Question 1

Net taxes are indirect business taxes plus transfer payments.

Accepted Answer

A) True 
 B)False

Question 2

Suppose the real gross domestic product (GDP) equals $200 billion this year and the nominal gross domestic product (GDP) equals $300 billion. This implies that the price level has increased by _____ compared to the base year.

Accepted Answer

A)  $100 billion 
B)  $200 billion 
C)  50 percent 
D)  100 percent 
E)  33 percent 
A)  $100 billion 
B)  $200 billion 
C)  50 percent 
D)  100 percent 
E)  33 percent

Question 3

Which of the following would be included in this year's gross domestic product (GDP)?

Accepted Answer

A)  one hundred shares of IBM stock that Tony sold this May 
B)  a used car that Tracey sold to Justin 
C)  George's purchase of a fishing rod and reel at a garage sale 
D)  Sharon giving Dennis $20 as a reward for finding her ring 
E)  a bucket of Kentucky Fried Chicken that Kate bought this July 
A)  one hundred shares of IBM stock that Tony sold this May 
B)  a used car that Tracey sold to Justin 
C)  George's purchase of a fishing rod and reel at a garage sale 
D)  Sharon giving Dennis $20 as a reward for finding her ring 
E)  a bucket of Kentucky Fried Chicken that Kate bought this July

Question 4

Table 6.2
 $$\begin{array}{l}
\text { Table } 6.2\
\begin{array} { | c | c | c | } 
\hline \text { Year } & \text { Price of apples } & \text { Price of oranges } \
\hline 2016 & \$ 3.00 & \$ 1.00 \
\hline 2017 & \$ 4.00 & \$ 2.00 \
\hline
\end{array}
\end{array}$$
-Refer to Table 6.2 of a consumer's basket that consists of apples and oranges. The consumer buys 6 units of apples and 2 units of oranges every year. What is the consumer price index for 2017 if the base year is 2016?

Accepted Answer

A)  20 
B)  50 
C)  100 
D)  120 
E)  140 
A)  20 
B)  50 
C)  100 
D)  120 
E)  140

Question 5

Depreciation refers to _____

Accepted Answer

A)  the value of leisure goods. 
B)  changes in exchange rates. 
C)  income that we earn but do not receive. 
D)  capital worn out during the production process. 
E)  the effects of government subsidy programs. 
A)  the value of leisure goods. 
B)  changes in exchange rates. 
C)  income that we earn but do not receive. 
D)  capital worn out during the production process. 
E)  the effects of government subsidy programs.

Question 6

A farmer grows wheat and sells it to a bakery for $5. The bakery uses the wheat to bake bread and sells it to a distributor for $20. The distributor sells the bread to a supermarket for $30, which then sells the bread to customers for $50. Which of the following is true?

Accepted Answer

A)  The value added by the distributor is $30. 
B)  The value added by the supermarket is more than that added by the bakery. 
C)  GDP rises by $50 plus the value added at each stage of production. 
D)  Counting the value added at each stage instead of counting the final selling price creates a problem of double-counting. 
E)  The value added by the farmer is $20 because the wheat, which is worth $5, is necessary for each of the three remaining stages of production. 
A)  The value added by the distributor is $30. 
B)  The value added by the supermarket is more than that added by the bakery. 
C)  GDP rises by $50 plus the value added at each stage of production. 
D)  Counting the value added at each stage instead of counting the final selling price creates a problem of double-counting. 
E)  The value added by the farmer is $20 because the wheat, which is worth $5, is necessary for each of the three remaining stages of production.

Question 7

Which of the following is the best definition of gross domestic product (GDP)?

Accepted Answer

A)  the market value of all intermediate goods and services 
B)  the market value of all goods and services produced by resources located outside the country 
C)  the market value of all final goods and services produced by resources located within the country 
D)  the value added to the economy by intermediate goods and services minus the original cost 
E)  the value of the total sales of financial assets 
A)  the market value of all intermediate goods and services 
B)  the market value of all goods and services produced by resources located outside the country 
C)  the market value of all final goods and services produced by resources located within the country 
D)  the value added to the economy by intermediate goods and services minus the original cost 
E)  the value of the total sales of financial assets

Question 8

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 9

An inflation measure that reduces the bias caused by a fixed-price weighting system index is known as a(an) _____

Accepted Answer

A)  average value. 
B)  real value. 
C)  fixed-price weighting system 
D)  chain-weighted system. 
E)  index. 
A)  average value. 
B)  real value. 
C)  fixed-price weighting system 
D)  chain-weighted system. 
E)  index.

Question 10

To determine the consumer price index (CPI), _____.

Accepted Answer

A)  the values of the current market basket at current and base-year prices need to be known. 
B)  the values of the base-year market basket at current and base-year prices need to be known. 
C)  the values of the current market basket at current prices and the base-year market basket at base-year prices need to be known. 
D)  only the current market basket at base-year prices needs to be known. 
E)  only the current market basket at current prices needs to be known. 
A)  the values of the current market basket at current and base-year prices need to be known. 
B)  the values of the base-year market basket at current and base-year prices need to be known. 
C)  the values of the current market basket at current prices and the base-year market basket at base-year prices need to be known. 
D)  only the current market basket at base-year prices needs to be known. 
E)  only the current market basket at current prices needs to be known.

Question 11

Which of the following actions would increase the consumption spending component of GDP?

Accepted Answer

A)  Ann cooking dinner for Tim instead of going out 
B)  Ann and Tim buying a used microwave oven 
C)  Ann and Tim buying vegetables to prepare soup at home 
D)  Tim buying Ann a dress 
E)  Tim and Ann painting the garage themselves 
A)  Ann cooking dinner for Tim instead of going out 
B)  Ann and Tim buying a used microwave oven 
C)  Ann and Tim buying vegetables to prepare soup at home 
D)  Tim buying Ann a dress 
E)  Tim and Ann painting the garage themselves

Question 12

If the United States made the sale of an illegal drug legal, GDP would _____

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change. 
D)  be imputed. 
E)  illegal drugs are already included in GDP estimates. 
A)  increase. 
B)  decrease. 
C)  not change. 
D)  be imputed. 
E)  illegal drugs are already included in GDP estimates.

Question 13

A family spent $6,500 for food last year and spent $6,695 this year. By how much did the cost of living increase?

Accepted Answer

A)  65% 
B)  0.98% 
C)  3% 
D)  1.5% 
E)  5% 
A)  65% 
B)  0.98% 
C)  3% 
D)  1.5% 
E)  5%

Question 14

According to the CPI, what is the smallest spending category in the United States?

Accepted Answer

A)  food 
B)  education 
C)  housing 
D)  medical care 
E)  transportation 
A)  food 
B)  education 
C)  housing 
D)  medical care 
E)  transportation

Question 15

Which of the following is an example of an injection into the circular flow of income and expenditure?

Accepted Answer

A)  net taxes 
B)  savings 
C)  transfer payments 
D)  government borrowing 
E)  disposable income 
A)  net taxes 
B)  savings 
C)  transfer payments 
D)  government borrowing 
E)  disposable income

Question 16

If the price index is 100 in the base year, and 95 in the next year, what happened to prices?

Accepted Answer

A)  Prices increased by 5%. 
B)  Prices decreased by 5%. 
C)  Prices increased by 95%. 
D)  Prices decreased by 95%. 
E)  Prices did not change. 
A)  Prices increased by 5%. 
B)  Prices decreased by 5%. 
C)  Prices increased by 95%. 
D)  Prices decreased by 95%. 
E)  Prices did not change.

Question 17

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 the 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 the 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 the 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 the part of the capital stock used up in the production process, while NDP does not.

Question 18

Which of the following expenditures is included in the consumption component of the gross domestic product (GDP)?

Accepted Answer

A)  the money spent on the purchase of stocks 
B)  the money spent on the purchase of used furniture 
C)  the money spent on the purchase of a used car 
D)  the money spent on the purchase of kitchen appliances 
E)  the money spent on the purchase of bonds issued by the government 
A)  the money spent on the purchase of stocks 
B)  the money spent on the purchase of used furniture 
C)  the money spent on the purchase of a used car 
D)  the money spent on the purchase of kitchen appliances 
E)  the money spent on the purchase of bonds issued by the government

Question 19

Imports are leakages from the circular flow of income and expenditure model.

Accepted Answer

A) True 
 B)False

Question 20

Table 6.3
 $$\begin{array}{l}
\text { Table } 6.3\
\begin{array} { c c c c } 
\text { Product } & \begin{array} { c } 
\text { Quantity in } \
\text { market basket }
\end{array} & \begin{array} { c } 
\text { Price in } \
\text { base year } ( \$ )
\end{array} & \begin{array} { c } 
\text { Price in } \
\text { current year } ( \$ )
\end{array} \
\hline \text { Bread } & 10 & 1.00 & 1.50 \
\text { Milk } & 5 & 1.00 & 2.00 \
\text { Gum } & 50 & 0.20 & 0.50
\end{array}
\end{array}$$
-Refer to Table 6.3, which shows the current and base-year prices of different goods in a market basket. The consumer price index (CPI) for the base year is _____

Accepted Answer

A)  100 percent. 
B)  50 percent. 
C)  1 percent. 
D)  200 percent. 
A)  100 percent. 
B)  50 percent. 
C)  1 percent. 
D)  200 percent.

Net taxes are indirect business taxes plus transfer payments.

Suppose the real gross domestic product (GDP) equals $200 billion this year and the nominal gross domestic product (GDP) equals $300 billion. This implies that the price level has increased by _____ compared to the base year.

Which of the following would be included in this year's gross domestic product (GDP)?

Depreciation refers to _____

A farmer grows wheat and sells it to a bakery for $5. The bakery uses the wheat to bake bread and sells it to a distributor for $20. The distributor sells the bread to a supermarket for $30, which then sells the bread to customers for $50. Which of the following is true?

Which of the following is the best definition of gross domestic product (GDP)?

The final market value of a good is _____

An inflation measure that reduces the bias caused by a fixed-price weighting system index is known as a(an) _____

To determine the consumer price index (CPI), _____.

Which of the following actions would increase the consumption spending component of GDP?

If the United States made the sale of an illegal drug legal, GDP would _____

A family spent $6,500 for food last year and spent $6,695 this year. By how much did the cost of living increase?

According to the CPI, what is the smallest spending category in the United States?

Which of the following is an example of an injection into the circular flow of income and expenditure?

If the price index is 100 in the base year, and 95 in the next year, what happened to prices?

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

Which of the following expenditures is included in the consumption component of the gross domestic product (GDP)?

Imports are leakages from the circular flow of income and expenditure model.

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

Exam 6: Tracking the U. S. Economy.

Net taxes are indirect business taxes plus transfer payments.

Suppose the real gross domestic product (GDP) equals $200 billion this year and the nominal gross domestic product (GDP) equals $300 billion. This implies that the price level has increased by _____ compared to the base year.

Which of the following would be included in this year's gross domestic product (GDP)?

Depreciation refers to _____

A farmer grows wheat and sells it to a bakery for $5. The bakery uses the wheat to bake bread and sells it to a distributor for $20. The distributor sells the bread to a supermarket for $30, which then sells the bread to customers for $50. Which of the following is true?

Which of the following is the best definition of gross domestic product (GDP)?

The final market value of a good is _____

An inflation measure that reduces the bias caused by a fixed-price weighting system index is known as a(an) _____

To determine the consumer price index (CPI), _____.

Which of the following actions would increase the consumption spending component of GDP?

If the United States made the sale of an illegal drug legal, GDP would _____

A family spent $6,500 for food last year and spent $6,695 this year. By how much did the cost of living increase?

According to the CPI, what is the smallest spending category in the United States?

Which of the following is an example of an injection into the circular flow of income and expenditure?

If the price index is 100 in the base year, and 95 in the next year, what happened to prices?

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

Which of the following expenditures is included in the consumption component of the gross domestic product (GDP)?

Imports are leakages from the circular flow of income and expenditure model.

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