Question 1

Macroeconomists define consumption as

Accepted Answer

A)  purchases by the business sector. 
B)  wearing away and breakdown of capital goods. 
C)  the difference between imports and exports. 
D)  purchases by the household sector. 
A)  purchases by the business sector. 
B)  wearing away and breakdown of capital goods. 
C)  the difference between imports and exports. 
D)  purchases by the household sector.

Question 2

Which of the following statements is true?

Accepted Answer

A)  Indirect business taxes are a component of national income because when added to the other components of national income,the sum must equal GDP. 
B)  Indirect business taxes must be subtracted from national income to yield a figure equal to GDP. 
C)  Indirect business taxes are a part of national income because they are considered a payment to a factor of production. 
D)  Indirect business taxes are not part of national income because they are not considered a payment to a factor of production. 
A)  Indirect business taxes are a component of national income because when added to the other components of national income,the sum must equal GDP. 
B)  Indirect business taxes must be subtracted from national income to yield a figure equal to GDP. 
C)  Indirect business taxes are a part of national income because they are considered a payment to a factor of production. 
D)  Indirect business taxes are not part of national income because they are not considered a payment to a factor of production.

Question 3

Suppose that inventory investment is $20 billion and (total)investment is $680 billion.What does purchases of newly produced capital goods equal?

Accepted Answer

A)  $715 billion 
B)  $785 billion 
C)  $750 billion 
D)  $35 billion 
E)  There is not enough information to answer this question. 
A)  $715 billion 
B)  $785 billion 
C)  $750 billion 
D)  $35 billion 
E)  There is not enough information to answer this question.

Question 4

In 1900,the country with the highest per capita GDP was

Accepted Answer

A)  Australia. 
B)  New Zealand. 
C)  the United States. 
D)  Belgium. 
E)  the Netherlands. 
A)  Australia. 
B)  New Zealand. 
C)  the United States. 
D)  Belgium. 
E)  the Netherlands.

Question 5

The typical U.S.business cycle,measured peak to peak,lasts approximately

Accepted Answer

A)  4 to 5 years. 
B)  8 to 10 years. 
C)  1 to 3 years. 
D)  6 months to 2 years. 
A)  4 to 5 years. 
B)  8 to 10 years. 
C)  1 to 3 years. 
D)  6 months to 2 years.

Question 6

Explain why GDP figures do not necessarily measure happiness or well-being.

Accepted Answer

Well-being and happiness are subjective.

Question 7

The base year is the year

Accepted Answer

A)  in which prices are unstable. 
B)  in which prices are lowest. 
C)  in which prices are highest. 
D)  that serves as a reference point or benchmark. 
E)  in which nominal output is largest. 
A)  in which prices are unstable. 
B)  in which prices are lowest. 
C)  in which prices are highest. 
D)  that serves as a reference point or benchmark. 
E)  in which nominal output is largest.

Question 8

Some economists argue that GDP overstates overall economic welfare because it does not include the impact of bads such as pollution.

Accepted Answer

A) True 
 B)False

Question 9

An economy produces 10X,20Y,and 30Z in a year.Base-year prices for these goods are $1,$2,and $3,respectively.Current-year prices for these goods are $2,$3,and $4,respectively.What is Real GDP?

Accepted Answer

A)  $180 
B)  $200 
C)  $140 
D)  $240 
E)  none of the above 
A)  $180 
B)  $200 
C)  $140 
D)  $240 
E)  none of the above

Question 10

Look at the following data: consumption = $915 billion;exports = $40 billion;imports = $33 billion;inventory investment = $123 billion;fixed investment = $500 billion;government purchases = $300 billion.GDP is equal to

Accepted Answer

A)  $1,632 billion. 
B)  $1,466 billion. 
C)  $1,911 billion. 
D)  $1,845 billion. 
E)  none of the above 
A)  $1,632 billion. 
B)  $1,466 billion. 
C)  $1,911 billion. 
D)  $1,845 billion. 
E)  none of the above

Question 11

Investment equals inventory investment added to

Accepted Answer

A)  business purchases of new capital goods. 
B)  purchases of new residential housing. 
C)  fixed investment. 
D)  business purchases of new capital goods and purchases of new residential housing. 
E)  either c or d 
A)  business purchases of new capital goods. 
B)  purchases of new residential housing. 
C)  fixed investment. 
D)  business purchases of new capital goods and purchases of new residential housing. 
E)  either c or d

Question 12

"Economic growth" has occurred if the

Accepted Answer

A)  inflation rate between this year and last year is zero or less. 
B)  GDP this year exceeds the Real GDP this year. 
C)  unemployment rate this year is above the natural rate of unemployment. 
D)  Real GDP this year exceeds the Real GDP of last year. 
A)  inflation rate between this year and last year is zero or less. 
B)  GDP this year exceeds the Real GDP this year. 
C)  unemployment rate this year is above the natural rate of unemployment. 
D)  Real GDP this year exceeds the Real GDP of last year.

Question 13

A recession is always part of a

Accepted Answer

A)  contraction. 
B)  recovery. 
C)  detraction. 
D)  remission. 
A)  contraction. 
B)  recovery. 
C)  detraction. 
D)  remission.

Question 14

Gross Domestic Product is computed by using

Accepted Answer

A)  base-year prices. 
B)  wholesale prices. 
C)  previous-year prices. 
D)  current-year prices. 
A)  base-year prices. 
B)  wholesale prices. 
C)  previous-year prices. 
D)  current-year prices.

Question 15

In the business cycle,what is the difference between the recovery phase and the expansion phase?

Accepted Answer

A)  The expansion phase occurs in the rising portion of the business cycle,while the recovery phase occurs in the falling portion of the business cycle. 
B)  The expansion phase occurs in the falling portion of the business cycle,while the recovery phase occurs in the rising portion of the business cycle. 
C)  The expansion phase is the period when Real GDP increases beyond the recovery phase. 
D)  The expansion phase must always preceed the recovery phase. 
A)  The expansion phase occurs in the rising portion of the business cycle,while the recovery phase occurs in the falling portion of the business cycle. 
B)  The expansion phase occurs in the falling portion of the business cycle,while the recovery phase occurs in the rising portion of the business cycle. 
C)  The expansion phase is the period when Real GDP increases beyond the recovery phase. 
D)  The expansion phase must always preceed the recovery phase.

Question 16

When computing national income,which of the following is included in compensation of employees?

Accepted Answer

A)  wages and salaries paid to employees 
B)  employers' contributions to Social Security and employee benefit plans 
C)  the monetary value of fringe benefits,tips,and paid vacations 
D)  all of the above 
A)  wages and salaries paid to employees 
B)  employers' contributions to Social Security and employee benefit plans 
C)  the monetary value of fringe benefits,tips,and paid vacations 
D)  all of the above

Question 17

Depreciation refers to a decrease in the value of a good caused by

Accepted Answer

A)  an increase in the price level. 
B)  a decrease in the price level. 
C)  "wear and tear" of capital goods over time. 
D)  the depreciation allowance. 
E)  a decrease in purchasing power. 
A)  an increase in the price level. 
B)  a decrease in the price level. 
C)  "wear and tear" of capital goods over time. 
D)  the depreciation allowance. 
E)  a decrease in purchasing power.

Question 18

If a business firm in Country A produces a good but does not sell it in that same year,that good will not be counted in Country A's GDP.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is false?

Accepted Answer

A)  For purposes of computing GDP,the purchases of new residential housing are considered investment although it is undertaken by the household sector. 
B)  Consumption includes spending on durable goods but not spending on services. 
C)  Investment includes fixed investment but not inventory investment. 
D)  b and c 
E)  a,b,and c 
A)  For purposes of computing GDP,the purchases of new residential housing are considered investment although it is undertaken by the household sector. 
B)  Consumption includes spending on durable goods but not spending on services. 
C)  Investment includes fixed investment but not inventory investment. 
D)  b and c 
E)  a,b,and c

Question 20

The two ways of measuring Gross Domestic Product are the __________ approach and the __________ approach.

Accepted Answer

A)  expenditure;income 
B)  expenditure;national product 
C)  national product;income 
D)  real gross domestic product;nominal gross domestic product 
E)  net national product;personal income 
A)  expenditure;income 
B)  expenditure;national product 
C)  national product;income 
D)  real gross domestic product;nominal gross domestic product 
E)  net national product;personal income

Exam 7: Macroeconomic Measurements, Gdp and Real Gdp

Macroeconomists define consumption as

Which of the following statements is true?

Suppose that inventory investment is $20 billion and (total)investment is $680 billion.What does purchases of newly produced capital goods equal?

In 1900,the country with the highest per capita GDP was

The typical U.S.business cycle,measured peak to peak,lasts approximately

Explain why GDP figures do not necessarily measure happiness or well-being.

The base year is the year

Some economists argue that GDP overstates overall economic welfare because it does not include the impact of bads such as pollution.

An economy produces 10X,20Y,and 30Z in a year.Base-year prices for these goods are $1,$2,and $3,respectively.Current-year prices for these goods are $2,$3,and $4,respectively.What is Real GDP?

Look at the following data: consumption = $915 billion;exports = $40 billion;imports = $33 billion;inventory investment = $123 billion;fixed investment = $500 billion;government purchases = $300 billion.GDP is equal to

Investment equals inventory investment added to

"Economic growth" has occurred if the

A recession is always part of a

Gross Domestic Product is computed by using

In the business cycle,what is the difference between the recovery phase and the expansion phase?

When computing national income,which of the following is included in compensation of employees?

Depreciation refers to a decrease in the value of a good caused by

If a business firm in Country A produces a good but does not sell it in that same year,that good will not be counted in Country A's GDP.

Which of the following statements is false?

The two ways of measuring Gross Domestic Product are the __________ approach and the __________ approach.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, Prices and Unemployment

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self-Regulating Economy

Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money,banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

Stocks, bonds, futures, and Options

Agriculture: Problems, policies, and Unintended Effects

Filters

The two ways of measuring Gross Domestic Product are the approach and the approach.