Question 1

Sales tax is an example of an indirect business tax.

Accepted Answer

A) True 
 B)False  True

Question 2

Corporate profits can be broken into three categories: dividends,undistributed profits,and corporate profits taxes.

Accepted Answer

A) True 
 B)False  True

Question 3

To derive net domestic product (NDP)from gross domestic product (GDP),we must subtract ________________ from GDP.

Accepted Answer

A)  the capital consumption allowance 
B)  gross private domestic investment 
C)  imports 
D)  inventory investment 
E)  the statistical discrepancy 
A)  the capital consumption allowance 
B)  gross private domestic investment 
C)  imports 
D)  inventory investment 
E)  the statistical discrepancy A

Question 4

Real GDP is always measured in

Accepted Answer

A)  cheaper dollars. 
B)  quality of goods produced. 
C)  base-year dollars. 
D)  nominal dollars. 
E)  current dollars. 
A)  cheaper dollars. 
B)  quality of goods produced. 
C)  base-year dollars. 
D)  nominal dollars. 
E)  current dollars.

Question 5

The standard definition of "recession" is

Accepted Answer

A)  a period of a positive frictional unemployment rate. 
B)  two consecutive quarters of falling Real GDP. 
C)  the lowest point in a business cycle. 
D)  a period of negative inflation. 
A)  a period of a positive frictional unemployment rate. 
B)  two consecutive quarters of falling Real GDP. 
C)  the lowest point in a business cycle. 
D)  a period of negative inflation.

Question 6

Net domestic product equals gross domestic product minus the capital consumption allowance.

Accepted Answer

A) True 
 B)False

Question 7

Suppose that inventory investment is $20 billion and (total)investment is $680 billion.What does purchases of newly produced capital goods equal?

Accepted Answer

A)  $715 billion 
B)  $785 billion 
C)  $750 billion 
D)  $35 billion 
E)  There is not enough information to answer this question. 
A)  $715 billion 
B)  $785 billion 
C)  $750 billion 
D)  $35 billion 
E)  There is not enough information to answer this question.

Question 8

Look at the following data: personal income = $4,900 billion; personal taxes = $900 billion; transfer payments = $980 billion.What is disposable income?

Accepted Answer

A)  $3,200 billion 
B)  $4,000 billion 
C)  $4,980 billion 
D)  $1,880 billion 
E)  There is not enough information to answer the question. 
A)  $3,200 billion 
B)  $4,000 billion 
C)  $4,980 billion 
D)  $1,880 billion 
E)  There is not enough information to answer the question.

Question 9

Is it possible for a country with a relatively large GDP to have a relatively small per-capita GDP?

Accepted Answer

A)  Yes,since the country with a relatively large GDP could also have a relatively large population. 
B)  No,since countries with a relatively large GDP (such as the United States and Japan)also have a relatively high per-capita GDP. 
C)  Yes,but only under the condition that the country "produces" relatively more "bads" than other countries. 
D)  Yes,since government transfer payments may be exorbitantly high in the country with the relatively high GDP. 
E)  There is not enough information to answer this question. 
A)  Yes,since the country with a relatively large GDP could also have a relatively large population. 
B)  No,since countries with a relatively large GDP (such as the United States and Japan)also have a relatively high per-capita GDP. 
C)  Yes,but only under the condition that the country "produces" relatively more "bads" than other countries. 
D)  Yes,since government transfer payments may be exorbitantly high in the country with the relatively high GDP. 
E)  There is not enough information to answer this question.

Question 10

Compensation of employees is the largest component of GDP when using the expenditure approach to calculate GDP.

Accepted Answer

A) True 
 B)False

Question 11

Using the expenditures approach,GDP is equal to consumption plus investment,plus government purchases,minus net exports.

Accepted Answer

A) True 
 B)False

Question 12

If GDP in year 1 is the same dollar amount as the GDP in year 2,does it follow that Real GDP in year 1 is the same as Real GDP in year 2?

Accepted Answer

A)  Yes,since prices must necessarily be the same in the two years. 
B)  No,since equal GDP figures do not account for population. 
C)  No,since prices may not be the same in the two years. 
D)  Yes,since equal GDP figures do account for a change in the quality of goods produced in the two years. 
E)  none of the above 
A)  Yes,since prices must necessarily be the same in the two years. 
B)  No,since equal GDP figures do not account for population. 
C)  No,since prices may not be the same in the two years. 
D)  Yes,since equal GDP figures do account for a change in the quality of goods produced in the two years. 
E)  none of the above

Question 13

Suppose that consumption spending is $3,200 billion,spending on durable goods is $800 billion,and spending on services is $1,800 billion.What does spending on nondurable goods equal?

Accepted Answer

A)  $5,800 billion 
B)  $600 billion 
C)  $2,400 billion 
D)  $3,200 billion 
E)  There is not enough information to answer this question. 
A)  $5,800 billion 
B)  $600 billion 
C)  $2,400 billion 
D)  $3,200 billion 
E)  There is not enough information to answer this question.

Question 14

Which of the following is a macroeconomic measurement used to gauge macroeconomic activity?

Accepted Answer

A)  Net domestic product 
B)  National income 
C)  Personal income 
D)  Disposable income 
E)  all of the above 
A)  Net domestic product 
B)  National income 
C)  Personal income 
D)  Disposable income 
E)  all of the above

Question 15

Countries with a large GDP must also have a large per-capita GDP.

Accepted Answer

A) True 
 B)False

Question 16

Macroeconomists define consumption as

Accepted Answer

A)  purchases by the business sector. 
B)  wearing away and breakdown of capital goods. 
C)  the difference between imports and exports. 
D)  purchases by the household sector. 
A)  purchases by the business sector. 
B)  wearing away and breakdown of capital goods. 
C)  the difference between imports and exports. 
D)  purchases by the household sector.

Question 17

If Real GDP was $9,542 billion in year 2 and it had been $9,300 billion in year 1,what was the approximate economic growth rate during this time period?

Accepted Answer

A)  9.7 percent 
B)  2.4 percent 
C)  3.5 percent 
D)  2.6 percent 
A)  9.7 percent 
B)  2.4 percent 
C)  3.5 percent 
D)  2.6 percent

Question 18

National income equals

Accepted Answer

A)  wages + salaries + corporate profits + net income. 
B)  compensation of employees + proprietors' income + corporate profits + rental income + net interest. 
C)  compensation of employees + proprietors' income + indirect business taxes + rental income + net interest. 
D)  the monetary value of fringe benefits + tips + wages + profits + salaries. 
E)  none of the above 
A)  wages + salaries + corporate profits + net income. 
B)  compensation of employees + proprietors' income + corporate profits + rental income + net interest. 
C)  compensation of employees + proprietors' income + indirect business taxes + rental income + net interest. 
D)  the monetary value of fringe benefits + tips + wages + profits + salaries. 
E)  none of the above

Question 19

Increases in import spending _____________________,ceteris paribus.

Accepted Answer

A)  raise GDP 
B)  lower GDP 
C)  are always equal to decreases in exports 
D)  may raise or lower GDP 
A)  raise GDP 
B)  lower GDP 
C)  are always equal to decreases in exports 
D)  may raise or lower GDP

Question 20

Government purchases consist of the total dollar amount(s)spent on goods and services by the

Accepted Answer

A)  federal government only. 
B)  state governments only. 
C)  local governments only. 
D)  state and local governments,but not the federal government. 
E)  federal,state,and local governments. 
A)  federal government only. 
B)  state governments only. 
C)  local governments only. 
D)  state and local governments,but not the federal government. 
E)  federal,state,and local governments.

Exam 7: Consumer Choice: Maximizing Utility and Behavioral Economics

Sales tax is an example of an indirect business tax.

Corporate profits can be broken into three categories: dividends,undistributed profits,and corporate profits taxes.

To derive net domestic product (NDP)from gross domestic product (GDP),we must subtract ________________ from GDP.

Real GDP is always measured in

The standard definition of "recession" is

Net domestic product equals gross domestic product minus the capital consumption allowance.

Suppose that inventory investment is $20 billion and (total)investment is $680 billion.What does purchases of newly produced capital goods equal?

Look at the following data: personal income = $4,900 billion; personal taxes = $900 billion; transfer payments = $980 billion.What is disposable income?

Is it possible for a country with a relatively large GDP to have a relatively small per-capita GDP?

Compensation of employees is the largest component of GDP when using the expenditure approach to calculate GDP.

Using the expenditures approach,GDP is equal to consumption plus investment,plus government purchases,minus net exports.

If GDP in year 1 is the same dollar amount as the GDP in year 2,does it follow that Real GDP in year 1 is the same as Real GDP in year 2?

Suppose that consumption spending is $3,200 billion,spending on durable goods is $800 billion,and spending on services is $1,800 billion.What does spending on nondurable goods equal?

Which of the following is a macroeconomic measurement used to gauge macroeconomic activity?

Countries with a large GDP must also have a large per-capita GDP.

Macroeconomists define consumption as

If Real GDP was $9,542 billion in year 2 and it had been $9,300 billion in year 1,what was the approximate economic growth rate during this time period?

National income equals

Increases in import spending _____________________,ceteris paribus.

Government purchases consist of the total dollar amount(s)spent on goods and services by the

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

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