Macroeconomics

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.

C

Suppose that an economy's labor productivity and total worker-hours each grew by 4 percent between Year 1 and Year 2. We could conclude that this economy's a) real GDP also increased by 4 percent. b) real GDP remained constant. c) production possibilities curve shifted outward. d) capital stock increased by 4 percent.

C

Suppose the total monetary value of all final goods and services produced in a particular country in a year is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that a) GDP that year is $450 billion. b) NDP is $450 billion. c) GDP that year is $500 billion. d) inventories fell by $50 billion.

C

The income amount used for "Rents" in the national accounts is net rent, so it is a) gross rental income plus appreciation of the rental property. b) gross rental income plus appreciation of the neighborhood. c) gross rental income minus depreciation of the rental property. d) gross rental income minus depreciation of the neighborhood.

C

Veterans' payments are excluded from GDP calculations because they are a) a private transfer payment. b) an interstate transfer payment. c) a public transfer payment. d) None of the answers are correct.

C

Refer to the accompanying data (all figures in billions of dollars). The gross domestic product for this economy is a) $100. b) $95. c) $110. d) $107.

$110

A business buys $1,000 worth of inputs from other firms in order to produce a product. The business makes 500 units of the product and each of them sells for $3. The value added by the business to these products is a) $500. b) $1,000. c) $15. d) $15,000.

A

A competitive market system a) encourages growth by allowing producers to make profitable investment decisions based on market signals. b) encourages growth by ensuring that everyone in society will receive a decent standard of living. c) discourages growth because firms busy competing have no time to innovate or invest. d) discourages growth unless government protects domestic firms from foreign competition.

A

A nation's gross domestic product (GDP) a) is the dollar value of all final output produced within the borders of the nation during a specific period of time. b) is the dollar value of all final 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 C + Ig + G + Xn.

A

A transfers of funds from one private individual to another private individual without any production taking place is a(n) a) private transfer payment. b) intrastate transfer payment. c) public transfer payment. d) None of the answers are correct.

A

Expenditures on the research and development (R&D) of new productive technologies a) are included in Ig. b) are not included in Ig. c) are included in changes in inventories. d) are included in the "tools" category in Investment.

A

If intermediate goods and services were included in GDP, a) then GDP would be overstated. b) then GDP would have to be deflated for changes in the price level. c) nominal GDP would exceed real GDP. d) then GDP would be understated.

A

National income accountants consider services to be an intangible act or use for which a consumer, firm, or government is willing to pay. a) True b) False

A

Purchasing a two-year-old, secondhand laptop contributes nothing to this year's GDP. a) True b) False

A

The income approach to national income accounting lists "Rents" as one of the components. All of the following statements about "rents" are correct except a) rents include the interest paid to the suppliers of loans used to purchase capital. b) rents include lease payments corporations pay for the use of office space. c) rents include monthly payments tenants make to landlords. d) rents include gross rental income minus depreciation of the rental property.

A

To manage the problem of adding dissimilar items when calculating GDP, the BEA a) adds the monetary values of each final good or service produced. b) uses the measurement of weight, adding the pounds of each final good or service produced. c) uses the measurement of height, adding the inches of each final good or service produced. d) goes ahead and adds apples and oranges, adding the numbers of each final good and service produced.

A

Which Scottish inventor perfected an efficient steam engine, and thus is credited with starting the Industrial Revolution? a) James Watt b) Adam Smith c) Karl Marx d) David Hume

A

Which of the following statements about a growing economy is incorrect? a) A growing economy is just like a static economy in that it cannot consume more today without sacrificing its capacity to produce more in the future. b) A growing economy eases the burden of scarcity in the nation. c) A growing economy helps a nation attain its economic goals. d) A nation with a growing economy enjoys relaxed constraints on production and helps an economy undertake new endeavors.

A

Which of the following will NOT be included in U.S. GDP? a) the value of avocados grown in Mexico and shipped to your local grocery store b) the value of paper towels made at the P&G plant in Missouri c) the value of a Boeing 787 Dreamliner made in South Carolina d) the value of a checkup with your doctor

A

By summing the dollar value of all monetary transactions in the economy, we would a) determine the market value of all resources used in the production process. b) obtain a sum substantially larger than GDP. c) determine the value added for the economy. d) measure GDP.

B

GDP is the a) national income minus all private transfer payments. b) monetary value of all final goods and services produced within the borders of a nation in a particular year. 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

National income accountants can avoid multiple counting by a) including transfer payments in their calculations. b) only counting final goods. c) counting both intermediate and final goods. d) only counting intermediate goods.

B

The Bureau of Economic Analysis compiles the NIPA accounts. The letters NIPA represent a) National Inflation and Production Assessment. b) National Income and Product Accounts. c) Net Income of Production Analysis. d) National Incorporation for Professional America.

B

The agency responsible for compiling the National Income and Product Accounts for the U.S. economy is the a) Council of Economic Advisers. b) Bureau of Economic Analysis. c) National Bureau of Economic Research. d) Bureau of Labor Statistics.

B

The money paid by private businesses to the suppliers of loans used to purchase capital is called a) depreciation. b) interest. c) rents. d) a transfer payment.

B

The nation of Eritrea experienced growth of real GDP of 1.3 percent with a population growth rate of 3.8 percent, therefore, Eritrea a) experienced a 5.1 percent increase in real GDP per capita. b) had a 2.5 percent decline in real GDP per capita. c) experienced a 2.5 percent increase in real GDP per capita. d) had a 5.1 percent decline in real GDP per capita.

B

Transfer payments are not included in government purchases because a) they are included in personal consumption expenditures. b) such payments generate no production. c) households that receive transfer payments usually spend the money very quickly. d) All of the answers are correct.

B

U.S. GDP growth statistics may understate the gain in well-being, a) since there is not as much time available for leisure as there was years ago. b) since products have greatly improved over time. c) if growth creates a more stressful work environment. d) if growth debases the physical environment and excessively warms the planet.

B

What percentage of the U.S. adult population has a college or postcollege education (as of 2020)? a) 8 percent b) 38 percent c) 51 percent d) 86 percent

B

Buying new furniture for your home would increase a) consumer services and subsequently personal consumption expenditures. b) consumer nondurable goods and consequently personal consumption expenditures. c) consumer durable goods and therefore personal consumption expenditures. d) changes in inventory and therefore gross domestic private investment.

C

Economies of scale refers to a) the idea that proprietorships are less bureaucratic and therefore more efficient than corporations. b) public investments in highways, schools, utilities, and such. c) the fact that large producers may be able to use more efficient technologies than smaller producers. d) the reallocation of labor from less productive to more productive uses.

C

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, rather than for resale or further processing. d) the excess of U.S. exports over U.S. imports.

C

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).

C

Human-made resources that are referred to as "recipes" includes a) changes in inventory. b) the cost of new equipment for a factory. c) spending on new writing that increases the flow of entertainment and education. d) consumption of fixed capital.

C

(LAST WORD) Which of the following is not a reason for women's increased labor-force participation? a) Service industries—teaching, nursing, and office work—that traditionally have employed many women have expanded rapidly in the past several decades. b) The population has shifted from farms and rural regions to urban areas, where jobs for women are more abundant and more geographically accessible. c) Discrimination and other occupational barriers to professions have eroded, resulting in more women becoming managers, lawyers, professors, physicians, and entrepreneurs. d) There has been an increase in the number of jobs requiring a college degree.

D

Compensation of employees a) is paid as wages and salaries by business and government to their employees. b) includes payments by employers into social insurance. c) includes payments into private pension, health, and welfare funds for workers. d) All of the answers are correct.

D

Government purchases include a) federal government expenditures, but not state and local government expenditures. b) state and local government expenditures, but not federal government expenditures. c) just state expenditures, not federal or local government expenditures. d) federal, state, and local government expenditures.

D

Interest consists of the money households receive on a) corporate bonds. b) certificates of deposit (CDs). c) savings deposits. d) All of the answers are correct.

D

Suppose Smith pays $100 to Jones. a) We can say with certainty that GDP has increased by $100. b) We can say with certainty that GDP has increased, but we cannot determine the amount. c) We can say with certainty that nominal GDP has increased, but we cannot say whether real GDP has increased or decreased. d) We need more information to determine whether GDP has changed.

D

Which of the following is not a supply factor in economic growth? a) the stock of capital b) technological advance c) the size and quality of the labor force d) aggregate expenditures of households, businesses, and government

D