  is the dollar value of all ?nal output produced within the borders of the nation during a speci?c period of time. 
B)  is the dollar value of all ?nal output produced by its citizens, regardless of where they are living. 
C)  $\text { can be found by summing   }  C + I _ { n } + S + X _ { n } \text {. }$ 
D)  $\text { is always some amount less than } C + I _ { g } + G + X _ { n }$ 
A)  is the dollar value of all ?nal output produced within the borders of the nation during a speci?c period of time. 
B)  is the dollar value of all ?nal output produced by its citizens, regardless of where they are living. 
C)  $\text { can be found by summing   }  C + I _ { n } + S + X _ { n } \text {. }$ 
D)  $\text { is always some amount less than } C + I _ { g } + G + X _ { n }$

Question 14

$$\begin{array} { | c | c | c | } 
\hline \text { Year } & \text { Units of Output } & \text { Price Per Unit } \
\hline 1 & 3 & \$ 3 \
\hline 2 & 4 & 4 \
\hline 3 & 6 & 5 \
\hline 4 & 7 & 7 \
\hline 5 & 8 & 8 \
\hline
\end{array}$$ 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. The nominal GDP for year 4 is

Accepted Answer

A)  $49. 
B)  $55. 
C)  $40. 
D)  $35. 
A)  $49. 
B)  $55. 
C)  $40. 
D)  $35.

Question 15

To avoid multiple counting in national income accounts,

Accepted Answer

A)  only ﬁnal goods and services should be counted. 
B)  intermediate goods and services should be counted. 
C)  both ﬁnal and intermediate goods and services should be counted. 
D)  primary, intermediate, and ﬁnal goods and services should be counted. 
A)  only ﬁnal goods and services should be counted. 
B)  intermediate goods and services should be counted. 
C)  both ﬁnal and intermediate goods and services should be counted. 
D)  primary, intermediate, and ﬁnal goods and services should be counted.

Question 16

All of the following are examples of intermediate goods, except

Accepted Answer

A)  ﬂour bought by a bakery. 
B)  an oven bought by a bakery. 
C)  oﬃce supplies bought by an accounting ﬁrm. 
D)  gasoline bought by a trucking company. 
A)  ﬂour bought by a bakery. 
B)  an oven bought by a bakery. 
C)  oﬃce supplies bought by an accounting ﬁrm. 
D)  gasoline bought by a trucking company.

Question 17

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

Accepted Answer

A)  $26. 
B)  $16. 
C)  $24. 
D)  $14. 
A)  $26. 
B)  $16. 
C)  $24. 
D)  $14.

Question 18

Assume that the size of the underground economy increases both absolutely and relatively over time. As a result,

Accepted Answer

A)  real GDP will rise more rapidly than nominal GDP. 
B)  GDP will tend to increasingly understate the level of output through time. 
C)  GDP will tend to increasingly overstate the level of output through time. 
D)  the accuracy of GDP will be unaffected through time. 
A)  real GDP will rise more rapidly than nominal GDP. 
B)  GDP will tend to increasingly understate the level of output through time. 
C)  GDP will tend to increasingly overstate the level of output through time. 
D)  the accuracy of GDP will be unaffected through time.

Question 19

Suppose Smith pays $100 to Jones.

Accepted Answer

A)  We can say with certainty that the GDP has increased by $100. 
B)  We can say with certainty that the GDP has increased, but we cannot determine the amount. 
C)  We can say with certainty that the nominal GDP has increased, but we can't say whether real GDP has increased or decreased. 
D)  We need more information to determine whether GDP has changed. 
A)  We can say with certainty that the GDP has increased by $100. 
B)  We can say with certainty that the GDP has increased, but we cannot determine the amount. 
C)  We can say with certainty that the nominal GDP has increased, but we can't say whether real GDP has increased or decreased. 
D)  We need more information to determine whether GDP has changed.

Question 20

Net exports are

Accepted Answer

A)  that portion of consumption and investment goods sent to other countries. 
B)  exports plus imports. 
C)  exports less imports. 
D)  imports less exports. 
A)  that portion of consumption and investment goods sent to other countries. 
B)  exports plus imports. 
C)  exports less imports. 
D)  imports less exports.

If there are no statistical discrepancies, NDP (net domestic product) is

Which of the following is not included in personal consumption expenditures?

Which of the following is a primary use for national income accounts?

The National Income and Product Accounts (NIPA) for the U.S. are compiled by the

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

A distinguishing characteristic of public transfer payments is that

In an economy experiencing a persistently falling price level,

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. Nominal GDP in year 3 is

What is the difference between national income and personal income?

Subtracting the purchase of intermediate products and supplies from the value of the sales of ﬁnal products determines the amount of

Gross output (GO)

A nation's gross domestic product (GDP)

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. The nominal GDP for year 4 is

To avoid multiple counting in national income accounts,

All of the following are examples of intermediate goods, except

Assume that the size of the underground economy increases both absolutely and relatively over time. As a result,

Suppose Smith pays $100 to Jones.

Net exports are

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 there are no statistical discrepancies, NDP (net domestic product) is

Which of the following is not included in personal consumption expenditures?

Which of the following is a primary use for national income accounts?

The National Income and Product Accounts (NIPA) for the U.S. are compiled by the

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

A distinguishing characteristic of public transfer payments is that

In an economy experiencing a persistently falling price level,

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. Nominal GDP in year 3 is

What is the difference between national income and personal income?

Subtracting the purchase of intermediate products and supplies from the value of the sales of ﬁnal products determines the amount of

Gross output (GO)

A nation's gross domestic product (GDP)

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. The nominal GDP for year 4 is

To avoid multiple counting in national income accounts,

All of the following are examples of intermediate goods, except

Assume that the size of the underground economy increases both absolutely and relatively over time. As a result,

Suppose Smith pays $100 to Jones.

Net exports are

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