Question 1

Because of activity in the underground economy,

Accepted Answer

A) GDP statistics understate the true volume of economic activity 
B) GDP statistics overstate the true prices in the economy 
C) consumers are not as well off as GDP statistics indicate 
D) firms' profits are higher than GDP statistics indicate 
E) government revenue is higher than GDP statistics indicate 
A) GDP statistics understate the true volume of economic activity 
B) GDP statistics overstate the true prices in the economy 
C) consumers are not as well off as GDP statistics indicate 
D) firms' profits are higher than GDP statistics indicate 
E) government revenue is higher than GDP statistics indicate

Question 2

Which of the following is included in GDP as government purchases?

Accepted Answer

A) Social Security payments to elderly citizens 
B) welfare benefits distributed to the poor 
C) outright grants from government to recipients 
D) payments to clerical workers hired by government 
E) unemployment compensation benefits 
A) Social Security payments to elderly citizens 
B) welfare benefits distributed to the poor 
C) outright grants from government to recipients 
D) payments to clerical workers hired by government 
E) unemployment compensation benefits

Question 3

The name of the organization that is developing a collection of data series that provides more detail about the US economy than GDP does is called:

Accepted Answer

A) The Bureau of Economic Analysis 
B) The Bureau of Labor Statistics 
C) The Council of Economic Sdvisors 
D) The State of the USA 
E) The Data Collection Board 
A) The Bureau of Economic Analysis 
B) The Bureau of Labor Statistics 
C) The Council of Economic Sdvisors 
D) The State of the USA 
E) The Data Collection Board

Question 4

Which of the following is not included in GDP?

Accepted Answer

A) the value of the restoration of an old painting 
B) interest payments on the national debt 
C) the cost of a new vending machine 
D) government expenditure on a new bridge 
E) a purchase of legal services by a household 
A) the value of the restoration of an old painting 
B) interest payments on the national debt 
C) the cost of a new vending machine 
D) government expenditure on a new bridge 
E) a purchase of legal services by a household

Question 5

Exhibit 6-3
  
-Refer to Exhibit 6-3. Between 2002 and 2005, real GDP for this nation

Accepted Answer

A) increased more than $5 billion 
B) decreased more than $5 billion 
C) increased by less than $1 billion 
D) decreased by less than $1 billion 
E) cannot be determined from the information above 
A) increased more than $5 billion 
B) decreased more than $5 billion 
C) increased by less than $1 billion 
D) decreased by less than $1 billion 
E) cannot be determined from the information above

Question 6

If the price index for 2008 was 100 and the price index for 2009 was 109, then how much did prices change between 2008 and 2009?

Accepted Answer

A) 1 percent increase 
B) 8 percent increase 
C) 9 percent increase 
D) 12 percent increase 
E) 12 percent decrease 
A) 1 percent increase 
B) 8 percent increase 
C) 9 percent increase 
D) 12 percent increase 
E) 12 percent decrease

Question 7

To accurately measure the growth rate of output between two years, one should use

Accepted Answer

A) gross domestic product 
B) net domestic product 
C) real net investment 
D) real gross domestic product 
E) disposable income 
A) gross domestic product 
B) net domestic product 
C) real net investment 
D) real gross domestic product 
E) disposable income

Question 8

Rhonda sells a house she has owned for 15 years. To make it more marketable, she buys carpeting and has it professionally installed, and buys wallpaper that her daughter hangs. Which items would be included in this year's GDP?

Accepted Answer

A) the sale price of the house 
B) the sale price of the house, carpeting, and wallpaper and the installation fee for the carpet 
C) the sale price of the house, carpeting, and wallpaper, the installation fee for the carpet, and the opportunity cost of Rhonda's daughter's time 
D) the sale price of the house, carpeting, and wallpaper, the installation fee for the carpet, and the opportunity cost of Rhonda's time 
E) the sale price of the wallpaper and carpeting and the installation fee for the carpet 
A) the sale price of the house 
B) the sale price of the house, carpeting, and wallpaper and the installation fee for the carpet 
C) the sale price of the house, carpeting, and wallpaper, the installation fee for the carpet, and the opportunity cost of Rhonda's daughter's time 
D) the sale price of the house, carpeting, and wallpaper, the installation fee for the carpet, and the opportunity cost of Rhonda's time 
E) the sale price of the wallpaper and carpeting and the installation fee for the carpet

Question 9

A problem inherent in using value added to measure GDP is that the method does not avoid double counting.

Accepted Answer

A) True 
 B)False

Question 10

GDP fails to measure changes in

Accepted Answer

A) the prices of products caused by inflation 
B) the market value of goods and services since it uses market prices for valuation 
C) the quality of existing products that do not cause a change in price 
D) leisure time, since it is valued at the minimum wage and not the true opportunity cost of lost wages 
E) the production of services that are produced in the economy 
A) the prices of products caused by inflation 
B) the market value of goods and services since it uses market prices for valuation 
C) the quality of existing products that do not cause a change in price 
D) leisure time, since it is valued at the minimum wage and not the true opportunity cost of lost wages 
E) the production of services that are produced in the economy

Question 11

Suppose that the economy is in equilibrium with the government budget in surplus and with exports less than imports. According to the circular flow model,

Accepted Answer

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

Question 12

Jimmy Earl, a farmer, sells $20 worth of peanuts to a factory that turns them into peanut butter, which is then sold for $45. Which of the following is true?

Accepted Answer

A) Total value added is $65. 
B) The value of final sales is $65. 
C) The value of final sales is $25. 
D) Total value added is $25. 
E) Total value added is $45. 
A) Total value added is $65. 
B) The value of final sales is $65. 
C) The value of final sales is $25. 
D) Total value added is $25. 
E) Total value added is $45.

Question 13

The value of tires purchased by GM to use on its cars does not get counted in the calculation gross domestic product.

Accepted Answer

A) True 
 B)False

Question 14

If currently illegal drugs are made legal, GDP will increase.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 6-1
  
-Given the data in Exhibit 6-1, calculate aggregate expenditure in equilibirum.

Accepted Answer

A) $1,800 
B) $1,900 
C) $2,000 
D) $2,200 
E) $2,300 
A) $1,800 
B) $1,900 
C) $2,000 
D) $2,200 
E) $2,300

Question 16

Which of the following would not be included in an economist's definition of investment spending?

Accepted Answer

A) the purchase of robots by Motor Magic Manufacturing 
B) the construction of a new office building by the Mountain City Real Estate Company 
C) the purchase of General Motors stock by Donald Trump 
D) the purchase of a new pizza oven by H and R Pizza 
E) an unexpected rise in inventories at Randle Manufacturing 
A) the purchase of robots by Motor Magic Manufacturing 
B) the construction of a new office building by the Mountain City Real Estate Company 
C) the purchase of General Motors stock by Donald Trump 
D) the purchase of a new pizza oven by H and R Pizza 
E) an unexpected rise in inventories at Randle Manufacturing

Question 17

If an economy produces final output worth $5 trillion, then the amount of gross income generated by that production

Accepted Answer

A) is $5 trillion 
B) is more than $5 trillion 
C) is $5 trillion minus taxes 
D) would be $5 trillion if profits were zero 
E) would be $5 trillion if costs of production were zero 
A) is $5 trillion 
B) is more than $5 trillion 
C) is $5 trillion minus taxes 
D) would be $5 trillion if profits were zero 
E) would be $5 trillion if costs of production were zero

Question 18

If aggregate income equals aggregate expenditure, which of the following will not be true?

Accepted Answer

A) Leakages from the circular flow must equal injections. 
B) Consumption plus investment plus government spending plus net exports must equal disposable income plus net taxes. 
C) Saving must equal investment. 
D) Saving plus net taxes and imports must equal investment plus government purchases and exports. 
E) Saving must equal investment if the government's budget is balanced and exports equal imports. 
A) Leakages from the circular flow must equal injections. 
B) Consumption plus investment plus government spending plus net exports must equal disposable income plus net taxes. 
C) Saving must equal investment. 
D) Saving plus net taxes and imports must equal investment plus government purchases and exports. 
E) Saving must equal investment if the government's budget is balanced and exports equal imports.

Question 19

Transfer payments are an injection into the circular flow.

Accepted Answer

A) True 
 B)False

Question 20

U.S. exports are

Accepted Answer

A) not included in U.S. GDP because they are consumed abroad 
B) included in U.S. GDP because they are produced domestically 
C) included in U.S. GDP because they represent an increase in inventories 
D) included in U.S. GDP as government purchases because the government decides what goods may be exported 
E) not included in U.S. GDP because they are not subject to a tariff 
A) not included in U.S. GDP because they are consumed abroad 
B) included in U.S. GDP because they are produced domestically 
C) included in U.S. GDP because they represent an increase in inventories 
D) included in U.S. GDP as government purchases because the government decides what goods may be exported 
E) not included in U.S. GDP because they are not subject to a tariff

Exam 7: Tracking the Us Economy

Because of activity in the underground economy,

Which of the following is included in GDP as government purchases?

The name of the organization that is developing a collection of data series that provides more detail about the US economy than GDP does is called:

Which of the following is not included in GDP?

Exhibit 6-3 -Refer to Exhibit 6-3. Between 2002 and 2005, real GDP for this nation

If the price index for 2008 was 100 and the price index for 2009 was 109, then how much did prices change between 2008 and 2009?

To accurately measure the growth rate of output between two years, one should use

Rhonda sells a house she has owned for 15 years. To make it more marketable, she buys carpeting and has it professionally installed, and buys wallpaper that her daughter hangs. Which items would be included in this year's GDP?

A problem inherent in using value added to measure GDP is that the method does not avoid double counting.

GDP fails to measure changes in

Suppose that the economy is in equilibrium with the government budget in surplus and with exports less than imports. According to the circular flow model,

Jimmy Earl, a farmer, sells $20 worth of peanuts to a factory that turns them into peanut butter, which is then sold for $45. Which of the following is true?

The value of tires purchased by GM to use on its cars does not get counted in the calculation gross domestic product.

If currently illegal drugs are made legal, GDP will increase.

Exhibit 6-1 -Given the data in Exhibit 6-1, calculate aggregate expenditure in equilibirum.

Which of the following would not be included in an economist's definition of investment spending?

If an economy produces final output worth $5 trillion, then the amount of gross income generated by that production

If aggregate income equals aggregate expenditure, which of the following will not be true?

Transfer payments are an injection into the circular flow.

U.S. exports are

The Art and Science of Economic Analysis

Understanding Graphs-Appendix

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Agregate Demand

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

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