Deck 2: The US Economy

Question 1

Ceteris paribus GDP most closely measures:

A) Output per worker.
B) A summary of the world's output.
C) The total value of all final goods and services produced within a nation's borders in a given year.
D) The rate of change in capital stock.

Answer 1

C

Question 2

The inflation-adjusted value of final goods and services produced in the United States measures:

A) Nominal GDP.
B) Real GDP.
C) Per capita GDP.
D) GDP per worker.

Answer 2

B

Question 3

In order to measure what a country produces,we:

A) Summarize total output in physical terms.
B) Count units of output.
C) Count the weight of different products.
D) Summarize the monetary value of output.

Answer 3

D

Question 4

To compare the standard of living of one country to another,economists use:

A) Per capita GDP.
B) Real GDP.
C) Nominal GDP.
D) Output per worker.

Question 5

In 2012,per capita GDP in the United States was approximately:

A) $41,000.
B) $49,000.
C) $35,000.
D) $51,000.

Question 6

Per capita GDP is the most practical way to:

A) Measure how much income households receive.
B) Measure how much output can be consumed on a sustainable basis.
C) Measure how much output is potentially available to the average person.
D) Analyze the growth rate of the economy over time.

Question 7

Which of the following is NOT included in U.S.GDP?

A) The construction of new homes to replace those destroyed by fires in California.
B) The salary of the President of the United States.
C) Shoes produced abroad and imported by a U.S.company.
D) The purchase of U.

Question 8

Which of the following is the best measure of an increase in actual output?

A) Nominal GDP.
B) Real GDP.
C) Per capita GDP.
D) GDP per dollar.

Question 9

U.S.GDP for 2012 was approximately:

A) $11 trillion.
B) $100 billion.
C) $15 trillion.
D) $20 trillion.

Question 10

Which of the following is NOT included in U.S.GDP?

A) Toys produced by a U.S.firm located in China.
B) Beer brewed in Colorado and purchased by a German tourist.
C) A car made by a Japanese auto producer in Kansas.
D) Corn grown in Iowa and exported to Africa.

Question 11

Country's GDP is:

A) The sum of the physical amounts of goods and services in the economy.
B) A dollar measure of output produced within a nation's borders during a given time period.
C) A measure of the per capita economic growth rate of the economy.
D) A physical measure of the capital stock of the economy.

Question 12

Nominal GDP is affected by changes in:

A) Output only.
B) Output and prices.
C) Income transfers.
D) Prices only.

Question 13

Which of the following countries currently has the largest GDP?

A) Japan.
B) China.
C) Britain.
D) United States.

Question 14

Nominal GDP measures the:

A) Inflation-adjusted value of output.
B) Real value of output per worker.
C) Value of output produced in current prices.
D) Value of output produced in constant prices.

Question 15

Changes in real GDP serve as a better measure of the health of the economy than changes in nominal GDP because real GDP is affected by changes in:

A) Output only.
B) Prices and output.
C) Prices only.
D) Average wages.

Question 16

The economy of the United States is important because it:

A) Produces as much output as China,Japan,and Western Europe combined.
B) Produces about 20 percent of total world output.
C) Exceeds the combined production of all other countries in the world.
D) Accounts for over 20 percent of total world population.

Question 17

GDP can be found by:

A) Adding the monetary value of all final goods and services produced during a given period of time.
B) Adding the physical amount of all final goods and services produced during a given period of time.
C) Taking the difference between exports and imports during a given period of time.
D) Adding the value of all final output produced and measuring it in constant prices during a given period of time.

Question 18

Real GDP is a more accurate measure of economic growth than nominal GDP because:

A) Nominal GDP is a total dollar measurement.
B) Nominal GDP only increases because of an increase in production.
C) Nominal GDP can increase due to an increase in production or prices or both.
D) Real GDP is a measurement of the overall price level.

Question 19

The output of cell phones can be added to the output of refrigerators in order to compute GDP by:

A) Multiplying the output of each by the corresponding prices and adding these dollar values.
B) Dividing the output of each by price and adding these dollar values.
C) Adding up the physical number of cell phones and refrigerators produced.
D) Dividing dollar values of output for each by price and adding the results.

Question 20

The value of output produced in the United States in current prices measures:

A) GDP growth.
B) Real GDP.
C) Per capita GDP.
D) Nominal GDP.

Question 21

Investment includes all of the following EXCEPT:

A) The production of new factories.
B) The purchase of new machinery and equipment.
C) Money in a retirement fund.
D) Business inventories.

Question 22

Suppose during a year an economy produces $10 trillion of consumer goods,$4 trillion of investment goods,$6 trillion in government services,and has $4 trillion of exports and $5 trillion of imports.GDP would be:

A) $19 trillion.
B) $21 trillion.
C) $24 trillion.
D) $29 trillion.

Question 23

Per capita GDP will always rise when:

A) The population rises.
B) The rate of economic growth increases.
C) There is an increase in the rate at which the economy's labor force grows.
D) The rate of economic growth exceeds the rate of population growth.

Question 24

Suppose during a year an economy produces $6 trillion of consumer goods,$1 trillion of investment goods,$2 trillion in government services,and has $3 trillion of exports and $2 trillion of imports.GDP would be:

A) $8 trillion.
B) $10 trillion.
C) $12 trillion.
D) $14 trillion.

Question 25

Which of the following components of consumer spending is the most cyclical?

A) Services.
B) Agricultural goods.
C) Nondurable goods.
D) Durable goods.

Question 26

Economic growth implies that:

A) Prices have risen.
B) Total value of the output produced has increased.
C) Per capita GDP has declined.
D) Resources are limiteD.

Question 27

If output growth exceeds population growth for a country,then:

A) Average living standards will increase.
B) GDP must have grown at a very rapid rate.
C) Per capita GDP will decrease.
D) This country must have overcome the problem of scarcity.

Question 28

On average,U.S.real GDP has grown roughly _____ percent per year.

A) Two
B) Three
C) Four
D) Five

Question 29

Ceteris paribus,economic growth involves an:

A) Increase in imports.
B) Expansion of production possibilities.
C) Increase in GDP due to inflation.
D) Increase in government spending.

Question 30

When comparing GDP per capita globally,which list ranks countries correctly from largest to smallest?

A) China,India,Mexico.
B) Japan,Mexico,Haiti.
C) Mexico,France,India.
D) Greece,Japan,Indonesia.

Question 31

Which of the following is included in investment,according to economists?

A) Production of plant and machinery.
B) Purchases of corporate stock.
C) Money put into a pension fund.
D) Dollars spent in the stock market.

Question 32

According to your textbook,which of the following spending categories ranks the contribution to GDP in correct order (from largest to smallest for the United States)?

A) Consumer goods,total government purchases,investment goods,exports.
B) Consumer goods,investment goods,total government purchases,exports.
C) Investment goods,consumer goods,total government purchases,exports.
D) Total government purchases,consumer goods,investment goods,exports.

Question 33

Economic growth:

A) Is an increase in output or real GDP.
B) Causes a contraction in the production possibilities curve.
C) Involves reduced capacity in the short run.
D) Cannot be sustained over time.

Question 34

Which of the following statements is true?

A) Nominal GDP is a good measure of social welfare.
B) GDP per capita is a complete measure of social welfare.
C) Crime and pollution reduce social welfare which reduces GDP.
D) GDP is not necessarily the best measure of social welfare.

Question 35

The largest component of U.S.GDP is:

A) Government services at the federal,state and local levels combined.
B) Business investment.
C) Household consumption.
D) Net exports.

Question 36

A country's total output includes all of the following except:

A) Household consumption.
B) Business investment.
C) Imports.
D) Government services.

Question 37

If all of our GDP were distributed equally across the United States,each individual would receive:

A) Their current income divided by the U.S.population.
B) The market value of final goods and services produced in the U.S.per year.
C) The value of total world output divided by the population.
D) The market value of final goods and services produced in the U.

Question 38

Which of the following is NOT an example of investment,according to economists?

A) A business builds a new factory.
B) A private college buys a new copy machine to replace an old worn out machine.
C) A family buys $10,000 worth of bonds.
D) A department store buys additional men's jeans just before Christmas.

Question 39

Consumer goods:

A) Account for half of total U.S.output.
B) Include expenditures for durable goods,nondurable goods,and services.
C) Include government expenditure on welfare and food stamps.
D) Account for the smallest portion of U.

Question 40

Consumer goods:

A) Account for over two-thirds of total U.S.output.
B) Include nondurable goods but not durable goods.
C) Account for a smaller portion of GDP than government services.
D) Include durable and nondurable goods but not services.

Question 41

Income transfers include:

A) Food provided by a privately funded food bank.
B) Housing provided at a reduced cost by the government.
C) Free medical care provided by a retired doctor.
D) The money saved when clothing is purchased on sale.

Question 42

Which of the following is NOT true about investment goods?

A) They add to the nation's stock of capital.
B) They can be used to replace worn-out equipment.
C) They can expand the nation's production possibilities.
D) They increase the retirement benefits for individuals.

Question 43

GDP is the sum of consumption,investment,government purchases,and:

A) The factors of production.
B) Net exports.
C) Saving.
D) Capital stock.

Question 44

According to your textbook,for the United States,investment accounts for approximately _____ percent of GDP.

A) 13
B) 25
C) 35
D) 70

Question 45

As a portion of GDP,government purchases include:

A) Food stamps.
B) National defense expenditures.
C) Unemployment benefits.
D) Welfare checks.

Question 46

Government services:

A) Is larger than consumption in the United States.
B) Includes the dollars spent on income transfers.
C) Includes federal,state,and local government purchases of goods and services.
D) Equals approximately $10 trillion per year in the United States.

Question 47

The decline in employment in the farm sector in the U.S.during the 1900s can be attributed primarily to:

A) New technology that made it possible to grow more food with fewer workers.
B) An increase in the importance of the manufacturing sector.
C) Competition from imported agricultural products.
D) A decline in the amount of food consumption per person.

Question 48

Over the last century in the United States there has been an increase in _______ as a percentage of total output.

A) Construction and mining
B) Farming
C) Manufacturing
D) Services

Question 49

U.S.net exports are:

A) Equal to the value of exports minus the value of imports.
B) Positive if the U.S.imports more than it exports.
C) A larger portion of GDP than investment.
D) Always equal to zero.

Question 50

Which of the following is true about government services as a component of GDP?

A) It includes welfare benefits.
B) It includes spending on national defense.
C) It includes Social Security benefits.
D) It includes federal government spending but not state and local spending.

Question 51

The goods and services purchased from foreign sources are:

A) Investment.
B) Exports.
C) Imports.
D) Income transfers.

Question 52

Government income transfers are NOT included in the calculation of GDP because:

A) It is difficult to measure the value of these payments.
B) Most of these payments are paid to foreign immigrants.
C) These payments do not have an impact on the WHAT question.
D) These payments do not reflect the production of goods and services.

Question 53

The goods and services sold to foreign buyers are:

A) Imports.
B) Exports.
C) Income transfers.
D) Externalities.

Question 54

Over the last century in the United States there has been an increase in _______ as a percentage of total output.

A) Manufacturing,government,and services
B) Farming,international trade,and manufacturing
C) Services,government,and international trade
D) Services,farming,and construction

Question 55

Exports represent:

A) Goods and services sold to foreigners.
B) Goods and services bought from foreigners.
C) A larger number than imports for the United States.
D) A negative number when calculating GDP.

Question 56

Net exports measures the:

A) Total dollar value of U.S.exports.
B) Dollar amount of imports.
C) Quantity of goods produced abroad.
D) Dollar value of exports minus the dollar value of imports.

Question 57

Which of the following is not included in GDP as part of government services?

A) Social Security benefits.
B) Military equipment.
C) Highways and bridges.
D) Education.

Question 58

Which of the following is an example of investment,as a component of GDP?

A) The purchase of a truck by a delivery company.
B) The purchase of Ford stock by an individual saving for retirement.
C) The purchase of land by an individual.
D) The purchase of bridges and dams by the government.

Question 59

Imports:

A) Are goods and services sold to foreigners.
B) Increase the value of GDP.
C) Are a larger dollar value than exports for the United States.
D) Equal exports in dollar value for most countries.

Question 60

Which of the following expenditures is the most important in expanding a country's production possibilities?

A) Consumer goods.
B) Investment goods.
C) Government services.
D) Net exports.

Question 61

Factor mobility refers to:

A) How easily factors of production can be reallocated.
B) The quantity of resources a country has.
C) How rapidly resources depreciate.
D) The quality of the factors of production.

Question 62

Productivity measures:

A) Output per worker.
B) The dollar value of investment.
C) Final goods minus intermediate goods.
D) The total amount of goods produced in the United States.

Question 63

Which of the following contribute to high levels of U.S.production?

A) Abundant factors of production.
B) Labor-intensive production.
C) Barriers to trade.
D) Immigration restrictions.

Question 64

The growth of international trade for the United States has been enhanced by:

A) An increase in trade barriers.
B) Improved communication and transportation technologies.
C) A decline in the government and services sectors.
D) An increase in domestic manufacturing.

Question 65

Education and job training are part of:

A) Business investment spending.
B) Consumer spending on durables since the impact is long lasting.
C) Human capital investment.
D) Income transfers.

Question 66

Which of the following sectors contributes the largest amount to the U.S.GDP?

A) Farming.
B) Manufacturing.
C) Services.
D) Exports.

Question 67

The factors of production:

A) Are unlimited for the United States since the country is so wealthy.
B) Include land,capital,and money.
C) Are the resource inputs used to produce goods and services.
D) Include consumption,investment and government spending.

Question 68

Which of the following does NOT contribute to an increase in productivity?

A) Technological advances.
B) High quality of capital.
C) High quantity of labor.
D) Highly skilled labor.

Question 69

Currently,the U.S.economy is best described as:

A) A service economy.
B) A manufacturing economy.
C) An agricultural economy.
D) A government economy.

Question 70

Which of the following statements is true?

A) A country's GDP includes all output produced by its factors of production.
B) A country's GDP includes all output produced within its borders.
C) A country's GDP is equal to its exports minus its imports.
D) A country's GDP is equal to all output produced and consumed within its borders.

Question 71

Which of the following is NOT a reason why the United States is able to produce such high levels of GDP?

A) Abundant factors of production.
B) Labor-intensive production process.
C) High levels of investment in human capital.
D) High quality of capital.

Question 72

A capital-intensive production process:

A) Reduces productivity because few workers are being employed.
B) Is necessary if a country has few factors of production.
C) Uses a high ratio of capital to labor inputs.
D) Is used in poor countries.

Question 73

The factors of production include all of the following EXCEPT:

A) Money.
B) Land.
C) Labor.
D) Entrepreneurship.

Question 74

When World War II ended some resources moved easily from the production of military goods to the production of consumer goods which is referred to in economics as:

A) Production equality.
B) Capital adaptation.
C) Resource flexibility.
D) Factor mobility.

Question 75

American production is described as capital intensive,which means that:

A) Foreign investment is relatively small.
B) The ratio of machinery to labor is high.
C) The ratio of labor to machinery is high.
D) Government control of production processes is high.

Question 76

Capital intensive means:

A) The production process uses a high ratio of capital to labor inputs.
B) The production process uses a high ratio of labor to capital inputs.
C) The production process is inefficient because it requires too much capital.
D) That there are fewer jobs for workers and the economy will begin to decline.

Question 77

Which of the following plays an increasingly important role in the U.S.economy?

A) International trade.
B) Manufacturing.
C) Farming.
D) Construction and mining.

Question 78

The primary way to distinguish among corporations,partnerships,and proprietorships is by observing:

A) Ownership characteristics.
B) The size of the industry.
C) The number of firms in each classification.
D) The size of profits.

Question 79

The productivity of American workers reflects all of the following EXCEPT:

A) Capital intensity of the production process.
B) Investment in human capital.
C) High quality of capital.
D) Scarcity of plant and equipment.

Question 80

Which sector is expected to grow most rapidly for the United States in the future?

A) Farming since Americans are getting fatter.
B) Services since Americans have high relative incomes.
C) Manufacturing since Americans demand more and more luxury items.
D) Mining since Americans use a lot of natural resources.