Unit 2 Chapter 6

E

In the income approach to measuring GDP, factor payments do not include a. wages and salaries for the use of labor services. b. rent for land. c. interest payments for the use of capital goods. d. profits for entrepreneurs. e. All of the above are included as factor payments.

D

Included in the investment category under the expenditure approach to GDP accounting is (are) a. additions to inventory. b. machines and tools. c. newly constructed residential housing. d. all of the above.

A

The contractionary phase of the business cycle is characterized by a. reduced output and increased unemployment. b. reduced output and reduced unemployment. c. increased output and increased unemployment. d. increased output and reduced unemployment.

C

Total spending in an economy is the sum of: A) durable goods + nondurable goods + services. B) imports - exports. C) personal consumption + gross private investment + government + net exports. D) food + housing + business + government.

C

(Table) According to the table, what is this country's GDP? A) $1,225 B) $1,305 C) $1,365 D) $1,440

B

(Table) According to the table, what is this country's net exports? A) $35 B) -$35 C) $115 D) -$115

A

A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle in order are a. expansion, peak, contraction, and trough. b. expansion, trough, contraction, and peak. c. contraction, recession, expansion, and boom. d. trough, expansion, contraction, and peak.

B

Alternating increases and decreases in economic activity are known as: A) hyperinflations. B) business cycles. C) budget surpluses and deficits. D) trade surpluses and deficits.

D

An example of an intermediate product is a. the purchase of tires by Ford Motor Company to put on its Ford Explorers. b. the purchase of wood by a home construction firm. c. the purchase of leather by a shoe manufacturer. d. All of the above are examples of intermediate products.

D

Business cycles A) are always the same duration. B) are always the same intensity. C) are always the same duration and intensity. D) vary in duration and intensity.

True

Macroeconomics focuses on issues such as economic growth, the output of the entire economy, and inflation rates.

False

Macroeconomics studies economic activity from the level of one individual or firm.

B

Which of the following is not included in government purchases? a. government purchases of investment goods b. transfer payments c. government spending on services d. None of the above is included in government purchases. e. Neither b nor c is included in government purchases.

B

Which of the following would be included in the GDP calculations? A) a windshield purchased by General Motors B) a hamburger purchase by a hungry restaurant patron C) petroleum purchased by a refiner from the company that drilled it D) nails purchased by a building contractor

B

Which phase of the business cycle occurs immediately before a trough? A) peak B) recession C) boom D) recovery

C

GDP is calculated including a. intermediate products but not final products. b. manufactured goods but not services. c. final products but not intermediate products. d. only goods purchased by consumers in a given year.

D

If personal consumption = $100, investment = $25, government purchases = $25, imports = $20, and exports = $10, then GDP= A) $160. B) $180. C) $150. D) $140.

C

If the United States imported $1.5 billion worth of goods and services and sold $2.9 billion worth of goods and services outside its borders, net exports would equal a. -$4.4 billion. b. $4.4 billion. c. $1.4 billion. d. -$1.4 billion. e. none of the above.

True

If we counted the value of intermediate goods as well as the full value of the final products in GDP, we would be double counting

True

In boom periods, expenditures on consumer durables often increase more than expenditures on nondurables.

D

Net exports A) all the goods and services produced, minus those exported. B) all the goods and services produced, plus imports. C) exports plus imports. D) exports minus imports

C

Nominal GDP differs from real GDP in that a. nominal GDP tends to increase when total production of output in the economy increases, while real GDP does not. b. nominal GDP is measured in base year prices, while real GDP is measured in current year prices. c. nominal GDP is measured in current year prices, while real GDP is measured in base year prices. d. real GDP excludes taxes paid to the government, while nominal GDP does not.

False

The distinction between whether a good is durable or nondurable is clear and easy to apply.

C

The event that stimulated the U.S. government's commitment to tracking the economy's health through a national income accounting system was the: A) Civil War and Reconstruction. B) Panic of 1907. C) Great Depression. D) Oil embargo of 1973.

B

The nation's gross domestic product (GDP) is equal to: A) the total market value of all intermediate goods and services produced by resources in the United States. B) the total market value of all final goods and services produced by resources in the United States. C) the total market value of all final goods and services produced by American citizens in the United States. D) the total market value of all intermediate goods and services produced by American citizens in the United States.

1,835 Billion

Using any relevant information below, calculate GDP using the expenditure approach

D

We can be certain that net exports fall if a. both exports and imports rise. b. both exports and imports fall. c. exports rise and imports fall. d. exports fall and imports rise. e. either b or d occurs.

C

What is an example of a final good? A) tartar sauce purchased by a fish restaurant B) corn purchased by a pig farmer C) bacon purchased at a grocery store D) rubber purchased by a bicycle company

B

Which organization dates business cycles? A) Federal Reserve B) National Bureau of Economic Research C) Bureau of Commerce and Labor Department D) Bureau of Economic Analysis

B

_____ are over 70% of GDP, while _____ are nearly 11% of GDP. A) Personal consumption expenditures; government expenditures B) Personal consumption expenditures; gross private domestic investments C) Government expenditures; gross private domestic investments D) Government expenditures; net exports