Question 1

Which of the following is not a durable good?

Accepted Answer

A)  furniture 
B)  automobile 
C)  clothing 
D)  refrigerator 
A)  furniture 
B)  automobile 
C)  clothing 
D)  refrigerator

Question 2

Macroeconomics, as opposed to microeconomics, includes the study of what determines the

Accepted Answer

A)  average price levels of goods and services in the economy. 
B)  price charged for laptop computers by Dell. 
C)  wages paid to employees by Dell. 
D)  quantity of Dell employees. 
A)  average price levels of goods and services in the economy. 
B)  price charged for laptop computers by Dell. 
C)  wages paid to employees by Dell. 
D)  quantity of Dell employees.

Question 3

The size of the underground economy would tend to increase if the government of a country

Accepted Answer

A)  decreased government regulations on businesses. 
B)  increased income tax rates. 
C)  legalized prostitution. 
D)  legalized marijuana. 
A)  decreased government regulations on businesses. 
B)  increased income tax rates. 
C)  legalized prostitution. 
D)  legalized marijuana.

Question 4

Which of the following would not be included in the expenditure category called investment expenditures?

Accepted Answer

A)  spending on new houses 
B)  a purchase of shares of preferred stock 
C)  a purchase of a copy machine by FedEx Office 
D)  the cars held in inventory on a local Ford dealer's lot 
A)  spending on new houses 
B)  a purchase of shares of preferred stock 
C)  a purchase of a copy machine by FedEx Office 
D)  the cars held in inventory on a local Ford dealer's lot

Question 5

If the GDP deflator is less than 100, which will be higher: nominal GDP or real GDP? Why?

Accepted Answer

Real GDP will be higher. The G

Question 6

Which of the following is not a true statement about the impact of World War II on the U.S. economy?

Accepted Answer

A)  U.S. GDP increased dramatically from 1941 to 1945. 
B)  The war time years were a period of prosperity for U.S. consumers. 
C)  More than 40% of the labor force was in the military or producing war goods. 
D)  Increased production of tanks, ships, planes, and munitions accounted for most of the increase in GDP. 
A)  U.S. GDP increased dramatically from 1941 to 1945. 
B)  The war time years were a period of prosperity for U.S. consumers. 
C)  More than 40% of the labor force was in the military or producing war goods. 
D)  Increased production of tanks, ships, planes, and munitions accounted for most of the increase in GDP.

Question 7

The GDP deflator is equal to

Accepted Answer

A)  real GDP divided by nominal GDP. 
B)  nominal GDP divided by real GDP, multiplied by 100. 
C)  nominal GDP divided by real GDP. 
D)  real GDP divided by nominal GDP, multiplied by 100. 
A)  real GDP divided by nominal GDP. 
B)  nominal GDP divided by real GDP, multiplied by 100. 
C)  nominal GDP divided by real GDP. 
D)  real GDP divided by nominal GDP, multiplied by 100.

Question 8

Which of the following transactions represents the purchase of a final good?

Accepted Answer

A)  Starbucks purchases coffee beans. 
B)  Delta buys a new European-made jetliner. 
C)  Apple computer buys computer processors from Intel. 
D)  Your father buys a new John Deere riding lawn mower. 
A)  Starbucks purchases coffee beans. 
B)  Delta buys a new European-made jetliner. 
C)  Apple computer buys computer processors from Intel. 
D)  Your father buys a new John Deere riding lawn mower.

Question 9

Table 19-19
  
-Refer to Table 19-19. Given the information above, calculate the GDP deflator in 2013.

Accepted Answer

A)  114 
B)  105 
C)  95 
D)  87 
A)  114 
B)  105 
C)  95 
D)  87

Question 10

Table 19-32
  
-Refer to Table 19-32. The table above represents hypothetical data from the National Income Accounts for 2013. Use the data to calculate personal income and disposable income.

Accepted Answer

Personal income = National income - Reta

Question 11

Real GDP will increase

Accepted Answer

A)  only if the price level rises. 
B)  only if the price level falls. 
C)  only if the quantity of final goods and services produced rises. 
D)  if either the price level rises or the quantity of final goods and services produced rises. 
A)  only if the price level rises. 
B)  only if the price level falls. 
C)  only if the quantity of final goods and services produced rises. 
D)  if either the price level rises or the quantity of final goods and services produced rises.

Question 12

Value added equals the market price of the firm's product minus

Accepted Answer

A)  wages and salaries. 
B)  the price of intermediate goods. 
C)  the price of all factors of production. 
D)  depreciation on plant and equipment. 
A)  wages and salaries. 
B)  the price of intermediate goods. 
C)  the price of all factors of production. 
D)  depreciation on plant and equipment.

Question 13

An example of a final good would be

Accepted Answer

A)  the soy milk sold to Starbucks. 
B)  the whipped cream sold to Starbucks. 
C)  a soy latte sold by Starbucks to a student. 
D)  the coffee beans sold to Starbucks. 
A)  the soy milk sold to Starbucks. 
B)  the whipped cream sold to Starbucks. 
C)  a soy latte sold by Starbucks to a student. 
D)  the coffee beans sold to Starbucks.

Question 14

Caroline is an artist. She purchases canvas, paints, brushes, and accessories for $75. She sells one of her original paintings to an art gallery for $1,500, which, in turn, sells it to an art lover for $4,500. How much value does the gallery add?

Accepted Answer

A)  $1,425 
B)  $1,500 
C)  $3,000 
D)  $4,500 
A)  $1,425 
B)  $1,500 
C)  $3,000 
D)  $4,500

Question 15

Using "chain-weighted" prices to calculate real GDP remedies the distortions causes by changes in relative prices over time.

Accepted Answer

A) True 
 B)False

Question 16

The purchase of a new automobile is included in

Accepted Answer

A)  consumption expenditures on services. 
B)  consumption expenditures on nondurable goods. 
C)  consumption expenditures on durable goods. 
D)  investment expenditures. 
A)  consumption expenditures on services. 
B)  consumption expenditures on nondurable goods. 
C)  consumption expenditures on durable goods. 
D)  investment expenditures.

Question 17

Table 19-18
   A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above.
-Refer to Table 19-18. What is the GDP deflator in 2008 if 2013 is the base year?

Accepted Answer

A)  187 
B)  87 
C)  8.7 
D)  0.87 
A)  187 
B)  87 
C)  8.7 
D)  0.87

Question 18

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 19

If GDP calculations included measurements of pollution and environmental damage, GDP values would most likely be

Accepted Answer

A)  greater than their values without these measurements. 
B)  less than their values without these measurements. 
C)  unchanged from their values without these measurements. 
D)  meaningless, since GDP values without these measurements would no longer be of value. 
A)  greater than their values without these measurements. 
B)  less than their values without these measurements. 
C)  unchanged from their values without these measurements. 
D)  meaningless, since GDP values without these measurements would no longer be of value.

Question 20

The circular flow diagram shows that

Accepted Answer

A)  the value of total income is equal to the total value of expenditures on final goods and services. 
B)  firms pay households wages, and households receive transfer payments from firms. 
C)  households spend all their income on goods and services. 
D)  GDP will be less than the total value of expenditures on final goods and services in the economy. 
A)  the value of total income is equal to the total value of expenditures on final goods and services. 
B)  firms pay households wages, and households receive transfer payments from firms. 
C)  households spend all their income on goods and services. 
D)  GDP will be less than the total value of expenditures on final goods and services in the economy.

Exam 19: GDP: Measuring Total Production and Income

Which of the following is not a durable good?

Macroeconomics, as opposed to microeconomics, includes the study of what determines the

The size of the underground economy would tend to increase if the government of a country

Which of the following would not be included in the expenditure category called investment expenditures?

If the GDP deflator is less than 100, which will be higher: nominal GDP or real GDP? Why?

Which of the following is not a true statement about the impact of World War II on the U.S. economy?

The GDP deflator is equal to

Which of the following transactions represents the purchase of a final good?

Table 19-19 -Refer to Table 19-19. Given the information above, calculate the GDP deflator in 2013.

Table 19-32 -Refer to Table 19-32. The table above represents hypothetical data from the National Income Accounts for 2013. Use the data to calculate personal income and disposable income.

Real GDP will increase

Value added equals the market price of the firm's product minus

An example of a final good would be

Caroline is an artist. She purchases canvas, paints, brushes, and accessories for $75. She sells one of her original paintings to an art gallery for $1,500, which, in turn, sells it to an art lover for $4,500. How much value does the gallery add?

Using "chain-weighted" prices to calculate real GDP remedies the distortions causes by changes in relative prices over time.

The purchase of a new automobile is included in

Table 19-18 A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above. -Refer to Table 19-18. What is the GDP deflator in 2008 if 2013 is the base year?

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

If GDP calculations included measurements of pollution and environmental damage, GDP values would most likely be

The circular flow diagram shows that

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

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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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