Question 1

In the circular flow model,

Accepted Answer

A) the flow of expenditures measures the dollar value on purchases of resources in the product market 
B) the flow of expenditures measures the dollar value of purchases of both goods and services 
C) the flow of income to the owners of labor only 
D) the flow of expenditures as they move through the loanable funds market 
E) the flow of funds from the product to the resource market 
A) the flow of expenditures measures the dollar value on purchases of resources in the product market 
B) the flow of expenditures measures the dollar value of purchases of both goods and services 
C) the flow of income to the owners of labor only 
D) the flow of expenditures as they move through the loanable funds market 
E) the flow of funds from the product to the resource market B

Question 2

The U.S.Department of Commerce has been developing so called "green accounting" to

Accepted Answer

A) focus attention to the money side of GDP 
B) reflect the impact of pollution and natural resource depletion 
C) properly value the output of very new firms 
D) illustrate the difference between GDP and real GDP 
E) measure the value of the output produced by inexperienced workers 
A) focus attention to the money side of GDP 
B) reflect the impact of pollution and natural resource depletion 
C) properly value the output of very new firms 
D) illustrate the difference between GDP and real GDP 
E) measure the value of the output produced by inexperienced workers B

Question 3

Which of the following is the best example of an intermediate good or service?

Accepted Answer

A) any good bought by a household,rather than a firm 
B) pizzas bought at a restaurant 
C) legal services hired by a public accounting firm 
D) sunglasses worn on a summer vacation in Florida 
E) a professional performance of "The Phantom of the Opera" 
A) any good bought by a household,rather than a firm 
B) pizzas bought at a restaurant 
C) legal services hired by a public accounting firm 
D) sunglasses worn on a summer vacation in Florida 
E) a professional performance of "The Phantom of the Opera" C

Question 4

Which of the following is the best indicator of the performance of the national economy?

Accepted Answer

A) the federal government budget deficit 
B) the stock of capital goods (machinery)in the nation 
C) the size of the nation's stock of money 
D) the balance of trade with other nations 
E) the flow of new goods and services produced in the nation 
A) the federal government budget deficit 
B) the stock of capital goods (machinery)in the nation 
C) the size of the nation's stock of money 
D) the balance of trade with other nations 
E) the flow of new goods and services produced in the nation

Question 5

In GDP measurement,Investment spending includes

Accepted Answer

A) spending by individual households on automobiles and durable goods 
B) spending by businesses on labor resources 
C) changes in business inventories 
D) spending by government on salaries 
E) spending by households on stocks and bonds 
A) spending by individual households on automobiles and durable goods 
B) spending by businesses on labor resources 
C) changes in business inventories 
D) spending by government on salaries 
E) spending by households on stocks and bonds

Question 6

A decrease in GDP necessarily means that consumer welfare has decreased.

Accepted Answer

A) True 
 B)False

Question 7

The immediate effect on GDP of Ibrahim's purchase of a government bond is

Accepted Answer

A) a decrease in consumption because Ibrahim has less money to spend 
B) an increase in government spending 
C) an increase in investment 
D) a decrease in investment because less money is available to him for further investment 
E) nonexistent,since no real goods and services have been produced 
A) a decrease in consumption because Ibrahim has less money to spend 
B) an increase in government spending 
C) an increase in investment 
D) a decrease in investment because less money is available to him for further investment 
E) nonexistent,since no real goods and services have been produced

Question 8

Which of the following would be included in this year's GDP?

Accepted Answer

A) one hundred shares of IBM stock that Tony Hanks bought this May 
B) the used car Tracey sold to Justin 
C) George Garcia's purchase of a fishing rod and reel at a garage sale 
D) the $20 Sharon Johnson gave Dennis O'Brien as a reward for finding her lost wedding ring 
E) that bucket of Kentucky Fried Chicken you bought this July 
A) one hundred shares of IBM stock that Tony Hanks bought this May 
B) the used car Tracey sold to Justin 
C) George Garcia's purchase of a fishing rod and reel at a garage sale 
D) the $20 Sharon Johnson gave Dennis O'Brien as a reward for finding her lost wedding ring 
E) that bucket of Kentucky Fried Chicken you bought this July

Question 9

Which of the following statements about exports and imports is true?

Accepted Answer

A) Both imports and exports are added to a nation's GDP. 
B) Both imports and exports are subtracted from a nation's GDP. 
C) Imports are added to a nation's GDP; exports are subtracted. 
D) Exports are added to a nation's GDP; imports are subtracted. 
E) Neither imports nor exports are included in a nation's GDP. 
A) Both imports and exports are added to a nation's GDP. 
B) Both imports and exports are subtracted from a nation's GDP. 
C) Imports are added to a nation's GDP; exports are subtracted. 
D) Exports are added to a nation's GDP; imports are subtracted. 
E) Neither imports nor exports are included in a nation's GDP.

Question 10

Which of the following would not be an expenditure on a final good or service?

Accepted Answer

A) a farmer's purchase of a pound of hamburger 
B) a medical clinic's purchase of flu vaccine 
C) a factory's purchase of a spot welding machine 
D) the purchase of a cup of coffee at a restaurant 
E) a college student's purchase of a textbook for a medieval history class 
A) a farmer's purchase of a pound of hamburger 
B) a medical clinic's purchase of flu vaccine 
C) a factory's purchase of a spot welding machine 
D) the purchase of a cup of coffee at a restaurant 
E) a college student's purchase of a textbook for a medieval history class

Question 11

The two basic markets in the simple circular flow model are the

Accepted Answer

A) product and resource market 
B) export and product market 
C) export and import market 
D) household market and the business market 
E) business market and the government market 
A) product and resource market 
B) export and product market 
C) export and import market 
D) household market and the business market 
E) business market and the government market

Question 12

Which of the following would not be included in GDP?

Accepted Answer

A) you hire someone to fix a leaky faucet 
B) you clean the house before relatives visit 
C) the value of housing services if you own your own home 
D) an unplanned drop in business inventories 
E) the Federal government buys U.S.soybeans to ship to Russia 
A) you hire someone to fix a leaky faucet 
B) you clean the house before relatives visit 
C) the value of housing services if you own your own home 
D) an unplanned drop in business inventories 
E) the Federal government buys U.S.soybeans to ship to Russia

Question 13

GDP is not a perfect measure of material well-being because it ignores

Accepted Answer

A) production of goods and services by the government 
B) goods produced in the United States but shipped overseas 
C) negative externalities 
D) consumer spending on services 
E) business spending on equipment 
A) production of goods and services by the government 
B) goods produced in the United States but shipped overseas 
C) negative externalities 
D) consumer spending on services 
E) business spending on equipment

Question 14

If nominal GDP for a particular year is $4 trillion and real GDP for that year is $5 trillion,then the GDP price index for that year is

Accepted Answer

A) 1.25 
B) 20 
C) 25 
D) 80 
E) 125 
A) 1.25 
B) 20 
C) 25 
D) 80 
E) 125

Question 15

Which of the following is an injection into the circular flow?

Accepted Answer

A) savings 
B) taxes 
C) government borrowing 
D) investment 
E) imports 
A) savings 
B) taxes 
C) government borrowing 
D) investment 
E) imports

Question 16

Which of the following would directly reduce GDP?

Accepted Answer

A) An unscrupulous disposal company dumps barrels of toxic waste near a suburban water supply. 
B) The switch from home-cooked meals to restaurant meals lowers the nutritional value of the average diet. 
C) The town of Council Bluffs decides to fire the lifeguards at the local swimming pool. 
D) Pollution of international waters increases. 
E) Damage claims filed with auto insurance companies increase. 
A) An unscrupulous disposal company dumps barrels of toxic waste near a suburban water supply. 
B) The switch from home-cooked meals to restaurant meals lowers the nutritional value of the average diet. 
C) The town of Council Bluffs decides to fire the lifeguards at the local swimming pool. 
D) Pollution of international waters increases. 
E) Damage claims filed with auto insurance companies increase.

Question 17

Value added is

Accepted Answer

A) the sum of all income earned by resource suppliers 
B) actual investment minus planned investment 
C) any payment of income that adds to the domestic spending stream 
D) the value of a product minus the cost of materials 
E) the increase in the value of a financial asset such as a stock or bond 
A) the sum of all income earned by resource suppliers 
B) actual investment minus planned investment 
C) any payment of income that adds to the domestic spending stream 
D) the value of a product minus the cost of materials 
E) the increase in the value of a financial asset such as a stock or bond

Question 18

The CPI overstates the true inflation rate because it ignores changes in consumers' purchasing patterns as relative prices change.

Accepted Answer

A) True 
 B)False

Question 19

If Bureau of Labor Statistics data collectors find that the model of car they priced the previous month is no longer available on the market,they

Accepted Answer

A) just drop that product from the calculation of the CPI 
B) ask the manufacturer to choose another of its models for the CPI calculation 
C) must look for an available model with very similar features 
D) keep entering the price of the car from the last month it was available 
E) None of the answers is correct 
A) just drop that product from the calculation of the CPI 
B) ask the manufacturer to choose another of its models for the CPI calculation 
C) must look for an available model with very similar features 
D) keep entering the price of the car from the last month it was available 
E) None of the answers is correct

Question 20

Which of the following is a leakage from the circular flow?

Accepted Answer

A) government purchases of goods and services 
B) taxes 
C) investment 
D) exports 
E) consumption expenditures 
A) government purchases of goods and services 
B) taxes 
C) investment 
D) exports 
E) consumption expenditures

Exam 6: Tracking the Useconomy

In the circular flow model,

The U.S.Department of Commerce has been developing so called "green accounting" to

Which of the following is the best example of an intermediate good or service?

Which of the following is the best indicator of the performance of the national economy?

In GDP measurement,Investment spending includes

A decrease in GDP necessarily means that consumer welfare has decreased.

The immediate effect on GDP of Ibrahim's purchase of a government bond is

Which of the following would be included in this year's GDP?

Which of the following statements about exports and imports is true?

Which of the following would not be an expenditure on a final good or service?

The two basic markets in the simple circular flow model are the

Which of the following would not be included in GDP?

GDP is not a perfect measure of material well-being because it ignores

If nominal GDP for a particular year is $4 trillion and real GDP for that year is $5 trillion,then the GDP price index for that year is

Which of the following is an injection into the circular flow?

Which of the following would directly reduce GDP?

Value added is

The CPI overstates the true inflation rate because it ignores changes in consumers' purchasing patterns as relative prices change.

If Bureau of Labor Statistics data collectors find that the model of car they priced the previous month is no longer available on the market,they

Which of the following is a leakage from the circular flow?

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate 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

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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