Question 1

If the price of a good increases compared to the base year, then the price level also increases.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following is an example of a final good or service?

Accepted Answer

A)  bricks purchased by a company for constructing houses 
B)  wheat purchased by a bakery 
C)  steel purchased by a company for manufacturing cars 
D)  a cup of coffee bought at a restaurant 
E)  a used car bought by a person 
A)  bricks purchased by a company for constructing houses 
B)  wheat purchased by a bakery 
C)  steel purchased by a company for manufacturing cars 
D)  a cup of coffee bought at a restaurant 
E)  a used car bought by a person D

Question 3

According to a federal study, the equivalent of what percentage of U.S. GDP is underground production?

Accepted Answer

A)  50 percent 
B)  25 percent 
C)  15 percent 
D)  10 percent 
E)  5 percent 
A)  50 percent 
B)  25 percent 
C)  15 percent 
D)  10 percent 
E)  5 percent C

Question 4

Which of the following formulas is correct for disposable income?

Accepted Answer

A)  DI = C- NT 
B)  DI = S + NT 
C)  DI = C+S 
D)  DI = C+I 
E)  DI = C + S - NT 
A)  DI = C- NT 
B)  DI = S + NT 
C)  DI = C+S 
D)  DI = C+I 
E)  DI = C + S - NT

Question 5

The circular-flow model shows that _____

Accepted Answer

A)  households are on the demand side of the resource market. 
B)  firms are on the demand side of both the product and resource markets. 
C)  households are on the supply side of the resource market and the demand side of the product market. 
D)  firms and governments are on the supply side of the loanable funds market. 
E)  governments are on the demand side of the product market and the supply side of the resource market. 
A)  households are on the demand side of the resource market. 
B)  firms are on the demand side of both the product and resource markets. 
C)  households are on the supply side of the resource market and the demand side of the product market. 
D)  firms and governments are on the supply side of the loanable funds market. 
E)  governments are on the demand side of the product market and the supply side of the resource market.

Question 6

If the GDP price index rises from 100 to 110 to 115 over three consecutive years, it can be concluded that the inflation rate is decreasing.

Accepted Answer

A) True 
 B)False

Question 7

If the price index is 100 in the base year, and 104 in the next year, what happened to prices?

Accepted Answer

A)  Prices increased by 6%. 
B)  Prices decreased by 6%. 
C)  Prices increased by 4%. 
D)  Prices decreased by 4%. 
E)  Prices did not change. 
A)  Prices increased by 6%. 
B)  Prices decreased by 6%. 
C)  Prices increased by 4%. 
D)  Prices decreased by 4%. 
E)  Prices did not change.

Question 8

_____ are goods and services sold to final, or end, users.

Accepted Answer

A)  Intermediate goods and services 
B)  Final goods and services 
C)  Inventories 
D)  Physical capital 
E)  Value 
A)  Intermediate goods and services 
B)  Final goods and services 
C)  Inventories 
D)  Physical capital 
E)  Value

Question 9

Real gross domestic product (GDP) is measured in terms of _____

Accepted Answer

A)  current-year prices. 
B)  base-year prices. 
C)  foreign currencies. 
D)  the quality of goods produced. 
E)  hours of employment. 
A)  current-year prices. 
B)  base-year prices. 
C)  foreign currencies. 
D)  the quality of goods produced. 
E)  hours of employment.

Question 10

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 11

Jimmy Earl, a farmer, sells $20 worth of peanuts to a factory that manufactures peanut butter, which sells it for $45. Which of the following is true?

Accepted Answer

A)  Total value added is $65. 
B)  The value of final sales is $65. 
C)  The value of final sales is $25. 
D)  Total value added is $25. 
E)  Total value added is $45. 
A)  Total value added is $65. 
B)  The value of final sales is $65. 
C)  The value of final sales is $25. 
D)  Total value added is $25. 
E)  Total value added is $45.

Question 12

Which of the following would be included in the gross domestic product (GDP)?

Accepted Answer

A)  the monthly telephone bill paid by Mr. Jones 
B)  the corporate stock purchased by Steven 
C)  the used limousine purchased by Harold 
D)  the bricks purchased by a construction company to build a house 
E)  the $300 George saved because he painted his own garage 
A)  the monthly telephone bill paid by Mr. Jones 
B)  the corporate stock purchased by Steven 
C)  the used limousine purchased by Harold 
D)  the bricks purchased by a construction company to build a house 
E)  the $300 George saved because he painted his own garage

Question 13

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

Accepted Answer

A)  the flowers that Mr. Grover buys at a local nursery 
B)  the flowers that Timmy picks from a neighbor's garden and brings to Mrs. Grover 
C)  the flour that Grandma buys to bake a birthday cake 
D)  the flour that Joe buys so that he can eat pizza three nights a week 
E)  the flour that Amy orders each month for the bakery she manages 
A)  the flowers that Mr. Grover buys at a local nursery 
B)  the flowers that Timmy picks from a neighbor's garden and brings to Mrs. Grover 
C)  the flour that Grandma buys to bake a birthday cake 
D)  the flour that Joe buys so that he can eat pizza three nights a week 
E)  the flour that Amy orders each month for the bakery she manages

Question 14

The gross domestic product (GDP) excludes _____

Accepted Answer

A)  the value of a new building. 
B)  the value of new stocks and shares. 
C)  the cost of a new vending machine. 
D)  government expenditure on a new bridge. 
E)  the money spent on the purchase of legal services by a household. 
A)  the value of a new building. 
B)  the value of new stocks and shares. 
C)  the cost of a new vending machine. 
D)  government expenditure on a new bridge. 
E)  the money spent on the purchase of legal services by a household.

Question 15

The circular-flow model shows the flow of _____

Accepted Answer

A)  money in the banking sector of the economy. 
B)  financial assets in the economy. 
C)  goods and services in the product market. 
D)  resources and money in the economy. 
E)  resources through the resource markets and their allocation in the product market. 
A)  money in the banking sector of the economy. 
B)  financial assets in the economy. 
C)  goods and services in the product market. 
D)  resources and money in the economy. 
E)  resources through the resource markets and their allocation in the product market.

Question 16

Which of the following is an example of a leakage from the circular flow of income and expenditure?

Accepted Answer

A)  investment 
B)  imports 
C)  government purchases 
D)  exports 
E)  transfer payments 
A)  investment 
B)  imports 
C)  government purchases 
D)  exports 
E)  transfer payments

Question 17

Louise sells ten sweaters she had knitted to a retail store. The gross domestic product (GDP) of her country _____

Accepted Answer

A)  will increase. 
B)  will decrease. 
C)  will remain unaffected. 
D)  will increase only if the sweaters are as good as the sweaters sold by other retailers. 
E)  will increase if the price of each sweater is less than the cost of inputs required. 
A)  will increase. 
B)  will decrease. 
C)  will remain unaffected. 
D)  will increase only if the sweaters are as good as the sweaters sold by other retailers. 
E)  will increase if the price of each sweater is less than the cost of inputs required.

Question 18

A(n) _____ involves market transactions that go unreported either because they are illegal or because people involved want to evade taxes.

Accepted Answer

A)  foreign portfolio investment 
B)  underground economy 
C)  net export 
D)  capital inflow 
E)  transfer payment 
A)  foreign portfolio investment 
B)  underground economy 
C)  net export 
D)  capital inflow 
E)  transfer payment

Question 19

Suppose the respective prices of yogurt, candy bars, and popcorn in Year 1 are $1, $2, and $3. In Year 2, the unit prices of each are $2, $3, and $4, respectively. Which of the following statements is true of the price level between Year 1 and Year 2?

Accepted Answer

A)  It decreased by 20 percent. 
B)  It increased by 33 percent. 
C)  It increased from $6 to $9. 
D)  It decreased at a rate between 20 percent and 50 percent. 
E)  It increased at a rate between 33 percent and 100 percent. 
A)  It decreased by 20 percent. 
B)  It increased by 33 percent. 
C)  It increased from $6 to $9. 
D)  It decreased at a rate between 20 percent and 50 percent. 
E)  It increased at a rate between 33 percent and 100 percent.

Question 20

When a firm produces and sells a refrigerator worth $1,000, its contribution to the gross domestic product (GDP) on the income side is measured by _____

Accepted Answer

A)  the price paid by the consumer. 
B)  the cost to the consumer of forgoing another product. 
C)  the stock of inventories used by the firm to manufacture the refrigerator. 
D)  the cost to the producer of not producing another product. 
E)  the sum of the wages, interest, and rent paid by the firm's owners and the profit of the firm. 
A)  the price paid by the consumer. 
B)  the cost to the consumer of forgoing another product. 
C)  the stock of inventories used by the firm to manufacture the refrigerator. 
D)  the cost to the producer of not producing another product. 
E)  the sum of the wages, interest, and rent paid by the firm's owners and the profit of the firm.

If the price of a good increases compared to the base year, then the price level also increases.

Which of the following is an example of a final good or service?

According to a federal study, the equivalent of what percentage of U.S. GDP is underground production?

Which of the following formulas is correct for disposable income?

The circular-flow model shows that _____

If the GDP price index rises from 100 to 110 to 115 over three consecutive years, it can be concluded that the inflation rate is decreasing.

If the price index is 100 in the base year, and 104 in the next year, what happened to prices?

_____ are goods and services sold to final, or end, users.

Real gross domestic product (GDP) is measured in terms of _____

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 _____

Jimmy Earl, a farmer, sells $20 worth of peanuts to a factory that manufactures peanut butter, which sells it for $45. Which of the following is true?

Which of the following would be included in the gross domestic product (GDP)?

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

The gross domestic product (GDP) excludes _____

The circular-flow model shows the flow of _____

Which of the following is an example of a leakage from the circular flow of income and expenditure?

Louise sells ten sweaters she had knitted to a retail store. The gross domestic product (GDP) of her country _____

A(n) _____ involves market transactions that go unreported either because they are illegal or because people involved want to evade taxes.

Suppose the respective prices of yogurt, candy bars, and popcorn in Year 1 are $1, $2, and $3. In Year 2, the unit prices of each are $2, $3, and $4, respectively. Which of the following statements is true of the price level between Year 1 and Year 2?

When a firm produces and sells a refrigerator worth $1,000, its contribution to the gross domestic product (GDP) on the income side is measured by _____

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Unemployment and Inflation.

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.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

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Exam 6: Tracking the U. S. Economy.

If the price of a good increases compared to the base year, then the price level also increases.

Which of the following is an example of a final good or service?

According to a federal study, the equivalent of what percentage of U.S. GDP is underground production?

Which of the following formulas is correct for disposable income?

The circular-flow model shows that _____

If the GDP price index rises from 100 to 110 to 115 over three consecutive years, it can be concluded that the inflation rate is decreasing.

If the price index is 100 in the base year, and 104 in the next year, what happened to prices?

_____ are goods and services sold to final, or end, users.

Real gross domestic product (GDP) is measured in terms of _____

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 _____

Jimmy Earl, a farmer, sells $20 worth of peanuts to a factory that manufactures peanut butter, which sells it for $45. Which of the following is true?

Which of the following would be included in the gross domestic product (GDP)?

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

The gross domestic product (GDP) excludes _____

The circular-flow model shows the flow of _____

Which of the following is an example of a leakage from the circular flow of income and expenditure?

Louise sells ten sweaters she had knitted to a retail store. The gross domestic product (GDP) of her country _____

A(n) _____ involves market transactions that go unreported either because they are illegal or because people involved want to evade taxes.

Suppose the respective prices of yogurt, candy bars, and popcorn in Year 1 are $1, $2, and $3. In Year 2, the unit prices of each are $2, $3, and $4, respectively. Which of the following statements is true of the price level between Year 1 and Year 2?

When a firm produces and sells a refrigerator worth $1,000, its contribution to the gross domestic product (GDP) on the income side is measured by _____

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Unemployment and Inflation.

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.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters