Question 1

Refer to the graph above. They suggest that the GDP price index during the period shown was generally:

Accepted Answer

A)  Constant 
B)  Decreasing 
C)  Increasing 
D)  Positive 
A)  Constant 
B)  Decreasing 
C)  Increasing 
D)  Positive

Question 2

The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($1,050); personal consumption expenditures ($4,800); imports ($370); exports ($240); gross private domestic investment ($1,130). Personal consumption expenditures are approximately what percentage of this economy?

Accepted Answer

A)  60 percent 
B)  65 percent 
C)  70 percent 
D)  75 percent 
A)  60 percent 
B)  65 percent 
C)  70 percent 
D)  75 percent

Question 3

Which of the following is not included in personal consumption expenditures?

Accepted Answer

A)  New furniture and appliances bought by homeowners 
B)  Payments for cable and Internet services to homes 
C)  Purchases of mutual funds by consumers 
D)  Food purchased at supermarkets 
A)  New furniture and appliances bought by homeowners 
B)  Payments for cable and Internet services to homes 
C)  Purchases of mutual funds by consumers 
D)  Food purchased at supermarkets

Question 4

The gross domestic product is not a good measure of the standard of living in a nation because it:

Accepted Answer

A)  Includes the cost of health insurance 
B)  Excludes payments for pollution control equipment 
C)  Does not account for the size of the population 
D)  Does not account for the cost of police protection 
A)  Includes the cost of health insurance 
B)  Excludes payments for pollution control equipment 
C)  Does not account for the size of the population 
D)  Does not account for the cost of police protection

Question 5

Net exports is a positive number when:

Accepted Answer

A)  A nation's exports of goods and services are increasing 
B)  A nation exports goods and services to other nations 
C)  A nation's exports of goods and services exceed its imports 
D)  A nation's exports of goods and services fall short of its imports 
A)  A nation's exports of goods and services are increasing 
B)  A nation exports goods and services to other nations 
C)  A nation's exports of goods and services exceed its imports 
D)  A nation's exports of goods and services fall short of its imports

Question 6

(The following national income data are in billions of dollars.)   Refer to the above data. Personal income in this economy is:

Accepted Answer

A)  $621 billion 
B)  $656 billion 
C)  $705 billion 
D)  $716 billion 
A)  $621 billion 
B)  $656 billion 
C)  $705 billion 
D)  $716 billion

Question 7

The total volume of business sales in our economy is several times larger than GDP because:

Accepted Answer

A)  The GDP does not take taxes into account 
B)  The GDP excludes intermediate transactions 
C)  The GDP grossly understates the value of our annual output 
D)  Total sales are in money terms and GDP is always stated in real terms 
A)  The GDP does not take taxes into account 
B)  The GDP excludes intermediate transactions 
C)  The GDP grossly understates the value of our annual output 
D)  Total sales are in money terms and GDP is always stated in real terms

Question 8

Nominal GDP is less than real GDP in an economy in both year 1 and year 2. In year 3, nominal GDP is equal to real GDP. In year 4, nominal GDP is slightly greater than real GDP. In year 5, nominal GDP is significantly greater than real GDP. Which year is the base year being used to calculate the price index for this economy?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
A)  2 
B)  3 
C)  4 
D)  5

Question 9

All of the following are examples of intermediate goods, except:

Accepted Answer

A)  Flour bought by a bakery 
B)  Oven bought by a bakery 
C)  Office supplies bought by an accounting firm 
D)  Gasoline bought by a trucking company 
A)  Flour bought by a bakery 
B)  Oven bought by a bakery 
C)  Office supplies bought by an accounting firm 
D)  Gasoline bought by a trucking company

Question 10

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. In year 4, nominal GDP would be:

Accepted Answer

A)  $60 
B)  $90 
C)  $120 
D)  $316 
A)  $60 
B)  $90 
C)  $120 
D)  $316

Question 11

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion. In year 2, the total expenditure for the same market basket of goods was $5,500 billion. What was the GDP price index for the economy in year 2?

Accepted Answer

A)  100 
B)  110 
C)  115 
D)  120 
A)  100 
B)  110 
C)  115 
D)  120

Question 12

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

Accepted Answer

A)  $9 billion 
B)  $16 billion 
C)  $24 billion 
D)  $28 billion 
A)  $9 billion 
B)  $16 billion 
C)  $24 billion 
D)  $28 billion

Question 13

The service a homeowner performs when she mows her yard is not included in GDP because:

Accepted Answer

A)  This is a nonmarket transaction 
B)  This is a nonproduction activity 
C)  This is a noninvestment transaction 
D)  Multiple counting would be involved 
A)  This is a nonmarket transaction 
B)  This is a nonproduction activity 
C)  This is a noninvestment transaction 
D)  Multiple counting would be involved

Question 14

Answer the question based on the following data, using year 1 as the base year. All dollars are in billions.   Refer to the above data. Real GDP in year 4 was approximately:

Accepted Answer

A)  $3,989 billion 
B)  $3,562 billion 
C)  $3,774 billion 
D)  $3,494 billion 
A)  $3,989 billion 
B)  $3,562 billion 
C)  $3,774 billion 
D)  $3,494 billion

Question 15

Personal income (PI) is the income that households are free to spend or save as they please.

Accepted Answer

A) True 
 B)False

Question 16

GDP tends to understate economic welfare because it does not take into account increases in leisure.

Accepted Answer

A) True 
 B)False

Question 17

If prices increased, we need to adjust nominal GDP values to give us a measure of GDP for various years in constant-dollar terms. We refer to that adjustment as:

Accepted Answer

A)  Inflating GDP 
B)  Deflating GDP 
C)  Compounding GDP 
D)  Indexing GDP 
A)  Inflating GDP 
B)  Deflating GDP 
C)  Compounding GDP 
D)  Indexing GDP

Question 18

(The following national income data for an economy are in billions of dollars.)   Refer to the above data. The net private domestic investment in this economy is equal to:

Accepted Answer

A)  $1,793 billion 
B)  -$424 billion 
C)  $200 billion 
D)  $1,643 billion 
A)  $1,793 billion 
B)  -$424 billion 
C)  $200 billion 
D)  $1,643 billion

Question 19

The largest expenditure component of GDP is:

Accepted Answer

A)  Government purchases 
B)  Personal consumption expenditures 
C)  Gross private domestic investment 
D)  Net exports 
A)  Government purchases 
B)  Personal consumption expenditures 
C)  Gross private domestic investment 
D)  Net exports

Question 20

(The following national income data are in billions of dollars.)   Refer to the above data. Net domestic product equals:

Accepted Answer

A)  $1,039 billion 
B)  $1,044 billion 
C)  $1,054 billion 
D)  $1,076 billion 
A)  $1,039 billion 
B)  $1,044 billion 
C)  $1,054 billion 
D)  $1,076 billion

Refer to the graph above. They suggest that the GDP price index during the period shown was generally:

Which of the following is not included in personal consumption expenditures?

The gross domestic product is not a good measure of the standard of living in a nation because it:

Net exports is a positive number when:

(The following national income data are in billions of dollars.) Refer to the above data. Personal income in this economy is:

The total volume of business sales in our economy is several times larger than GDP because:

All of the following are examples of intermediate goods, except:

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. In year 4, nominal GDP would be:

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion. In year 2, the total expenditure for the same market basket of goods was $5,500 billion. What was the GDP price index for the economy in year 2?

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

The service a homeowner performs when she mows her yard is not included in GDP because:

Answer the question based on the following data, using year 1 as the base year. All dollars are in billions. Refer to the above data. Real GDP in year 4 was approximately:

Personal income (PI) is the income that households are free to spend or save as they please.

GDP tends to understate economic welfare because it does not take into account increases in leisure.

If prices increased, we need to adjust nominal GDP values to give us a measure of GDP for various years in constant-dollar terms. We refer to that adjustment as:

(The following national income data for an economy are in billions of dollars.) Refer to the above data. The net private domestic investment in this economy is equal to:

The largest expenditure component of GDP is:

(The following national income data are in billions of dollars.) Refer to the above data. Net domestic product equals:

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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Exam 7: Measuring Domestic Output and National Income

Refer to the graph above. They suggest that the GDP price index during the period shown was generally:

Which of the following is not included in personal consumption expenditures?

The gross domestic product is not a good measure of the standard of living in a nation because it:

Net exports is a positive number when:

(The following national income data are in billions of dollars.) Refer to the above data. Personal income in this economy is:

The total volume of business sales in our economy is several times larger than GDP because:

All of the following are examples of intermediate goods, except:

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. In year 4, nominal GDP would be:

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion. In year 2, the total expenditure for the same market basket of goods was $5,500 billion. What was the GDP price index for the economy in year 2?

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

The service a homeowner performs when she mows her yard is not included in GDP because:

Answer the question based on the following data, using year 1 as the base year. All dollars are in billions. Refer to the above data. Real GDP in year 4 was approximately:

Personal income (PI) is the income that households are free to spend or save as they please.

GDP tends to understate economic welfare because it does not take into account increases in leisure.

If prices increased, we need to adjust nominal GDP values to give us a measure of GDP for various years in constant-dollar terms. We refer to that adjustment as:

(The following national income data for an economy are in billions of dollars.) Refer to the above data. The net private domestic investment in this economy is equal to:

The largest expenditure component of GDP is:

(The following national income data are in billions of dollars.) Refer to the above data. Net domestic product equals:

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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