Question 1

The circular flow of income shows

Accepted Answer

A)   the dollar value of output is less than the total income.
B)   the dollar value of output is more than the total income because of the existence of profits.
C)   the dollar value of output is exactly equal to the total income.
D)   the dollar value of output is more or less than the total income, depending on whether profits are positive or negative.E) A) and C)
F) B) and C)

Question 2

-According to the above table, net domestic product (NDP)  is

Accepted Answer

A)   $1,995.
B)   $2,265.
C)   $2,550.
D)   $2,850.E) A) and C)
F) A) and D)

Question 3

Which of the following transactions is included in GDP?

Accepted Answer

A)   funds given to a college student by her parents
B)   funds received by a college student for working in the college dining hall
C)   funds given to a family on welfare
D)   Social Security check received by an elderly coupleE) None of the above
F) C) and D)

Question 4

A capital good is

Accepted Answer

A)   one produced by the government.
B)   part of investment spending when purchased by either private businesses or by the federal government.
C)   one that is purchased in order to make other goods and services.
D)   not part of Gross Domestic Product (GDP)  because it is an intermediate product.E) A) and B)
F) B) and C)

Question 5

Which of the following will be included in this year's GDP?

Accepted Answer

A)   a Pablo Picasso (1881-1973)  painting purchased this year by the art museum
B)   the purchase of a used textbook by your friend
C)   the purchase of 100 shares of Google stock through your broker
D)   the purchase of an insurance policy for your homeE) A) and D)
F) A) and C)

Question 6

The total market value of the nation's annual final products produced domestically best defines the

Accepted Answer

A)   GDP.
B)   GNP.
C)   CPI.
D)   PPI.E) A) and C)
F) None of the above

Question 7

GDP minus depreciation equals

Accepted Answer

A)   national income.
B)   aggregate spending.
C)   personal income.
D)   net domestic product.E) A) and B)
F) All of the above

Question 8

Why are exports added to (rather than subtracted from)  the other expenditure components to arrive at GDP using the expenditure method?

Accepted Answer

A)   because exports account for those goods that were produced in the economy but that were not devoted to domestic consumption, used for domestic investment, or provided as government goods
B)   because exports have a higher profit margin for manufacturers than do similar products sold in domestic markets
C)   because exported goods are not valued properly, due to problems with the purchasing power parity index
D)   because it is only through exporting that we can generate jobs in our own economyE) None of the above
F) All of the above

Question 9

To compute national income, which of the following items are added to net domestic product (NDP) ? I. business income adjustments net of indirect business taxes and transfers
II)  capital consumption allowance
III)  U.S. net income earned abroad

Accepted Answer

A)   I only
B)   II only
C)   both I and III
D)   both II and IIIE) A) and C)
F) All of the above

Question 10

Fixed investment includes

Accepted Answer

A)   business spending on plant and equipment.
B)   business spending on printing paper.
C)   business salaries.
D)   labor union contracts.E) A) and B)
F) B) and D)

Question 11

Consider the following: Farmer Jones bought seed and fertilizer for $100.
He grew wheat that he sold to the Acme Bread Company for $200.
Acme Bread produced and sold bread to the ABC Grocery Store for $250.
Consumers bought the bread from the grocery for $350.
How much was added to the GDP?

Accepted Answer

A)   $700
B)   $800
C)   $350
D)   $600E) None of the above
F) A) and B)

Question 12

Excluding indirect business taxes and depreciation, Gross Domestic Income (GDI)

Accepted Answer

A)   is the sum of all income paid to the factors of production.
B)   never equals GDP.
C)   would equal GDP if there was no depreciation.
D)   cannot be computed.E) All of the above
F) A) and C)

Question 13

U.S. Gross Domestic Product (GDP)  does NOT include which of the following?

Accepted Answer

A)   business investment in the United States
B)   the value of goods produced in Mexico by a U.S. owned firm
C)   U.S. exports to other countries
D)   the purchase of all final goods and services by U.S. householdsE) A) and B)
F) None of the above

Question 14

Suppose 2010 is the base year. From 2010 to 2018, the price index increases from 100 to 102.5. If nominal Gross Domestic Product (GDP)  is $2,800 in 2018, then the real Gross Domestic Product (GDP)  in 2018 is

Accepted Answer

A)   $2,700.
B)   $2,800.
C)   $2,732.
D)   $2,870.E) All of the above
F) A) and B)

Question 15

Net exports for the United States

Accepted Answer

A)   are always positive numbers.
B)   may be negative.
C)   are a result of decreasing investment in the manufacturing industries.
D)   are a result of decreasing domestic consumption.E) All of the above
F) A) and B)

Question 16

If a firm produces more output than it sells, there will be I. An increase in the firm's inventories
II)  An increase in the gross private investment of the nation

Accepted Answer

A)   I only
B)   II only
C)   Both I and II
D)   Neither I nor IIE) B) and C)
F) A) and D)

Question 17

Many economists argue that real GDP is

Accepted Answer

A)   not a good measure of economic well-being because it overvalues increases in leisure time.
B)   not a good measure of economic well-being because it excludes increases in leisure time.
C)   a good measure of economic well-being because it includes increases in leisure time.
D)   a good measure of economic well-being because it includes changes in personal safety.E) A) and D)
F) C) and D)

Question 18

Net domestic product (NDP)  is

Accepted Answer

A)   Gross Domestic Product (GDP)  minus depreciation.
B)   Gross Domestic Product (GDP)  minus private investment.
C)   Gross Domestic Product (GDP)  minus the foreign sector.
D)   Gross Domestic Product (GDP)  minus government transfers.E) None of the above
F) All of the above

Question 19

-Refer to the above table. Real GDP in 2017 is

Accepted Answer

A)   146.4.
B)   682.9.
C)   700.
D)   717.5.E) None of the above
F) A) and B)

Question 20

Which of the following is included in GDP?

Accepted Answer

A)   A newly laid-off worker receives his $400 unemployment compensation check from the state government.
B)   A college senior receives a $1,000 graduation gift from a grandparent.
C)   You buy a $12 snow shovel to have on hand for the next snow storm.
D)   You purchase $300 worth of clothes from a thrift shop selling second-hand clothing.E) All of the above
F) A) and B)

Exam 8: Measuring the Economys Performance

Net domestic product (NDP) is

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A capital good is

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Fixed investment includes

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Consider the following: Farmer Jones bought seed and fertilizer for $100. He grew wheat that he sold to the Acme Bread Company for $200. Acme Bread produced and sold bread to the ABC Grocery Store for $250. Consumers bought the bread from the grocery for $350. How much was added to the GDP?

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GDP minus depreciation equals

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To compute national income, which of the following items are added to net domestic product (NDP) ? I. business income adjustments net of indirect business taxes and transfers II) capital consumption allowance III) U.S. net income earned abroad

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If a firm produces more output than it sells, there will be I. An increase in the firm's inventories II) An increase in the gross private investment of the nation

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U.S. Gross Domestic Product (GDP) does NOT include which of the following?

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The total market value of the nation's annual final products produced domestically best defines the

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The circular flow of income shows

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Net exports for the United States

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-Refer to the above table. Real GDP in 2017 is

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Which of the following is included in GDP?

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Excluding indirect business taxes and depreciation, Gross Domestic Income (GDI)

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Many economists argue that real GDP is

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-According to the above table, net domestic product (NDP) is

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Suppose 2010 is the base year. From 2010 to 2018, the price index increases from 100 to 102.5. If nominal Gross Domestic Product (GDP) is $2,800 in 2018, then the real Gross Domestic Product (GDP) in 2018 is

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Why are exports added to (rather than subtracted from) the other expenditure components to arrive at GDP using the expenditure method?

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Which of the following will be included in this year's GDP?

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Which of the following transactions is included in GDP?

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