Deck 7: The First Step Into Macroeconomics

Question 1

In GDP calculations,the work of stay-at-home parents is

A) counted only for equivalent hours.
B) not counted.
C) counted as intermediate inputs.
D) counted at 50%.

Answer 1

B
Explanation: Volunteer work and unpaid domestic work are not counted in the GDP. This includes the work of stay-at-home parents.

Question 2

Volunteers in the workforce have what effect on the GDP?

A) None because they are not counted.
B) Only hours actually volunteered are counted.
C) Hours are counted at 50%.
D) Hours are counted as intermediate inputs.

Answer 2

A
Explanation: Volunteer work and unpaid domestic work are not counted in the GDP. This includes volunteer work in any business. If it is not paid, it is not counted.

Question 3

Nondefense government spending peaked in the

A) 1990s.
B) 1980s.
C) 1940s.
D) 1970s.

Answer 3

D
Explanation: Nondefense government spending on goods and services peaked in the mid-1970s.

Question 4

Nonresidential investment does NOT include

A) office chairs.
B) computers on desktops.
C) copy paper.
D) software.

Question 5

The salaries paid to government employees are an example of a government input.

Question 6

The production by American companies in foreign countries counts in U.S.GDP.

Question 7

Net exports are calculated as exports minus imports.

Question 8

The BEA is the

A) Bureau of Educational Administration.
B) Bureau of Economic Alliances.
C) Bureau of Economic Analysis.
D) Bureau of Educational Analysis.

Question 9

Government investment includes all purchases of long-lived assets such as tanks and planes.

Question 10

In a BLS study,the average adult spends __________ per day on unpaid work.

A) 1.5 hours
B) 3.5 hours
C) 0 hours
D) 5 hours

Question 11

The main statistical agencies in Washington are

A) the Federal Bureau of Investigation, the Central Intelligence Agency, the Bureau of Economic Analysis, and the National Labor Relations Board.
B) the Bureau of Economic Analysis, the Bureau of Labor Statistics, the Census Bureau, and the Federal Reserve Board.
C) the National Labor Relations Board, the Drug Enforcement Agency, and the Internal Revenue Service.
D) the U.S. Department of Agriculture, the Federal Trade Commission, the Food and Drug Administration, and the Census Bureau.

Question 12

Nonresidential investment is part of the GDP calculation.

Question 13

The underground economy includes

A) self-employed workers.
B) babysitters paid in cash.
C) babysitters on a payroll.
D) landscapers.

Question 14

Macroeconomics is the study of specific parts of the economy.

Question 15

Only final goods and services count in calculating the GDP.

Question 16

The output of a government is equal to government consumption plus government investment.

Question 17

The gross domestic product is the dollar value of the output of the national economy.

Question 18

Personal consumption accounted for $10.3 billion in 2010 in the United States.

Question 19

Goods that are produced but not immediately sold

A) do not count in the GDP.
B) count in the GDP as a change in private inventories.
C) count in the GDP as intermediate input.
D) count in the GDP as private investment.

Question 20

The production of an Intel factory in Ireland

A) counts in the U.S. GDP.
B) counts in the Irish GDP.
C) counts in both GDPs.
D) is subtracted from Intel's U.S. production for U.S.GDP calculations.

Question 21

The GDP includes government consumption such as

A) Social Security.
B) Medicare.
C) Medicaid.
D) Office products.

Question 22

If gross domestic purchases are _________,then net exports are __________.

A) greater than gross domestic product; greater than net imports
B) equal to zero; also equal to zero
C) greater than gross domestic product; positive
D) less than gross domestic product; positive

Question 23

Which component of GDP captures goods that are produced but not sold in a given year?

A) Personal consumption.
B) Nonresidential investment.
C) Changes in private inventories.
D) Net exports.

Question 24

In the late 1930s,military planners needed to know the size of the economy so they could determine

A) the tax base in case of war.
B) how many tanks and planes the economy could produce.
C) the military budget for the next five years.
D) whether military spending was too large.

Question 25

Using the GDP to measure the economy began

A) in the 1930s.
B) during the Ford administration.
C) after World War II.
D) as part of the Great Society legislation.

Question 26

The biggest category of business investment spending today is

A) trucks.
B) software.
C) computers.
D) residential structures.

Question 27

Which does NOT belong in GDP?

A) Salaries for government employees.
B) New trays purchased by a company for use in the cafeteria.
C) Tractors purchased by a farmer.
D) Police salaries in Toledo, Ohio.

Question 28

GDP per capita means

A) gross domestic product per business.
B) gross domestic product per employee.
C) gross domestic product per person.
D) gross domestic product per dollar in revenue.

Question 29

In 2010,the country with the highest GDP per capita in the world was

A) India.
B) China.
C) The United States.
D) Norway.

Question 30

If a foreign car manufacturer builds a plant in the United States,the new plant will

A) Increase the GDP by the amount produced.
B) Have no effect on the GDP because it is a foreign company.
C) Decrease the GDP by the amount produced because of foreign ownership.
D) Increase the GDP by the net exports of the company.

Question 31

Since the 1950s,nonresidential investment has

A) changed as we invest more in software and computers than buildings.
B) not changed.
C) declined.
D) decreased substantially.

Question 32

Which is NOT an example of an intermediate input?

A) A new chair for a restaurant dining room.
B) Toilet paper used in an office.
C) A computer chip factory built in Arizona.
D) Electricity used in a school.

Question 33

The Bureau of Labor Statistics is responsible for

A) regulating accounting standards.
B) gathering various employment statistics.
C) administering the U.S. census.
D) calculating net marginal product for private businesses.

Question 34

GDP stands for

A) gross domestic price.
B) general domestic product.
C) gross detailed product.
D) gross domestic product.

Question 35

Net exports are

A) exports divided by population.
B) exports minus marginal product.
C) exports minus imports.
D) exports minus debt.

Question 36

One of the only purchases a business can make that counts directly in the GDP is

A) Software.
B) Copy paper.
C) Pencils.
D) Pens.

Question 37

Simon Kuznets was

A) a contemporary of Albert Einstein's who is responsible for the theory of economic relativity.
B) the Secretary of the Treasury that helped pull the country out of the Great Depression.
C) an award-winning hip-hop artist.
D) the first economist to construct an overall measurement of the U.S. economy.

Question 38

Government consumption includes all

A) salaries paid to factory workers.
B) fuel for nuclear submarines.
C) cola served in a company cafeteria.
D) pencils bought by a private university.

Question 39

If goods are produced domestically but sold overseas,

A) they are not counted in our GDP.
B) they are still counted in our GDP.
C) they are counted in our GDP and in the GDP of the country in which they were sold.
D) they are considered intermediate inputs.

Question 40

Gross domestic product does NOT include

A) personal consumption.
B) intermediate inputs.
C) residential investment.
D) net exports.

Question 41

Which of the following describes an intermediate input?

A) A business-to-business sale where the product is used in the production process.
B) A business-to-consumer sale included in the GDP.
C) A wholesale transaction.
D) The production of a good that has not yet been sold or delivered.

Question 42

Imports enter the GDP

A) with a positive sign.
B) with a negative sign.
C) as an addition to changes in private inventories.
D) as a subtraction from consumption.

Question 43

Which of the following is NOT an element of the underground economy?

A) Off-the-books babysitting.
B) Illegal drug deals.
C) Commissioned salespeople.
D) Cash-only under-the-table businesses.

Question 44

In 2010,Brazil had a population of roughly 200 million people and a GDP of approximately $2.2 trillion.This means that GDP per capita in Brazil was approximately

A) $91.
B) $11,000.
C) $11.
D) $91,000.

Question 45

The term "gross domestic purchases" refers to

A) the amount spent by U.S. consumers, business, and government on final goods and services.
B) the amount spent only by U.S. consumers on final goods and services.
C) the amount spent only by businesses on final goods and services.
D) the amount spent only by government on final goods and services.

Question 46

The GDP per capita tells us

A) the amount of output each person would get if the economic pie were sliced evenly.
B) the amount of output each worker would get if the economic pie were sliced evenly.
C) the ratio of the maximum amount of output any person gets to the minimum amount of output each person gets.
D) the average amount of output each person gets, adjusted for inequality.

Question 47

When companies add to their inventories,

A) the amount of the change gets added to the GDP.
B) the amount of the change gets subtracted from the GDP.
C) the amount of the change has no effect on the GDP.
D) net exports go up.

Question 48

When companies reduce their inventories,

A) the amount of the change gets added to the GDP.
B) the amount of the change gets subtracted from the GDP.
C) the amount of the change has no effect on the GDP.
D) net exports go up.

Question 49

In 2010,the United States imported about __________ of goods and services.

A) $2.3 trillion
B) $1.8 trillion
C) $2.3 billion
D) $14.7 trillion

Question 50

Official GDP numbers do not include the activity of the __________ economy,which includes illegal activities and off-the-book transactions.

A) underground
B) barter
C) unofficial
D) laissez-faire

Question 51

The economy of the United States is roughly __________ the economy of China.

A) twice as large as
B) half as large as
C) equal in size to
D) halfway interconnected to

Question 52

Gross domestic product (GDP)is the __________ of the total output of the economy in a given year.

A) quantity
B) physical volume
C) dollar value
D) physical weight

Question 53

GDP is defined as the dollar value of __________ in a given year.

A) the total output of the economy
B) all of the inputs used in the economy
C) all intermediate and final goods produced in the economy
D) the total purchases made in the economy

Question 54

Which country has a higher GDP per capita than the United States?

A) China.
B) Switzerland.
C) Norway.
D) All three of these countries have a higher GDP per capita than does the United States.

Question 55

How are net exports calculated?

Question 56

According to most estimates,the size of the "underground" economy in the United States could be as large as

A) The "above-ground" economy.
B) The economy of China.
C) 10% of GDP.
D) The state of Rhode Island.

Question 57

Exports are

A) goods and services produced in foreign countries by U.S. companies.
B) goods and services produced in the United States and sold outside the United States.
C) goods and services produced in foreign countries by foreign companies.
D) goods and services produced in foreign countries and sold in the United States.

Question 58

What six items make up the gross domestic product figure?

Question 59

Which of the following does not count as personal consumption?

A) Gambling losses.
B) Spending on education.
C) Bequests to a hospital.
D) Tax payments.

Question 60

Which of the following is the correct formula for net exports?

A) Net exports = Imports - Exports.
B) Net exports = Exports - Imports.
C) Net exports = Imports + Exports.
D) Net exports = (- Imports) + (- Exports).

Question 61

What is macroeconomics?

Question 62

What is included in government consumption and investment when calculating the GDP?

Question 63

The GDP does not include the nonmarket economy.What is this,and why isn't it included?