Question 1

When a firm buys a new machine for its business, it is considered to be:

Accepted Answer

A) consumption. 
B) investment spending. 
C) government spending. 
D) private saving. 
A) consumption. 
B) investment spending. 
C) government spending. 
D) private saving.

Question 2

Explain the difference between the consumer price index and the producer price index. Which is likely to be the first to indicate inflation?

Accepted Answer

The consumer price index measures the ov

Question 3

The GDP deflator measures changes in the cost of a market basket of raw commodities, such as steel, electricity, and coal.

Accepted Answer

A) True 
 B)False

Question 4

Use the following to answer questions :
Figure: Circular-Flow Model  
-(Figure: Circular-Flow Model) Look at the figure Circular-Flow Model. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it) and there is a decrease in investment spending, which of the following is likely to happen?

Accepted Answer

A) an increase in the nominal GDP 
B) an increase in the real GDP 
C) an increase in the unemployment rate 
D) an increase in the inflation rate 
A) an increase in the nominal GDP 
B) an increase in the real GDP 
C) an increase in the unemployment rate 
D) an increase in the inflation rate

Question 5

In the circular-flow diagram, households:

Accepted Answer

A) supply goods. 
B) supply services. 
C) supply resources. 
D) buy resources. 
A) supply goods. 
B) supply services. 
C) supply resources. 
D) buy resources.

Question 6

Which of the following is consumption?

Accepted Answer

A) a new computer purchased by Federal Express for one of its corporate executives 
B) a storage facility for a moving company 
C) a new car purchased for personal use 
D) a dump truck purchased by a demolition company 
A) a new computer purchased by Federal Express for one of its corporate executives 
B) a storage facility for a moving company 
C) a new car purchased for personal use 
D) a dump truck purchased by a demolition company

Question 7

The PPI and the consumer price index are both price indexes.

Accepted Answer

A) True 
 B)False

Question 8

Disposable income equals:

Accepted Answer

A) income plus government transfers minus taxes. 
B) income plus government spending minus taxes. 
C) income minus taxes plus government spending. 
D) income minus taxes minus government transfers. 
A) income plus government transfers minus taxes. 
B) income plus government spending minus taxes. 
C) income minus taxes plus government spending. 
D) income minus taxes minus government transfers.

Question 9

Use the following to answer question :  
-(Table: CPI) Look at the table CPI. Suppose only bread, laptops, and movies are produced in this economy. Calculate the consumer price index of 2012, using 2008 as the base year.

Accepted Answer

A) 81.9 
B) 100 
C) 75.8 
D) 95 
A) 81.9 
B) 100 
C) 75.8 
D) 95

Question 10

Suppose a consumer buys a Perfect Pizza frozen cheese pizza at the grocery store for $10. Perfect Pizza purchased the dough and tomato sauce from a food processing company for $2 and bought the cheese for $1. It sold the pizza to the store for $5. How much has GDP increased?

Accepted Answer

A) $2 
B) $5 
C) $10 
D) $18 
A) $2 
B) $5 
C) $10 
D) $18

Question 11

Use the following to answer questions :
Figure: Circular-Flow Model  
-(Figure: Circular-Flow Model) Look at the figure Circular-Flow Model. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it) and there is an increase in consumer spending, which of the following is likely to happen?

Accepted Answer

A) an increase in the nominal GDP 
B) a decrease in the nominal GDP 
C) an increase in the unemployment rate 
D) a decrease in the inflation rate 
A) an increase in the nominal GDP 
B) a decrease in the nominal GDP 
C) an increase in the unemployment rate 
D) a decrease in the inflation rate

Question 12

A decrease in inventories is:

Accepted Answer

A) a fall in investment spending that will lead to a drop in sales. 
B) an increase in investment spending that will lead to an increase in sales. 
C) thought to have no impact on investment, since it is not part of investment spending. 
D) part of government spending. 
A) a fall in investment spending that will lead to a drop in sales. 
B) an increase in investment spending that will lead to an increase in sales. 
C) thought to have no impact on investment, since it is not part of investment spending. 
D) part of government spending.

Question 13

In the circular-flow diagram, the places where resources, especially capital and labor, are bought and sold are the:

Accepted Answer

A) product markets. 
B) factor markets. 
C) households. 
D) firms. 
A) product markets. 
B) factor markets. 
C) households. 
D) firms.

Question 14

Use the following to answer questions :
Table: Measuring GDP  
-(Table: Measuring GDP) Look at the table Measuring GDP. Total expenditures on GDP by the household sector are:

Accepted Answer

A) $100 billion. 
B) $150 billion. 
C) $200 billion. 
D) $500 billion. 
A) $100 billion. 
B) $150 billion. 
C) $200 billion. 
D) $500 billion.

Question 15

The circular-flow diagram illustrates all of the following in the U.S. economy EXCEPT:

Accepted Answer

A) growing income inequality. 
B) flows of money. 
C) flows of goods and services. 
D) the purchase and sale of factors of production. 
A) growing income inequality. 
B) flows of money. 
C) flows of goods and services. 
D) the purchase and sale of factors of production.

Question 16

In the consumer price index of the United States:

Accepted Answer

A) the current cost of a basket of goods is compared to the base-period cost of the same basket of goods. 
B) the base-period index is always equal to 100. 
C) the base period is 1982-1984. 
D) the current cost of a basket of goods is compared to the base-period cost of the same basket of goods, the calculation of the base-period index is always equal to 100, and the base period is 1982-1984. 
A) the current cost of a basket of goods is compared to the base-period cost of the same basket of goods. 
B) the base-period index is always equal to 100. 
C) the base period is 1982-1984. 
D) the current cost of a basket of goods is compared to the base-period cost of the same basket of goods, the calculation of the base-period index is always equal to 100, and the base period is 1982-1984.

Question 17

The consumer price index is intended to measure the cost of all goods purchased in the economy over time.

Accepted Answer

A) True 
 B)False

Question 18

The circular-flow diagram is important because it shows that the flow of money into each market or sector of the economy is _____ the flow of money coming out of that sector.

Accepted Answer

A) greater than 
B) equal to 
C) less than 
D) unrelated to 
A) greater than 
B) equal to 
C) less than 
D) unrelated to

Question 19

Chain linking is a method used to measure the change in real GDP.

Accepted Answer

A) True 
 B)False

Question 20

Assume that the consumer price index for 2009 was 103.9 and for 2010 was 107.6. What was the inflation rate between the two years?

Accepted Answer

A) 0.97% 
B) 1.04% 
C) 3.56% 
D) 3.70% 
A) 0.97% 
B) 1.04% 
C) 3.56% 
D) 3.70%

When a firm buys a new machine for its business, it is considered to be:

Explain the difference between the consumer price index and the producer price index. Which is likely to be the first to indicate inflation?

The GDP deflator measures changes in the cost of a market basket of raw commodities, such as steel, electricity, and coal.

In the circular-flow diagram, households:

Which of the following is consumption?

The PPI and the consumer price index are both price indexes.

Disposable income equals:

Use the following to answer question : -(Table: CPI) Look at the table CPI. Suppose only bread, laptops, and movies are produced in this economy. Calculate the consumer price index of 2012, using 2008 as the base year.

Suppose a consumer buys a Perfect Pizza frozen cheese pizza at the grocery store for $10. Perfect Pizza purchased the dough and tomato sauce from a food processing company for $2 and bought the cheese for $1. It sold the pizza to the store for $5. How much has GDP increased?

A decrease in inventories is:

In the circular-flow diagram, the places where resources, especially capital and labor, are bought and sold are the:

Use the following to answer questions : Table: Measuring GDP -(Table: Measuring GDP) Look at the table Measuring GDP. Total expenditures on GDP by the household sector are:

The circular-flow diagram illustrates all of the following in the U.S. economy EXCEPT:

In the consumer price index of the United States:

The consumer price index is intended to measure the cost of all goods purchased in the economy over time.

The circular-flow diagram is important because it shows that the flow of money into each market or sector of the economy is _____ the flow of money coming out of that sector.

Chain linking is a method used to measure the change in real GDP.

Assume that the consumer price index for 2009 was 103.9 and for 2010 was 107.6. What was the inflation rate between the two years?

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Exam 7: Gdp and Cpi: Tracking the Macroeconomy

When a firm buys a new machine for its business, it is considered to be:

Explain the difference between the consumer price index and the producer price index. Which is likely to be the first to indicate inflation?

The GDP deflator measures changes in the cost of a market basket of raw commodities, such as steel, electricity, and coal.

In the circular-flow diagram, households:

Which of the following is consumption?

The PPI and the consumer price index are both price indexes.

Disposable income equals:

Use the following to answer question : -(Table: CPI) Look at the table CPI. Suppose only bread, laptops, and movies are produced in this economy. Calculate the consumer price index of 2012, using 2008 as the base year.

Suppose a consumer buys a Perfect Pizza frozen cheese pizza at the grocery store for $10. Perfect Pizza purchased the dough and tomato sauce from a food processing company for $2 and bought the cheese for $1. It sold the pizza to the store for $5. How much has GDP increased?

A decrease in inventories is:

In the circular-flow diagram, the places where resources, especially capital and labor, are bought and sold are the:

Use the following to answer questions : Table: Measuring GDP -(Table: Measuring GDP) Look at the table Measuring GDP. Total expenditures on GDP by the household sector are:

The circular-flow diagram illustrates all of the following in the U.S. economy EXCEPT:

In the consumer price index of the United States:

The consumer price index is intended to measure the cost of all goods purchased in the economy over time.

The circular-flow diagram is important because it shows that the flow of money into each market or sector of the economy is _____ the flow of money coming out of that sector.

Chain linking is a method used to measure the change in real GDP.

Assume that the consumer price index for 2009 was 103.9 and for 2010 was 107.6. What was the inflation rate between the two years?

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters