Macro FINAL Ch. 5 practice quiz

Based on the circular flow model, money flows from businesses to households in A. factor markets. B. product markets. C. neither factor nor product markets. D. both factor and product markets.

a

The circular flow model does not include which of the following? A. the quantity of shoes in inventory on January 1. B. The total wages paid per month. C. The percentage of profits paid out as dividends each year. D. The total profits earned per year in the U.S. economy.

a

Disposable personal income A. is the income people spend for personal items, such as homes and cars. B. includes transfer payments. C. excludes transfer payments. D. includes personal taxes.

b

Gross domestic product data that reflect actual prices as they exist in a given year are expressed in terms of A. fixed dollars. B. current dollars. C. constant dollars. D. real dollars.

b

The GDP chain price index is A. widely reported in the news. B. broadly based. C. adjusted for government spending. D. a measure of changes in consumer prices.

b

Adding all incomes earned by households from the sale of resources yields A. intermediate goods. B. indirect business taxes. C. national income. D. personal income.

c

Which of the following statements is true? A. the inclusion of intermediate goods and services run GDP calculations would underestimate out nation's production level. B. The expenditure approach sums the compensation of employees, rents, profits, net interest, and non-income expenses for depreciation and indirect business taxes. C. Real GDP has been adjusted for changes in the general level of prices due to inflation or deflation. D. Real GDP equals nominal GDP multiplied by the GDP deflator.

c

GDP is a less-than-perfect measure of the nation's economic pulse because it A. excludes non-market transactions B. does not measure the quality of goods and services. C. does not report illegal transactions. D. all of the above are true.

d

Personal income equals disposable income plus A. personal savings. B. transfer payments. C. dividend payments. D. personal taxes.

d

Subtracting an allowance for depreciation of fixed capital from gross domestic products yields A. real GDP. B. nominal GDP. C. personal income. D. national income.

d

The dollar value of all final goods and services produce within the borders of a nation is A. GNP deflator. B. gross national product. C. net domestic product. D. gross domestic product.

d

Which of the following is a shortcoming of GDP? A. GDP measures non market transactions. B. GDP includes an estimate of illegal transactions. C. GDP includes an estimate of the value of household services. D. None of the above are true.

d

Which of the following statements is true? A. National income is total income earned by households whereas personal income is total income received by households. B. Disposable personal income equals personal income minus personal taxes. C. The expenditure approach and the income approach yield the same GDP figure. D. All of the above are true.

d

Which of the following items is included in the calculation of GDP? A. Purchase of 100 shares of General motors stock B. Purchase of a used car C. The value of a homemaker's services D. Sale of Gulf War military surplus E. None of the above would be included.

e

the expenditure approach measures GDP by adding all the expenditures for final goods made by A. households. B. businesses. C. government. D. foreigners. E. all of the above.

e