Question 1

Depreciation is

Accepted Answer

A)  the difference between exports and imports. 
B)  subtracted from net investment to obtain gross investment. 
C)  added to NNP to get GNP. 
D)  added to GDP to get gross investment. 
A)  the difference between exports and imports. 
B)  subtracted from net investment to obtain gross investment. 
C)  added to NNP to get GNP. 
D)  added to GDP to get gross investment.

Question 2

The change in capital stock in a period is equal to

Accepted Answer

A)  the ratio of the amount of the capital at the beginning of the period to the amount of depreciation. 
B)  the amount of the capital stock at the beginning of the period plus gross investment minus depreciation. 
C)  the amount of the capital at the beginning of the period plus gross investment. 
D)  the amount of the capital at the beginning of the period minus net investment. 
A)  the ratio of the amount of the capital at the beginning of the period to the amount of depreciation. 
B)  the amount of the capital stock at the beginning of the period plus gross investment minus depreciation. 
C)  the amount of the capital at the beginning of the period plus gross investment. 
D)  the amount of the capital at the beginning of the period minus net investment.

Question 3

If NNP is $175 billion and depreciation is $20 billion, then GDP

Accepted Answer

A)  is $155 billion. 
B)  is $195 billion. 
C)  is $215 billion. 
D)  cannot be determined from this information. 
A)  is $155 billion. 
B)  is $195 billion. 
C)  is $215 billion. 
D)  cannot be determined from this information.

Question 4

Consumers can spend their entire disposable income.

Accepted Answer

A) True 
 B)False

Question 5

Gross investment minus depreciation is equal to

Accepted Answer

A)  non-residential investment. 
B)  gross national product. 
C)  the value of durable goods. 
D)  the change in capital stock. 
A)  non-residential investment. 
B)  gross national product. 
C)  the value of durable goods. 
D)  the change in capital stock.

Question 6

Since services do not involve the production of physical things, they are not included in GDP calculations.

Accepted Answer

A) True 
 B)False

Question 7

Gross investment is

Accepted Answer

A)  the total value of all capital goods newly produced in a given period. 
B)  GDP minus GNP. 
C)  net investment divided by depreciation. 
D)  GDP minus depreciation. 
A)  the total value of all capital goods newly produced in a given period. 
B)  GDP minus GNP. 
C)  net investment divided by depreciation. 
D)  GDP minus depreciation.

Question 8

What should be added to national income to calculate GNP?

Accepted Answer

A)  depreciation 
B)  indirect taxes 
C)  personal income taxes 
D)  net factor payments to the rest of the world 
A)  depreciation 
B)  indirect taxes 
C)  personal income taxes 
D)  net factor payments to the rest of the world

Question 9

Refer to the information provided in Table 6.1 below to answer the questions that follow.
Table 6.1  
-Refer to Table 6.1. The value for net exports in billions of dollars is

Accepted Answer

A)  150. 
B)  250. 
C)  650. 
D)  800. 
A)  150. 
B)  250. 
C)  650. 
D)  800.

Question 10

Related to the Economics in Practice on p. 112: ________ is responsible for producing and maintaining the National Income and Product Accounts (NIPAs).

Accepted Answer

A)  The Department of the Treasury 
B)  The Federal Reserve Bank 
C)  Congress 
D)  The Department of Commerce 
A)  The Department of the Treasury 
B)  The Federal Reserve Bank 
C)  Congress 
D)  The Department of Commerce

Question 11

The yearly value of worn out machinery is called

Accepted Answer

A)  depreciation. 
B)  capital gains. 
C)  net investment. 
D)  non-durable goods. 
A)  depreciation. 
B)  capital gains. 
C)  net investment. 
D)  non-durable goods.

Question 12

The equation for GDP using the expenditure approach is

Accepted Answer

A)  GDP = C + I + G + EX - IM. 
B)  GDP = C + I + G + (IM - EX). 
C)  GDP = C + I + G + EX + IM. 
D)  GDP = C + I + G - EX - IM. 
A)  GDP = C + I + G + EX - IM. 
B)  GDP = C + I + G + (IM - EX). 
C)  GDP = C + I + G + EX + IM. 
D)  GDP = C + I + G - EX - IM.

Question 13

GDP is not a perfect measure of social welfare and the society's economic well-being because

Accepted Answer

A)  it does not say anything about the distribution of income. 
B)  GDP accounting rules do not adjust for production that causes negative externalities. 
C)  it does not include all economic activities in the economy. 
D)  all of the above 
A)  it does not say anything about the distribution of income. 
B)  GDP accounting rules do not adjust for production that causes negative externalities. 
C)  it does not include all economic activities in the economy. 
D)  all of the above

Question 14

Refer to the information provided in Table 6.7 below to answer the questions that follow.
Table 6.7  
-Refer to Table 6.7. The value of net factor payments to the rest of the world in billions of dollars is

Accepted Answer

A)  45. 
B)  5. 
C)  -5. 
D)  -45. 
A)  45. 
B)  5. 
C)  -5. 
D)  -45.

Question 15

If net investment in 2017 is $500 billion and gross investment in 2017 is $900 billion, depreciation in 2017 is

Accepted Answer

A)  -$500 billion. 
B)  $0. 
C)  $400 billion. 
D)  $1,400 billion. 
A)  -$500 billion. 
B)  $0. 
C)  $400 billion. 
D)  $1,400 billion.

Question 16

Refer to the information provided in Table 6.6 below to answer the questions that follow.
Table 6.6  
-Refer to Table 6.6. The value for net exports in billions of dollars is

Accepted Answer

A)  800. 
B)  200. 
C)  -200. 
D)  -500. 
A)  800. 
B)  200. 
C)  -200. 
D)  -500.

Question 17

Refer to the information provided in Table 6.9 below to answer the questions that follow.
Table 6.9  
-Refer to Table 6.9. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's real GDP in year 2 is

Accepted Answer

A)  $168. 
B)  $179. 
C)  $202. 
D)  $214. 
A)  $168. 
B)  $179. 
C)  $202. 
D)  $214.

Question 18

The value of what Burger King produces in France is included in the United States ________ and in the French ________.

Accepted Answer

A)  GDP; GDP 
B)  GNP; GNP 
C)  GNP; GDP 
D)  GDP; GNP 
A)  GDP; GDP 
B)  GNP; GNP 
C)  GNP; GDP 
D)  GDP; GNP

Question 19

Profits earned in the United States by foreign-owned companies are included in

Accepted Answer

A)  the U.S. GDP but not GNP. 
B)  neither the U.S. GDP nor GNP. 
C)  the U.S. GNP but not GDP. 
D)  both the U.S. GDP and GNP. 
A)  the U.S. GDP but not GNP. 
B)  neither the U.S. GDP nor GNP. 
C)  the U.S. GNP but not GDP. 
D)  both the U.S. GDP and GNP.

Question 20

If real GDP in 2016 using 2015 prices is higher than nominal GDP of 2016, then

Accepted Answer

A)  prices in 2016 are lower than prices in the base year. 
B)  nominal GDP in 2016 equals nominal GDP in 2015. 
C)  prices in 2016 are higher than prices in the base year. 
D)  real GDP in 2016 is larger than real GDP in 2015. 
A)  prices in 2016 are lower than prices in the base year. 
B)  nominal GDP in 2016 equals nominal GDP in 2015. 
C)  prices in 2016 are higher than prices in the base year. 
D)  real GDP in 2016 is larger than real GDP in 2015.

Exam 6: Measuring National Output and National Income

Depreciation is

The change in capital stock in a period is equal to

If NNP is $175 billion and depreciation is $20 billion, then GDP

Consumers can spend their entire disposable income.

Gross investment minus depreciation is equal to

Since services do not involve the production of physical things, they are not included in GDP calculations.

Gross investment is

What should be added to national income to calculate GNP?

Refer to the information provided in Table 6.1 below to answer the questions that follow. Table 6.1 -Refer to Table 6.1. The value for net exports in billions of dollars is

Related to the Economics in Practice on p. 112: ________ is responsible for producing and maintaining the National Income and Product Accounts (NIPAs).

The yearly value of worn out machinery is called

The equation for GDP using the expenditure approach is

GDP is not a perfect measure of social welfare and the society's economic well-being because

Refer to the information provided in Table 6.7 below to answer the questions that follow. Table 6.7 -Refer to Table 6.7. The value of net factor payments to the rest of the world in billions of dollars is

If net investment in 2017 is $500 billion and gross investment in 2017 is $900 billion, depreciation in 2017 is

Refer to the information provided in Table 6.6 below to answer the questions that follow. Table 6.6 -Refer to Table 6.6. The value for net exports in billions of dollars is

Refer to the information provided in Table 6.9 below to answer the questions that follow. Table 6.9 -Refer to Table 6.9. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's real GDP in year 2 is

The value of what Burger King produces in France is included in the United States ________ and in the French ________.

Profits earned in the United States by foreign-owned companies are included in

If real GDP in 2016 using 2015 prices is higher than nominal GDP of 2016, then

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

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The value of what Burger King produces in France is included in the United States and in the French .