Question 1

A firm's revenue from selling its product minus the cost of inputs purchased from other firms is called:

Accepted Answer

A)  profits. 
B)  investment. 
C)  value added. 
D)  production costs. 
A)  profits. 
B)  investment. 
C)  value added. 
D)  production costs.

Question 2

An economy produces only 500,000 tables valued at $100 each. Of these, 100,000 are sold to consumers, 200,000 are sold to businesses, 100,000 are sold to the government, and 50,000 are sold abroad. No tables are imported. The unsold tables at the end of the year are held in inventory by the table manufacturers. What is the value of GDP?

Accepted Answer

A)  $5 million 
B)  $40 million 
C)  $45 million 
D)  $50 million 
A)  $5 million 
B)  $40 million 
C)  $45 million 
D)  $50 million

Question 3

When economists use market values to aggregate output, they sum the:

Accepted Answer

A)  number of items produced. 
B)  quantity of items produced. 
C)  price times the quantity of each item produced. 
D)  amount of each item produced. 
A)  number of items produced. 
B)  quantity of items produced. 
C)  price times the quantity of each item produced. 
D)  amount of each item produced.

Question 4

Assume an economy produces only hamburgers and hotdogs and the base year is 2005. $\begin{array}{lcccc} 
&& {\text { Quantities Produced }} && {\text { Prices }} \
 & 2005 & 2006 & 2005 & 2006 \
\text { Hamburgers } & 2,000 & 3,000 & \$ 2 & \$ 3 \
\text { Hotdogs } & 3,000 & 4,000 & \$ 1 & \$ 1.50
\end{array}$ Given the data in the table above, what is the value of nominal GDP in 2006?

Accepted Answer

A)  $5,000 
B)  $7,000 
C)  $10,500 
D)  $15,000 
A)  $5,000 
B)  $7,000 
C)  $10,500 
D)  $15,000

Question 5

The most commonly used measure of an economy's output is:

Accepted Answer

A)  the rate of employment. 
B)  the rate of inflation. 
C)  gross domestic product. 
D)  the Dow Jones stock market index. 
A)  the rate of employment. 
B)  the rate of inflation. 
C)  gross domestic product. 
D)  the Dow Jones stock market index.

Question 6

GDP would be a better measure of economic well-being if it included:

Accepted Answer

A)  the costs of education. 
B)  the total value of intermediate goods. 
C)  the market value of final goods. 
D)  the value of leisure. 
A)  the costs of education. 
B)  the total value of intermediate goods. 
C)  the market value of final goods. 
D)  the value of leisure.

Question 7

The four components of aggregate expenditures are:

Accepted Answer

A)  consumption, imports, government spending, and net exports. 
B)  consumption, interest payments, government spending, and net exports. 
C)  consumer durables, investment, government spending, and net exports. 
D)  consumption, investment, government spending, and net exports. 
A)  consumption, imports, government spending, and net exports. 
B)  consumption, interest payments, government spending, and net exports. 
C)  consumer durables, investment, government spending, and net exports. 
D)  consumption, investment, government spending, and net exports.

Question 8

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: $$\begin{array} { l c c } 
\text { Name of Company } & \text { Revenues } & \text { Cost of Purchased Inputs } \
\text { Fulton Family Farm } & \$ 0.50 & 0 \
\text { DeLux Popcorn Co. } & \$ 2.50 & \$ .50 \
\text { Friendly Groceries } & \$ 4.00 & \$ 2.50
\end{array}$$ What is the value added of Friendly Groceries?

Accepted Answer

A)  $1.50 
B)  $2.50 
C)  $3.50 
D)  $4.00 
A)  $1.50 
B)  $2.50 
C)  $3.50 
D)  $4.00

Question 9

Wages and salaries are examples of:

Accepted Answer

A)  consumption. 
B)  labor income. 
C)  capital income. 
D)  profits. 
A)  consumption. 
B)  labor income. 
C)  capital income. 
D)  profits.

Question 10

An economy produces 500,000 tables valued at $100 each. Households purchase 100,000 tables, of which 50,000 are imported. Businesses purchase 200,000 domestically produced tables, the government purchases 100,000 domestically produced tables, and 50,000 domestically produced tables are sold abroad. The unsold tables at the end of the year are held in inventory by the table manufacturers. What is value of the investment component of GDP?

Accepted Answer

A)  $10 billion 
B)  $20 million 
C)  $25 million 
D)  $30 million 
A)  $10 billion 
B)  $20 million 
C)  $25 million 
D)  $30 million

Question 11

Government expenditures include spending by federal, state, and local governments on:

Accepted Answer

A)  consumer durables, nondurables, and services. 
B)  stocks, bonds, and other financial instruments. 
C)  capital goods, residential housing, and changes in inventories. 
D)  final goods and services. 
A)  consumer durables, nondurables, and services. 
B)  stocks, bonds, and other financial instruments. 
C)  capital goods, residential housing, and changes in inventories. 
D)  final goods and services.

Question 12

Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: $$\begin{array} { l c c } 
{ \text { Name of Company } } & \text { Revenues } & \text { Cost of Purchased Inputs } \
\text { Citrus Growers Inc. } & \$ 0.75 & 0 \
\text { Florida Jam Company } & \$ 2.00 & \$ .75 \
\text { The Corner Store } & \$ 2.50 & \$ 2.00
\end{array}$$ What is the value added of Florida Jam Company?

Accepted Answer

A)  $0.50 
B)  $0.75 
C)  $1.25 
D)  $2.00 
A)  $0.50 
B)  $0.75 
C)  $1.25 
D)  $2.00

Question 13

The following table provides data for an economy in a certain year. $$\begin{array} { l l } 
\text { Consumption expenditures } & 50 \
\text { Imports } & 40 \
\text { Government purchases of goods and services } & 20 \
\text { Construction of new homes and apartments } & 30 \
\text { Sales of existing homes and apartments } & 40 \
\text { Exports } & 50 \
\text { Government payments to retirees } & 10 \
\text { Household purchases of durable goods } & 20 \
\text { Beginning-of-year inventory } & 10 \
\text { End-of-year inventory } & 20 \
\text { Business fixed investment } & 30
\end{array}$$ Given the data in the table, compute the investment component of GDP.

Accepted Answer

A)  30 
B)  40 
C)  60 
D)  70 
A)  30 
B)  40 
C)  60 
D)  70

Question 14

Investment spending includes spending on:

Accepted Answer

A)  consumer durable goods. 
B)  new capital goods. 
C)  services. 
D)  stocks and bonds. 
A)  consumer durable goods. 
B)  new capital goods. 
C)  services. 
D)  stocks and bonds.

Question 15

Labor income includes:

Accepted Answer

A)  wages, salaries, and earnings of the self-employed. 
B)  payments to owners of factories, machines, and buildings. 
C)  interest, dividends, and rent. 
D)  profits, royalties, and rent. 
A)  wages, salaries, and earnings of the self-employed. 
B)  payments to owners of factories, machines, and buildings. 
C)  interest, dividends, and rent. 
D)  profits, royalties, and rent.

Question 16

Assume an economy produces only footballs and baseballs and the base year is 2005. $\begin{array}{lllll} 
& {\text { Quantities Produced }} && {\text { Prices }} \
 & 2005 & 2006 & 2005 & 2006 \
\text { Footballs } & 200 & 300 & \$ 20 & \$ 25 \
\text { Baseballs } & 500 & 600 & \$ 10 & \$ 15
\end{array}$

Given the data in the table above, what is the value of real GDP in 2006?

Accepted Answer

A)  $9,000 
B)  $10,000 
C)  $12,000 
D)  $12,500 
A)  $9,000 
B)  $10,000 
C)  $12,000 
D)  $12,500

Question 17

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: $$\begin{array} { l c c } 
\text { Name of Company } & \text { Revenues } & \text { Cost of Purchased Inputs } \
\text { Fulton Family Farm } & \$ 0.50 & 0 \
\text { DeLux Popcorn Co. } & \$ 2.50 & \$ .50 \
\text { Friendly Groceries } & \$ 4.00 & \$ 2.50
\end{array}$$ If the corn was grown and the jar of popcorn produced in the year 2009, but the jar was sold at Friendly Groceries in the year 2010, what is the contribution of these transactions to GDP in the year 2010?

Accepted Answer

A)  $0.00 
B)  $0.50 
C)  $1.50 
D)  $4.00 
A)  $0.00 
B)  $0.50 
C)  $1.50 
D)  $4.00

Question 18

An economy produces only 1,000,000 computers valued at $2,000 each. Of these, 200,000 are sold to consumers, 300,000 are sold to businesses, 300,000 are sold to the government, and 100,000 are sold abroad. No computers are imported. The unsold computers at the end of the year are held in inventory by the computer manufacturers. What is the value of the investment component of GDP?

Accepted Answer

A)  $0.3 billion 
B)  $0.4 billion 
C)  $0.6 billion 
D)  $0.8 billion 
A)  $0.3 billion 
B)  $0.4 billion 
C)  $0.6 billion 
D)  $0.8 billion

Question 19

Real GDP is measured in ______ prices; nominal GDP is measured in ______ prices.

Accepted Answer

A)  current; base-year 
B)  base-year; current 
C)  current; current 
D)  base-year; base-year 
A)  current; base-year 
B)  base-year; current 
C)  current; current 
D)  base-year; base-year

Question 20

Despite some problems with equating GDP with economic well-being, higher real GDP per person does imply greater economic well-being because it tends to be positively associated with:

Accepted Answer

A)  crime, pollution, and economic inequality. 
B)  better education, health and life expectancy. 
C)  poverty, depletion of nonrenewable resources, and congestion. 
D)  unemployment, availability of goods and services, and better education. 
A)  crime, pollution, and economic inequality. 
B)  better education, health and life expectancy. 
C)  poverty, depletion of nonrenewable resources, and congestion. 
D)  unemployment, availability of goods and services, and better education.

A firm's revenue from selling its product minus the cost of inputs purchased from other firms is called:

When economists use market values to aggregate output, they sum the:

Assume an economy produces only hamburgers and hotdogs and the base year is 2005. Quantities Produced Prices 2005 2006 2005 2006 Hamburgers 2,000 3,000 \ 2 \ 3 Hotdogs 3,000 4,000 \ 1 \ 1.50 Given the data in the table above, what is the value of nominal GDP in 2006?

The most commonly used measure of an economy's output is:

GDP would be a better measure of economic well-being if it included:

The four components of aggregate expenditures are:

Wages and salaries are examples of:

Government expenditures include spending by federal, state, and local governments on:

Investment spending includes spending on:

Labor income includes:

Assume an economy produces only footballs and baseballs and the base year is 2005. Quantities Produced Prices 2005 2006 2005 2006 Footballs 200 300 \ 20 \ 25 Baseballs 500 600 \ 10 \ 15 Given the data in the table above, what is the value of real GDP in 2006?

Real GDP is measured in prices; nominal GDP is measured in prices.

Despite some problems with equating GDP with economic well-being, higher real GDP per person does imply greater economic well-being because it tends to be positively associated with:

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Measuring Economic Activity: Gdp and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

Workers, Wages, and Unemployment

Saving and Capital Formation

Money, Prices, and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economics Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: the Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Filters

Exam 4: Macroeconomics: the Birds-Eye View of the Economy

A firm's revenue from selling its product minus the cost of inputs purchased from other firms is called:

When economists use market values to aggregate output, they sum the:

Assume an economy produces only hamburgers and hotdogs and the base year is 2005. Quantities Produced Prices 2005 2006 2005 2006 Hamburgers 2,000 3,000 \ 2 \ 3 Hotdogs 3,000 4,000 \ 1 \ 1.50 Given the data in the table above, what is the value of nominal GDP in 2006?

The most commonly used measure of an economy's output is:

GDP would be a better measure of economic well-being if it included:

The four components of aggregate expenditures are:

Wages and salaries are examples of:

Government expenditures include spending by federal, state, and local governments on:

Investment spending includes spending on:

Labor income includes:

Assume an economy produces only footballs and baseballs and the base year is 2005. Quantities Produced Prices 2005 2006 2005 2006 Footballs 200 300 \ 20 \ 25 Baseballs 500 600 \ 10 \ 15 Given the data in the table above, what is the value of real GDP in 2006?

Real GDP is measured in ______ prices; nominal GDP is measured in ______ prices.

Despite some problems with equating GDP with economic well-being, higher real GDP per person does imply greater economic well-being because it tends to be positively associated with:

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Measuring Economic Activity: Gdp and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

Workers, Wages, and Unemployment

Saving and Capital Formation

Money, Prices, and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economics Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: the Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Filters

Real GDP is measured in prices; nominal GDP is measured in prices.