Question 1

In the circular flow model,who is a seller in the factor markets and a buyer in the product markets?

Accepted Answer

A)   Businesses.
B)   Transnational corporations.
C)   Foreign producers who export final goods and services into the U.S.
D)   Households.

Question 2

Which of the following spending is larger for U.S.GDP?

Accepted Answer

A)   State and local government.
B)   Federal government.
C)   Net exports.
D)   Change in business inventories.

Question 3

To construct GDP,exports:

Accepted Answer

A)   and imports must be subtracted.
B)   and imports must be included.
C)   must be included and imports must be ignored.
D)   must be included and imports must be subtracted.

Question 4

GDP provides substantial information about an economy's income distribution.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following would be classified as a personal consumption expenditure?

Accepted Answer

A)   All of the following.
B)   Your purchase of a newly constructed house
C)   Your purchase of a preowned house.
D)   Your purchase of one share of Microsoft stock.
E)   Your purchase of this economics course.

Question 6

The expenditure approach for the calculation of GDP includes spending on:

Accepted Answer

A)   consumption, investment, durable goods and exports.
B)   consumption, gross private domestic investment, government spending for goods and services, and exports.
C)   consumption, gross private domestic investment, government spending for goods and services, and net exports.
D)   consumption, net private domestic investment, government spending for goods and services, and net exports.
E)   consumption, gross private domestic investment, all government spending including transfer payments, and net exports.

Question 7

The three components of personal consumption expenditures are:

Accepted Answer

A)   durable goods, nondurable goods, and services.
B)   durable goods, food, and housing.
C)   durable goods, nondurable goods, and housing.
D)   durable goods, services, and food.
E)   durable goods, services, and transportation.

Question 8

Suppose in a given year,GDP was $7,242 billion and the GDP chain price index for that year is 117.5.Real GDP is:

Accepted Answer

A)   $5,488 billion.
B)   $6,163 billion.
C)   $6,740 billion.
D)   $7,789 billion. B

Question 9

Exhibit 11-9 GDP data (billions of dollars) 
   Personal consumption expenditures $4,750 Exgarts 810 Govemment spending 1,400 Social Security taxes 600 Depreciation 450 Indirect business taxes 550 Imparts 850 Gross private domestic investment 900 Corparate income taxes 200 Persanal taxes 800 Corporate profits 50 Transfer payments 700\begin{array} { | l | r | } \hline 	ext { Personal consumption expenditures } & \$ 4,750 \\hline 	ext { Exgarts } & 810 \\hline 	ext { Govemment spending } & 1,400 \\hline 	ext { Social Security taxes } & 600 \\hline 	ext { Depreciation } & 450 \\hline 	ext { Indirect business taxes } & 550 \\hline 	ext { Imparts } & 850 \\hline 	ext { Gross private domestic investment } & 900 \\hline 	ext { Corparate income taxes } & 200 \\hline 	ext { Persanal taxes } & 800 \\hline 	ext { Corporate profits } & 50 \\hline 	ext { Transfer payments } & 700 \\hline\end{array} Personal consumption expenditures  Exgarts  Govemment spending  Social Security taxes  Depreciation  Indirect business taxes  Imparts  Gross private domestic investment  Corparate income taxes  Persanal taxes  Corporate profits  Transfer payments ​$4,7508101,40060045055085090020080050700​​ 
-In Exhibit 11-9,personal income (PI) is:

Accepted Answer

A)   $9,210 billion.
B)   $8,510 billion.
C)   $6,560 billion.
D)   $6,610 billion.
E)   $10,910 billion.

Question 10

The portion of the four-sector circular flow model which shows the flow of funds from savers to borrowers is the:

Accepted Answer

A)   product market.
B)   factor market.
C)   savings market.
D)   financial market.

Question 11

Personal income is:

Accepted Answer

A)   total income received by households before taxes.
B)   the amount households have available for consumption, savings, and payment of personal taxes.
C)   national income minus corporate profits and Social Security (FIC
A)   plus transfer payments, and other income.
D)   all of the above.

Question 12

Which of the following statements is true?

Accepted Answer

A)   The inclusion of intermediate goods and services into GDP calculations would underestimate our nation's production level.
B)   The expenditures approach sums the compensation of employees, rents, profits, net interest, and nonincome expenses for depreciation and indirect business taxes.
C)   Real GDP has been adjusted for changes in the general level of prices due to inflation.
D)   Real GDP equals nominal GDP multiplied by the GDP deflator. C

Question 13

Exhibit 11-7 GDP data (billions of dollars) 
   Depreciation $438 Compensation af employees 2,000 Rental income 100 Net interest 300 Corparate profits 700 Sacial Security taxes 519 Transfer payments 650 Personal consumption exgenditures 2,582 Grass Private Domestic Investment 669 Government 5pending 815 Net exparts −7a Personal taxes 590 Indirect business taxes 450\begin{array} { | l | r | } \hline 	ext { Depreciation } & \$ 438 \\hline 	ext { Compensation af employees } & 2,000 \\hline 	ext { Rental income } & 100 \\hline 	ext { Net interest } & 300 \\hline 	ext { Corparate profits } & 700 \\hline 	ext { Sacial Security taxes } & 519 \\hline 	ext { Transfer payments } & 650 \\hline 	ext { Personal consumption exgenditures } & 2,582 \\hline 	ext { Grass Private Domestic Investment } & 669 \\hline 	ext { Government 5pending } & 815 \\hline 	ext { Net exparts } & - 7 a \\hline 	ext { Personal taxes } & 590 \\hline 	ext { Indirect business taxes } & 450 \\hline\end{array} Depreciation  Compensation af employees  Rental income  Net interest  Corparate profits  Sacial Security taxes  Transfer payments  Personal consumption exgenditures  Grass Private Domestic Investment  Government 5pending  Net exparts  Personal taxes  Indirect business taxes ​$4382,0001003007005196502,582669815−7a590450​​ 
-In Exhibit 11-7,and using the expenditures approach,gross domestic product (GDP) equals:

Accepted Answer

A)   $4,066 billion.
B)   $4,144 billion.
C)   $3,988 billion.
D)   $4,884 billion.
E)   $5,782 billion.

Question 14

Because of transactions which take place in the underground economy,the:

Accepted Answer

A)   GDP calculation tends to overstate the actual value of goods sold in the economy.
B)   GDP calculation tends to accurately portray the value of goods sold in the economy.
C)   GDP calculation tends to understate the actual value of goods sold in the economy.
D)   value of the GDP calculation will be equal to the value of the national income calculation.
E)   value of the GDP calculation through the expenditure approach will be greater then the value calculated through the income approach.

Question 15

The government (G)category of gross domestic product (GDP)excludes welfare and other transfer payments.

Accepted Answer

A) True 
 B)False

Question 16

All changes in nominal GDP are due to price changes.

Accepted Answer

A) True 
 B)False  False

Question 17

Nominal values are values measured in terms of the prices at which goods and services are actually sold.

Accepted Answer

A) True 
 B)False

Question 18

GDP measures the economy's production of:

Accepted Answer

A)   final goods and services.
B)   intermediate goods.
C)   consumer goods and services.
D)   capital goods.

Question 19

Gross domestic product (GDP)is a satisfactory measure of both economic "goods" and "bads".

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would be counted as a final good for inclusion in GDP?

Accepted Answer

A)   A piece of glass bought this year by a consumer to fix a broken window.
B)   A sheet of glass produced this year by Ford for windows in a new car.
C)   A tire produced this year and sold to a car maker for a new car sold this year.
D)   None of the above would be counted in GDP.

Exam 11: Gross Domestic Product

In the circular flow model,who is a seller in the factor markets and a buyer in the product markets?

Correct Answer
verified

Which of the following spending is larger for U.S.GDP?

Correct Answer
verified

To construct GDP,exports:

Correct Answer
verified

GDP provides substantial information about an economy's income distribution.

Correct Answer
verified

Which of the following would be classified as a personal consumption expenditure?

Correct Answer
verified

The expenditure approach for the calculation of GDP includes spending on:

Correct Answer
verified

The three components of personal consumption expenditures are:

Correct Answer
verified

Suppose in a given year,GDP was $7,242 billion and the GDP chain price index for that year is 117.5.Real GDP is:

Correct Answer
verified
B

Correct Answer
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The portion of the four-sector circular flow model which shows the flow of funds from savers to borrowers is the:

Correct Answer
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Personal income is:

Correct Answer
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Which of the following statements is true?

Correct Answer
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C

Correct Answer
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Because of transactions which take place in the underground economy,the:

Correct Answer
verified

The government (G)category of gross domestic product (GDP)excludes welfare and other transfer payments.

Correct Answer
verified

All changes in nominal GDP are due to price changes.

Correct Answer
verified
False

Nominal values are values measured in terms of the prices at which goods and services are actually sold.

Correct Answer
verified

GDP measures the economy's production of:

Correct Answer
verified

Gross domestic product (GDP)is a satisfactory measure of both economic "goods" and "bads".

Correct Answer
verified

Which of the following would be counted as a final good for inclusion in GDP?

Correct Answer
verified

Exam 11: Gross Domestic Product

In the circular flow model,who is a seller in the factor markets and a buyer in the product markets?

Correct AnswerverifiedShow Answer

Which of the following spending is larger for U.S.GDP?

Correct AnswerverifiedShow Answer

To construct GDP,exports:

Correct AnswerverifiedShow Answer

GDP provides substantial information about an economy's income distribution.

Correct AnswerverifiedShow Answer

Which of the following would be classified as a personal consumption expenditure?

Correct AnswerverifiedShow Answer

The expenditure approach for the calculation of GDP includes spending on:

Correct AnswerverifiedShow Answer

The three components of personal consumption expenditures are:

Correct AnswerverifiedShow Answer

Suppose in a given year,GDP was $7,242 billion and the GDP chain price index for that year is 117.5.Real GDP is:

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

The portion of the four-sector circular flow model which shows the flow of funds from savers to borrowers is the:

Correct AnswerverifiedShow Answer

Personal income is:

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedC

Correct AnswerverifiedShow Answer

Because of transactions which take place in the underground economy,the:

Correct AnswerverifiedShow Answer

The government (G)category of gross domestic product (GDP)excludes welfare and other transfer payments.

Correct AnswerverifiedShow Answer

All changes in nominal GDP are due to price changes.

Correct AnswerverifiedFalse

Nominal values are values measured in terms of the prices at which goods and services are actually sold.

Correct AnswerverifiedShow Answer

GDP measures the economy's production of:

Correct AnswerverifiedShow Answer

Gross domestic product (GDP)is a satisfactory measure of both economic "goods" and "bads".

Correct AnswerverifiedShow Answer

Which of the following would be counted as a final good for inclusion in GDP?

Correct AnswerverifiedShow Answer

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B

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C

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False

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