Question 1

Which of the following is not a component of aggregate expenditure?

Accepted Answer

A)  Consumption expenditures 
B)  Investment 
C)  Imports 
D)  Rent 
E)  Government purchases 
A)  Consumption expenditures 
B)  Investment 
C)  Imports 
D)  Rent 
E)  Government purchases

Question 2

If the real gross domestic product (GDP) for the base year is $4 trillion, then the nominal gross domestic product (GDP) for that year is _____.

Accepted Answer

A)  −$.04 trillion 
B)  $0.4 trillion 
C)  $4 trillion 
D)  $40 trillion 
E)  $400 trillion 
A)  −$.04 trillion 
B)  $0.4 trillion 
C)  $4 trillion 
D)  $40 trillion 
E)  $400 trillion

Question 3

Which of the following is an example of an intermediate good?

Accepted Answer

A)  Sugar bought by a bakery 
B)  Sugar bought by a family 
C)  Furniture bought by a family 
D)  Burgers bought at a restaurant 
E)  Medicines bought at a pharmacy 
A)  Sugar bought by a bakery 
B)  Sugar bought by a family 
C)  Furniture bought by a family 
D)  Burgers bought at a restaurant 
E)  Medicines bought at a pharmacy

Question 4

The consumer price index (CPI) overstates the true inflation rate because it ignores changes in consumers' purchasing patterns as relative prices change.

Accepted Answer

A) True 
 B)False

Question 5

_____ is measured in terms of current-year prices.

Accepted Answer

A)  Nominal gross domestic product (GDP) 
B)  GDP price index 
C)  Real gross domestic product (GDP) 
D)  Arbitrage 
E)  Depreciation 
A)  Nominal gross domestic product (GDP) 
B)  GDP price index 
C)  Real gross domestic product (GDP) 
D)  Arbitrage 
E)  Depreciation

Question 6

If a firm hires labor for $4,000, pays rent of $1,500, buys raw materials for $6,000 from another firm, earns profits of $500, and sells its output for $14,000, the value added by the firm is _____.

Accepted Answer

A)  $12,000 
B)  $8,000 
C)  $6,000 
D)  $2,000 
E)  $500 
A)  $12,000 
B)  $8,000 
C)  $6,000 
D)  $2,000 
E)  $500

Question 7

Leakages cause diversion of income from the domestic spending stream.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a difference between net domestic product (NDP) and gross domestic product (GDP)?

Accepted Answer

A)  GDP includes the cost of polluting the environment, while NDP does not. 
B)  GDP excludes net taxes, while NDP includes it. 
C)  GDP excludes that part of the capital stock used up in the production process, while NDP includes it. 
D)  GDP includes all government spending, while NDP excludes government spending. 
E)  GDP includes that part of the capital stock used up in the production process, while NDP does not. 
A)  GDP includes the cost of polluting the environment, while NDP does not. 
B)  GDP excludes net taxes, while NDP includes it. 
C)  GDP excludes that part of the capital stock used up in the production process, while NDP includes it. 
D)  GDP includes all government spending, while NDP excludes government spending. 
E)  GDP includes that part of the capital stock used up in the production process, while NDP does not.

Question 9

If a toy store overestimates the demand for a toy in 2004 and, as a result, has an unexpectedly large number of toys in stock at the end of the year, the value of the inventory of these toys will be considered as:

Accepted Answer

A)  investment in 2004. 
B)  investment in 2005. 
C)  consumption in 2004. 
D)  consumption in 2005. 
E)  a part of GDP when the toys are sold. 
A)  investment in 2004. 
B)  investment in 2005. 
C)  consumption in 2004. 
D)  consumption in 2005. 
E)  a part of GDP when the toys are sold.

Question 10

Chain-weighted indexes have less bias compared to fixed-weight indexes.

Accepted Answer

A) True 
 B)False

Question 11

When calculating gross domestic product (GDP), double counting can be avoided by:

Accepted Answer

A)  taxing corporate income. 
B)  adding all income taxes to GDP. 
C)  calculating GDP using the income as well as the expenditure method. 
D)  adding the value of exports to GDP and subtracting the value of imports. 
E)  summing the value added at each stage of production. 
A)  taxing corporate income. 
B)  adding all income taxes to GDP. 
C)  calculating GDP using the income as well as the expenditure method. 
D)  adding the value of exports to GDP and subtracting the value of imports. 
E)  summing the value added at each stage of production.

Question 12

If the price index is 100 this year, then:

Accepted Answer

A)  there has been no inflation during the year. 
B)  the price level is thrice as it was in the base year. 
C)  the price level is one hundred times what it was in the base year. 
D)  the price level is double what it was in the base year. 
E)  the inflation rate has been 100 percent since the base year. 
A)  there has been no inflation during the year. 
B)  the price level is thrice as it was in the base year. 
C)  the price level is one hundred times what it was in the base year. 
D)  the price level is double what it was in the base year. 
E)  the inflation rate has been 100 percent since the base year.

Question 13

The final market value of a good is _____.

Accepted Answer

A)  the sum of the value added at all stages of production 
B)  the value added at one stage of production 
C)  greater than the sum of all the values added at all stages of production 
D)  less than the sum of all the values added at all stages of production 
E)  the value added at the final stage of production 
A)  the sum of the value added at all stages of production 
B)  the value added at one stage of production 
C)  greater than the sum of all the values added at all stages of production 
D)  less than the sum of all the values added at all stages of production 
E)  the value added at the final stage of production

Question 14

A nation's aggregate expenditure decreases with an increase in imports, other things constant.

Accepted Answer

A) True 
 B)False

Question 15

If a firm hires labor for $20,000, pays rent of $12,000, buys raw materials for $6,000 from another firm, earns profits of $3,000, and sells its output for $41,000, the value added by the firm is _____.

Accepted Answer

A)  $0 
B)  $15,000 
C)  $35,000 
D)  $38,000 
E)  $41,000 
A)  $0 
B)  $15,000 
C)  $35,000 
D)  $38,000 
E)  $41,000

Question 16

Which of the following is true of exports and imports?

Accepted Answer

A)  Both imports and exports are added to a nation's gross domestic product (GDP). 
B)  Both imports and exports are subtracted from a nation's gross domestic product (GDP). 
C)  Imports are added and exports are subtracted from a nation's gross domestic product (GDP). 
D)  Exports are added and imports are subtracted from a nation's gross domestic product (GDP). 
E)  Neither imports nor exports are included in a nation's gross domestic product (GDP). 
A)  Both imports and exports are added to a nation's gross domestic product (GDP). 
B)  Both imports and exports are subtracted from a nation's gross domestic product (GDP). 
C)  Imports are added and exports are subtracted from a nation's gross domestic product (GDP). 
D)  Exports are added and imports are subtracted from a nation's gross domestic product (GDP). 
E)  Neither imports nor exports are included in a nation's gross domestic product (GDP).

Question 17

Taxes are injections into the circular flow of income and expenditure model.

Accepted Answer

A) True 
 B)False

Question 18

The value added method to measure GDP does not avoid double counting.

Accepted Answer

A) True 
 B)False

Question 19

Net exports equals _____.

Accepted Answer

A)  the value of exports minus the value of imports 
B)  the value of imports minus the value of exports 
C)  the value of imports minus tariffs 
D)  the value of exports minus tariffs 
E)  the value of exports plus the value of imports minus depreciation 
A)  the value of exports minus the value of imports 
B)  the value of imports minus the value of exports 
C)  the value of imports minus tariffs 
D)  the value of exports minus tariffs 
E)  the value of exports plus the value of imports minus depreciation

Question 20

The statement "Gross domestic product (GDP) values all output equally" means that:

Accepted Answer

A)  household production is treated the same as production by firms. 
B)  depreciation of manufactured capital is treated the same as depletion of natural resources. 
C)  the purchase of pollution control equipment is valued the same as pollution itself. 
D)  leisure time is valued the same as time spent working a job. 
E)  the market price of output is the measure of that output's value. 
A)  household production is treated the same as production by firms. 
B)  depreciation of manufactured capital is treated the same as depletion of natural resources. 
C)  the purchase of pollution control equipment is valued the same as pollution itself. 
D)  leisure time is valued the same as time spent working a job. 
E)  the market price of output is the measure of that output's value.

Which of the following is not a component of aggregate expenditure?

If the real gross domestic product (GDP) for the base year is $4 trillion, then the nominal gross domestic product (GDP) for that year is _____.

Which of the following is an example of an intermediate good?

The consumer price index (CPI) overstates the true inflation rate because it ignores changes in consumers' purchasing patterns as relative prices change.

_____ is measured in terms of current-year prices.

If a firm hires labor for $4,000, pays rent of $1,500, buys raw materials for $6,000 from another firm, earns profits of $500, and sells its output for $14,000, the value added by the firm is _____.

Leakages cause diversion of income from the domestic spending stream.

Which of the following is a difference between net domestic product (NDP) and gross domestic product (GDP)?

If a toy store overestimates the demand for a toy in 2004 and, as a result, has an unexpectedly large number of toys in stock at the end of the year, the value of the inventory of these toys will be considered as:

Chain-weighted indexes have less bias compared to fixed-weight indexes.

When calculating gross domestic product (GDP), double counting can be avoided by:

If the price index is 100 this year, then:

The final market value of a good is _____.

A nation's aggregate expenditure decreases with an increase in imports, other things constant.

If a firm hires labor for $20,000, pays rent of $12,000, buys raw materials for $6,000 from another firm, earns profits of $3,000, and sells its output for $41,000, the value added by the firm is _____.

Which of the following is true of exports and imports?

Taxes are injections into the circular flow of income and expenditure model.

The value added method to measure GDP does not avoid double counting.

Net exports equals _____.

The statement "Gross domestic product (GDP) values all output equally" means that:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

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Exam 6: Tracking the U S Economy

Which of the following is not a component of aggregate expenditure?

If the real gross domestic product (GDP) for the base year is $4 trillion, then the nominal gross domestic product (GDP) for that year is _____.

Which of the following is an example of an intermediate good?

The consumer price index (CPI) overstates the true inflation rate because it ignores changes in consumers' purchasing patterns as relative prices change.

_____ is measured in terms of current-year prices.

If a firm hires labor for $4,000, pays rent of $1,500, buys raw materials for $6,000 from another firm, earns profits of $500, and sells its output for $14,000, the value added by the firm is _____.

Leakages cause diversion of income from the domestic spending stream.

Which of the following is a difference between net domestic product (NDP) and gross domestic product (GDP)?

If a toy store overestimates the demand for a toy in 2004 and, as a result, has an unexpectedly large number of toys in stock at the end of the year, the value of the inventory of these toys will be considered as:

Chain-weighted indexes have less bias compared to fixed-weight indexes.

When calculating gross domestic product (GDP), double counting can be avoided by:

If the price index is 100 this year, then:

The final market value of a good is _____.

A nation's aggregate expenditure decreases with an increase in imports, other things constant.

If a firm hires labor for $20,000, pays rent of $12,000, buys raw materials for $6,000 from another firm, earns profits of $3,000, and sells its output for $41,000, the value added by the firm is _____.

Which of the following is true of exports and imports?

Taxes are injections into the circular flow of income and expenditure model.

The value added method to measure GDP does not avoid double counting.

Net exports equals _____.

The statement "Gross domestic product (GDP) values all output equally" means that:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters