Question 1

Which one of the following transactions will be included in the official measurement of GDP?

Accepted Answer

A)  Stan sold his house at a huge gain. 
B)  Monica illegally downloaded movies to her laptop. 
C)  Ben won the state lottery. 
D)  Sean bought a new truck. 
A)  Stan sold his house at a huge gain. 
B)  Monica illegally downloaded movies to her laptop. 
C)  Ben won the state lottery. 
D)  Sean bought a new truck.

Question 2

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

Accepted Answer

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

Question 3

The total volume of business sales in the economy is much larger than GDP because:

Accepted Answer

A)  GDP understates the value of total output. 
B)  the output approach to measuring GDP excludes intermediate transactions. 
C)  GDP includes transfer payments. 
D)  GDP excludes exports. 
A)  GDP understates the value of total output. 
B)  the output approach to measuring GDP excludes intermediate transactions. 
C)  GDP includes transfer payments. 
D)  GDP excludes exports.

Question 4

In the circular-flow diagram, households:

Accepted Answer

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

Question 5

A country's GNP:

Accepted Answer

A)  must be larger than its GDP. 
B)  is the total factor income earned by residents of a country. 
C)  includes factor income earned by foreigners. 
D)  excludes factor income earned abroad by Americans. 
A)  must be larger than its GDP. 
B)  is the total factor income earned by residents of a country. 
C)  includes factor income earned by foreigners. 
D)  excludes factor income earned abroad by Americans.

Question 6

Households receive income in the form of all of the following EXCEPT:

Accepted Answer

A)  wages. 
B)  dividends. 
C)  interest and rent. 
D)  investment spending. 
A)  wages. 
B)  dividends. 
C)  interest and rent. 
D)  investment spending.

Question 7

Gross domestic product is defined as:

Accepted Answer

A)  consumer spending + government purchases of goods and services + financial spending + exports - imports. 
B)  consumer spending + government transfers + investment spending + exports - imports. 
C)  disposable income + taxes + investment spending + exports + imports. 
D)  consumer spending + government purchases of goods and services + investment spending + exports - imports. 
A)  consumer spending + government purchases of goods and services + financial spending + exports - imports. 
B)  consumer spending + government transfers + investment spending + exports - imports. 
C)  disposable income + taxes + investment spending + exports + imports. 
D)  consumer spending + government purchases of goods and services + investment spending + exports - imports.

Question 8

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 9

A transfer payment is a payment for:

Accepted Answer

A)  a military transfer to a war zone. 
B)  which no services were rendered. 
C)  transfer of a debt to a different person. 
D)  being transferred to a different city by your employer. 
A)  a military transfer to a war zone. 
B)  which no services were rendered. 
C)  transfer of a debt to a different person. 
D)  being transferred to a different city by your employer.

Question 10

The Arcadia Entertainment Co. produced 20,000 DVDs of the movie Thor in 2011. Only 4,000 copies remained unsold at the end of 2011. As a result:

Accepted Answer

A)  only 16,000 DVDs should be included in GDP in 2011 as consumption expenditure. 
B)  all 20,000 DVDs will be included in GDP in 2011, 16,000 as consumption expenditure and 4,000 as investment expenditure 
C)  only 16,000 DVDs are included in GDP of 2011; the remaining 4,000 are counted in GDP of 2012. 
D)  all 20,000 DVDs are initially counted in 2011 GDP as consumption expenditure, but they will be subtracted and added to 2012 GDP as the merchandise gets sold. 
A)  only 16,000 DVDs should be included in GDP in 2011 as consumption expenditure. 
B)  all 20,000 DVDs will be included in GDP in 2011, 16,000 as consumption expenditure and 4,000 as investment expenditure 
C)  only 16,000 DVDs are included in GDP of 2011; the remaining 4,000 are counted in GDP of 2012. 
D)  all 20,000 DVDs are initially counted in 2011 GDP as consumption expenditure, but they will be subtracted and added to 2012 GDP as the merchandise gets sold.

Question 11

The total of the values added at every stage of production for a good yields:

Accepted Answer

A)  the total cost of the labor used to produce the good. 
B)  the prices of the factors of production used to produce the good. 
C)  the final value of the good. 
D)  the intermediate value of the good. 
A)  the total cost of the labor used to produce the good. 
B)  the prices of the factors of production used to produce the good. 
C)  the final value of the good. 
D)  the intermediate value of the good.

Question 12

Use the following to answer questions  
-(Table: Peanut Butter and Jelly Economy) Look at the table Peanut Butter and Jelly Economy. From 2010 to 2011 real GDP ____ by _____.

Accepted Answer

A)  increased; 12.5% 
B)  decreased; 50% 
C)  increased; 43.75% 
D)  decreased; 12.5% 
A)  increased; 12.5% 
B)  decreased; 50% 
C)  increased; 43.75% 
D)  decreased; 12.5%

Question 13

If during 2010, the Republic of Sildavia recorded investment spending of $3 billion, government purchases of $3 billion, consumer spending of $7 billion, imports of $5 billion, government transfers of $1 billion, and exports of $3 billion, Sildavia's GDP in 2010 was:

Accepted Answer

A)  $11 billion. 
B)  $12 billion. 
C)  $13 billion. 
D)  $14 billion. 
A)  $11 billion. 
B)  $12 billion. 
C)  $13 billion. 
D)  $14 billion.

Question 14

Use the following to answer question  
-(Table: Furniture Production Schedule) Look at the table Furniture Production Schedule. What is the total value added at all stages of production of the furniture?

Accepted Answer

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

Question 15

If your professor wins the lottery:

Accepted Answer

A)  GDP goes up. 
B)  GDP goes down. 
C)  GDP is not affected. 
D)  the economy will be better off. 
A)  GDP goes up. 
B)  GDP goes down. 
C)  GDP is not affected. 
D)  the economy will be better off.

Question 16

In the product markets:

Accepted Answer

A)  households supply goods and services. 
B)  households demand goods and services. 
C)  firms demand resources. 
D)  firms supply resources. 
A)  households supply goods and services. 
B)  households demand goods and services. 
C)  firms demand resources. 
D)  firms supply resources.

Question 17

Use the following to answer questions 
Figure: Circular-Flow Model  
-(Figure: Circular-Flow Model) Look at the figure Circular-Flow Model. What are net exports?

Accepted Answer

A)  $0 
B)  $30 
C)  $60 
D)  $100 
A)  $0 
B)  $30 
C)  $60 
D)  $100

Question 18

Private savings is equal to:

Accepted Answer

A)  disposable income less taxes. 
B)  disposable income less consumption. 
C)  wealth. 
D)  wealth plus government transfer payments. 
A)  disposable income less taxes. 
B)  disposable income less consumption. 
C)  wealth. 
D)  wealth plus government transfer payments.

Question 19

If real GDP falls while nominal GDP rises, then prices on average have:

Accepted Answer

A)  risen. 
B)  fallen. 
C)  stayed the same. 
D)  Real GDP cannot rise when nominal GDP falls. 
A)  risen. 
B)  fallen. 
C)  stayed the same. 
D)  Real GDP cannot rise when nominal GDP falls.

Question 20

Use the following to answer questions 
Figure: Expanded Circular-Flow Model  
-(Figure: Expanded Circular-Flow Model) Look at the figure Expanded Circular-Flow Model. What is the value of net exports?

Accepted Answer

A)  -$20 
B)  $20 
C)  $50 
D)  $130 
A)  -$20 
B)  $20 
C)  $50 
D)  $130

Exam 21: Gdp and the Consumer Price Index

Which one of the following transactions will be included in the official measurement of GDP?

The total volume of business sales in the economy is much larger than GDP because:

In the circular-flow diagram, households:

A country's GNP:

Households receive income in the form of all of the following EXCEPT:

Gross domestic product is defined as:

A transfer payment is a payment for:

The Arcadia Entertainment Co. produced 20,000 DVDs of the movie Thor in 2011. Only 4,000 copies remained unsold at the end of 2011. As a result:

The total of the values added at every stage of production for a good yields:

Use the following to answer questions -(Table: Peanut Butter and Jelly Economy) Look at the table Peanut Butter and Jelly Economy. From 2010 to 2011 real GDP ____ by _____.

If during 2010, the Republic of Sildavia recorded investment spending of $3 billion, government purchases of $3 billion, consumer spending of $7 billion, imports of $5 billion, government transfers of $1 billion, and exports of $3 billion, Sildavia's GDP in 2010 was:

Use the following to answer question -(Table: Furniture Production Schedule) Look at the table Furniture Production Schedule. What is the total value added at all stages of production of the furniture?

If your professor wins the lottery:

In the product markets:

Use the following to answer questions Figure: Circular-Flow Model -(Figure: Circular-Flow Model) Look at the figure Circular-Flow Model. What are net exports?

Private savings is equal to:

If real GDP falls while nominal GDP rises, then prices on average have:

Use the following to answer questions Figure: Expanded Circular-Flow Model -(Figure: Expanded Circular-Flow Model) Look at the figure Expanded Circular-Flow Model. What is the value of net exports?

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

Filters

Use the following to answer questions -(Table: Peanut Butter and Jelly Economy) Look at the table Peanut Butter and Jelly Economy. From 2010 to 2011 real GDP by _.