Macroeconomics Ch 8

Which of these do we subtract from GDP to obtain national income? A. Consumption B. Depreciation C. Investment

A. Consumption

The difference between the price the firm sells a good for and the price the firm paid other firms for intermediate goods is called A. value added B. producer surplus. C. fixed investment. D. profit.

A. value added

Which of the following goods and services would be excluded from personal consumption expenditures in the Bureau of Economic Analysis (BEA) statistics? A. Education B. A new house C. A haircut

B. A new house

When a significant fraction of the domestic production takes place in foreign-owned facilities, a country's difference between GDP and GNP is as follows: A. GDP will be almost identical to GNP B. GDP will be much larger than GNP C. GNP will be much larger than GDP

A. GDP will be almost identical to GNP

To calculate personal income from national​ income, which of the following must the BEA​ do? A. add government transfer payments B. add profits C. add corporate retained earnings D. All of the above.

A. add government transfer payments

The best measure of the income households actually have available to spend is: A. disposable personal income B. gross domestic product C. national income

A. disposable personal income

The GDP per capita is computed by dividing a country's: A. real GDP by its population B. real GDP by its labor force C. nominal GDP by its labor force

A. real GDP by its population

In calculating​ GDP, which levels of government spending are included in government​ purchases? A. spending by​ federal, state, and local governments B. spending by the federal government and some state​ governments, but not local governments C. spending by the federal government only D. spending by governments only on national​ security, social​ welfare, and other national programs

A. spending by​ federal, state, and local governments Your answer is correct.

Which of the following is included in the​ economist's definition of​ investment? A. the purchase of new​ machines, factories, or houses B. the purchase of a share of stock C. the purchase of a rare coin or a deposit in a savings account D. All of the above

A. the purchase of new​ machines, factories, or houses This is the correct answer.

What happens if we measure GDP by adding up the value of every good and service produced in the​ economy? A. This is the correct measure of real GDP but not nominal GDP. B. GDP is overestimated because of double counting. C. This is the correct measure of nominal GDP but not real GDP. D. GDP is underestimated because of double counting.

B. GDP is overestimated because of double counting. This is the correct answer.

Which of the following is not a shortcoming of GDP as a measure of​ well-being? A. GDP is not adjusted for the effects of pollution caused by the production of goods and services. B. GDP only counts final goods and services and not intermediate goods. C. GDP is not adjusted for crime and other social problems. D. GDP does not include the value of leisure.

B. GDP only counts final goods and services and not intermediate goods.

Over​ time, prices may change relative to each other. To take this change into​ account, the Bureau of Economic Analysis calculates A. real GDP using the prices in the current year. B. real GDP using chain weights. C. real GDP and nominal GDP using only​ base-year prices. D. nominal GDP using chain weights.

B. real GDP using chain weights.

Real GDP is A. equal to the value of nominal GDP in every year except for the base year. B. the value of goods and services evaluated at base year prices. C. a measure of output that was replaced by nominal GDP some time ago. D. the value of goods and services evaluated at current year prices.

B. the value of goods and services evaluated at base year prices.

Disposable personal income is equal to A. the income households have to​ consume, save, and pay taxes. B. personal income minus government transfer payments plus personal tax payments. C. personal income minus personal tax payments. D. personal income minus Social Security payments.

C. personal income minus personal tax payments.

To calculate personal income from national income, which of the following must be done by the BEA? A. Add profits B. Add corporate retained earnings C. Add government transfer payments

C. Add government transfer payments

Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant? A. Nominal GDP B. Real GDP C. Net national product

B. Real GDP

In an economy with rising​ prices, compared to the base​ year, A. nominal GDP is equal to real GDP in years after the base year. B. nominal GDP is equal to real GDP in years before the base year. C. nominal GDP is larger than real GDP in years before the base year. D. nominal GDP is larger than real GDP in years after the base year.

D. nominal GDP is larger than real GDP in years after the base year.

According to most​ economists, is it a serious shortcoming of GDP that it does not count household production or production in the underground​ economy? A. Most economists would answer​ "no" because the purpose of measuring GDP is to see how the economy performs over fairly long periods of a decade or more. B. Most economists would answer​ "no" because these types of production do not affect the most important use of the GDP​ measure, which is to measure changes in total production over short periods of time. C. Most economists would answer​ "yes" because these types of production are likely to change significantly from one year to the next. D. Most economists would answer​ "yes" because these types of production are likely to be a large component of the economy​ (or a large percentage of measured​ GDP), especially in countries like the United States.

B. Most economists would answer​ "no" because these types of production do not affect the most important use of the GDP​ measure, which is to measure changes in total production over short periods of time.

Which of the following do we subtract from GDP to obtain national​ income? A. consumption B. depreciation C. the production of fixed capital D. investment

B. depreciation

How does the Bureau of Economic Analysis of the U.S. Department of Commerce measure GDP? A. By adding the value in dollar terms of all the final goods and services produced domestically. B. By ascribing a historic value to all of the quantities produced in the economy. C. By adding the quantities of every goods and service produced in the economy.

A. By adding the value in dollar terms of all the final goods and services produced domestically.

Household production and the underground economy A. are not considered important​ and, therefore, are not included when calculating GDP. B. are fully accounted for in the Bureau of Economic​ Analysis' estimates of GDP. C. are not accounted for in the Bureau of Economic​ Analysis' estimates of GDP. D. are an increasingly large fraction of economic activity in the United States.

C. are not accounted for in the Bureau of Economic​ Analysis' estimates of GDP

Gross domestic product is best defined as A. the total quantity of goods and services produced in a country during a period of time. B. the amount of all incomes earned by all citizens of a​ country, including those living overseas. C. the total value of all goods that can be found in a country. D. the market value of all final goods and services produced in a country during a period of​ time, typically one year.

D. the market value of all final goods and services produced in a country during a period of​ time, typically one year.