Question 1

Which of the following is NOT included in investment spending in the national income accounts?

Accepted Answer

A)  new residential construction 
B)  the purchase of machinery and other productive physical capital 
C)  the purchase of stocks and bonds by a business 
D)  spending on inventories 
A)  new residential construction 
B)  the purchase of machinery and other productive physical capital 
C)  the purchase of stocks and bonds by a business 
D)  spending on inventories C

Question 2

-(Table: Lemonade and Cookies) Look at the table Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. If 2014 is the base year, real GDP in 2014 was:

Accepted Answer

A)  $400. 
B)  $420. 
C)  $425. 
D)  $445. 
A)  $400. 
B)  $420. 
C)  $425. 
D)  $445. C

Question 3

Economists frequently use GDP per capita to reflect:

Accepted Answer

A)  the impact of prices on GDP. 
B)  differences in living standards across countries. 
C)  people who are employed. 
D)  both people who are employed and those who are unemployed. 
A)  the impact of prices on GDP. 
B)  differences in living standards across countries. 
C)  people who are employed. 
D)  both people who are employed and those who are unemployed. B

Question 4

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 5

Most households derive the bulk of their income from:

Accepted Answer

A)  wages. 
B)  interest. 
C)  profit. 
D)  rent. 
A)  wages. 
B)  interest. 
C)  profit. 
D)  rent.

Question 6

Goods that are produced in a particular period but NOT sold in that period:

Accepted Answer

A)  go into inventory and are called consumption. 
B)  end up in inventory and are included in investment. 
C)  are finally included in depreciation when they are sold. 
D)  are classified as intermediate goods. 
A)  go into inventory and are called consumption. 
B)  end up in inventory and are included in investment. 
C)  are finally included in depreciation when they are sold. 
D)  are classified as intermediate goods.

Question 7

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 investment spending, which of the following is likely to happen?

Accepted Answer

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

Question 8

The value, at current market prices, of the final goods and services produced during a particular period is:

Accepted Answer

A)  disposable personal product. 
B)  gross foreign factor output. 
C)  gross personal product. 
D)  gross domestic product. 
A)  disposable personal product. 
B)  gross foreign factor output. 
C)  gross personal product. 
D)  gross domestic product.

Question 9

GDP is:

Accepted Answer

A)  the total dollar value of all transactions in a year. 
B)  the total value of all final goods and services produced in a year. 
C)  the total value of all final goods and services produced by Americans at home and abroad in a year. 
D)  the total dollar value of all goods produced in the economy in a year. 
A)  the total dollar value of all transactions in a year. 
B)  the total value of all final goods and services produced in a year. 
C)  the total value of all final goods and services produced by Americans at home and abroad in a year. 
D)  the total dollar value of all goods produced in the economy in a year.

Question 10

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 11

Which of the following is included in the calculation of GDP?

Accepted Answer

A)  expenditure on new construction 
B)  a retiree's monthly Social Security check 
C)  buying a house built 10 years ago 
D)  buying shares of Home Depot stock 
A)  expenditure on new construction 
B)  a retiree's monthly Social Security check 
C)  buying a house built 10 years ago 
D)  buying shares of Home Depot stock

Question 12

Which of the following is considered to be an IOU?

Accepted Answer

A)  stock 
B)  bond 
C)  interest 
D)  dividend 
A)  stock 
B)  bond 
C)  interest 
D)  dividend

Question 13

Inventory is counted as investment because:

Accepted Answer

A)  it is used for future production. 
B)  it is a source of future sales. 
C)  it has no opportunity cost. 
D)  it is tax deductible. 
A)  it is used for future production. 
B)  it is a source of future sales. 
C)  it has no opportunity cost. 
D)  it is tax deductible.

Question 14

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 15

Real GDP is the same as _____ GDP.

Accepted Answer

A)  current-dollar 
B)  inflation-adjusted 
C)  nominal 
D)  value-added 
A)  current-dollar 
B)  inflation-adjusted 
C)  nominal 
D)  value-added

Question 16

Use the following to answer questions 
Figure: Expanded Circular-Flow Model  
-(Figure: Expanded Circular-Flow Model) Look at the figure Expanded Circular-Flow Model. Which of the following is a type of market?

Accepted Answer

A)  household 
B)  rest of the world 
C)  government 
D)  financial 
A)  household 
B)  rest of the world 
C)  government 
D)  financial

Question 17

In the United States, investment spending accounts for approximately _____ of GDP.

Accepted Answer

A)  6% 
B)  16% 
C)  24% 
D)  33% 
A)  6% 
B)  16% 
C)  24% 
D)  33%

Question 18

A laptop computer purchased by a private individual for personal use is considered to be:

Accepted Answer

A)  consumption spending. 
B)  investment spending. 
C)  private saving. 
D)  a transfer of income. 
A)  consumption spending. 
B)  investment spending. 
C)  private saving. 
D)  a transfer of income.

Question 19

In the circular-flow model, households:

Accepted Answer

A)  receive transfer payments from the government. 
B)  buy resources in the factor markets. 
C)  sell products in the market for goods and services. 
D)  issue stocks and bonds to raise capital. 
A)  receive transfer payments from the government. 
B)  buy resources in the factor markets. 
C)  sell products in the market for goods and services. 
D)  issue stocks and bonds to raise capital.

Question 20

Use the following to answer questions  
-(Table: Peanut Butter and Jelly Economy) Look at the table Peanut Butter and Jelly Economy. Between 2010 and 2011, nominal GDP:

Accepted Answer

A)  increased by 12.5%. 
B)  decreased by 12.5%. 
C)  increased by 16.67%. 
D)  increased by 31.25%. 
A)  increased by 12.5%. 
B)  decreased by 12.5%. 
C)  increased by 16.67%. 
D)  increased by 31.25%.

Exam 21: Gdp and the Consumer Price Index

Which of the following is NOT included in investment spending in the national income accounts?

-(Table: Lemonade and Cookies) Look at the table Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. If 2014 is the base year, real GDP in 2014 was:

Economists frequently use GDP per capita to reflect:

Disposable income equals:

Most households derive the bulk of their income from:

Goods that are produced in a particular period but NOT sold in that period:

The value, at current market prices, of the final goods and services produced during a particular period is:

GDP is:

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

Which of the following is included in the calculation of GDP?

Which of the following is considered to be an IOU?

Inventory is counted as investment because:

Which of the following is consumption?

Real GDP is the same as _____ GDP.

Use the following to answer questions Figure: Expanded Circular-Flow Model -(Figure: Expanded Circular-Flow Model) Look at the figure Expanded Circular-Flow Model. Which of the following is a type of market?

In the United States, investment spending accounts for approximately _____ of GDP.

A laptop computer purchased by a private individual for personal use is considered to be:

In the circular-flow model, households:

Use the following to answer questions -(Table: Peanut Butter and Jelly Economy) Look at the table Peanut Butter and Jelly Economy. Between 2010 and 2011, nominal GDP:

First Principles

Economic Models- Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas- Meddling With Markets

Elasticity

Taxes

The Rational Consumer

International Trade

Decision Making by Individuals and Firms

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Macroeconomics- the Big Picture

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Macroeconomics- Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

Toward a Fuller Understanding

Consumer Preferences and Consumer Choice

Indifference Curve Analysis of Labor Supply

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