Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which is not a shortcoming of GDP accounting?

Accepted Answer

A)  It ignores the underground economy. 
B)  It excludes household production. 
C)  It excludes the value of leisure time. 
D)  It ignores changes in population. 
E)  It has no mechanism for adjusting the figures for inflation. 
A)  It ignores the underground economy. 
B)  It excludes household production. 
C)  It excludes the value of leisure time. 
D)  It ignores changes in population. 
E)  It has no mechanism for adjusting the figures for inflation.

Question 3

Which of the following is reflected in GDP?

Accepted Answer

A)  the value of leisure time 
B)  the value of illegal goods and services 
C)  emotional and psychological well-being 
D)  costs of cleaning up after pollution 
E)  the value of house maintenance performed by homeowners 
A)  the value of leisure time 
B)  the value of illegal goods and services 
C)  emotional and psychological well-being 
D)  costs of cleaning up after pollution 
E)  the value of house maintenance performed by homeowners

Question 4

Given the following hypothetical data: C = $3,000; I = $1,200; G = $2,000; X - M = -$500; depreciation = $200; transfer payments = $800,net domestic product is

Accepted Answer

A)  $5,500 
B)  $5,700 
C)  $6,200 
D)  $6,400 
E)  $6,900 
A)  $5,500 
B)  $5,700 
C)  $6,200 
D)  $6,400 
E)  $6,900

Question 5

The simple circular flow model shows that

Accepted Answer

A)  households are on the demand side of both the product and resource market 
B)  firms are on the demand side of both the product and resource market 
C)  households are on the supply side of the resource market and the demand side of the product market 
D)  firms and governments are on the supply side of the loanable funds market 
E)  governments are on the demand side of the product market and the supply side of the resource market 
A)  households are on the demand side of both the product and resource market 
B)  firms are on the demand side of both the product and resource market 
C)  households are on the supply side of the resource market and the demand side of the product market 
D)  firms and governments are on the supply side of the loanable funds market 
E)  governments are on the demand side of the product market and the supply side of the resource market

Question 6

Suppose that storage costs increase,so that firms decide to hold less output in inventory,other things constant.Which of the following is true?

Accepted Answer

A)  consumption spending will increase 
B)  consumption spending will decrease 
C)  investment will increase 
D)  investment will decrease 
E)  GDP for this year is not affected 
A)  consumption spending will increase 
B)  consumption spending will decrease 
C)  investment will increase 
D)  investment will decrease 
E)  GDP for this year is not affected

Question 7

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.

Question 8

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 9

If real GDP increased by 3 percent,then

Accepted Answer

A)  real output has increased by 3 percent 
B)  the price level has increased by 3 percent 
C)  consumer spending increased by 3 percent 
D)  government spending increased by 3 percent 
E)  the increase might have been caused by an increase in the price level,but we cannot tell for sure 
A)  real output has increased by 3 percent 
B)  the price level has increased by 3 percent 
C)  consumer spending increased by 3 percent 
D)  government spending increased by 3 percent 
E)  the increase might have been caused by an increase in the price level,but we cannot tell for sure

Question 10

The immediate effect on GDP of Ibrahim's purchase of a government bond is

Accepted Answer

A)  a decrease in consumption because Ibrahim has less money to spend 
B)  an increase in government spending 
C)  an increase in investment 
D)  a decrease in investment because less money is available to him for further investment 
E)  nonexistent,since no real goods and services have been produced 
A)  a decrease in consumption because Ibrahim has less money to spend 
B)  an increase in government spending 
C)  an increase in investment 
D)  a decrease in investment because less money is available to him for further investment 
E)  nonexistent,since no real goods and services have been produced

Question 11

If the CPI rises in one year from 220 to 230,the inflation rate is 10 percent.

Accepted Answer

A) True 
 B)False

Question 12

If the GDP price index rises from 100 to 110 to 115 over three consecutive year,the inflation rate is decreasing.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that in year 1 the respective prices of yogurt,candy bars,and popcorn are $1,$2,and $3.In year 2 the unit prices of each are $2,$3,and $4,respectively.Which of the following statements is true of the price level between year 1 and year 2?

Accepted Answer

A)  it doubled 
B)  it increased by 33 percent 
C)  it rose from $6 to $9 
D)  it went up from 106 to 109 
E)  it must have risen at a rate between 33 percent and 100 percent 
A)  it doubled 
B)  it increased by 33 percent 
C)  it rose from $6 to $9 
D)  it went up from 106 to 109 
E)  it must have risen at a rate between 33 percent and 100 percent

Question 14

Suppose that the economy is in equilibrium with the government budget in surplus and with saving is greater than investment.According to the circular flow model,

Accepted Answer

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

Question 15

A major difference between the CPI and the GDP price index is that the CPI includes

Accepted Answer

A)  all domestically produced goods and the price index includes only a sample of domestically produced goods 
B)  all domestically produced goods and the price index includes a sample of goods consumed,including imported goods 
C)  only a sample of domestically produced goods and the price index includes all domestically produced goods 
D)  a sample of goods consumed,including imported goods,and the price index includes all domestically produced goods 
E)  a sample of all goods consumed that are domestically produced,and the price index includes all goods produced 
A)  all domestically produced goods and the price index includes only a sample of domestically produced goods 
B)  all domestically produced goods and the price index includes a sample of goods consumed,including imported goods 
C)  only a sample of domestically produced goods and the price index includes all domestically produced goods 
D)  a sample of goods consumed,including imported goods,and the price index includes all domestically produced goods 
E)  a sample of all goods consumed that are domestically produced,and the price index includes all goods produced

Question 16

The economy's production possibilities depend on what happens to

Accepted Answer

A)  fishing net investment 
B)  gross investment 
C)  net investment 
D)  net domestic product 
E)  computer network investment 
A)  fishing net investment 
B)  gross investment 
C)  net investment 
D)  net domestic product 
E)  computer network investment

Question 17

The base year for a price index is the year

Accepted Answer

A)  in which prices are lowest 
B)  in which prices are highest 
C)  in which real output is largest 
D)  in which prices were stable 
E)  that serves as a reference point 
A)  in which prices are lowest 
B)  in which prices are highest 
C)  in which real output is largest 
D)  in which prices were stable 
E)  that serves as a reference point

Question 18

Which of the following best describes an intermediate good?

Accepted Answer

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

Question 19

GDP understates total economic activity because it ignores household production of goods and services.

Accepted Answer

A) True 
 B)False

Question 20

If U.S.net investment is positive,the nation's capital stock is growing.

Accepted Answer

A) True 
 B)False

Exam 7: Tracking the US Economy

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

Which is not a shortcoming of GDP accounting?

Which of the following is reflected in GDP?

Given the following hypothetical data: C = $3,000; I = $1,200; G = $2,000; X - M = -$500; depreciation = $200; transfer payments = $800,net domestic product is

The simple circular flow model shows that

Suppose that storage costs increase,so that firms decide to hold less output in inventory,other things constant.Which of the following is true?

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

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

If real GDP increased by 3 percent,then

The immediate effect on GDP of Ibrahim's purchase of a government bond is

If the CPI rises in one year from 220 to 230,the inflation rate is 10 percent.

If the GDP price index rises from 100 to 110 to 115 over three consecutive year,the inflation rate is decreasing.

Suppose that in year 1 the respective prices of yogurt,candy bars,and popcorn are $1,$2,and $3.In year 2 the unit prices of each are $2,$3,and $4,respectively.Which of the following statements is true of the price level between year 1 and year 2?

Suppose that the economy is in equilibrium with the government budget in surplus and with saving is greater than investment.According to the circular flow model,

A major difference between the CPI and the GDP price index is that the CPI includes

The economy's production possibilities depend on what happens to

The base year for a price index is the year

Which of the following best describes an intermediate good?

GDP understates total economic activity because it ignores household production of goods and services.

If U.S.net investment is positive,the nation's capital stock is growing.

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Productivity and Growth

Unemployment and Inflation

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

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

International Finance

Developing and Transitional Economies

Understanding Graphs

National Income Accounts

Variable Net Exports

Variable Net Exports Revisited

The Algebra of Income and Expenditure

The Algebra of Demand-Side Equilibrium

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