Chapter 5

The lower portion of the circular flow model contains factor markets in which households provide: labor, money, and machines. none of these. savings, spending, and investment. output of all final goods and services produced.

none of these.

The largest component of GDP as measured by the expenditure approach is: gross private investment. personal consumption. wages and salary earnings. net profits of corporations.

personal consumption.

Payments to households not in exchange for goods and services currently produced are: investment expenditures. consumption expenditures. government purchases. transfer payments.

transfer payments.

Which of the following would not be included in the gross private domestic investment (I) category of GDP? A bank's purchase of a U.S. Treasury bond. A retailer's additions to its inventories. A bakery's purchase of a new oven. Newly built residential construction.

A bank's purchase of a U.S. Treasury bond.

If you buy a brand new, American-made laptop computer to use for taking notes in your economics class, then it will be counted as: C. I. none of the following. G. (X - M).

C.

Which one of the following is not a component of GDP, as measured using the expenditure approach? Interest. Personal consumption. Exports. Government spending. Durable goods.

Interest.

Which of the following would be classified as a personal consumption expenditure? Your purchase of a newly constructed house All of the following. Your purchase of this economics course. Your purchase of one share of Microsoft stock. Your purchase of a preowned house.

Your purchase of this economics course.

Intermediate goods are goods and services used: both as inputs and final goods. by state and local governments. by the ultimate user. as inputs.

as inputs.

More than 70 percent of national income can be attributed to: rental income. net interest. corporate profit. proprietors' income. compensation of employees.

compensation of employees.

Gross private domestic investment or simply business investment spending (I): excludes all investment in the United States by foreign firms. includes all capital in the United States. includes business expenditures on new factories, tools, and machinery. includes net additions to the capital stock plus all new corporate stocks and bonds.

includes business expenditures on new factories, tools, and machinery.