Question 1

Disposable income (DI) includes transfer payments like Social Security benefits and unemployment benefits.

Accepted Answer

A) True 
 B)False

Question 2

GDP estimates account for which of the following items?

Accepted Answer

A)  Do-it-yourself activities 
B)  "Psychic income" people derive from their work 
C)  Household spending for health and home insurance 
D)  Improvements in product quality 
A)  Do-it-yourself activities 
B)  "Psychic income" people derive from their work 
C)  Household spending for health and home insurance 
D)  Improvements in product quality

Question 3

One year nominal GDP was $286 billion and the price index was 88. Real GDP that year was:

Accepted Answer

A)  $252 billion 
B)  $325 billion 
C)  $308 billion 
D)  $262 billion 
A)  $252 billion 
B)  $325 billion 
C)  $308 billion 
D)  $262 billion

Question 4

Which of the following is a private transfer payment?

Accepted Answer

A)  Unemployment benefits received by newly laid-off workers 
B)  The sale of used clothing at a thrift store 
C)  The Social Security benefits paid to a retired worker 
D)  A check for $250 sent by a parent to a daughter at college 
A)  Unemployment benefits received by newly laid-off workers 
B)  The sale of used clothing at a thrift store 
C)  The Social Security benefits paid to a retired worker 
D)  A check for $250 sent by a parent to a daughter at college

Question 5

The value of a sale of a share of stock is considered to be an investment in national income accounting.

Accepted Answer

A) True 
 B)False

Question 6

The value of corporate stocks and bonds traded in a given year is:

Accepted Answer

A)  Included in the calculation of GDP because they make a contribution to the current production of goods and services 
B)  Excluded from the calculation of GDP because they make no contribution to current production of goods and services 
C)  Included in the calculation of net private domestic investment 
D)  Included in the calculation of gross private domestic investment 
A)  Included in the calculation of GDP because they make a contribution to the current production of goods and services 
B)  Excluded from the calculation of GDP because they make no contribution to current production of goods and services 
C)  Included in the calculation of net private domestic investment 
D)  Included in the calculation of gross private domestic investment

Question 7

Disinvestment occurs when:

Accepted Answer

A)  Businesses sell machinery and equipment to one another 
B)  The prices of investment goods rise faster than the prices of consumer goods 
C)  Businesses have larger inventories at the end of the year than they had at the start 
D)  The consumption of private fixed capital exceeds gross private domestic investment 
A)  Businesses sell machinery and equipment to one another 
B)  The prices of investment goods rise faster than the prices of consumer goods 
C)  Businesses have larger inventories at the end of the year than they had at the start 
D)  The consumption of private fixed capital exceeds gross private domestic investment

Question 8

When gross private domestic investment exceeds depreciation, it can be concluded that:

Accepted Answer

A)  Net investment is positive 
B)  Net investment is negative 
C)  The economy is exporting more than it imports 
D)  The economy is importing more than it exports 
A)  Net investment is positive 
B)  Net investment is negative 
C)  The economy is exporting more than it imports 
D)  The economy is importing more than it exports

Question 9

A nation's capital stock was valued at $300 billion at the start of the year and $350 billion at the end. Consumption of private fixed capital in the year was $25 billion. Assuming stable prices, gross investment was:

Accepted Answer

A)  $25 billion 
B)  $50 billion 
C)  $75 billion 
D)  $90 billion 
A)  $25 billion 
B)  $50 billion 
C)  $75 billion 
D)  $90 billion

Question 10

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

Accepted Answer

A)  $1,049 billion 
B)  $1,079 billion 
C)  $1,090 billion 
D)  $1,101 billion 
A)  $1,049 billion 
B)  $1,079 billion 
C)  $1,090 billion 
D)  $1,101 billion

Question 11

A business buys $5,000 worth of inputs from other firms in order to produce a product. The business makes 100 units of the product and each of them sells for $65. The value added by the business to these products is:

Accepted Answer

A)  $5,000 
B)  $6,500 
C)  $1,500 
D)  $1,000 
A)  $5,000 
B)  $6,500 
C)  $1,500 
D)  $1,000

Question 12

The "underground economy" is mostly made up of:

Accepted Answer

A)  Unpaid work 
B)  Illegal activities 
C)  Do-it-yourself activities 
D)  Tax-evasion activities 
A)  Unpaid work 
B)  Illegal activities 
C)  Do-it-yourself activities 
D)  Tax-evasion activities

Question 13

Government purchases in national income accounts would include payments for:

Accepted Answer

A)  Social Security checks to retirees 
B)  Salaries for current U.S. military officers 
C)  Public assistance for welfare recipients 
D)  Unemployment benefits 
A)  Social Security checks to retirees 
B)  Salaries for current U.S. military officers 
C)  Public assistance for welfare recipients 
D)  Unemployment benefits

Question 14

The value added in an industry includes the wages earned by workers in the industry.

Accepted Answer

A) True 
 B)False

Question 15

If the University of Missouri, a public school, builds a new laboratory, then it will be counted as part of Ig in GDP.

Accepted Answer

A) True 
 B)False

Question 16

GDP is the market value of:

Accepted Answer

A)  Resources (land, labor, capital, and entrepreneurship) in an economy in a given year 
B)  All final goods and services produced in an economy in a given year 
C)  Consumption and investment spending in an economy in a given year 
D)  All output produced and accumulated over the years 
A)  Resources (land, labor, capital, and entrepreneurship) in an economy in a given year 
B)  All final goods and services produced in an economy in a given year 
C)  Consumption and investment spending in an economy in a given year 
D)  All output produced and accumulated over the years

Question 17

An example of final goods in national income accounts would be:

Accepted Answer

A)  New lawn mowers purchased by Cut-Rite Lawn Equipment & Supplies 
B)  Flowers and pots purchased by homeowner Joe Smith 
C)  Chemicals purchased by Green Grass Lawn Care Services 
D)  Seedlings and saplings purchased for resale by Wendy's Garden Center 
A)  New lawn mowers purchased by Cut-Rite Lawn Equipment & Supplies 
B)  Flowers and pots purchased by homeowner Joe Smith 
C)  Chemicals purchased by Green Grass Lawn Care Services 
D)  Seedlings and saplings purchased for resale by Wendy's Garden Center

Question 18

The "statistical discrepancy" that the NIPA includes in the data is to account for the following, except:

Accepted Answer

A)  To equalize GDP totals produced by the expenditures approach and the income approach 
B)  Errors due to people misrepresenting their incomes on their tax returns 
C)  Difficulty in accurately estimating depreciation 
D)  Household production, or "do-it-yourself" activities of households 
A)  To equalize GDP totals produced by the expenditures approach and the income approach 
B)  Errors due to people misrepresenting their incomes on their tax returns 
C)  Difficulty in accurately estimating depreciation 
D)  Household production, or "do-it-yourself" activities of households

Question 19

Personal consumption expenditures include expenditures for new houses.

Accepted Answer

A) True 
 B)False

Question 20

A nation's capital stock was valued at $500 billion at the start of the year and $575 billion at the end. Consumption of private fixed capital in the year was $35 billion. Assuming stable prices, net investment was:

Accepted Answer

A)  $35 billion 
B)  $40 billion 
C)  $45 billion 
D)  $75 billion 
A)  $35 billion 
B)  $40 billion 
C)  $45 billion 
D)  $75 billion

Exam 7: Measuring Domestic Output and National Income

Disposable income (DI) includes transfer payments like Social Security benefits and unemployment benefits.

GDP estimates account for which of the following items?

One year nominal GDP was $286 billion and the price index was 88. Real GDP that year was:

Which of the following is a private transfer payment?

The value of a sale of a share of stock is considered to be an investment in national income accounting.

The value of corporate stocks and bonds traded in a given year is:

Disinvestment occurs when:

When gross private domestic investment exceeds depreciation, it can be concluded that:

A nation's capital stock was valued at $300 billion at the start of the year and $350 billion at the end. Consumption of private fixed capital in the year was $25 billion. Assuming stable prices, gross investment was:

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

A business buys $5,000 worth of inputs from other firms in order to produce a product. The business makes 100 units of the product and each of them sells for $65. The value added by the business to these products is:

The "underground economy" is mostly made up of:

Government purchases in national income accounts would include payments for:

The value added in an industry includes the wages earned by workers in the industry.

If the University of Missouri, a public school, builds a new laboratory, then it will be counted as part of Ig in GDP.

GDP is the market value of:

An example of final goods in national income accounts would be:

The "statistical discrepancy" that the NIPA includes in the data is to account for the following, except:

Personal consumption expenditures include expenditures for new houses.

A nation's capital stock was valued at $500 billion at the start of the year and $575 billion at the end. Consumption of private fixed capital in the year was $35 billion. Assuming stable prices, net investment was:

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

Filters

If the University of Missouri, a public school, builds a new laboratory, then it will be counted as part of I_g in GDP.