Econ Test 1

Which of the following will NOT be included in the GDP?

a cruise on a ship registered in Norway

Everything else the same, if investment expenditures rise by $300 billion and imports increase by $300 billion, then GDP:

does not change

Net exports equal:

exports minus imports

GDP includes outputs produced_____ but it does not include outputs produced _________.

inside the United States by foreign citizens; outside the United States by U.S. citizens

Economists believe that change is investment spending are important for forecasting the business cycle becuase:

investment is a key determinant

The value of the cars that Ford Motor Company produces in a German plant:

is a part of U.S. GNP

The capital consumption allowance:

is an allowance for depreciation

One important reason economists track business investment is that:

it is a leading indicator of the business cycle

The income approach to calculating GDP includes compensation of employees plus:

corporate profits and rental income

GDP measures the final value of goods and services produced to avoid the problem of:

Double counting

Investment in structures, equipment , software, and net inventory is known as:

gross private domestic investment

Which equation summarizes the expenditures approach to measuring GDP?

GDP = C + I + G + (X-M)

The largest component of GDP is:

consumption expenditure

Which ONE of the following would be included in the GDP calculations?

a hamburger purchased by a hungry restaurant patron

The diagram that illustrates how households and businesses interact through product and resource markets is called the:

circular flow diagram

Gross private domestic investment, which consist of__________ and changes in private inventories, is an important determinant of___________.

fixed investments; swings in the business cycle

Which of the following is Not included in gross private domestic investment?

purchases of common stock

Which of the following items would be considered a durable good?

refrigerator

Which of the following is NOT a category of personal consumption expenditures?

residential housing circular

Holding other expenditures constant, if imports fall by $20 billion and exports fall by $10 billion, then GDP:

rises by $10 billion

What component of GDP includes college tuition?

services

What is an example of a final good?

bacon purchased at a grocery store

The four types of spending in GDP are personal consumer spending, ________ private domestic investment, government spending, and_________.

gross; net exports

What does M represent in the following formula? GDP = C + I + G + (X-M)

imports

A sheep ranch produces $30 worth of wool. A suit manufacturer produces $60 worth of suits. A retail outlet sells a suit to a customer for $180. The change in GDP would be:

$180

One of the key concepts involved in the circular flow diagram is that:

One person's spending is another person's income

GNP includes outputs produced___________ but it does not include outputs produced_________.

Outside the united states citizens; inside the united states by foreign citizens

Net domestic product measures:

GDP minus depreciation

Which of the following is TRUE within the circular flow of the economic activity?

Households are buyers of products and sellers of production factors.

If personal consumption is $100, investment is $25, government purchases total $25, imports equal $20, and exports equal $10, then GDP equals:

$140

The largest component of national income is:

compensation of employees

Total spending in an economy is the sum of:

Personal consumption plus gross private investment plus government spending plus net exports.

The simple circular flow diagram shows that economic aggregates can be calculated either by the_________ flows in the product market or by the__________ flowing to households in the resource market.

Spending; income

Which of the following is a criticism of the national income and product accounts?

They do not capture most nonmarket economic activity.

In the national income and product accounts system the two main approaches to measuring the size of the economy are:

income and expenditures

Which component of GDP includes inventory changes?

investment

What component of U.S GDP is usually negative in boom years?

net exports

In th national income accounts, which of the following is NOT classified as government spending?

payments to Social Security recipients

Expenditures by individuals for durable goods, nondurable goods, and services is known as:

personal consumption expenditures