Question 1

Gross private domestic investment consists of _____

Accepted Answer

A)  spending by individual households on automobiles and durable goods. 
B)  spending by businessman on office furniture. 
C)  net additions to business inventories. 
D)  spending by government on welfare benefits. 
E)  spending by households on stocks and bonds. 
A)  spending by individual households on automobiles and durable goods. 
B)  spending by businessman on office furniture. 
C)  net additions to business inventories. 
D)  spending by government on welfare benefits. 
E)  spending by households on stocks and bonds.

Question 2

The value of tires purchased by a company to use on its cars is not included when calculating the gross domestic product (GDP).

Accepted Answer

A) True 
 B)False

Question 3

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 4

How often does the federal government report the CPI?

Accepted Answer

A)  daily 
B)  weekly 
C)  monthly 
D)  quarterly 
E)  annually 
A)  daily 
B)  weekly 
C)  monthly 
D)  quarterly 
E)  annually

Question 5

Table 6.4
 $$\begin{array}{l}
\text { Table } 6.4\
\begin{array} { c c c } 
\text { Year } & \text { Price Index } & \text { Nominal GDP } \
\hline 2001 & 100 & \$ 95 \text { billion } \
2002 & 105 & \$ 110 \text { billion } \
2003 & 110 & \$ 120 \text { billion } \
2004 & 120 & \$ 125 \text { billion } \
2005 & 132 & \$ 137.5 \text { billion }
\end{array}
\end{array}$$
-Refer to Table 6.4, which shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005. What happened to the real GDP between 2002 and 2005?

Accepted Answer

A)  It increased more than $5 billion. 
B)  It decreased more than $5 billion. 
C)  It increased by less than $1 billion. 
D)  It decreased by less than $1 billion. 
E)  It remained constant. 
A)  It increased more than $5 billion. 
B)  It decreased more than $5 billion. 
C)  It increased by less than $1 billion. 
D)  It decreased by less than $1 billion. 
E)  It remained constant.

Question 6

If the nominal gross domestic product (GDP) for a particular year is $4 trillion and the real GDP for that year is $3 trillion, then the GDP price index is 133.3.

Accepted Answer

A) True 
 B)False

Question 7

What base period does the federal government use as to calculate the CPI?

Accepted Answer

A)  the 36 months of 1982, 1983, and 1984 
B)  the 24 months of 1995 and 1996 
C)  the 12 months of 2000 
D)  the current year 
E)  the past year 
A)  the 36 months of 1982, 1983, and 1984 
B)  the 24 months of 1995 and 1996 
C)  the 12 months of 2000 
D)  the current year 
E)  the past year

Question 8

Which of the following is true of an intermediate good?

Accepted Answer

A)  It is of no value to the seller. 
B)  It is of no value to the buyer. 
C)  It is purchased for household production. 
D)  It helps produce another good. 
E)  It is sold at a discounted price by firms. 
A)  It is of no value to the seller. 
B)  It is of no value to the buyer. 
C)  It is purchased for household production. 
D)  It helps produce another good. 
E)  It is sold at a discounted price by firms.

Question 9

One of the limitations of the national income accounting system is _____

Accepted Answer

A)  valuing all output at its market price regardless of its contribution to society's economic welfare. 
B)  placing a market value on all negative externalities. 
C)  accurately measuring the value of leisure time. 
D)  double-countingfood produced on a farm for family consumption. 
E)  ignoring government production of goods and services. 
A)  valuing all output at its market price regardless of its contribution to society's economic welfare. 
B)  placing a market value on all negative externalities. 
C)  accurately measuring the value of leisure time. 
D)  double-countingfood produced on a farm for family consumption. 
E)  ignoring government production of goods and services.

Question 10

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

Accepted Answer

A)  the sale price of equipment produced last year but sold this year 
B)  the money spent by Kate on the purchase of new furniture 
C)  the money spent by Barney on the purchase of his uncle's house 
D)  the sale price of the stock purchased by John 
E)  the opportunity cost of the time spent by Bruno cooking lunch for his neighbor 
A)  the sale price of equipment produced last year but sold this year 
B)  the money spent by Kate on the purchase of new furniture 
C)  the money spent by Barney on the purchase of his uncle's house 
D)  the sale price of the stock purchased by John 
E)  the opportunity cost of the time spent by Bruno cooking lunch for his neighbor

Question 11

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 market basket in the current year is _____ higher than the price of the market basket in the base year.

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

Question 12

_____ are purchased for additional processing and resale.

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 13

Which approach to GDP adds up spending on all final goods and services produced in the United States during the year?

Accepted Answer

A)  the intermediate goods and services approach 
B)  the final goods and services approach 
C)  the income approach 
D)  the expenditure approach 
E)  the double-counting approach 
A)  the intermediate goods and services approach 
B)  the final goods and services approach 
C)  the income approach 
D)  the expenditure approach 
E)  the double-counting approach

Question 14

The price index in the base year always equals _____

Accepted Answer

A)  0. 
B)  10. 
C)  100. 
D)  1. 
E)  0.01. 
A)  0. 
B)  10. 
C)  100. 
D)  1. 
E)  0.01.

Question 15

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

Accepted Answer

A)  government purchases of goods and services 
B)  taxes 
C)  investment 
D)  exports 
E)  consumption expenditures 
A)  government purchases of goods and services 
B)  taxes 
C)  investment 
D)  exports 
E)  consumption expenditures

Question 16

Nominal gross domestic product (GDP) is a better measure of growth in production than real GDP.

Accepted Answer

A) True 
 B)False

Question 17

According to the CPI, what is the largest 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 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is the best indicator of the performance of the national economy?

Accepted Answer

A)  the budget deficit of the federal government 
B)  the stock of capital goods (machinery) in the nation 
C)  the nation's stock of precious metals 
D)  the balance of trade with other nations 
E)  the value of the final goods and services produced in the nation 
A)  the budget deficit of the federal government 
B)  the stock of capital goods (machinery) in the nation 
C)  the nation's stock of precious metals 
D)  the balance of trade with other nations 
E)  the value of the final goods and services produced in the nation

Question 20

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

Accepted Answer

A)  government spending 
B)  imports 
C)  disposable income 
D)  net taxes 
E)  saving 
A)  government spending 
B)  imports 
C)  disposable income 
D)  net taxes 
E)  saving

Gross private domestic investment consists of _____

The value of tires purchased by a company to use on its cars is not included when calculating the gross domestic product (GDP).

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

How often does the federal government report the CPI?

If the nominal gross domestic product (GDP) for a particular year is $4 trillion and the real GDP for that year is $3 trillion, then the GDP price index is 133.3.

What base period does the federal government use as to calculate the CPI?

Which of the following is true of an intermediate good?

One of the limitations of the national income accounting system is _____

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

_____ are purchased for additional processing and resale.

Which approach to GDP adds up spending on all final goods and services produced in the United States during the year?

The price index in the base year always equals _____

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

Nominal gross domestic product (GDP) is a better measure of growth in production than real GDP.

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

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

Which of the following is the best indicator of the performance of the national economy?

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

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.

Gross private domestic investment consists of _____

The value of tires purchased by a company to use on its cars is not included when calculating the gross domestic product (GDP).

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

How often does the federal government report the CPI?

If the nominal gross domestic product (GDP) for a particular year is $4 trillion and the real GDP for that year is $3 trillion, then the GDP price index is 133.3.

What base period does the federal government use as to calculate the CPI?

Which of the following is true of an intermediate good?

One of the limitations of the national income accounting system is _____

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

_____ are purchased for additional processing and resale.

Which approach to GDP adds up spending on all final goods and services produced in the United States during the year?

The price index in the base year always equals _____

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

Nominal gross domestic product (GDP) is a better measure of growth in production than real GDP.

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

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

Which of the following is the best indicator of the performance of the national economy?

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

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