Question 1

Which of the following statements about exports and imports is true?

Accepted Answer

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

Question 2

Nominal GDP is a better measure of the growth in production than real GDP is.

Accepted Answer

A) True 
 B)False  False

Question 3

GDP figures tend to understate the quantity of goods and services available because

Accepted Answer

A) they ignore most household production 
B) many items are counted twice or more in intermediate stages of production 
C) more women are entering the labor force 
D) firms often add less to inventories than they planned to 
E) exports are subtracted from GDP but imports are not added back in 
A) they ignore most household production 
B) many items are counted twice or more in intermediate stages of production 
C) more women are entering the labor force 
D) firms often add less to inventories than they planned to 
E) exports are subtracted from GDP but imports are not added back in A

Question 4

Exhibit 6-3
  
-Refer to Exhibit 6-3. Between 2002 and 2005, real GDP for this nation

Accepted Answer

A) increased more than $5 billion 
B) decreased more than $5 billion 
C) increased by less than $1 billion 
D) decreased by less than $1 billion 
E) cannot be determined from the information above 
A) increased more than $5 billion 
B) decreased more than $5 billion 
C) increased by less than $1 billion 
D) decreased by less than $1 billion 
E) cannot be determined from the information above

Question 5

Each month, the Bureau of Labor Statistics calculates the

Accepted Answer

A) CPI 
B) number of births in the U.S. 
C) nominal GDP 
D) cost of going to college 
E) All of the answers are correct 
A) CPI 
B) number of births in the U.S. 
C) nominal GDP 
D) cost of going to college 
E) All of the answers are correct

Question 6

Use the following data to calculate GDP: consumption = $5,000; gross investment = $800; government purchases = $700; exports = $30; imports = $60; transfer payments = $340.

Accepted Answer

A) GDP = $7,400 
B) GDP = $7,740 
C) GDP = $3,140 
D) GDP = $6,200 
E) GDP cannot be determined due to insufficient data 
A) GDP = $7,400 
B) GDP = $7,740 
C) GDP = $3,140 
D) GDP = $6,200 
E) GDP cannot be determined due to insufficient data

Question 7

Which of the following is an injection into the circular flow?

Accepted Answer

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

Question 8

Which of the following would not be included in GDP as government purchases?

Accepted Answer

A) The local township repairs the roads. 
B) The state government funds a state university. 
C) The federal government sends out Social Security checks. 
D) The federal government pays a lawyer as a public defender. 
E) The state government buys computer time. 
A) The local township repairs the roads. 
B) The state government funds a state university. 
C) The federal government sends out Social Security checks. 
D) The federal government pays a lawyer as a public defender. 
E) The state government buys computer time.

Question 9

Suppose that the economy is in equilibrium with the government budget in surplus and with exports less than imports. According to the circular flow model,

Accepted Answer

A) saving must exceed investment 
B) saving must be less than investment 
C) saving must equal investment 
D) saving could be greater than or equal to investment 
E) it is impossible to determine anything about saving and investment using the given information 
A) saving must exceed investment 
B) saving must be less than investment 
C) saving must equal investment 
D) saving could be greater than or equal to investment 
E) it is impossible to determine anything about saving and investment using the given information

Question 10

A panel of economists concluded that the current Consumer Price Index overstates increases in the "cost of living" by about

Accepted Answer

A) 9 percent per year 
B) 3 percent per year 
C) 5 percent per year 
D) 7 percent per year 
E) 1 percent per year 
A) 9 percent per year 
B) 3 percent per year 
C) 5 percent per year 
D) 7 percent per year 
E) 1 percent per year

Question 11

Which of the following would not be included in an economist's definition of investment spending?

Accepted Answer

A) the purchase of robots by Motor Magic Manufacturing 
B) the construction of a new office building by the Mountain City Real Estate Company 
C) the purchase of General Motors stock by Donald Trump 
D) the purchase of a new pizza oven by H and R Pizza 
E) an unexpected rise in inventories at Randle Manufacturing 
A) the purchase of robots by Motor Magic Manufacturing 
B) the construction of a new office building by the Mountain City Real Estate Company 
C) the purchase of General Motors stock by Donald Trump 
D) the purchase of a new pizza oven by H and R Pizza 
E) an unexpected rise in inventories at Randle Manufacturing

Question 12

Net exports is the value of

Accepted Answer

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

Question 13

Which of the following would not be included in the measurement of GDP?

Accepted Answer

A) the spark plugs you bought to tune up your car at home 
B) the government hiring a public relations consultant 
C) any improvements in product or service quality not reflected in a higher price 
D) winning a brand new Chevy truck in a contest 
E) sales of U.S. beef to Scotland 
A) the spark plugs you bought to tune up your car at home 
B) the government hiring a public relations consultant 
C) any improvements in product or service quality not reflected in a higher price 
D) winning a brand new Chevy truck in a contest 
E) sales of U.S. beef to Scotland

Question 14

U.S. imports are

Accepted Answer

A) not added to U.S. GDP because they are produced abroad 
B) added to U.S. GDP because they are consumed domestically 
C) added to U.S. GDP because they represent an increase in inventories 
D) added to U.S. GDP as government purchases because the government decides what goods may be imported 
E) not added to U.S. GDP because they are intermediate goods 
A) not added to U.S. GDP because they are produced abroad 
B) added to U.S. GDP because they are consumed domestically 
C) added to U.S. GDP because they represent an increase in inventories 
D) added to U.S. GDP as government purchases because the government decides what goods may be imported 
E) not added to U.S. GDP because they are intermediate goods

Question 15

A problem inherent in using value added to measure GDP is that the method does not avoid double counting.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

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

Question 17

Which of the following is a leakage from the circular flow?

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 18

Katrina pays $40 for a meal at a fancy restaurant. The ingredients used in it probably cost the restaurant $10. The value added to GDP by the purchase of this meal is

Accepted Answer

A) $30 
B) $40 
C) $70 
D) $40 plus the wages paid the chef and waiters 
E) $40 plus the profit earned by the restaurant's owner 
A) $30 
B) $40 
C) $70 
D) $40 plus the wages paid the chef and waiters 
E) $40 plus the profit earned by the restaurant's owner

Question 19

Ann's Adventures, Inc. organizes and leads backpacking trips for $160. The business spends $30 on first aid equipment and $10 on maps. The amount of value added to GDP is

Accepted Answer

A) $160 of backpacking trips 
B) $200 of backpacking trips, $30 of first aid equipment, and $10 of maps 
C) $160 of backpacking trips, $30 of first aid equipment, and $10 of maps 
D) $120 of backpacking trips 
E) $30 of first aid equipment and $10 of maps only 
A) $160 of backpacking trips 
B) $200 of backpacking trips, $30 of first aid equipment, and $10 of maps 
C) $160 of backpacking trips, $30 of first aid equipment, and $10 of maps 
D) $120 of backpacking trips 
E) $30 of first aid equipment and $10 of maps only

Question 20

GDP does not include the

Accepted Answer

A) increase in business inventories in the period 
B) expenditures by government for newly produced goods and services in a given period 
C) value of all transactions in the economy during a given period 
D) value of final output during a given period 
E) household spending on electricity 
A) increase in business inventories in the period 
B) expenditures by government for newly produced goods and services in a given period 
C) value of all transactions in the economy during a given period 
D) value of final output during a given period 
E) household spending on electricity

Exam 6: Tracking the Us Economy

Which of the following statements about exports and imports is true?

Nominal GDP is a better measure of the growth in production than real GDP is.

GDP figures tend to understate the quantity of goods and services available because

Exhibit 6-3 -Refer to Exhibit 6-3. Between 2002 and 2005, real GDP for this nation

Each month, the Bureau of Labor Statistics calculates the

Use the following data to calculate GDP: consumption = $5,000; gross investment = $800; government purchases = $700; exports = $30; imports = $60; transfer payments = $340.

Which of the following is an injection into the circular flow?

Which of the following would not be included in GDP as government purchases?

Suppose that the economy is in equilibrium with the government budget in surplus and with exports less than imports. According to the circular flow model,

A panel of economists concluded that the current Consumer Price Index overstates increases in the "cost of living" by about

Which of the following would not be included in an economist's definition of investment spending?

Net exports is the value of

Which of the following would not be included in the measurement of GDP?

U.S. imports are

A problem inherent in using value added to measure GDP is that the method does not avoid double counting.

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

Which of the following is a leakage from the circular flow?

Katrina pays $40 for a meal at a fancy restaurant. The ingredients used in it probably cost the restaurant $10. The value added to GDP by the purchase of this meal is

Ann's Adventures, Inc. organizes and leads backpacking trips for $160. The business spends $30 on first aid equipment and $10 on maps. The amount of value added to GDP is

GDP does not include the

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand Supply and Markets

Introduction to Macroeconomics

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

The Algebra of Income and Expenditure

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

The Algebra of Demand-Side Equilibrium

International Trade

International Finance

Economic Development

National Income Accounts

Understanding Graphs

Variable Net Exports

Variable Net Exports Revisited

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