Question 1

Which of the following best describes an intermediate good?

Accepted Answer

A) It has no value to the seller. 
B) It has no value to the buyer. 
C) It is purchased by a household for future use. 
D) It helps produce another good. 
E) It is sold at a discounted price by middlemen. 
A) It has no value to the seller. 
B) It has no value to the buyer. 
C) It is purchased by a household for future use. 
D) It helps produce another good. 
E) It is sold at a discounted price by middlemen.

Question 2

Which of the following is not an injection into the circular flow?

Accepted Answer

A) saving 
B) domestic exports 
C) government expenditure on goods 
D) transfer payments 
E) investment by firms 
A) saving 
B) domestic exports 
C) government expenditure on goods 
D) transfer payments 
E) investment by firms

Question 3

Which of the following is not a component of aggregate expenditure?

Accepted Answer

A) consumption expenditures 
B) investment 
C) imports 
D) rent 
E) government purchases 
A) consumption expenditures 
B) investment 
C) imports 
D) rent 
E) government purchases

Question 4

If nominal GDP increases by 3 percent from 2004 to 2005 and real GDP increases by 5 percent from 2004 to 2005,this indicates that

Accepted Answer

A) depreciation occurred 
B) taxes increased 
C) the inflation rate decreased 
D) the price level decreased 
E) output decreased 
A) depreciation occurred 
B) taxes increased 
C) the inflation rate decreased 
D) the price level decreased 
E) output decreased

Question 5

The economy's production possibilities depend on what happens to

Accepted Answer

A) fishing net investment 
B) gross investment 
C) net investment 
D) net domestic product 
E) computer network investment 
A) fishing net investment 
B) gross investment 
C) net investment 
D) net domestic product 
E) computer network investment

Question 6

If real GDP equals $200 billion this year and nominal GDP equals $300 billion,the price level since the base year has increased

Accepted Answer

A) $100 billion 
B) $200 billion 
C) 50 percent 
D) 100 percent 
E) 33 percent 
A) $100 billion 
B) $200 billion 
C) 50 percent 
D) 100 percent 
E) 33 percent

Question 7

Which of the following actions would not increase GDP?

Accepted Answer

A) Tom's alarm clock breaks,so he buys a new one. 
B) Tom buys a new alarm clock because he routinely sleeps through the first alarm. 
C) Tom's alarm clock breaks; now he oversleeps long enough that he buys a cup of coffee on the way to work instead of making it for himself at home. 
D) Tom gets fired for being late so often after his alarm clock breaks,so he moves off to the wilderness. 
E) Tom sells his broken alarm clock and uses the revenue to buy some French fries. 
A) Tom's alarm clock breaks,so he buys a new one. 
B) Tom buys a new alarm clock because he routinely sleeps through the first alarm. 
C) Tom's alarm clock breaks; now he oversleeps long enough that he buys a cup of coffee on the way to work instead of making it for himself at home. 
D) Tom gets fired for being late so often after his alarm clock breaks,so he moves off to the wilderness. 
E) Tom sells his broken alarm clock and uses the revenue to buy some French fries.

Question 8

The statement that "GDP values all output equally" means that

Accepted Answer

A) household production is treated the same as production by firms 
B) depreciation of manufactured capital is treated the same as depletion of natural resources 
C) the purchase of pollution control equipment is valued the same as the pollution itself 
D) leisure time is valued the same as time spent working at a job 
E) the market price of output is the measure of that output's value 
A) household production is treated the same as production by firms 
B) depreciation of manufactured capital is treated the same as depletion of natural resources 
C) the purchase of pollution control equipment is valued the same as the pollution itself 
D) leisure time is valued the same as time spent working at a job 
E) the market price of output is the measure of that output's value

Question 9

If a firm hires labor for $6,000,pays rent of $2,000,buys raw materials for $10,000,earns profits of $800,and sells its output for $25,000,the firm's value added is

Accepted Answer

A) $6,200 
B) $9,000 
C) $15,000 
D) $18,000 
E) $18,800 
A) $6,200 
B) $9,000 
C) $15,000 
D) $18,000 
E) $18,800

Question 10

If nominal GDP increases by 4 percent,then

Accepted Answer

A) real output has increased by 4 percent 
B) the price level has increased by 4 percent 
C) consumer spending must have increased by 4 percent 
D) it is possible that all of the increase was caused by an increase in the price level 
E) net exports increased by 4 percent 
A) real output has increased by 4 percent 
B) the price level has increased by 4 percent 
C) consumer spending must have increased by 4 percent 
D) it is possible that all of the increase was caused by an increase in the price level 
E) net exports increased by 4 percent

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

If the GDP deflator is 100 this year,

Accepted Answer

A) there has been no inflation during the year 
B) the price level is the same as it was in the base year 
C) the price level is one hundred times what it was in the base year 
D) the price level is double what it was in the base year 
E) the inflation rate has been 100 percent per year since the base year 
A) there has been no inflation during the year 
B) the price level is the same as it was in the base year 
C) the price level is one hundred times what it was in the base year 
D) the price level is double what it was in the base year 
E) the inflation rate has been 100 percent per year since the base year

Question 13

Ann's Adventures,Inc.organizes and leads backpacking trips for $160.The business spends $30 on first aid equipment and $10 on maps.The amount of value added to GDP is

Accepted Answer

A) $160 of backpacking trips 
B) $200 of backpacking trips,$30 of first aid equipment,and $10 of maps 
C) $160 of backpacking trips,$30 of first aid equipment,and $10 of maps 
D) $120 of backpacking trips 
E) $30 of first aid equipment and $10 of maps only 
A) $160 of backpacking trips 
B) $200 of backpacking trips,$30 of first aid equipment,and $10 of maps 
C) $160 of backpacking trips,$30 of first aid equipment,and $10 of maps 
D) $120 of backpacking trips 
E) $30 of first aid equipment and $10 of maps only

Question 14

If the CPI is 220 one year and 210 the next,the annual rate of inflation as measured by the CPI is approximately

Accepted Answer

A) -2.3 percent 
B) -4.6 percent 
C) 10 percent 
D) 4.8 percent 
E) 220 percent 
A) -2.3 percent 
B) -4.6 percent 
C) 10 percent 
D) 4.8 percent 
E) 220 percent

Question 15

Double counting in the value added approach to GDP statistics is avoided by

Accepted Answer

A) correct accounting of the values of exports and imports 
B) choosing only one method to calculate GDP--either the income or the expenditures method 
C) counting only the value added at each stage of a good's production process 
D) counting the value of final and intermediate goods and services 
E) subtracting the total value of intermediate goods and services from the total value of final goods and services 
A) correct accounting of the values of exports and imports 
B) choosing only one method to calculate GDP--either the income or the expenditures method 
C) counting only the value added at each stage of a good's production process 
D) counting the value of final and intermediate goods and services 
E) subtracting the total value of intermediate goods and services from the total value of final goods and services

Question 16

If U.S.net investment is positive,the nation's capital stock is growing.

Accepted Answer

A) True 
 B)False

Question 17

If real GDP increased by 3 percent,then

Accepted Answer

A) real output has increased by 3 percent 
B) the price level has increased by 3 percent 
C) consumer spending increased by 3 percent 
D) government spending increased by 3 percent 
E) the increase might have been caused by an increase in the price level,but we cannot tell for sure 
A) real output has increased by 3 percent 
B) the price level has increased by 3 percent 
C) consumer spending increased by 3 percent 
D) government spending increased by 3 percent 
E) the increase might have been caused by an increase in the price level,but we cannot tell for sure

Question 18

Which of the following is the largest component of GDP?

Accepted Answer

A) investment (I) 
B) government spending (G) 
C) consumption (
C)  
D) net exports (X - M) 
E) taxes (T) 
A) investment (I) 
B) government spending (G) 
C) consumption (
C)  
D) net exports (X - M) 
E) taxes (T)

Question 19

The hedonic method of calculating prices breaks down the item under consideration into its characteristics and then estimates the value of each characteristics.

Accepted Answer

A) True 
 B)False

Question 20

Consumption in the expenditures approach to calculating GDP includes

Accepted Answer

A) spending by businesses on plant and equipment 
B) spending by government on office buildings 
C) spending by households on new single-family houses 
D) changes in business inventories 
E) purchases of medical services at the local clinic 
A) spending by businesses on plant and equipment 
B) spending by government on office buildings 
C) spending by households on new single-family houses 
D) changes in business inventories 
E) purchases of medical services at the local clinic

Exam 6: Tracking the Useconomy

Which of the following best describes an intermediate good?

Which of the following is not an injection into the circular flow?

Which of the following is not a component of aggregate expenditure?

If nominal GDP increases by 3 percent from 2004 to 2005 and real GDP increases by 5 percent from 2004 to 2005,this indicates that

The economy's production possibilities depend on what happens to

If real GDP equals $200 billion this year and nominal GDP equals $300 billion,the price level since the base year has increased

Which of the following actions would not increase GDP?

The statement that "GDP values all output equally" means that

If a firm hires labor for $6,000,pays rent of $2,000,buys raw materials for $10,000,earns profits of $800,and sells its output for $25,000,the firm's value added is

If nominal GDP increases by 4 percent,then

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

If the GDP deflator is 100 this year,

Ann's Adventures,Inc.organizes and leads backpacking trips for $160.The business spends $30 on first aid equipment and $10 on maps.The amount of value added to GDP is

If the CPI is 220 one year and 210 the next,the annual rate of inflation as measured by the CPI is approximately

Double counting in the value added approach to GDP statistics is avoided by

If U.S.net investment is positive,the nation's capital stock is growing.

If real GDP increased by 3 percent,then

Which of the following is the largest component of GDP?

The hedonic method of calculating prices breaks down the item under consideration into its characteristics and then estimates the value of each characteristics.

Consumption in the expenditures approach to calculating GDP includes

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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