Question 1

If a country passes a labor law limiting the number of hours of work per week,GDP would ________ and leisure would ________.

Accepted Answer

A) decrease; increase 
B) increase; increase 
C) decrease; decrease 
D) increase; decrease 
A) decrease; increase 
B) increase; increase 
C) decrease; decrease 
D) increase; decrease

Question 2

Table 8-10
   a)What is the value added by each stage of production?
b)What is the total value added?
For simplicity,you can ignore the cost of the inputs for oil drilling.
-The table below describes the value added in the production of a gallon of gasoline by each stage of production.(The values are hypothetical.)

Accepted Answer

@#IMG-DLM& a)The value added is the difference bet

Question 3

National income is equal to

Accepted Answer

A) personal income minus personal taxes. 
B) GDP minus depreciation. 
C) disposable personal income plus depreciation plus personal taxes. 
D) GNP plus depreciation. 
A) personal income minus personal taxes. 
B) GDP minus depreciation. 
C) disposable personal income plus depreciation plus personal taxes. 
D) GNP plus depreciation.

Question 4

People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power.If inflation and income grow at the same rate,is this complaint valid? Explain carefully.

Accepted Answer

If inflation and income grow at the same

Question 5

Government spending on transfer payments is included in government purchases when calculating GDP because it results in the production of new goods and services.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not true about the composition of GDP in 2016?

Accepted Answer

A) The majority of consumer spending is on durable goods. 
B) Purchases made by state and local governments are greater than purchases made by the federal government. 
C) Imports are greater than exports. 
D) Business fixed investment is the largest component of investment. 
A) The majority of consumer spending is on durable goods. 
B) Purchases made by state and local governments are greater than purchases made by the federal government. 
C) Imports are greater than exports. 
D) Business fixed investment is the largest component of investment.

Question 7

Government spending ________ is included in gross domestic product.

Accepted Answer

A) at federal,state,and local levels of government 
B) at the federal level of government only 
C) at state and local levels of government only 
D) on defense goods only 
A) at federal,state,and local levels of government 
B) at the federal level of government only 
C) at state and local levels of government only 
D) on defense goods only

Question 8

If prices rise on average in the U.S.economy,the purchasing power of a dollar declines.

Accepted Answer

A) True 
 B)False

Question 9

If nominal GDP is less than real GDP,then the GDP deflator will be greater than 100.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following transactions would take place in the "underground economy"?

Accepted Answer

A) Elizabeth tells her mother she's going to work but really goes to see a movie. 
B) Paul buys 15 gallons of gasoline for $3.29 a gallon,not realizing that $1.50 per gallon of that price goes to the government as tax revenue. 
C) John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes. 
D) Matt bought an iPad for $499 but decided to sell it on eBay instead of keeping it. 
A) Elizabeth tells her mother she's going to work but really goes to see a movie. 
B) Paul buys 15 gallons of gasoline for $3.29 a gallon,not realizing that $1.50 per gallon of that price goes to the government as tax revenue. 
C) John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes. 
D) Matt bought an iPad for $499 but decided to sell it on eBay instead of keeping it.

Question 11

When consumers are less confident about their jobs or incomes,they are more likely to

Accepted Answer

A) reduce purchases of durable goods than nondurable goods. 
B) reduce purchases of nondurable goods and increase purchases of durable goods. 
C) increase investment spending and decrease consumption spending. 
D) increase consumption spending and decrease investment spending. 
A) reduce purchases of durable goods than nondurable goods. 
B) reduce purchases of nondurable goods and increase purchases of durable goods. 
C) increase investment spending and decrease consumption spending. 
D) increase consumption spending and decrease investment spending.

Question 12

Table 8-27
  
-Refer to Table 8-27.Based on the table above,what is national income for this economy?

Accepted Answer

A) $1,950 billion 
B) $2,250 billion 
C) $2,950 billion 
D) $3,550 billion 
A) $1,950 billion 
B) $2,250 billion 
C) $2,950 billion 
D) $3,550 billion

Question 13

Table 8-19
  
-Refer to Table 8-19.Given the information above,calculate the rate of increase in the price level from 2017 to 2018.

Accepted Answer

A) 8.6% 
B) 7.9% 
C) -7.9% 
D) -8.6% 
A) 8.6% 
B) 7.9% 
C) -7.9% 
D) -8.6%

Question 14

Disposable personal income equals personal income

Accepted Answer

A) minus personal tax payments. 
B) plus government transfer payments. 
C) minus personal tax payments plus government transfer payments. 
D) minus government transfer payments plus personal tax payments. 
A) minus personal tax payments. 
B) plus government transfer payments. 
C) minus personal tax payments plus government transfer payments. 
D) minus government transfer payments plus personal tax payments.

Question 15

A transfer payment is a payment by the government to an individual

Accepted Answer

A) for a service. 
B) for an investment good. 
C) for a consumption good. 
D) for which the government does not receive a good or service in return. 
E) for a debt owed. 
A) for a service. 
B) for an investment good. 
C) for a consumption good. 
D) for which the government does not receive a good or service in return. 
E) for a debt owed.

Question 16

Table 8-3
  
-Refer to Table 8-3.Consider the data above (in billions of dollars)for an economy: Gross domestic product (in billions of dollars)for this economy equals

Accepted Answer

A) $2,200. 
B) $1,600. 
C) $1,400. 
D) $1,200. 
A) $2,200. 
B) $1,600. 
C) $1,400. 
D) $1,200.

Question 17

Disposable personal income is defined as

Accepted Answer

A) personal income less personal taxes plus indirect sales taxes. 
B) personal income less transfer payments plus personal taxes. 
C) personal income less personal taxes. 
D) personal income less depreciation. 
A) personal income less personal taxes plus indirect sales taxes. 
B) personal income less transfer payments plus personal taxes. 
C) personal income less personal taxes. 
D) personal income less depreciation.

Question 18

In a small economy,gross investment is $1,500,consumption spending is $6,000,net investment is $200,government purchases are $1,500,exports are $2,000 and imports are $1,000.What is GDP for this economy?

Accepted Answer

A) $10,700 
B) $10,300 
C) $10,200 
D) $10,000 
A) $10,700 
B) $10,300 
C) $10,200 
D) $10,000

Question 19

Scenario 8-1
CANOES-R-US makes canoes.It buys the shell of the canoe from another local firm for $300 and uses its labor and intermediate goods to make the canoe.It sells the finished canoe to a retail canoe store for $800.The retail canoe store then sells the canoe to a consumer for $1,200.
-Refer to Scenario 8-1.The value of each canoe in gross domestic product equals

Accepted Answer

A) $1,200. 
B) $800. 
C) $500. 
D) $400. 
A) $1,200. 
B) $800. 
C) $500. 
D) $400.

Question 20

Gross domestic product understates the total production of final goods and services because of the omission of

Accepted Answer

A) exports. 
B) inflation. 
C) intermediate goods. 
D) household production. 
A) exports. 
B) inflation. 
C) intermediate goods. 
D) household production.

If a country passes a labor law limiting the number of hours of work per week,GDP would and leisure would .

National income is equal to

People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power.If inflation and income grow at the same rate,is this complaint valid? Explain carefully.

Government spending on transfer payments is included in government purchases when calculating GDP because it results in the production of new goods and services.

Which of the following is not true about the composition of GDP in 2016?

Government spending ________ is included in gross domestic product.

If prices rise on average in the U.S.economy,the purchasing power of a dollar declines.

If nominal GDP is less than real GDP,then the GDP deflator will be greater than 100.

Which of the following transactions would take place in the "underground economy"?

When consumers are less confident about their jobs or incomes,they are more likely to

Table 8-27 -Refer to Table 8-27.Based on the table above,what is national income for this economy?

Table 8-19 -Refer to Table 8-19.Given the information above,calculate the rate of increase in the price level from 2017 to 2018.

Disposable personal income equals personal income

A transfer payment is a payment by the government to an individual

Table 8-3 -Refer to Table 8-3.Consider the data above (in billions of dollars)for an economy: Gross domestic product (in billions of dollars)for this economy equals

Disposable personal income is defined as

In a small economy,gross investment is $1,500,consumption spending is $6,000,net investment is $200,government purchases are $1,500,exports are $2,000 and imports are $1,000.What is GDP for this economy?

Gross domestic product understates the total production of final goods and services because of the omission of

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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Exam 8: GDP: Measuring Total Production and Income

If a country passes a labor law limiting the number of hours of work per week,GDP would ________ and leisure would ________.

National income is equal to

People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power.If inflation and income grow at the same rate,is this complaint valid? Explain carefully.

Government spending on transfer payments is included in government purchases when calculating GDP because it results in the production of new goods and services.

Which of the following is not true about the composition of GDP in 2016?

Government spending ________ is included in gross domestic product.

If prices rise on average in the U.S.economy,the purchasing power of a dollar declines.

If nominal GDP is less than real GDP,then the GDP deflator will be greater than 100.

Which of the following transactions would take place in the "underground economy"?

When consumers are less confident about their jobs or incomes,they are more likely to

Table 8-27 -Refer to Table 8-27.Based on the table above,what is national income for this economy?

Table 8-19 -Refer to Table 8-19.Given the information above,calculate the rate of increase in the price level from 2017 to 2018.

Disposable personal income equals personal income

A transfer payment is a payment by the government to an individual

Table 8-3 -Refer to Table 8-3.Consider the data above (in billions of dollars)for an economy: Gross domestic product (in billions of dollars)for this economy equals

Disposable personal income is defined as

In a small economy,gross investment is $1,500,consumption spending is $6,000,net investment is $200,government purchases are $1,500,exports are $2,000 and imports are $1,000.What is GDP for this economy?

Gross domestic product understates the total production of final goods and services because of the omission of

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

If a country passes a labor law limiting the number of hours of work per week,GDP would and leisure would .