Question 1

If gross investment in 2016 is $750 billion and depreciation in 2016 is $850 billion, net investment in 2016 is

Accepted Answer

A)  -$50 billion. 
B)  -$100 billion. 
C)  -$800 billion. 
D)  -$1,600 billion. 
A)  -$50 billion. 
B)  -$100 billion. 
C)  -$800 billion. 
D)  -$1,600 billion.

Question 2

If the personal saving rate is 5% and personal saving is $10 billion, the value of personal disposable income

Accepted Answer

A)  is $100 billion. 
B)  is $200 billion. 
C)  is $500 billion. 
D)  cannot be determined from this information. 
A)  is $100 billion. 
B)  is $200 billion. 
C)  is $500 billion. 
D)  cannot be determined from this information.

Question 3

The GDP deflator in year 4 is 120 and the GDP deflator in year 5 is 130. The rate of inflation between years 4 and 5 is

Accepted Answer

A)  -10%. 
B)  7.7%. 
C)  8.33%. 
D)  10%. 
A)  -10%. 
B)  7.7%. 
C)  8.33%. 
D)  10%.

Question 4

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 GDP deflator in year 2 is

Accepted Answer

A)  93.9. 
B)  100. 
C)  106.5. 
D)  179. 
A)  93.9. 
B)  100. 
C)  106.5. 
D)  179.

Question 5

Fixed weight indexes can not account for new goods.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

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 for national income in billions of dollars is

Accepted Answer

A)  710. 
B)  750. 
C)  800. 
D)  825. 
A)  710. 
B)  750. 
C)  800. 
D)  825.

Question 8

If GNP is $500 billion, receipts of factor income from the rest of the world are $15 billion, and payments of factor income to the rest of the world are $5 billion, then GDP is

Accepted Answer

A)  $480 billion. 
B)  $490 billion. 
C)  $510 billion. 
D)  $520 billion. 
A)  $480 billion. 
B)  $490 billion. 
C)  $510 billion. 
D)  $520 billion.

Question 9

The GDP deflator in year 2 is 110 using year 1 as a base year. This means that, on average, the price of goods and services is

Accepted Answer

A)  110% higher in year 2 than in year 1. 
B)  10% higher in year 2 than in year 1. 
C)  5% higher in year 1 than in year 2. 
D)  110% higher in year 1 than in year 2. 
A)  110% higher in year 2 than in year 1. 
B)  10% higher in year 2 than in year 1. 
C)  5% higher in year 1 than in year 2. 
D)  110% higher in year 1 than in year 2.

Question 10

The total income of households is

Accepted Answer

A)  net national product. 
B)  personal income. 
C)  national income. 
D)  production income. 
A)  net national product. 
B)  personal income. 
C)  national income. 
D)  production income.

Question 11

Which of the following is an example of an intermediate good?

Accepted Answer

A)  the tortillas you buy to make yourself a burrito for lunch 
B)  the blueberries you buy to bake yourself some muffins 
C)  the chocolate chips you purchase to make cookies to sell at a bake sale for your kids' school 
D)  the lumber you buy to build a house for your dog 
A)  the tortillas you buy to make yourself a burrito for lunch 
B)  the blueberries you buy to bake yourself some muffins 
C)  the chocolate chips you purchase to make cookies to sell at a bake sale for your kids' school 
D)  the lumber you buy to build a house for your dog

Question 12

Related to the Economics in Practice on p. 117: If the effects of pollution on society as a measure of welfare were included in GDP calculations, the measured level of GDP would most likely

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change. 
D)  become negative. 
A)  increase. 
B)  decrease. 
C)  not change. 
D)  become negative.

Question 13

Which of the following is counted in the GNP of the United States?

Accepted Answer

A)  the wage of a foreign citizen who works in the United States for a U.S. firm 
B)  the interest earned by a Brazilian bank on loans to a business firm located in the United States 
C)  the profit earned by a restaurant located in the United States but owned by a Guatemalan company 
D)  the value of services that are produced by state and local governments in the United States 
A)  the wage of a foreign citizen who works in the United States for a U.S. firm 
B)  the interest earned by a Brazilian bank on loans to a business firm located in the United States 
C)  the profit earned by a restaurant located in the United States but owned by a Guatemalan company 
D)  the value of services that are produced by state and local governments in the United States

Question 14

Refer to the information provided in Table 6.5 below to answer the questions that follow.
Table 6.5  
-Refer to Table 6.5. The value of government spending in billions of dollars is

Accepted Answer

A)  100. 
B)  250. 
C)  350. 
D)  450. 
A)  100. 
B)  250. 
C)  350. 
D)  450.

Question 15

Refer to the information provided in Table 6.2 below to answer the questions that follow.
Table 6.2  
-Refer to Table 6.2. The value for net exports in billions of dollars is

Accepted Answer

A)  -200. 
B)  -150. 
C)  50. 
D)  250. 
A)  -200. 
B)  -150. 
C)  50. 
D)  250.

Question 16

GDP understates the value of output produced by an economy because it

Accepted Answer

A)  includes environmental degradation caused by increased output production. 
B)  excludes value added from the underground economy, such as tips taken "under the table." 
C)  includes transactions that do not take place in organized markets, such as home-cooked meals. 
D)  excludes the value of the wages and fringe benefits of government employees. 
A)  includes environmental degradation caused by increased output production. 
B)  excludes value added from the underground economy, such as tips taken "under the table." 
C)  includes transactions that do not take place in organized markets, such as home-cooked meals. 
D)  excludes the value of the wages and fringe benefits of government employees.

Question 17

If an economy produced 10 pizzas at $20 each and fifteen gallons of root beer at $5 each, the total value of these goods and services would be

Accepted Answer

A)  $75. 
B)  $200. 
C)  $275. 
D)  $2,750. 
A)  $75. 
B)  $200. 
C)  $275. 
D)  $2,750.

Question 18

Gross domestic product measures

Accepted Answer

A)  the total spending of everyone in the economy. 
B)  the value of all output in the economy. 
C)  the total income of everyone in the economy. 
D)  all of the above 
A)  the total spending of everyone in the economy. 
B)  the value of all output in the economy. 
C)  the total income of everyone in the economy. 
D)  all of the above

Question 19

If no foreign companies produce in a country, but many of the country's companies produce abroad, then

Accepted Answer

A)  the country's GNP will tend to exceed its GDP. 
B)  the country's GDP will tend to exceed its GNP. 
C)  the country's GNP and GDP will tend to be equal. 
D)  the country's GDP will tend to be equal to its domestic income. 
A)  the country's GNP will tend to exceed its GDP. 
B)  the country's GDP will tend to exceed its GNP. 
C)  the country's GNP and GDP will tend to be equal. 
D)  the country's GDP will tend to be equal to its domestic income.

Question 20

GDP measured in current dollars is nominal GDP.

Accepted Answer

A) True 
 B)False

Exam 6: Measuring National Output and National Income

If gross investment in 2016 is $750 billion and depreciation in 2016 is $850 billion, net investment in 2016 is

If the personal saving rate is 5% and personal saving is $10 billion, the value of personal disposable income

The GDP deflator in year 4 is 120 and the GDP deflator in year 5 is 130. The rate of inflation between years 4 and 5 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 GDP deflator in year 2 is

Fixed weight indexes can not account for new goods.

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

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 for national income in billions of dollars is

If GNP is $500 billion, receipts of factor income from the rest of the world are $15 billion, and payments of factor income to the rest of the world are $5 billion, then GDP is

The GDP deflator in year 2 is 110 using year 1 as a base year. This means that, on average, the price of goods and services is

The total income of households is

Which of the following is an example of an intermediate good?

Related to the Economics in Practice on p. 117: If the effects of pollution on society as a measure of welfare were included in GDP calculations, the measured level of GDP would most likely

Which of the following is counted in the GNP of the United States?

Refer to the information provided in Table 6.5 below to answer the questions that follow. Table 6.5 -Refer to Table 6.5. The value of government spending in billions of dollars is

Refer to the information provided in Table 6.2 below to answer the questions that follow. Table 6.2 -Refer to Table 6.2. The value for net exports in billions of dollars is

GDP understates the value of output produced by an economy because it

If an economy produced 10 pizzas at $20 each and fifteen gallons of root beer at $5 each, the total value of these goods and services would be

Gross domestic product measures

If no foreign companies produce in a country, but many of the country's companies produce abroad, then

GDP measured in current dollars is nominal GDP.

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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