Question 1

_____ are banks and other financial institutions that facilitate the flow of funds from savers to borrowers.

Accepted Answer

A)  Financial markets 
B)  Commodity markets 
C)  Stock markets 
D)  Bond markets 
E)  Foreign exchange markets 
A)  Financial markets 
B)  Commodity markets 
C)  Stock markets 
D)  Bond markets 
E)  Foreign exchange markets

Question 2

An increase in household production will increase gross domestic product (GDP).

Accepted Answer

A) True 
 B)False

Question 3

A net increase in inventories is considered as investment for the current year.

Accepted Answer

A) True 
 B)False

Question 4

Who won the Nobel Prize in 1971 for "giving quantitative precision to economic entities"?

Accepted Answer

A)  John Maynard Keynes 
B)  Adam Smith 
C)  Milton Friedman 
D)  Simon Kuznets 
E)  François Quesnay 
A)  John Maynard Keynes 
B)  Adam Smith 
C)  Milton Friedman 
D)  Simon Kuznets 
E)  François Quesnay

Question 5

Suppose a loaf of bread sold for $3.00 in 2016. The price of bread then increases to $3.60 in 2017. The price index for bread in 2017, considering 2016 as the base year, is _____.

Accepted Answer

A)  1.20 
B)  83.33 
C)  120 
D)  100 
E)  20 
A)  1.20 
B)  83.33 
C)  120 
D)  100 
E)  20

Question 6

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 7

Which of the following correctly illustrates the leakages-injections approach to GDP?

Accepted Answer

A)  DI + (NT) = C + I + G + (X ‒ M) 
B)  S + C + NT = DI 
C)  S + C + (NT) = I + G + (X ‒ M) 
D)  S + (NT) + M = I + G + X 
E)  S + (NT) = I + G + (X ‒ M) 
A)  DI + (NT) = C + I + G + (X ‒ M) 
B)  S + C + NT = DI 
C)  S + C + (NT) = I + G + (X ‒ M) 
D)  S + (NT) + M = I + G + X 
E)  S + (NT) = I + G + (X ‒ M)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Rhonda sells a house she has owned for 15 years and starts living in a rented apartment. To make the house more marketable, she buys carpeting that she has professionally installed and buys wallpaper that her daughter hangs. Which items would be included in this year's gross domestic product (GDP)?

Accepted Answer

A)  The sale price of the house. 
B)  The cost of transporting all her furniture to the new apartment. 
C)  The opportunity cost of Rhonda's daughter's time. 
D)  The opportunity cost of Rhonda's time. 
E)  The purchase price of the carpet and wallpaper and the installation fee for the carpet. 
A)  The sale price of the house. 
B)  The cost of transporting all her furniture to the new apartment. 
C)  The opportunity cost of Rhonda's daughter's time. 
D)  The opportunity cost of Rhonda's time. 
E)  The purchase price of the carpet and wallpaper and the installation fee for the carpet.

Question 10

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.

Question 11

If a firm hires labor for $8,000, pays rent of $4,000, buys raw materials for $13,000 from another firm, earns profits of $1,200, and sells its output for $31,000, the value added by the firm is _____

Accepted Answer

A)  $4,800. 
B)  $10,000. 
C)  $18,000. 
D)  $25,000. 
E)  $26,200. 
A)  $4,800. 
B)  $10,000. 
C)  $18,000. 
D)  $25,000. 
E)  $26,200.

Question 12

If the United States made the sale of a legal drug illegal, 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

Which of the following is true of the gross domestic product (GDP) of a nation?

Accepted Answer

A)  It can be measured by the stock of consumer goods in the nation at a particular point in time. 
B)  It can be measured by the stock of capital goods in the nation at a particular point in time. 
C)  It can be measured by calculating either the total spending on production or the total income from that production. 
D)  It is the sum of total spending on production and total income from that production. 
E)  It can be measured from the stock of wealth in the nation. 
A)  It can be measured by the stock of consumer goods in the nation at a particular point in time. 
B)  It can be measured by the stock of capital goods in the nation at a particular point in time. 
C)  It can be measured by calculating either the total spending on production or the total income from that production. 
D)  It is the sum of total spending on production and total income from that production. 
E)  It can be measured from the stock of wealth in the nation.

Question 14

Aggregate income equals _____

Accepted Answer

A)  the sum of income earned by all laborers in the world economy. 
B)  the sum of income earned by all workers in the private sector. 
C)  the sum of income earned by all the resource suppliers in an economy. 
D)  the total income of all employees after payment of income tax. 
E)  the total income of all employees after purchases of necessities. 
A)  the sum of income earned by all laborers in the world economy. 
B)  the sum of income earned by all workers in the private sector. 
C)  the sum of income earned by all the resource suppliers in an economy. 
D)  the total income of all employees after payment of income tax. 
E)  the total income of all employees after purchases of necessities.

Question 15

Which of the following is true of leakages and injections in the circular-flow model?

Accepted Answer

A)  Leakages minus injections equal gross domestic product (GDP). 
B)  Injections minus leakages equal gross domestic product (GDP). 
C)  Leakages minus injections equal zero in equilibrium. 
D)  Leakages must be less than injections for an economy to be in equilibrium. 
E)  Leakages must be greater than injections for an economy to be growing. 
A)  Leakages minus injections equal gross domestic product (GDP). 
B)  Injections minus leakages equal gross domestic product (GDP). 
C)  Leakages minus injections equal zero in equilibrium. 
D)  Leakages must be less than injections for an economy to be in equilibrium. 
E)  Leakages must be greater than injections for an economy to be growing.

Question 16

Which two countries began to include spending on prostitution and illegal drugs in their GDP estimates in 2014?

Accepted Answer

A)  none 
B)  the United States and Canada 
C)  Mexico and Canada 
D)  Britain and Italy 
E)  Spain and Britain 
A)  none 
B)  the United States and Canada 
C)  Mexico and Canada 
D)  Britain and Italy 
E)  Spain and Britain

Question 17

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 18

If a farm family produces food for its own consumption, then _____

Accepted Answer

A)  GDP will be unchanged. 
B)  GDP will fall by an imputed dollar amount. 
C)  GDP will rise by an imputed dollar amount. 
D)  GDP will be unchanged because food is not included. 
E)  GDP will be unchanged because the value is a small amount. 
A)  GDP will be unchanged. 
B)  GDP will fall by an imputed dollar amount. 
C)  GDP will rise by an imputed dollar amount. 
D)  GDP will be unchanged because food is not included. 
E)  GDP will be unchanged because the value is a small amount.

Question 19

Any diversion of income from the domestic spending stream is known as _____

Accepted Answer

A)  government purchases. 
B)  investments. 
C)  injections. 
D)  leakages. 
E)  exports. 
A)  government purchases. 
B)  investments. 
C)  injections. 
D)  leakages. 
E)  exports.

Question 20

If the price index is 90 in the first year, and 80 in the next year, what happened to prices?

Accepted Answer

A)  Prices increased by about 11%. 
B)  Prices decreased by about 10%. 
C)  Prices increased by about 10%. 
D)  Prices decreased by about 11%. 
E)  Prices did not change. 
A)  Prices increased by about 11%. 
B)  Prices decreased by about 10%. 
C)  Prices increased by about 10%. 
D)  Prices decreased by about 11%. 
E)  Prices did not change.

_____ are banks and other financial institutions that facilitate the flow of funds from savers to borrowers.

An increase in household production will increase gross domestic product (GDP).

A net increase in inventories is considered as investment for the current year.

Who won the Nobel Prize in 1971 for "giving quantitative precision to economic entities"?

Suppose a loaf of bread sold for $3.00 in 2016. The price of bread then increases to $3.60 in 2017. The price index for bread in 2017, considering 2016 as the base year, is _____.

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

Which of the following correctly illustrates the leakages-injections approach to GDP?

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

Rhonda sells a house she has owned for 15 years and starts living in a rented apartment. To make the house more marketable, she buys carpeting that she has professionally installed and buys wallpaper that her daughter hangs. Which items would be included in this year's gross domestic product (GDP)?

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

If a firm hires labor for $8,000, pays rent of $4,000, buys raw materials for $13,000 from another firm, earns profits of $1,200, and sells its output for $31,000, the value added by the firm is _____

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

Which of the following is true of the gross domestic product (GDP) of a nation?

Aggregate income equals _____

Which of the following is true of leakages and injections in the circular-flow model?

Which two countries began to include spending on prostitution and illegal drugs in their GDP estimates in 2014?

The circular-flow model shows the flow of _____

If a farm family produces food for its own consumption, then _____

Any diversion of income from the domestic spending stream is known as _____

If the price index is 90 in the first year, and 80 in the next year, what happened to prices?

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.

_____ are banks and other financial institutions that facilitate the flow of funds from savers to borrowers.

An increase in household production will increase gross domestic product (GDP).

A net increase in inventories is considered as investment for the current year.

Who won the Nobel Prize in 1971 for "giving quantitative precision to economic entities"?

Suppose a loaf of bread sold for $3.00 in 2016. The price of bread then increases to $3.60 in 2017. The price index for bread in 2017, considering 2016 as the base year, is _____.

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

Which of the following correctly illustrates the leakages-injections approach to GDP?

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

Rhonda sells a house she has owned for 15 years and starts living in a rented apartment. To make the house more marketable, she buys carpeting that she has professionally installed and buys wallpaper that her daughter hangs. Which items would be included in this year's gross domestic product (GDP)?

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

If a firm hires labor for $8,000, pays rent of $4,000, buys raw materials for $13,000 from another firm, earns profits of $1,200, and sells its output for $31,000, the value added by the firm is _____

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

Which of the following is true of the gross domestic product (GDP) of a nation?

Aggregate income equals _____

Which of the following is true of leakages and injections in the circular-flow model?

Which two countries began to include spending on prostitution and illegal drugs in their GDP estimates in 2014?

The circular-flow model shows the flow of _____

If a farm family produces food for its own consumption, then _____

Any diversion of income from the domestic spending stream is known as _____

If the price index is 90 in the first year, and 80 in the next year, what happened to prices?

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