MACRO MID 2
A
1. A nation's gross domestic product (GDP): A) is the dollar value of the total output produced within the borders of the nation. B) is the dollar value of the total output produced by its citizens, regardless of where they are living. C) can be found by summing C + In + S + Xn. D) is always some amount less than its C + Ig + G + Xn
B
1. An economy is enlarging its stock of capital goods: A) when net investment exceeds gross investment. B) when gross investment exceeds replacement investment. C) whenever gross investment is positive. D) when replacement investment exceeds gross investment.
C
10. The term "final goods and services" refers to: A) goods and services that are unsold and therefore added to inventories. B) goods and services whose value has been adjusted for changes in the price level. C) goods and services purchased by ultimate users, as opposed to resale or further processing. D) the excess of U.S. exports over U.S. imports.
C
32. The amount of after-tax income received by households is measured by: A) discretionary income. B) national income. C) disposable income. D) personal income.
A
32. The smallest component of aggregate spending in the United States is: A) net exports. B) government purchases. C) investment. D) consumption.
C
33. In a typical year which of the following measures of aggregate output and income is likely to be the smallest? A) gross domestic product B) national income C) disposable income D) personal income
A
33. In calculating GDP, governmental transfer payments, such as social security or unemployment compensation, are: A) not counted. B) counted as investment spending. C) counted as government spending. D) counted as consumption spending.
B
34. Nominal GDP is: A) the sum of all monetary transactions that occur in the economy in a year. B) the sum of all monetary transactions involving final goods and services that occur in the economy in a year. C) the amount of production that occurs when the economy is operating at full employment. D) money GDP adjusted for inflation.
C
34. The largest component of total expenditures in the United States is: A) net exports. B) government purchases. C) consumption. D) gross investment.
A
35. Government purchases include government spending on: A) government consumption goods and public capital goods. B) government consumption goods only. C) public capital goods only. D) government consumption goods, public capital goods, and transfer payments.
D
35. The term "real GDP" refers to: A) the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. B) GDP data that embody changes in the price level, but not changes in physical output. C) GDP data that reflect changes in both physical output and the price level. D) GDP data that have been adjusted for changes in the price level.
A
36. In national income accounting, government purchases include: A) purchases by Federal, state, and local governments . B) purchases by the Federal government only. C) government transfer payments. D) purchases of goods for consumption, but not public capital goods.
B
36. Real GDP measures: A) current output at current prices. B) current output at base year prices. C) base year output at current prices. D) base year output at current exchange rates.
C
37. Nominal GDP is adjusted for price changes through the use of: A) the Consumer Price Index (CPI). B) the Producer Price Index (PPI). C) the GDP price index. D) exchange rates.
B
37. Transfer payments are: A) excluded when calculating GDP because they only reflect inflation. B) excluded when calculating GDP because they do not reflect current production. C) included when calculating GDP because they are a category of investment spending. D) included when calculating GDP because they increase the spending of recipients.
A
38. A price index is: A) a comparison of the price of a market basket from a fixed point of reference. B) a comparison of real GDP in one period relative to another. C) the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period. D) a ratio of real GDP to nominal GDP.
C
38. The value of U.S. imports is: A) added to exports when calculating GDP because imports reflect spending by Americans. B) subtracted from exports when calculating GDP because imports do not constitute spending by Americans. C) subtracted from exports when calculating GDP because imports do not constitute production in the United States. D) added when calculating GDP because imports do not constitute production in the United States.
D
39. In the treatment of U.S. exports and imports, national income accountants: A) subtract exports, but add imports, in calculating GDP. B) subtract both exports and imports in calculating GDP. C) add both exports and imports in calculating GDP. D) add exports, but subtract imports, in calculating GDP.
D
39. The GDP price index: A) includes fewer goods and services than the consumer price index. B) is identical to the consumer price index. C) is another term for the producer price index. D) includes all goods comprising the nation's domestic output.
C
11. If intermediate goods and services were included in GDP: A) the GDP would then have to be deflated for changes in the price level. B) nominal GDP would exceed real GDP. C) the GDP would be overstated. D) the GDP would be understated.
C
12. Which of the following is a final good or service? A) diesel fuel bought for a delivery truck B) fertilizer purchased by a farm supplier C) a haircut D) Chevrolet windows purchased by a General Motors assembly plant
C
13. Which of the following is an intermediate good? A) the purchase of gasoline for a ski trip to Colorado B) the purchase of a pizza by a college student. C) the purchase of baseball bats by a professional baseball team. D) the purchase of jogging shoes by a professor
C
14. Tom Atoe grows tomatoes for home consumption. This activity is: A) excluded from GDP in order to avoid double counting. B) excluded from GDP because an intermediate good is involved. C) productive but is excluded from GDP because no market transaction occurs. D) included in GDP because it reflects production.
D
15. GDP includes: A) neither intermediate nor final goods. B) both intermediate and final goods. C) intermediate, but not final, goods. D) final, but not intermediate, goods.
C
16. "Value added" refers to: A) any increase in GDP that has been adjusted for adverse environmental effects. B) the excess of gross investment over net investment. C) the difference between the value of a firm's output and the value of the inputs it has purchased from others. D) the portion of any increase in GDP that is caused by inflation as opposed to an increase in real output.
B
16. GDP can be calculated by summing: A) consumption, investment, government purchases, exports, and imports. B) investment, government purchases, consumption, and net exports. C) consumption, investment, wages, and rents. D) consumption, investment, government purchases, and imports.
B
17. Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is: A) $110. B) $30. C) $40. D) $70.
B
17. In national income accounting, consumption expenditures include purchases of: A) both new and used consumer goods. B) automobiles for personal use, but not houses. C) consumer durable and nondurable goods, but not services. D) consumer nondurable goods and services, but not consumer durable goods.
C
18. In national income accounting, consumption expenditures include: A) purchases of both new and used consumer goods. B) consumer durable goods and consumer nondurable goods, but not services. C) consumer durable goods, consumer nondurable goods, and services. D) changes in business inventories.
C
18. Setup Corporation buys $100,000 of sand, rock, and cement to produce redi-mix concrete. It sells 10,000 cubic yards of concrete at $30 a cubic yard. The value added by Setup Corporation is: A) $300,000. B) $100,000. C) $200,000. D) zero dollars.
D
19. By summing the values added at each stage in the production of some good we obtain: A) the price of that good. B) the total income generated by that good's production. C) the total cost (including profits) of that product. D) all of the above.
C
19. Net exports are: A) that portion of consumption and investment goods sent to other countries. B) exports plus imports. C) exports less imports. D) imports less exports.
A
2. A nation's gross domestic product (GDP): A) can be found by summing C + Ig + G + Xn. B) is the dollar value of the total output produced by its citizens, regardless of where they are living. C) can be found by summing C + S + G + Xn. D) is always some amount less than its NDP.
C
2. A nation's stock of capital goods will decline when: A) gross investment exceeds net investment. B) net investment is positive, but less than gross investment. C) depreciation exceeds gross investment. D) gross investment exceeds depreciation.
B
20. Gross investment refers to: A) private investment minus public investment. B) net investment plus replacement investment. C) net investment after it has been "inflated" for changes in the price level. D) net investment plus net exports.
B
20. Value added can be determined by: A) summing the profits of all enterprises in the economy. B) subtracting the purchase of intermediate products from the value of the sales of final products. C) calculating the year-to-year changes in real GDP. D) deflating nominal GDP.
A
21. Net exports are negative when: A) a nation's imports exceed its exports. B) the economy's stock of capital goods is declining. C) depreciation exceeds domestic investment. D) a nation's exports exceed its imports.
C
21. Which of the following best defines national income? A) income received by households less personal taxes B) the before-tax income received by households C) all incomes earned by U.S. resource suppliers for their current contributions to production D) the market value of the annual output net of consumption of fixed capital
B
22. The total amount of income earned by U.S. resource suppliers in a year is measured by: A) gross domestic product. B) national income. C) personal income. D) disposable income.
B
22. Which of the following is not economic investment? A) the purchase of a drill press by the Ajax Manufacturing Company B) the purchase of 100 shares of AT&T by a retired business executive C) construction of a suburban housing project D) the piling up of inventories on a grocer's shelf
A
23. The largest component of national income is: A) compensation of employees. B) rents. C) interest. D) corporate profits.
B
23. Which of the following do national income accountants consider to be "investment"? A) the purchase of an automobile for private, nonbusiness use B) the purchase of a new house C) the purchase of corporate bonds D) the purchase of gold coins
A
24. GDP is equal to: A) C + Ig + G + Xn. B) C + Ig + G - Xn. C) C + In + G + Xn. D) C + In + G - Xn.
B
24. The total income earned in any year by U.S. resource suppliers is measured by: A) DI. B) NI. C) PI. D) GDP.
A
25. Economists define investment to include: A) any increase in business inventories. B) the addition of cash to a savings account. C) the purchase of common or preferred stock. D) the purchase of any durable good, for example, an automobile or a refrigerator.
C
25. National income measures: A) nominal GDP after it has been inflated or deflated for changes in the value of the dollar. B) the after-tax income of resource suppliers. C) the market value or cost of the resources used in the production of the national output. D) the amount of wage, rent, interest, and profits income actually received by households.
A
26. As defined in national income accounting, investment includes: A) business expenditures on machinery and equipment. B) all consumption. C) imports, but not exports. D) all nonfood items.
B
26. Personal income is most likely to exceed national income: A) when gross and net investment are equal. B) during a period of recession or depression. C) when gross investment exceeds net investment. D) during a period of extended inflation.
D
27. If personal income exceedes national income in a particular year, we can conclude that: A) transfer payments exceeded the sum of social security contributions, corporate income taxes, and indirect business taxes. B) the sum of social security contributions, corporate income taxes, and undistributed corporate profits exceeded transfer payments. C) consumption of fixed capital and indirect business taxes exceeded personal taxes. D) transfer payments exceeded the sum of social security contributions, corporate income taxes, and undistributed corporate profits.
A
27. Suppose that inventories were $40 billion in 2000 and $50 billion in 2001. In 2001, accountants would: A) add $10 billion to other elements of investment in calculating total investment. B) subtract $10 billion from other elements of investments in calculating total investment. C) add $45 billion (= $90/2) to other elements of investment in calculating total investment. D) subtract $45 billion (= $90/2) from other elements of investment in calculating total investment.
B
28. Suppose that inventories were $80 billion in 2000 and $70 billion in 2001. In 2001, accountants would: A) add $10 billion to other elements of investment in calculating total investment. B) subtract $10 billion from other elements of investments in calculating total investment. C) add $45 billion (= $90/2) to other elements of investment in calculating total investment. D) subtract $45 billion (= $90/2) from other elements of investment in calculating total investment.
A
28. Which of the following best defines disposable income? A) income received by households less personal taxes B) the before-tax income received by households C) all income earned by resource suppliers for their current contributions to production D) the market value of the annual output net of consumption of fixed capital
D
29. Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories increased by $10 billion. GDP in year 2 is: A) $180 billion. B) $190 billion. C) $200 billion. D) $210 billion.
C
29. Which of the following is the largest dollar amount in the United States? A) disposable income B) personal income C) gross domestic product D) national income
C
3. In an economy experiencing a declining production capacity: A) the nation's stock of capital goods is expanding. B) net exports are necessarily zero. C) depreciation exceeds gross investment. D) NDP exceeds GDP.
A
3. The GDP is the: A) monetary value of all final goods and services produced within a nation in a particular year. B) national income minus all nonincome charges against output. C) monetary value of all economic resources used in producing a year's output. D) monetary value of all goods and services, final and intermediate, produced in a specific year.
B
30. Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories fell by $10 billion. GDP in year 2 is: A) $180 billion. B) $190 billion. C) $200 billion. D) $210 billion.
A
30. Which of the following is the smallest dollar amount in the United States? A) disposable income B) personal income C) gross domestic product D) national income
D
31. If the economy adds to its inventory of goods during 2001: A) gross investment will exceed net investment by the amount of the inventory increase. B) this amount should be ignored in calculating 2001's GDP. C) this amount should be subtracted in calculating 2001's GDP. D) this amount should be included in calculating 2001's GDP.
B
31. Transfer payments are included in: A) NI. B) PI. C) GDP. D) NDP.
B
4. If in some year gross investment was $120 billion and net investment was $65 billion, then in that year the country's capital stock: A) may have either increased or decreased. B) increased by $65 billion. C) increased by $55 billion. D) decreased by $55 billion.
D
4. Suppose Smith pays $100 to Jones. A) We can say with certainty that the GDP has increased by $100. B) We can say with certainty that the GDP has increased, but we cannot determine the amount. C) We can say with certainty that the nominal GDP has increased, but we can't say whether real GDP has increased or decreased. D) We need more information to determine whether GDP has changed.
D
40. If real GDP falls from one period to another, we can conclude that: A) deflation occurred. B) inflation occurred. C) nominal GDP fell. D) none of the above necessarily occurred.
D
40. In calculating the GDP national income accountants: A) treat inventory changes as an adjustment to personal consumption expenditures. B) ignore inventories because they do not represent final goods. C) subtract increases in inventories or add decreases in inventories. D) add increases in inventories or subtract decreases in inventories.
C
41. In comparing GDP data over a period of years, a difference between nominal and real GDP may arise because: A) of changes in trade deficits and surpluses. B) the length of the workweek has declined historically. C) the price level may change over time. D) depreciation may be greater or smaller than gross investment.
C
41. The ZZZ Corporation issued $25 million in new common stock in 2001. It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans. As a result, investment: A) of $7 million has occurred. B) of $25 million has occurred. C) of $18 million has occurred. D) has not occurred.
D
42. In 2001 Trailblazer Bicycle Company produced a mountain bike which was delivered to a retail outlet in November of 2001. The bicycle was sold to E.Z. Ryder in March of 2002. This bicycle is counted as: A) consumption in 2001 and as disinvestment in 2002. B) disinvestment in 2001 and as consumption in 2002. C) disinvestment in 2001 and as investment in 2002. D) investment in 2001 and as disinvestment in 2002.
C
42. In an economy experiencing persistent deflation: A) potential GDP will necessarily exceed actual GDP. B) changes in nominal GDP may either overstate or understate changes in real GDP. C) changes in nominal GDP understate changes in real GDP. D) changes in nominal GDP overstate changes in real GDP.
C
43. In determining real GDP economists adjust the nominal GDP by using the: A) national productivity index. B) wholesale (producers') price index. C) GDP price index. D) consumer price index.
A
43. In national income accounting, G stands for: A) government purchases. B) gross investment. C) government transfer payments. D) gross saving.
D
44. GDP differs from NDP in that: A) GDP is based on gross exports, while NDP is based on net exports. B) GDP includes, but NDP excludes, indirect business taxes. C) net investment is used in calculating GDP and gross investment is used in calculating NDP. D) gross investment is used in calculating GDP and net investment is used in calculating NDP.
D
44. The fact that nominal GDP has risen faster than real GDP: A) suggests that the base year of the GDP price index has been shifted. B) tells us nothing about what has happened to the price level. C) suggests that the general price level has fallen. D) suggests that the general price level has risen.
B
45. If depreciation exceeds gross investment: A) the economy's stock of capital may be either growing or shrinking. B) the economy's stock of capital is shrinking. C) the economy's stock of capital is growing. D) net investment is zero.
B
45. The consumer price index (CPI): A) is an average of the prices of all consumer goods purchased each year. B) measures changes in the prices of a market basket of some 300 goods and services purchased by urban consumers. C) measures prices of goods, but not services. D) is also known as the GDP price index.
D
46. The concept of net domestic investment refers to: A) the amount of machinery and equipment used up in producing the GDP in a specific year. B) the difference between the market value and book value of outstanding capital stock. C) gross domestic investment less net exports. D) total investment less the amount of investment goods used up in producing the year's output.
A
46. The consumer price index: A) uses a fixed market basket for all years in the series. B) is also called the GDP price index. C) measures changes in the prices of a market basket of some 50,000 goods and services. D) is adjusted monthly for changes in consumer spending patterns.
B
47. If depreciation (consumption of fixed capital) exceeds domestic investment, we can conclude that: A) nominal GDP is rising but real GDP is declining. B) net investment is negative. C) the economy is importing more than it exports. D) the economy is expanding.
A
47. If the CPI was 160 in 2001 and 40 in 1980, the cost of living was: A) 4 times higher in 2001 than in 1980. B) 25 percent higher in 2001 than in 1980. C) constant over the period. D) 4 times lower in 2001 than in 1980.
C
48. The GDP tends to: A) overstate economic welfare because it does not include certain nonmarket activities such as the productive work of housewives. B) understate economic welfare because it includes expenditures undertaken to offset or correct pollution. C) understate economic welfare because it does not take into account increases in leisure. D) overstate economic welfare because it does not reflect improvements in product quality.
D
48. When an economy's production capacity is expanding: A) nominal GDP, but not necessarily real GDP, is rising. B) net exports is always a positive amount. C) DI exceeds PI. D) domestic investment exceeds depreciation.
B
49. The growth of GDP may understate changes in the economy's economic well-being over time if the: A) distribution of income becomes increasingly unequal. B) quality of products and services improves. C) environment deteriorates because of pollution. D) amount of leisure decreases.
B
5. Consumption of fixed capital (depreciation) can be determined by: A) adding indirect business taxes to NDP. B) subtracting NDP from GDP. C) subtracting net investment from GDP. D) adding net investment to gross investment.
C
5. Suppose the total market value of all final goods and services produced in a particular country in 2001 is $500 billion and the total market value of final goods and services sold is $450 billion. We can conclude that: A) GDP in 2001 is $450 billion. B) NDP in 2001 is $450 billion. C) GDP in 2001 is $500 billion. D) inventories in 2001 fell by $50 billion.
D
50. GDP data are criticized as being inaccurate measures of economic welfare because: A) they do not take into account changes in the amount of leisure. B) they do not take into account changes in product quality. C) they do not take into account the adverse effects of economic activity on the environment. D) of all of the above considerations.
D
51. Environmental pollution is accounted for in: A) GDP. B) PI. C) DI. D) none of the above.
C
51. In 1933 net private domestic investment was a minus $6.0 billion. This means that: A) gross private domestic investment exceeded depreciation by $6.0 billion. B) the economy was expanding in that year. C) the production of 1933's GDP used up more capital goods than were produced in that year. D) the economy produced no capital goods at all in 1933.
B
52. Assume that the size of the underground economy increases both absolutely and relatively over time. As a result: A) real GDP will rise more rapidly than nominal GDP. B) GDP will tend to increasingly understate the level of output through time. C) GDP will tend to increasingly overstate the level of output through time. D) the accuracy of GDP will be unaffected through time.
C
53. (Last Word) The U.S. government agency responsible for compiling the national income accounts is the: A) Census Bureau. B) Bureau of Labor Statistics (BLS). C) Commerce Department's Bureau of Economic Analysis (BEA). D) Government Accounting Office (GAO).
A
54. (Last Word) Which of the following is a source of data for the consumption component of the U.S. GDP? A) the Census Bureau's Retail Trade Survey B) the Census Bureau's Survey of Government Finance C) the Conference Board's Index of Leading Indicators D) the Bureau of Labor Statistics Consumer Price Index
B
55. (Last Word) Which of the following is a source of data for the investment component of U.S. GDP? A) the Census Bureau's Retail Trade Survey B) the Census Bureau's Housing Starts Survey and Housing Sales Survey. C) the Conference Board's Survey of Consumer Sentiment D) the Bureau of Labor Statistics Consumer Price Index
A
6. GDP excludes: A) the market value of unpaid work in the home. B) the production of services. C) the production of nondurable goods. D) positive changes in inventories.
C
6. National income accountants can avoid multiple counting by: A) including transfers in their calculations. B) counting both intermediate and final goods. C) only counting final goods. D) only counting intermediate goods.
C
7. Gross domestic product (GDP) measures and reports output: A) as an index number. B) in percentage terms. C) in dollar amounts. D) in quantities of physical units (for example, pounds, gallons, and bushels).
D
8. GDP may be defined as: A) the monetary value of all goods and services (final, intermediate, and non-market) produced in a given year. B) total resource income less taxes, saving, and spending on exports. C) the economic value of all economic resources used in the production of a year's output. D) the market value of all final goods and services produced within a nation in a specific year.
B
9. By summing the dollar value of all market transactions in the economy we would: A) be determining the market value of all resources used in the production process. B) obtain a sum substantially larger than the GDP. C) be determining value added for the economy. D) be measuring GDP.
B
Assume a drought in the Great Plains reduces the supply of wheat. Noting that wheat is a basic ingredient in the production of bread and that potatoes are a consumer substitute for bread, we would expect the price of wheat to: A) rise, the supply of bread to increase, and the demand for potatoes to increase. B) rise, the supply of bread to decrease, and the demand for potatoes to increase. C) rise, the supply of bread to decrease, and the demand for potatoes to decrease. D) fall, the supply of bread to increase, and the demand for potatoes to increase.
B
By an "increase in demand" we mean that : A) product price has fallen so consumers move down to a new point on the demand curve. B) the quantity demanded at each price in a set of prices is greater. C) the quantity demanded at each price in a set of prices is smaller. D) a leftward shif of the demand curve has occurred.
D
Economists use the term "demand" to refer to: A) a particular price-quantity combination on a stable demand curve. B) the total amount spent on a particular commodity over a stipulated time period. C) an upsloping line on a graph that relates consumer purchases and product price. D) a schedule of various combinations of market prices and amounts demanded.
C
Economy A: gross investment equals depreciation Economy B: depreciation exceeds gross investment Economy C: gross investment exceeds depreciation 49. Refer to the above information. Positive net investment is occurring in: A) economy A only. B) economy B only. C) economy C only. D) economies A and B only.
D
Economy A: gross investment equals depreciation Economy B: depreciation exceeds gross investment Economy C: gross investment exceeds depreciation 50. Other things equal, the above information suggests that the production capacity in economy: A) B is growing more rapidly than either A or C. B) A is growing more rapidly than either B or C. Page 6 C) A is growing less rapidly than economy B. D) C is growing more rapidly than economy B.
C
Gross investment→$ 18 National income→100 Net exports→2 Personal income→85 Personal consumption expenditures→70 Saving→5 Government purchases→20 Net domestic product→105 12. The gross domestic product for the above economy is: A) $100. B) $95. C) $110. D) $107.
A
Gross investment→$ 18 National income→100 Net exports→2 Personal income→85 Personal consumption expenditures→70 Saving→5 Government purchases→20 Net domestic product→105 13. Refer to the above data. Consumption of fixed capital is: A) $5. B) $10. C) $20. D) $30.
C
Gross investment→$ 18 National income→100 Net exports→2 Personal income→85 Personal consumption expenditures→70 Saving→5 Government purchases→20 Net domestic product→105 14. Refer to the above data. Disposable income is: A) $83. B) $73. C) $75. D) $77.
A
Gross investment→$ 18 National income→100 Net exports→2 Personal income→85 Personal consumption expenditures→70 Saving→5 Government purchases→20 Net domestic product→105 15. Refer to the above data. From this information we can conclude that the sum of indirect business taxes and net foreign factor income is. A) $5 billion. B) zero. C) $1 billion. D) $15 billion.
C
If two goods are complements: A) they are consumed independently. B) an increase in the price of one will increase the demand for the other. C) a decrease in the price of one will increase the demand for the other. D) they are necessarily inferior goods.
A
Personal taxes→$ 40 Social security contributions→15 Indirect business taxes→20 Corporate income taxes→40 Transfer payments→22 U.S. exports→24 Undistributed corporate profits→35 Government purchases→90 Gross private domestic investment→75 U.S. imports→22 Personal consumption expenditures→250 Consumption of fixed capital→25 Net foreign factor income earned in the U.S.→10 10. Refer to the above data. PI is: A) $294. B) $346. C) $408. D) $437.
C
Personal taxes→$ 40 Social security contributions→15 Indirect business taxes→20 Corporate income taxes→40 Transfer payments→22 U.S. exports→24 Undistributed corporate profits→35 Government purchases→90 Gross private domestic investment→75 U.S. imports→22 Personal consumption expenditures→250 Consumption of fixed capital→25 Net foreign factor income earned in the U.S.→10 11. Refer to the above data. DI is: A) $284. B) $329. C) $254. D) $402.
B
Personal taxes→$ 40 Social security contributions→15 Indirect business taxes→20 Corporate income taxes→40 Transfer payments→22 U.S. exports→24 Undistributed corporate profits→35 Government purchases→90 Gross private domestic investment→75 U.S. imports→22 Personal consumption expenditures→250 Consumption of fixed capital→25 Net foreign factor income earned in the U.S.→10 7. Refer to the above data. GDP is: A) $390. B) $417. C) $422. D) $492. E) $512.
C
Personal taxes→$ 40 Social security contributions→15 Indirect business taxes→20 Corporate income taxes→40 Transfer payments→22 U.S. exports→24 Undistributed corporate profits→35 Government purchases→90 Gross private domestic investment→75 U.S. imports→22 Personal consumption expenditures→250 Consumption of fixed capital→25 Net foreign factor income earned in the U.S.→10 8. Refer to the above data. NDP is: A) $370. B) $402. C) $392. D) $467.
D
Personal taxes→$ 40 Social security contributions→15 Indirect business taxes→20 Corporate income taxes→40 Transfer payments→22 U.S. exports→24 Undistributed corporate profits→35 Government purchases→90 Gross private domestic investment→75 U.S. imports→22 Personal consumption expenditures→250 Consumption of fixed capital→25 Net foreign factor income earned in the U.S.→10 9. Refer to the above data. NI is: A) $364. B) $372. C) $447. D) $362.
B
The income and substitution effects account for: A) the upward sloping supply curve. B) the downward sloping demand curve. C) movements along a given supply curve. D) the "other things equal" assumption.
A
The law of demand states that: A) price and quantity demanded are inversely related. B) the larger the number of buyers in a market, the lower will be product price. C) price and quantity demanded are directly related. D) consumers will buy more of a product at high prices than at low prices.
A
The law of supply indicates that: A) producers will offer more of a product at high prices than they will at low prices. B) the product supply curve is downsloping. C) consumers will purchase less of a good at high prices than they will at low prices. D) producers will offer more of a product at low prices than they will at high prices.
D
Which of the following will cause the demand curve for product A to shift to the left? A) population growth that causes an expansion in the number of persons consuming A B) an increase in money income if A is a normal good C) a decrease in the price of complementary product C D) an increase in money income if A is an inferior good
B
Which of the following would not shift the demand curve for beef? A) a widely publicized study that indicates beef increases one's cholesterol B) a reduction in the price of cattle feed C) an effective advertising campaign by pork producers D) a change in the incomes of beef consumers
A
With a downsloping demand curve and an upsloping supply curve for a product, an increase in consumer income will: A) increase equilibrium price and quantity if the product is a normal good. B) decrease equilibrium price and quantity if the product is a normal good. C) have no effect on equilibrium price and quantity. D) reduce the quantity demanded, but not shift the demand curve.
