Question 1

Do-it-yourself activities of people are a big part of the "underground economy".

Accepted Answer

A) True 
 B)False  False

Question 2

An example of intermediate goods would be:

Accepted Answer

A)  Bricks bought by a homeowner for constructing a patio 
B)  Sacks of groceries bought by a dentist for his family 
C)  Cars bought by a car-rental company 
D)  Paper and ink bought by a publishing company 
A)  Bricks bought by a homeowner for constructing a patio 
B)  Sacks of groceries bought by a dentist for his family 
C)  Cars bought by a car-rental company 
D)  Paper and ink bought by a publishing company D

Question 3

(The following national income data are in billions of dollars.)   Refer to the above data. This nation's GDP is:

Accepted Answer

A)  $315 billion 
B)  $324 billion 
C)  $305 billion 
D)  $367 billion 
A)  $315 billion 
B)  $324 billion 
C)  $305 billion 
D)  $367 billion C

Question 4

Over a year, a nation's GDP at current prices rose by 15 percent while the price index increased from 100 to 110. GDP at constant prices rose by about:

Accepted Answer

A)  3 percent 
B)  5 percent 
C)  7 percent 
D)  9 percent 
A)  3 percent 
B)  5 percent 
C)  7 percent 
D)  9 percent

Question 5

The expenditures or output approach to GDP measures it by summing up:

Accepted Answer

A)  Compensation of employees, rents, interest, dividends, undistributed corporate profits, proprietors' income, indirect business taxes paid, consumption of fixed capital, and net foreign factor income earned in the United States 
B)  Compensation of employees, rents, interest, dividends, corporate profits, proprietors' income, and indirect business taxes, and subtracting the consumption of fixed capital 
C)  The total spending for consumption, investment, net exports, and government purchases 
D)  The total spending for consumption and government purchases, but subtracting public and private transfer payments 
A)  Compensation of employees, rents, interest, dividends, undistributed corporate profits, proprietors' income, indirect business taxes paid, consumption of fixed capital, and net foreign factor income earned in the United States 
B)  Compensation of employees, rents, interest, dividends, corporate profits, proprietors' income, and indirect business taxes, and subtracting the consumption of fixed capital 
C)  The total spending for consumption, investment, net exports, and government purchases 
D)  The total spending for consumption and government purchases, but subtracting public and private transfer payments

Question 6

Which of the following is included in the expenditures approach to GDP?

Accepted Answer

A)  Spending on meals by consumers at restaurants 
B)  Expenditures on used clothing at garage sales 
C)  Value of stocks and bonds bought by businessmen 
D)  Government spending on welfare payments 
A)  Spending on meals by consumers at restaurants 
B)  Expenditures on used clothing at garage sales 
C)  Value of stocks and bonds bought by businessmen 
D)  Government spending on welfare payments

Question 7

Money spent on the purchase of a new house is included in the GDP as a part of:

Accepted Answer

A)  Household expenditures on durable goods 
B)  Personal consumption expenditures 
C)  Personal saving 
D)  Gross domestic private investment 
A)  Household expenditures on durable goods 
B)  Personal consumption expenditures 
C)  Personal saving 
D)  Gross domestic private investment

Question 8

Which of the following is a primary use for national income accounts?

Accepted Answer

A)  To analyze the environmental cost of economic growth 
B)  To assess the economic efficiency of specific industries in the economy 
C)  To measure changes in the value of production and income in the economy 
D)  To determine whether there is a fair and equitable distribution of income in the economy 
A)  To analyze the environmental cost of economic growth 
B)  To assess the economic efficiency of specific industries in the economy 
C)  To measure changes in the value of production and income in the economy 
D)  To determine whether there is a fair and equitable distribution of income in the economy

Question 9

In the expenditures approach, transfer payments such as unemployment compensation are included in the G component of GDP.

Accepted Answer

A) True 
 B)False

Question 10

When local police and fire departments buy new cars for their operations, these are counted as part of:

Accepted Answer

A)  C 
B)  Ig 
C)  G 
D)  Xn 
A)  C 
B)  Ig 
C)  G 
D)  Xn

Question 11

Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year.   Refer to the above data. For the years shown, the growth of:

Accepted Answer

A)  Real GDP exceeds the growth of nominal GDP 
B)  Nominal GDP exactly reflects increases in real output 
C)  Nominal GDP overstates increases in real output 
D)  Nominal GDP understates increases in real output 
A)  Real GDP exceeds the growth of nominal GDP 
B)  Nominal GDP exactly reflects increases in real output 
C)  Nominal GDP overstates increases in real output 
D)  Nominal GDP understates increases in real output

Question 12

The following data about a hypothetical economy are in billions of dollars.   Refer to the above data. How much are net exports of this economy?

Accepted Answer

A)  +$150 billion 
B)  -$20 billion 
C)  +$20 billion 
D)  -$65 billion 
A)  +$150 billion 
B)  -$20 billion 
C)  +$20 billion 
D)  -$65 billion

Question 13

The two ways of looking at GDP are the:

Accepted Answer

A)  Output approach and expenditures approach 
B)  Income approach and saving approach 
C)  Expenditures approach and income approach 
D)  Output approach and consumption approach 
A)  Output approach and expenditures approach 
B)  Income approach and saving approach 
C)  Expenditures approach and income approach 
D)  Output approach and consumption approach

Question 14

The following are national income account data for a hypothetical economy in billions of dollars: gross private domestic investment ($320); imports ($35); exports ($22); personal consumption expenditures ($2,460); and, government purchases ($470). What is GDP in this economy?

Accepted Answer

A)  $3,250 billion 
B)  $3,263 billion 
C)  $3,237 billion 
D)  $3,290 billion 
A)  $3,250 billion 
B)  $3,263 billion 
C)  $3,237 billion 
D)  $3,290 billion

Question 15

(The following national income data for an economy are in billions of dollars.)   Refer to the above data. The national income in this economy can be estimated by adding items:

Accepted Answer

A)  1 through 7 
B)  8 through 11 
C)  2 through 7 
D)  1 through 13 
A)  1 through 7 
B)  8 through 11 
C)  2 through 7 
D)  1 through 13

Question 16

Which would be considered an investment according to economists?

Accepted Answer

A)  A fishing-company owner buys Google shares 
B)  A fishing-company buys a few boats from another fishing company that was closing out 
C)  A fishing-company owner buys new fishing gear 
D)  A fishing-company owner buys fuel to run the boats 
A)  A fishing-company owner buys Google shares 
B)  A fishing-company buys a few boats from another fishing company that was closing out 
C)  A fishing-company owner buys new fishing gear 
D)  A fishing-company owner buys fuel to run the boats

Question 17

GDP understates the amount of economic production in the United States because it excludes:

Accepted Answer

A)  Spending for the U.S. military 
B)  Transfer payments 
C)  Purchases of stocks and bonds 
D)  Work performed by people for their own benefit 
A)  Spending for the U.S. military 
B)  Transfer payments 
C)  Purchases of stocks and bonds 
D)  Work performed by people for their own benefit

Question 18

National income is the sum of employee compensation, profits, and the following items, except:

Accepted Answer

A)  Rent 
B)  Interest 
C)  Depreciation or consumption of fixed capital 
D)  Taxes on production and imports 
A)  Rent 
B)  Interest 
C)  Depreciation or consumption of fixed capital 
D)  Taxes on production and imports

Question 19

All activities included in GDP serve to enrich society.

Accepted Answer

A) True 
 B)False

Question 20

"GDP price index" measures changes in the:

Accepted Answer

A)  Value of final output produced in the nation 
B)  Prices of the output produced in the nation 
C)  Amount of resources available in the nation 
D)  Cost of resources employed in the nation 
A)  Value of final output produced in the nation 
B)  Prices of the output produced in the nation 
C)  Amount of resources available in the nation 
D)  Cost of resources employed in the nation

Exam 7: Measuring Domestic Output and National Income

Do-it-yourself activities of people are a big part of the "underground economy".

An example of intermediate goods would be:

(The following national income data are in billions of dollars.) Refer to the above data. This nation's GDP is:

Over a year, a nation's GDP at current prices rose by 15 percent while the price index increased from 100 to 110. GDP at constant prices rose by about:

The expenditures or output approach to GDP measures it by summing up:

Which of the following is included in the expenditures approach to GDP?

Money spent on the purchase of a new house is included in the GDP as a part of:

Which of the following is a primary use for national income accounts?

In the expenditures approach, transfer payments such as unemployment compensation are included in the G component of GDP.

When local police and fire departments buy new cars for their operations, these are counted as part of:

Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Refer to the above data. For the years shown, the growth of:

The following data about a hypothetical economy are in billions of dollars. Refer to the above data. How much are net exports of this economy?

The two ways of looking at GDP are the:

The following are national income account data for a hypothetical economy in billions of dollars: gross private domestic investment ($320); imports ($35); exports ($22); personal consumption expenditures ($2,460); and, government purchases ($470). What is GDP in this economy?

(The following national income data for an economy are in billions of dollars.) Refer to the above data. The national income in this economy can be estimated by adding items:

Which would be considered an investment according to economists?

GDP understates the amount of economic production in the United States because it excludes:

National income is the sum of employee compensation, profits, and the following items, except:

All activities included in GDP serve to enrich society.

"GDP price index" measures changes in the:

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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